Sunday, August 30, 2009

No Way Out, Collapse Inevitable: Marc Faber

Herewith an interview with Marc Faber on August 26th 2009 with Lateline Business of the Australian Television. He is incredible pessimistic and does not see a way out. Bernanke gets a lashing and he expect Bail Out after Bail Out. The total collapse will come through war. The Great depression of 1929 culminated in World War II of 1939 which can be seen as the Great Re-Set. Can we expect the same in 2017-19? Or sooner?
Interviewer: "5 months ago you told me to buy a farm and a gun"
Faber: "now you need a machine gun"
Got Gold?

Is Marc Faber a super pessimist? Can you take the chance? Troy Ounce is now the Authorized Dealer for BMG Bullion Bars in Toronto. We operate worldwide by fax, email, phone. Contact us for small or big gold, silver or platinum bullion investments with the option of insured safekeeping. Should Marc Faber be right, fiat currencies will be decimated in value and gold bullion will be extremely expensive and scarce.

Friday, August 28, 2009

Fake CNN "Live" Coverage.

Fake Everything; the Blurring between Reality and Fiction.

Fake US bonds found in Italy, fake boobs, fake faces through Botox, fake and inflated house prices, fake interest rates, fake stock prices as there are no fundamentals, fake prices for repackaged financial instruments, fake ratings, fake statistics questioned by Jon Williams of, fake gold/silver prices as the manipulation continues, fake food (they found traces of real food in Snickers") and fake "live" coverage from CNN.

How long can a country avoid looking in the mirror? Reality and fiction are blending into each other and I presume nobody knows anymore what is what.

Let the show begin!

Tuesday, August 25, 2009

Netherlands Antilles: Introduce US$ as Best Weapon Against Financial Crisis And Inflation

Welcome to the Netherlands?

I just had to look twice to this article in the Dutch Spitsnieuws but it is true. Now you know why the Carribean Islands are poor: they do not read. Bloggers and commentators as Max Keiser, Zero Hedge, Jesse's American Cafe, Prudent Investor, News Kontent, Mish, Financial Armageddon, Naked Capitalism, Calculated Risk, Jim Sinclair, Commodity Trade Alert, Steve Keen's Debt Watch, Generational Dynamics, Daily Bell etc are all there to inform you. They are for free and the only thing one must do is switch on the computer and voila: a wealth of information on why it would be incredible destructive to introduce a currency of which the printing presses are running like mad.

Netherlands Antilles Central Bank: Introduce the US$! . Free Google translation

Emsley Tromp, director of the Bank of the Netherlands Antilles, on Monday called for the introduction of the US dollar if and when Curaçao will become an independent country.

According to Tromp, the introduction of the dollar is the best weapon against future international financial crises. He also said it will minimize inflation and exchange rate costs.

The Government of the Caribbean is not as far as Tromp. Finance Minister Ersilia de Lannoy weighs off the pros and cons of introducing the dollar.

After the dismantling of the Antilles, planned for next year, Curacao hopes to become an autonomous country within the Kingdom of the Netherlands, just as St. Martin. All islands currently use the Antillean Guilder.

Friday, August 21, 2009

Tom Ridge: I Was Pressured To Raise Terror Alert To Help Bush Win

Tom Ridge, former Secretary of Homeland Security.Image via Wikipedia

Wow, this is explosive news. There are several sides to this article 1. people just will not believe the raising of a terror alert anymore 2. it will be interesting to see how the American main stream media reacts to this report as they were the cheerleaders of Bush 3. Politics is war and everything is permitted. Everything? Also misusing your authority? 4. The big picture is that this report undermines trust, slowly but the political system, already shaken. Put it this way: the genie is out of the bottle. People are getting very, very angry and this just adds to their frustration.

Tom Ridge: I Was Pressured To Raise Terror Alert To Help Bush Win

Huffington Post h/t

In a new book, former Secretary of Homeland Security Tom Ridge reveals new details on politicization under President Bush, reports US News & World Report's Paul Bedard. Among other things, Ridge admits that he was pressured to raise the terror alert to help Bush win re-election in 2004.

Ridge was never invited to sit in on National Security Council meetings; was "blindsided" by the FBI in morning Oval Office meetings because the agency withheld critical information from him; found his urgings to block Michael Brown from being named head of the emergency agency blamed for the Hurricane Katrina disaster ignored; and was pushed to raise the security alert on the eve of President Bush's re-election, something he saw as politically motivated and worth resigning over.

Dave Weigel, writing for the Washington Independent, notes that in the past, Ridge has denied manipulating security information for political reasons. In 2004, for example, he said, "We don't do politics in the Department of Homeland Security."

"What Tom Ridge disclosed confirms our worst suspicions," said Sen. Lautenberg (D-N.J.), who criticized the color-coded system back in 2003. "Just like they did in Iraq, the Bush Administration manipulated intelligence to cause fear in the public to further its political goals."

The Bush administration was forced to admit in the days after the 2004 alert that it was based on intelligence three or four years old. Officials then claimed there was a previously unmentioned "separate stream of intelligence" that justified the warning -- but offered little tangible information to support their new story..

ThinkProgress recalls, the AP reported that "even 'some senior Republicans' privately questioned Ridge's timing of a terror alert that came just three days after the Democratic National Convention."

Ridge's book, "The Test of Our Times: America Under Siege...and How We Can Be Safe Again," comes out September 1.

Wednesday, August 19, 2009

Zim$, eBay, Inflation and something for free.

