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The GoldBugg Report - Protection from Stagflation, own Precious Metals

February 26, 2008

TOP HEADLINES AND QUOTES

• That '70s Look: Stagflation.
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• Stagflation. A condition of slow economic growth and relatively high unemployment a time of stagnation accompanied by a rise in prices, or inflation. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in. This happened to a great extent during the 1970s, when world oil prices rose dramatically, fuelling sharp inflation in developed countries. For these countries, including the U.S., stagnation increased the inflationary effects. Investopedia.com
• Interest rates: The new conundrum
  
  When Alan Greenspan hiked short-term rates, long-term rates barely moved. Ben Bernanke is cutting interest rates but bond yields are rising. Here's what it means.
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• "The next president will inherit a monstrous mess created by one of the most fiscally irresponsible presidents in US history." Richard Russell Dow Theory Letters Feb 2008
• Gold futures rose to a record $958.40 an ounce Thursday as a slumping dollar and soaring commodity costs boosted the appeal of the precious metal as an inflation hedge. Silver rose to the highest since 1980.
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• "At some point, in 15 to 20 years, silver prices will be 5 times higher than gold prices. If my calculation is correct, a dollar invested in silver will do many times better than gold. In real estate value, I think 1,000 ounces of silver will buy a 3-bedroom apartment in Manhattan in Trump Towers. I am a different thinker, and some gold investors don't like my opinion, but that is their problem." Israel Friedman
• Market adjustments worldwide triggered by the real estate and CDO (Collateralized Debt Obligations) and SIV (Structured Investment Vehicle) collapse and the credit crisis has triggered the loss of $5.2 trillion 50 of 52 share indexes worldwide ended January lower.
  
  Wait until the investors and Wall Street see the write-offs over the next two years and the drop in earnings as a result. In January the Turkish market fell 22.7%; China 21.4%; Russia 16.1%; India 16%; Paris 12.3%; London 8.9% and New York was off 6%. Just under half of the major markets lost more than 10% of their value. The FTSE in London lost 9% and 16.5% over the past three months. Paris lost 15.3% over the past three months. Bob Chapman
• The Fed's interest-rate cuts last month have failed to lower borrowing costs for many companies and households. That means soon there will be one or probably two more ½% cuts. Taxpayers should ask Congress why they are bailing out borrowers, lenders, investment banks, bank and brokerage houses who all committed fraud? There are urgent proposals before Congress and the neocons for a bailout of the banking, investment banking and insurance industries. This would allow them to keep profits and lay off the losses on the public. There is more than $1 trillion in loses still to be accounted for. Bob Chapman
• "Mark O'Byrne, executive director at Gold and Silver Investments Ltd., wrote that, "In the medium to long term, the combination of strong international safe-haven demand and decreasing production of and supply of gold in most major producers and particularly in South Africa will likely result in gold going significantly higher in the coming months." Kitco Daily Resource
• Finite Natural Resources and Peak Gold, Silver and Platinum. Scientists have acknowledged the reality and the respected New Scientist has reported on it, especially in its 'Earth Natural Wealth: An Audit' report. The Wall Street Journal has also reported ( 'A Metal Scare to Rival the Oil Scare' ) how man's voracious demand for the earth's natural resources may lead to us 'running out' of some of them: "Scientists who have tried to estimate how long the world's mineral supply can meet global demand have made some gloomy predictions."
  
  This is especially the case with the unprecedented movement of billions of people in BRIC and other emerging economies moving from 'peasant class' to middle class in one of the greatest social and economic transformations the world has ever seen. In the same way that peak oil has been recognised in recent years so too will the reality of peak precious metals be realised in the coming years when the price of the earth's precious finite resources soar to levels previously thought impossible. Gold.ie
• Nigerian states support discontinuing payment in U.S. dollars.
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• US wholesale price inflation hit highest increase rate in 34 years, & consumer inflation rose at highest rate in 2yrs. Inflation rising everywhere, but UK is keeping interest rates steady & EU may raise them to fight inflation, whereas Bernanke will cut int-rates to fight recession. This difference is caused by history. EU has lived thru hyper-inflation in 20's. US has lived thru hyper-deflation in 30's. To each his own fear. Cutting rates will increase inflation. Harry Schultz
• "We should be looking at oil in the $120-to-$150 area by the end of the year without any major changes." Peter Schiff, chief executive officer of Darien, Connecticut-based brokerage Euro Pacific Capital, which has $1 billion in customer accounts
• Bush Administration Hides More Data, Shuts Down Website Tracking U.S. Economic Indicators. The U.S. economy is faltering. Family debt is on the rise, benefits are disappearing, the deficit is skyrocketing, and the mortgage crisis has worsened. Conservatives have attempted to deflect attention from the crisis, by blaming the media's negative coverage and insisting the United States is not headed toward a recession, despite what economists are predicting.
  