Stacks of worthless Zim$$ in my office

Yesterday I bought 7300 notes of ZIM$ from a friend from Zimbabwe. Needless to say, the notes only have collectors value. But it is fascinating, the kids had a ball when all the notes were on the table. We threw them in the air and after repacking them my sons (13 + 10) said : "dad, let's split up and meet in a few months time in the Bahama's". This says as much about the time they spend behind the TV (we insist: only in the weekend) as about our parenting skills. My Zim friend spend 1 1/2 hours counting the notes with 3 people. We spend 1 hour stacking them with the whole (5) family.
Included were old and new notes, with/without scribblings and telephone numbers on them, expired notes, agro-cheques, all colours of the rainbow, etc, etc. I am not a collector but am thinking hard what to do with them.

Now here is a tricky question for you. I will promise to send the first ten (10) correct answers a note of min. (100 Billion) Zim$ per snail mail. No questions asked. For fun.

The question is:

"If I would offer these 7300 notes to eBay to sell, the price per note would drop, no? I mean: this is supply & demand. Easy!
But inflation is the increase in money supply! My offer of 7300 additional Zim$ notes on eBay is an increase in money supply which means the price per note has to go up!
My offer is inflationary!
So what will happen according to you?"

Confused? You shouldn't be.

Read also the excellent piece on inflation of mr Janszen of iTulp.

Monday, August 17, 2009

9 out of 10 US Dollar Bills Contain Traces Of Cocaine

"Sorry Dude, you're not invited!"

....and the 50 US$ Bills are being used most, according to a study of the University of Massechusetts in Dartmouth.

Lies, lies and statistics...I just hope these tests were carried out before the Fed decided to let the printing presses run? If not, the problem would be much bigger.

Also, can we now assume that 9 out of 10 people in the US use cocaine, this is, including government, Treasury and Fed? If so, where are the parties?
Another example of a lack of transparency! ;)

Update: does somebody know how many 5, 10, 20 and 50 $ Bills are in circulation at the moment? We can so calculate how many kilo's of cocaine is floating around on paper money in the USA.

Contamination of cocaine on paper currency collected in Providence, Novi Michigan and Salt Lake City

Primary Author(s)
Zhuo Zhu, Zhao Luo, Yang Yang, Yuegang Zuo

It is well known that the U.S. paper currency in general circulation is contaminated with cocaine during the exchange, storage, and abuse of the illicit drug. The analysis of the extent of cocaine contamination on the banknotes collected from various cities may provide valuable epidemiological information on the illicit drug abuse. In this study, we determined cocaine on U.S. banknotes collected from Providence, Rhode Island, Novi, Michigan and Salt Lake City, Utah using a modified GC method reported by Zuo et al. (J. Separation Sci., 2008, 31, 2444). The new method comprises a fast ultrasonic aqueous extraction followed by liquid-liquid extraction with hexane and capillary GC separation, identification and quantification. The modified method is accurate and precise with recovery rate of 96.3%. The analytical results indicated that the banknotes collected from Providence were most contaminated with average level of cocaine on $50 denomination being 83.7, on $20 being 39.5, $10 being 23.6 and $5 being 26.1 µg per note.

Saturday, August 15, 2009

400,000 Soldiers Requested in "Times of Emergency": Pentagon to MOD

The timing and open wording of this request by the Pentagon is highly suspect.

From different sides we now read that the government is waiting for a collapse. Gerard Celente writes about "The Second American Revolution Has Begun" the following:

"Before the momentum of the “Second American Revolution” becomes unstoppable, it could be derailed through some false flag event designed to deceive the public, or a genuine event or crisis capable of rallying the entire nation behind the President. In a worst-case scenario, according to Trends Research Institute Director, Gerald Celente, Given the pattern of governments to parlay egregious failures into mega-failures, the classic trend they follow, when all else fails, is to take their nation to war.

A false flag attempt, a genuine crisis, or a declaration of war, may slow the momentum of the “Second American Revolution, but nothing will stop it."

At the same time bloggers like Jesse writes about the same topic in his blog:

"We are persuaded that the government is waiting for the next wave of failures, or some exogenous event of catastrophic proportion, to provide their rationale to take new aggressive action.

But while the financial oligarchy is in control of the men in power, we doubt that these will be the right steps for the majority of Americans, the US economy, and its debt holders."

The Fed and the US government are in a corner: all possible cures to heal the US from the financial crisis have been exhausted. The writing is on the wall for a bank holiday; Dollar devaluation and a new price for gold. This scenario would be the least painful. But do not discount other scenario's which would upset a lot of people. One thing's for sure: Joe the plumber will have to bend forward; corporate America will do the work.

Without being panicky one should prepare for the worst possible outcome which is that the US government is going to use the military against its population.

The Pentagon Wants Authority to Post Almost 400,000 Military Personnel in U.S.


The Pentagon has approached Congress to grant the Secretary of Defense the authority to post almost 400,000 military personnel throughout the United States in times of emergency or a major disaster.

This request has already occasioned a dispute with the nation’s governors. And it raises the prospect of U.S. military personnel patrolling the streets of the United States, in conflict with the Posse Comitatus Act of 1878.

In June, the U.S. Northern Command distributed a “Congressional Fact Sheet” entitled “Legislative Proposal for Activation of Federal Reserve Forces for Disasters.” That proposal would amend current law, thereby “authorizing the Secretary of Defense to order any unit or member of the Army Reserve, Air Force Reserve, Navy Reserve, and the Marine Corps Reserve, to active duty for a major disaster or emergency.”

Taken together, these reserve units would amount to “more than 379,000 military personnel in thousands of communities across the United States,” explained

Paul Stockton, Assistant Secretary of Defense for Homeland Defense and America’s Security Affairs, in a letter to the National Governors Association, dated July 20.

The governors were not happy about this proposal, since they want to maintain control of their own National Guard forces, as well as military personnel acting in a domestic capacity in their states.

“We are concerned that the legislative proposal you discuss in your letter would invite confusion on critical command and control issues,” Governor James H. Douglas of Vermont and Governor Joe Manchin III of West Virginia, the president and vice president of the governors’ association, wrote in a letter back to Stockton on August 7. The governors asserted that they “must have tactical control over all . . . active duty and reserve military forces engaged in domestic operations within the governor’s state or territory.”

According to Pentagon public affairs officer Lt. Col. Almarah K. Belk, Stockton has not responded formally to the governors but understands their concerns.

“There is a rub there,” she said. “If the Secretary calls up the reserve personnel to provide support in a state and retains command and control of those forces, the governors are concerned about if I have command and control of the Guard, how do we ensure unity of effort and everyone is communicating and not running over each other.”

Belk said Stockton is addressing this problem. “That is exactly what Dr. Stockton is working out right now with the governors and DHS and the National Guard,” she said. “He’s bringing all the stakeholders together.”

Belk said the legislative change is necessary in the aftermath of a “catastrophic natural disaster, not beyond that,” and she referred to Katrina, among other events.

But NorthCom’s Congressional fact sheet refers not just to a “major disaster” but also to “emergencies.” And it says, “Those terms are defined in section 5122 of title 42, U.S. Code.”

That section gives the President the sole discretion to designate an event as an “emergency” or a “major disaster.” Both are “in the determination of the President” alone.

That section also defines “major disaster” by citing plenty of specifics: “hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought,” as well as “fire, flood, or explosion.”

But the definition of “emergency” is vague: “Emergency means any occasion or instance for which, in the determination of the President, Federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States.”

Currently, the President can call up the Reserves only in an emergency involving “a use or threatened use of a weapon of mass destruction” or “a terrorist attack or threatened terrorist attack in the United States that results, or could result, in significant loss of life or property,” according to Title 10, Chapter 1209, Section 12304, of the U.S. Code. In fact, Section 12304 explicitly prohibits the President from calling up the Reserves for any other “natural or manmade disaster, accident, or catastrophe.”

So the new proposed legislation would greatly expand the President’s power to call up the Reserves in a disaster or an emergency and would extend that power to the Secretary of Defense. (There are other circumstances, such as repelling invasions or rebellions or enforcing federal authority, where the President already has the authority to call up the Reserves.)

The ACLU is alarmed by the proposed legislation. Mike German, the ACLU’s national security policy counsel, expressed amazement “that the military would propose such a broad set of authorities and potentially undermine a 100-year-old prohibition against the military in domestic law enforcement with no public debate and seemingly little understanding of the threat to democracy.”

At the moment, says Pentagon spokesperson Belk, the legislation does not have a sponsor in the House or the Senate.

Thursday, August 13, 2009

Gold: South Africa's wealth, shipped to the UK. Why?

Cape Town Waterfront Harbour. In the back you ...Image via Wikipedia

Gold: South Africa's wealth, shipped to the UK. Why?

South Africa's biggest bank, ABSA, manages an ETF called Newgold. In February of this year ABSA moved the gold they claimed to have (28 tons) to support the ETF from the storage facilities of Rand refinery , world biggest gold refinery in Johannesburg, to vaults in the UK and Wales, owned by Brinks, a NYS listed company, headquartered in Virginia, USA. "Because the core business of Rand refinery is not storage", we read in the press release.

Hmm, I am sure a few security companies in South Africa are looking at this deal with suspicion. Why are they being cold shouldered? Why not store the gold in South Africa? South Africa needs the jobs, has the expertise and I am sure South African security companies would do a great job looking after the gold professionally. Bet they would even build a vault. I mean, you will have a hard job trying to find people in the world with more expertise on crime than the South African security people.

So what can be the reason to fly bloody 28,000 kilos of gold to the UK and Wales? Besides the fact that the operation must have cost an arm and a leg it is also a security risk. Suppose something happens? Explosion in the air, sink to the bottom of the sea, high jack?

And why is ABSA, owned by Barclays bank (UK) shifting custody from our backyard of something so important (real money to the value of almost 1,1 Billion US$) to a NYS listed American company, to a vault in the UK, by airplane taking all the risks, circumventing South African security companies with apparent approval of the South African Reserve bank????

Yes, South Africa has exchange rate control, also called capital control. The rules and regulations are not so strict anymore compared to 20 years ago, but still, if you want to emigrate you are limited to a certain amount to take with you. Want to buy something overseas? You will be checked by grey people wearing grey shoes and grey suits. So on one hand the South African government wants to show overseas investors that they are very confident; internally they are scared as hell and do not show confidence at all with these regulations from the middle ages.

So, goodbye gold? Red lights flashing?

Strange story as it just does not make sense. Let's read Absa's Media release (bold = mine; Troy)
Media Release: Absa Capital
17 February 2009
New Custodian Appointed for NewGold ETF
Absa Capital, the investment banking division of Absa Bank Ltd, announced today
that the issuer of the NewGold Exchange Traded Fund (ETF), NewGold Issuer
Limited, has appointed Brink’s Limited (Brink’s) as the safe custody custodian of
NewGold’s gold bullion holdings.
The reason for the change was the limitation in the safe custody capacity of the
previous custodian, in light of significant increase in NewGold’s holdings of gold and the predicted continued growth of such holdings.
NewGold is the largest ETF in South Africa with R8.7 billion under management.
NewGold’s gold bullion has been transported to the safe vault premises of Brink’s inEngland where they have assumed physical control of the gold bullion with effect from 16 February 2009.
Brink’s is a global leader in business and security services serving banks, retailers,
governments, mines, refiners, metal traders, diamantaires and jewellers through morevthan 800 facilities in 50 countries on 6 continents.

About Absa Capital
Absa Capital, a division of Absa Bank Limited (Absa) and affiliated to Barclays
Capital, is a leading South African investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.

About Absa Capital ETFs and Index Products
Absa Capital is a leading originator of exchange traded funds (ETFs) in the South
African market. The investment bank listed and operates NewRand, the first ETF in South Africa based on a proprietary investible index (the NewRand Index, comprising rand hedge stocks with the highest correlation with the Rand/USD exchange rate), as well as NewGold, the first and only gold ETF in South Africa as well as the largest ETF in the SA market with R8.7 billion in assets under management.
Absa Capital ETFs are listed on the JSE Ltd and can be traded at any time throughout the course of the day. Typically, ETFs try to replicate a stock market index such as the FTSE/JSE Top 40 Index, a market sector such as resources or financials, or a commodity such as gold.

About Brink’s
Brink's, Incorporated, a subsidiary of The Brink's Company, is a global leader in business and security services serving banks, retailers, governments, mines, refiners, metal traders, diamantaires and jewellers through more than 800 facilities in 50 countries on 6 continents - an unrivalled global footprint that delivers incomparable security, efficiency and visibility across the logistics lifecycle.
Founded in 1859, Brink's has evolved from a leading armoured transportation service carrier to a premier provider of secure transportation and logistics solutions around the world. Brink's global leadership is founded on a heritage of trust and has earned a reputation as the most reliable name in secure logistics. Today, thousands of companies across the globe entrust Brink's with the secure armoured transportationand management of their most precious assets.
Brink's is an authorized depository for Nymex/Comex and an official vault operator in the Dubai Gold & Commodities Exchange and Mumbai NCDEX. Brink's is an approved weigher of the London Bullion Market Association and its vaults are utilised by clearing members of the London Bullion Market. Through its professional vault officers, Brink's is a recognised authority on the acceptable standards for gold bars. Brink's forms part of the LBMA committee that adjudicates on the criteria for the London Good Delivery Bar.
Issued by: etc.
Is this a clue? On the 16th of february 2009, 28 tons of physical gold has been deposited in the warehouses of Brink. Will Brink immediately register this gold to be deposited also at Comex? If, positive, this should wack the gold price downwards, wouldn't it? But the price in that period after 15th of February 2009 went up only to go in a downward spiral in the last week of Feb/first week of March.

No transparency; many questions. Anyone?

Apparently the only person in the US top structure who is not in denial: Elizabeth Warren.

Just when you wanted to close the book on the USA you find someone right at the top of the political food chain who is not afraid to tell the truth, who is not in denial and apparently knows her business. Elizabeth Warren, chair of the Congressional Oversight Panel has the story everyone knows, but is afraid to admit: there are no green shoots, nothing has changed and the USA is going to have real problems. Must see video. (h/t: Zero Hedge)

Wednesday, August 12, 2009

Total cost financial crisis: US$ 100 T.; cost till now: app 10%

NBP GoldImage by covilha via Flickr

Total estimated cost financial crisis: US$ 100 Trillion.; cost till now: app 10%.

Daily Bell

The cost of mopping up after the world financial crisis has come to $11.9 trillion (£7.12 trillion) - enough to finance a £1,779 handout for every man, woman and child on the planet. The staggering total is equivalent to around a fifth of the entire globe's annual economic output and includes capital injections pumped into banks in order to prevent them from collapse, the cost of soaking up so-called toxic assets, guarantees over debt and liquidity support from central banks. Although much of the total may never be called on, the potential outlay still dwarfs any previous repair bill for the global economy. - Telegraph

Dominant Social Theme: A lot of money.

Free-Market Analysis: We have been estimating that the total cost of the latest financial crisis may be up to US$100 trillion. According to this analysis we are only at 10 percent of this total. But it depends on how you add up the figures and how much is really known. US figures that were recently released indicated that the total from the US$700 billion TARP program alone could end up costing the US government trillions if the economy continued to go south. This doesn't include the British tax bailouts, the European Union figures, etc.

US congressional questioning revealed that the Federal Reserve had loaned out up to US$8 trillion or more to a variety of domestic and foreign financial entities. And who knows what other loans and payments have been made by other central banks as a result of the recent financial crisis.

This was no ordinary financial crisis. The fiat money system spawned by the West basically ended in 2008. It may seem to have come back now, but the idea that markets, investors and savers can merely continue on in a system that lay in ruins only months ago seems difficult to fathom. There are too many people now distrustful of the system and because the system decayed in real time on the Internet, too many people have been exposed to free-market explanations that make more sense than the ones provided by the authorities.

Conclusion: We still stand behind our US$100 trillion figure. It is not so outlandish when you start adding up corollary costs having to do with unemployment, bankruptcies and other figures not directly associated with monetary and fiscal stimulation. Regardless of the ultimate figure, we do believe that the current system has been basically destabilized along with ability of central banks to count on a limitless well of citizen good faith. The American Federal Reserve carries an approval rating around 30 percent - the same as the IRS. More than that, the ability of central bankers to stabilize a world economy with so much liquidity (along with a paucity of good will) is highly doubtful. We think it just as likely that economic struggles will lead eventually to some kind of renewed hard-money standard.

Got gold?

Sunday, August 9, 2009

Stimulus working; recovery imminent: Krugman

See above Krugman in different fashion-looks over the years. This took me months of investigative work. You see he adapts and talks the talk of his fashion master. Sorry, mr Krugman, but this is just too funny. Respectively: 1972, 1976, 1978, 1980, 1998 & 2000.
Thank you

U.S. Economy May Be on Brink of Recovery, Tyson, Krugman Say


Aug. 10 (Bloomberg) -- The U.S. economy may be on the cusp of a recovery and the impact of the nation’s stimulus plan should increase this quarter, said Laura Tyson, an adviser to President Barack Obama.

“We may have hit stability, we may be in the beginning of an upturn” based on the latest economic data, Tyson, a member of the White House’s Economic Recovery Advisory Board, said yesterday during an interview in Kuala Lumpur. Nobel Prize- winning economist Paul Krugman said the deepest slump since the Great Depression may be ending.

“It’s quite possible, though not certain, that retrospectively, we’ll say that the recession ended in July or August, maybe September,” Krugman said in a separate interview in the Malaysian capital. “My guess is that we’ve bottomed out now, that August was probably the trough month.”

Krugman, 56, cited last week’s government report showing that the pace of U.S. job losses slowed more than forecast in July and the unemployment rate dropped for the first time in 15 months. He also pointed to reports by the Institute of Supply Management that manufacturing, while still contracting, is on the mend.

Tyson, 62, cautioned that declining housing values and an overhang of unsold homes pose threats to a recovery, and it’s too early to say the jobs report is the beginning of a trend.

“We’ve had one number that’s been slightly stronger than expected,” she said. “It’s pretty hard to read a single month as creating a trend. Most of the forecasts are still that the unemployment rate rises through till the end of the year.”

Unemployment Falls

U.S. payrolls fell by 247,000 in July, after a 443,000 loss in June. The jobless rate unexpectedly dropped to 9.4 percent from 9.5 percent. Obama said last week that the unemployment numbers indicate “the worst may be behind us.”

The report propelled the Standard & Poor’s 500 Index above 1,000 for the first time since November as U.S. stocks rose for a fourth week. The S&P 500 rose 2.3 percent to 1,010.48, the highest since Oct. 6. The Dow Jones Industrial Average climbed 198.46 points, or 2.2 percent, to 9,370.07.

The Aug. 7 Labor Department report came a week after the Commerce Department said U.S. gross domestic product shrank at a better-than-forecast 1 percent annual pace in the second quarter after a 6.4 percent drop in the prior three months.

There’s no reason for a second stimulus package now, Tyson said in the interview. She suggested on July 7 the U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was “a bit too small.” She told CNBC three days later that it’s premature to plan for a second stimulus package.

Stimulus Expectations

“We know that relative to plan, the stimulus package in place is performing along expectations,” Tyson said yesterday. “Right now, based on the evidence that the economy has put forward and the stimulus spend out relative to plan, there isn’t any reason to think about a next round.”

Policy makers may want to consider doing more for unemployed Americans, Tyson said. Employers have eliminated about 6.7 million jobs since the recession began in December 2007, the most since the Great Depression.

Congress will consider extending unemployment benefits next month when lawmakers return from their August recess, Majority Leader Harry Reid said Aug. 7. The Senate’s top Democrat said 1.5 million Americans may exhaust their benefits by the end of the year if Congress doesn’t act.

“That could be considered as a second stimulus or it could be considered as an extension of unemployment compensation,” said Tyson, a professor at the University of California’s Walter A. Haas School of Business, who was an adviser to Obama during last year’s presidential campaign.

1 Million Jobs

Krugman, a Princeton University economist, said the stimulus plan probably saved 1 million jobs. He said a second package is needed and should be directed at state and local governments as well as spending on construction projects.

The U.S. economy may be the first after Asia to “take off,” said Raghuram Rajan, the former chief economist of the International Monetary Fund who’s now a professor at the University of Chicago.

“Unemployment may continue rising and job losses may continue, but growth will start picking up in the U.S.,” Rajan, 46, said in an interview yesterday. “We will get a few quarters of rebound growth.”

Krugman, Tyson and Rajan were in Kuala Lumpur for the World Capital Markets Symposium, which starts today.

Friday, August 7, 2009

Denial, Anger, Bargaining, Depression, Acceptance

Elisabeth Kubler-Ross, described the five stages of grief in her ground breaking book "On death and dying".

Interesting to see that differences of opinion are so fiercely debated in the US. After all, the differences between the Democrats and Republicans are superficial. Different programs, same execution. Bush, Obama, what difference does it make for the financial and economic situation? Nada! Nevertheless, it keeps the folks in the US pretty busy as fists are flying through the air. Frustration is at an all time high.
The phases people go through when confronted by grief or loss have been described by Elisabeth Kuebler-Ross in her book "On death and dying" (1969). But what about the experience of loss of 20 years of over consumption and loose credit? Same thing of course.
First we had (have) the denial phase, then the anger, after this the bargaining (Can we save ourselves if we take China out of the US$ trap? Or perhaps we should devalue the US$? Or perhaps we should audit the Fed?). Then the depression (we already have some proof of this) and lastly the acceptance.
Yes, We Can!

Town Hall Meetings turn violent

St Louis website

UPDATE: St. Louis County police say six people were arrested. Two of those were arrested on suspicion of assault, one of resisting arrest and three on suspicion of committing peace disturbances. Carnahan was gone when the ruckus started.

Kenneth Gladney, a 38-year-old conservative activist from St. Louis, said he was attacked by some of those arrested as he handed out yellow flags with “Don't tread on me” printed on them. He spoke to the Post-Dispatch from the emergency room of the St. John's Mercy Medical Center, where he said he was waiting to be treated for injuries to his knee, back, elbow, shoulder and face that he suffered in the attack. Gladney, who is black, said one of his attackers, also a black man, used a racial slur against him before the attack started.

“It just seems there's no freedom of speech without being attacked,” he said.

MEHLVILLE -- St. Louis County police on Thursday arrested at least four people, including a Post-Dispatch reporter, outside a town hall forum held by Rep. Russ Carnahan, said Dawn Majors, a Post-Dispatch photojournalist who witnessed everything unfold.

It happened about 8:30 p.m at Bernard Middle School on Forder Road in Mehlville. Carnahan, D-St. Louis, had drawn a rowdy crowd that overflowed the school gym and left dozens of people outside. Many of those who showed up at what had been billed as a forum on aging carried signs about the national health-care debate.

Dozens of people were kept out because there was no room for them inside. Members of the local Tea Party Coalition, a movement that has emerged to counter President Barack Obama’s policies, had urged their members to attend, which in turn spurred Democrats to establish a strong presence.

The event was winding down when Majors said she saw a police squad car turn its lights on and went to see what was happening. As she approached it, her eyes started to burn.

“And that's when I realized I'd walked through remnants of pepper spray,” Majors said. She turned her attention to taking pictures.

She said she saw a woman in handcuffs who was complaining about the pain of the spray and asking to wash her face and eyes. The response of the officer who was arresting her was, “I warned you,” Majors said.

Majors said the woman had been speaking very loudly and passionately in support of health-care reform earlier in the evening.

“She made herself very visible,” Majors said.

Tuesday, August 4, 2009

Western Cape may get fuel tax

I am a politician and I am here to help you

The easy way out for politicians to "fix things" but toxic for the economy is to raise taxes. The politicians should fire themselves and so save some money. After all, South African politicians are one of the best paid politicians in the world
. Don't believe it? See What World MP's really make and just try to find South Africa.

Update: US Congress orders 3 Gulfstreams. We need it!
Update1: SA government will spend R 2,4 Billion on lay-off scheme. Rand drops.

Western Cape may get fuel tax

Cape Town - The Western Cape's DA government is looking at introducing a tax on fuel to help subsidise the cost of maintaining the province's road networks.

"Yes, fuel tax is being looked at again, but as part of a package," Democratic Alliance transport MEC Robin Carlisle told a media briefing at Parliament on Tuesday.

The "package" included no new roads.

"There will be no further new roads in the Western Cape. The days of road building are over. Because we can't maintain what we've got, it makes no sense to build new roads.

"There will [also] be no further undoing of the 'big knots' in the Western Cape, such as Koeberg [a motorway junction in Cape Town] and Hospital Hill [also in Cape Town].

"Those days are also over. We simply can't afford that," he said.

The briefing - led by DA transport spokesperson Stuart Farrow - marked the launch of the party's new transport policy.

Farrow told journalists there had been a "mass deterioration" of South Africa's roads over the past decade, and an estimated R120bn was required to fix them.

This deterioration was the result of "inadequate funding and rising costs of construction and maintenance", he said.

Speaking later to Sapa, Carlisle said National Treasury had granted the former African National Congress government in the Western Cape permission to impose a fuel tax about three years ago, but it had chosen not to do so.

According to a study at the time, there were concerns about the impact such a levy would have on the province's economy.

Carlisle said he did not have concerns in this regard. High vehicle licence tariffs in the Western Cape were having more of an impact, with many owners, particularly of heavy vehicles, choosing to register in other provinces.

Asked if a fuel tax similar to what was proposed previously - between 10c and 50c a litres - was being considered for the province, he said the levy would be at "the bottom end of that band".

"It depends on what National Treasury allows us."

The application for such a tax would probably be submitted next year, he said.

Speaking at the briefing, Farrow called for the establishment of a dedicated national Road Maintenance Fund, funded primarily from the existing fuel levy.

Money raised through this levy and sent to provinces was often not being used for road maintenance.

Monday, August 3, 2009

Panic In The Air!

Headlines are getting more panicky:
The next wave of the financial crisis is fast approaching (Jesse)
Ug99 Fungus Threat to 80% of World's wheat Crop (Market Skeptics)
Why the Fed Is In Panic Mode: Gary North (GATA)
Warning: Oil supplies are running out fast (Independent)
US Middle Class might expect tax-hike: Obama (Yahoo News)
Recession won't end this year: Roubini (Bloomberg)
Bank of England urged to extend QE (Times)
Congressman Grayson demands Fed accountability (Daily Bell) (tip)

Sunday, August 2, 2009

Slavery Legal in America Again (VIDEO)

Wikipedia says about serfdom:

"Serfdom is the socio-economic status of unfree peasants under feudalism, and specifically relates to Manorialism. It was a condition of bondage or modified slavery which developed primarily during the High Middle Ages in Europe. Serfdom was the enforced labour of serfs on the fields of landowners, in return for protection and the right to work on their leased fields.

Serfdom involved not only work in fields, but also various other activities, like forestry, mining, transportation (both land and river-based), and crafts. Manors formed the basic unit of society during this period, and the lord and his serfs were bound legally, economically, and socially. Serfs were labourers who were bound to the land; they formed the lowest social class of the feudal society. Serfs were also defined as people in whose labour landowners held property rights".

Put this in your pipe and smoke it
Read the Article at HuffingtonPost

What is going on?

What The Heck Is Going On?
  1. Do Not Be Fooled, Another Major Economic Collapse Could Be Coming Sooner Than Many Think (Safehaven)
  2. A Bank Holiday? (Market Watch)
  3. Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year - Harry Schultz Letters (Market Watch)
  4. US issues home flight tickets for embassy staff's next of kin (Official Rumour)
  5. 2, 3 and 4 Explained (Prudent Investor)
  6. Dollar Devaluation: The Fed’s secret weapon? (Worldbank Crisis Talk)
  7. Dollar devaluation inevitable. Suggestion to index US$/€ on a 50/50 basis (Fxtraders)
  8. Sarah Palin's Future (Daily Thought Pad)

Expect 10 Bad Years: Belgium PM

Managing expectations in order to come to grips with reality.....

Expect 10 Bad Years: Belgium PM

Financieel Dagblad (Dutch): Free Google translation

Prime Minister of Belgium Herman Van Rompuy warned his countrymen that they can expect ten difficult years. The government finances, which are already bad, will deteriorate even more because of the aging population.

This is why the expenditure of this and future cabinets must be cut sharply.

Van Rompuy gave the interview last Saturday with the Brussels newspaper Le Soir. A major part of the government deficit will not disappear when this economic crisis is over. "What we thought was cyclical, is in fact permanent."

According to the Prime Minister, whose term runs until 2011, the problems are not insurmountable. He points out that Belgium had worse financial times. 'To give you an idea, in 1981 we had a deficit of 15 percent. Today, this is less than half. "

Saturday, August 1, 2009

Bubble Analysis

Doug Noland of Prudent Bear is a man of great wisdom and insight. He gathers information like a squirrel, dissects it and puts his conclusion down in a very readable format.

Today he writes about bubbles, that any bubble is the cause of loose credit politics and when the bubble appears, it re-enforces itself and is destructive in the end. He argues that:
"an unlimited supply of Credit will tend to satisfy rising demand at a lower price",
followed by the statement that:
"today’s mispricing of government finance feeds reinforces the market’s perception that U.S. policymakers will successfully reflate the economy. This Bubble distortion, then, fosters a problematic explosion of government debt issuance – and a most dangerous case Minskian “Ponzi finance.”
He sees both the Chinese and the Fed being held hostage by bubble dynamics and does not see any willingness from policymakers to act decisively against increasingly speculative financial markets.

Great insight.

Facets of Bubble Analysis:

The Prudent Bear; Credit Bubble Bulletin

...... A couple years back I received an email from a unimpressed reader with the following message: “Doug, when you’re a hammer everything looks like a nail.” He was referring to my thesis back then that Bubbles had sprung loose from the U.S. Credit system and had begun propagating around the world.

Months back I posited that a Government Finance Bubble had emerged from the smoking ashes of the Wall Street/mortgage finance Bubble. I understand why some might see me as a dreary hammer out searching for nails. All the same, the backdrop merits further discussion of facets of Bubble analysis.

Many see Bubbles in terms of an unsustainable overvaluation of asset prices. And many would view today’s “post-Bubble” landscape and find my ongoing Bubble premise borderline ridiculous. But I’ve always viewed Bubbles as a Credit phenomenon. Inflating assets prices are actually only one of many consequences of an over expansion of Credit. Rapid asset inflation is almost a sure sign of underlying Credit excess, though analysts should downplay asset prices while focusing keenly on underlying Credit and speculative dynamics. Huge Credit growth, market price distortions (especially the under-pricing of risk), highly speculative markets, and prolonged asset inflation are inevitably indicative of some underlying monetary/Credit disorder.

I want policymakers out of the business of targeting or tinkering with the asset markets and market yields. Instead, the focus should be on creating a backdrop of stable money and Credit. The problem today is that central bankers for years ignored a historic expansion of Credit (much of it directed to the asset markets) and resulting Monetary Disorder. Now, to avert systemic implosion central bankers at home and abroad have resorted to unprecedented measures to expand Credit and intervene in the market's pricing of Credit. Instead of a movement toward constructing a more stable global Credit system and backdrop, policymakers have instead jumped farther into the uncharted waters of unconstrained Credit expansion. Such a backdrop is ultra-conducive for ongoing speculation, Bubbles, general disorder.

Again, Bubbles are first and foremost a Credit phenomenon. Fundamental to the nature of Credit, expansion generally fosters more expansion. Credit excess begets only greater Credit excess. And Credit excess notoriously begets speculative excesses. Importantly, Credit is inherently self-reinforcing – both on the upswing and downswing. In today’s “system” of unrestrained Credit, rising demand does not dictate an increasing price for this Credit. Indeed, an unlimited supply of Credit will tend to satisfy rising demand at a lower price. And this gets right to the heart of a huge Bubble – and policymaking - dilemma.

The bottom line is that unrestrained Credit is inherently unstable, and few seem to appreciate the unique nature of today’s unfettered global Credit environment. There is no international gold monetary regime for which to discipline lenders, central banks, governments or economies. The dollar reserve system self-destructed over decades of undisciplined Credit expansion. And the breakdown of U.S. discipline – and the resulting massive dollar devaluation – has unleashed domestic Credit systems from China to Brazil. Never have “developing” Credit systems (and currencies) enjoyed such freedom to inflate financial claims.

It’s with this backdrop in mind that I contemplate the likelihood that we have entered an especially dangerous period of Credit excess and attendant Bubbles. Fundamentally, the massive intrusion of the Treasury and Federal Reserve into the marketplace has only further distorted the pricing of finance throughout our economy - as well as globally. Despite record debt issuance, the market will lend the Treasury three-month money at about 11 basis points. Two-year borrowings come at cost of about 100 bps. The price of Treasury notes and bonds inflates in spite of enormous deficits as far as the eye can see. Moreover, the marketplace is happy to lend to Fannie and Freddie at only a slight premium to the U.S. Treasury, with the prices of their obligations inflating in the face of these institutions’ ongoing financial implosions. Today’s price distortions go right to the heart of system “money.

Fannie Mae’s Book of Business (mortgage holdings and MBS guaranteed) jumped $43.9bn during June to $3.194 TN. This was the biggest growth since December 2007. Freddie’s Book of Business increased $12.2bn last month. According to Bloomberg’s issuance tally, the GSEs (Fannie, Freddie and Ginnie) issued $168bn of MBS in July, down somewhat from June’s huge $236bn and May’s $212bn. At $1.102 Trillion, year-to-date agency MBS issuance has already almost matched 2008 and 2007. The government is quietly accumulating dangerous Credit and interest rate risk in its ongoing mortgage operations.

During the Wall Street/mortgage finance Bubble, seemingly no amount of Credit creation and debt issuance would place upward pressure on the cost of borrowings (or reduced the price of the underlying debt instruments). Importantly, the bigger this Bubble inflated the more confident the savvy market operators became that an inevitable crisis would force policymakers to explicitly back GSE obligations and aggressively slash interest rates. Market yields remained artificially low and increasingly detached from escalating risks. Fundamentally, a market trapped in Bubble dynamics had lost is capacity for adjustment and self-regulation.
The massive expansion of GSE obligations, coupled with a speculative marketplace’s anticipation of yet another major government-induced reflation, severely distorted the marketplace and provided the bedrock for a historic mortgage finance Bubble. Today, the government’s intrusion into the marketplace is greater than ever. The markets readily accommodate a couple Trillion of annual issuance – as if the U.S. economy and Credit system were on solid footing. And I would argue that today’s mispricing of government finance feeds reinforces the market’s perception that U.S. policymakers will successfully reflate the economy. This Bubble distortion, then, fosters a problematic explosion of government debt issuance – and a most dangerous case Minskian “Ponzi finance.”

There are a number of reasons why the government finance Bubble is even more dangerous than the Wall Street/mortgage finance Bubble. First of all, the $2 TN or so of “government” issuance over the past year is greater than the $1.4 TN of peak total mortgage Credit growth during 2005 and 2006. I would expect another $2 TN next year and the year after. Government debt enjoys the attribute of “moneyness” in the marketplace to a much greater capacity than mortgage securities did during the boom. The risks associated with debasing this “moneyness” are momentous. And there is, as well, the dynamic where the greater the government finance Bubble inflates the more convinced the marketplace becomes that the Federal Reserve will do everything within its power to accommodate the debt markets (ultra-loose monetary conditions for the duration). And destabilizing speculation can return to all markets…

The government finance Bubble is a global dynamic. There were pertinent Bubble-related comments out of China this week:

July 30 – Dow Jones (J.R. Wu): “China’s central bank will emphasize market-based systems, rather than administrative controls, in guiding the appropriate growth of credit, People’s Bank of China Vice Governor Su Ning said. The statement… came just hours after Chinese shares posted their biggest one-day percentage fall in over eight months on fears that loan growth may start to pull back… ‘We should pay attention to the use of market-oriented means - rather than controlling the size - and flexibly use various monetary policy tools to guide the appropriate growth of credit,’ Su said… He said ‘the mind and action’ of all financial institutions should ‘be as one’ with the government’s goal, and financial institutions should properly handle the relationship between supporting the economy’s development and preventing financial risks. Su’s comments appeared to signal the PBOC wasn’t about to set loan curbs in the second half of this year to cool explosive lending growth, as it did in 2008 when it used the blunt tool of loan quotas for banks to hold down inflationary pressures that were building at the time… But Su said the central bank will resolutely maintain its moderately loose monetary policy. He said the foundation for China’s economic recovery isn’t firm yet and many uncertain factors still exist in both the external and domestic environment.”

Similar to the Federal Reserve, I see Chinese authorities increasingly held hostage to Bubble Dynamics. I found it fascinating that a top People’s Bank of China official would mention emphasizing “market-based systems” for guiding Credit growth. I suspect this may be a most inopportune time to begin relying on market mechanisms. As we have witnessed, market-based processes can be particularly unreliable Credit regulators after Bubbles reach an overheated state. It is my view that only decisive action by Chinese policymakers will at this point have much impact at restraining excess. Central to the analysis of unfolding precarious Bubble Dynamics is my view that few, if any, policymakers anywhere around world will be willing to act decisively to tighten Credit conditions and address increasingly speculative financial markets.