  The Bush administration's latest move is to simply hide the data. Forbes has awarded EconomicIndicators.gov one of its "Best of the Web" awards. As Forbes explains, the government site provides an invaluable service to the public for accessing U.S. economic data. Yet the Bush administration has decided to shut down this site because of "budgetary constraints," effective March 1.
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• U.S. Congressman Dennis Kucinich to Investigate 9/11 Insider Trading. "I'm not afraid to ask questions about 9/11"
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GOLD

• Five fundamentals will drive gold price higher in 2008. Precious metals and coin dealers Blanchard and Company expect five fundamental factors will keep the gold price high and rising throughout the year. Since hitting record highs above $900 since the first of the year, gold had shown continued strength at those price levels amid expected volatility, and analysts at Blanchard and Company Inc. say five specific fundamentals will continue to drive the price up through the end of 2008.
  
  "Gold has experienced a shift in fundamentals when compared to 1980's speculative highs, and today there are five factors that will drive prices higher - supply and demand, dollar weakness, institutional buying, the price relationship between gold and oil, and global economic uncertainty," says Donald W. Doyle, Jr. Chairman and CEO of Blanchard. "Expect some price consolidations, which are healthy for the market, and view them as buying opportunities because we see the price ultimately going significantly higher than current levels in the long-term."
  
  Doyle says investor demand is at record levels, and the markets should expect to see that demand continue as global supply shrinks, emerging markets begin to play a more significant role in the world's economy, and as former sellers of gold notably central banks and hedge books reverse their selling trends and become buyers again themselves.
  
  "The U.S. economy is slowing to a crawl, and the Fed is continuing to infuse liquidity through rate cuts that further weaken the dollar," Doyle says. "Look for large institutions and central banks to continue to move out of dollar-based assets and into quality alternative tangible assets such as gold."
  
  Doyle also pointed to differences between today's economic collapse and that of 1987, noting that the previous near global implosion featured a U.S. economy that was in solid shape. Now the underlying cause of the crisis is the domestic economy and housing deflation. Real consumer spending is declining, payroll employment numbers are falling, and industrial production in the U.S. is losing traction, triggering a flight to quality alternative investments.
  
  "Gold is not just a luxury item it was the foundation of the global currency system for eons and, as the current global economic crisis continues to unwind, the precious metal has reasserted itself as the fourth currency," Doyle says. "We believe widespread increased investment demand will offset any decline in luxury goods manufactured with gold as investors seek to secure assets that will retain their value." Mineweb.com
• The Only Charts You Need to Understand the Gold Price. ResouceInvester.com
  
  
• Today we find the tiny group of so-called gold-bugs waiting for gold to correct after its run-up of recent months. So far, the upward inflationary pressures have prevented much of a correction in gold. Below I show a monthly chart of gold which takes the metal back to 1998. It's truly amazing, but people tend to see what they want to see.
  
  Here on this chart we study the early part of what could be one of the greatest bull markets in history, and all we hear about is "gold was up two dollars today," or "gold was hit by a big five dollar drop in late trading." Somehow, under a blanket of orchestrated denials and ignorant comments, the great bull market in gold has placed blinders over the public's eyes. Show this chart to anyone, but leave off the identifying heading, and ask them what the chart might represent. They'll come up with all variety of answers. But see if anyone comes up with gold as an answer.
  
  "What's that? You say it's gold? I can't believe it. Nobody told me that gold was rising like that and blah blah, blah." [Editor's note: There is a chart with the heading removed for you to print or send to your friends click here.] The higher gold rises without attracting mass attention, the greater the potential for the gold bull market. After all, gold has risen this far literally without public participation. What happens when the public finally becomes interested?
  
  
  
  On a much smaller scale, on a daily scale, we see that gold has advanced while forming a number of continuation patterns. Here, take a look at this daily chart below. As each little pattern is formed, amateur gold "experts" warn that "gold is ready for the big correction." Fine, let the warnings continue. They serve to allow gold to advance without any important public participation. The bull market in gold heads north with only a small number of Americans zealots aboard. That too will change. Richard Russell
  
  
• In China and India, consumers unfazed by high gold prices.
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• Gold output falling at Africa's No. 3 producer. Mali, Africa's third largest gold producer, expects production to fall sharply again in 2008 according to government forecasts.
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• 2007 gold sales jump 30 percent in Middle East, but slip in 4Q WGC. Gold sales in the Middle East rose sharply in 2007, but the high prices in the fourth quarter led to slippage towards the end of the year.
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• China's demand for gold jumped 23 percent in 2007 as rising personal incomes helped it to race ahead of the U.S. to become the world's second-biggest market, the World Gold Council said. Gold use in jewelry in China mainland rose to 302.2 metric tons last year, from 244.7 tons in 2006, Roland Wang, general manager of Greater China at the council, told reporters Tuesday in Shanghai. That compares with 558.2 tons in India, the biggest consumer, and 262.9 tons in the U.S. Bloomberg
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SILVER

• 10 Gold / Silver ratios. The ratio gold and silver it is the number of Kilogram's of silver which one can buy with one kilogram of gold. This ratio has varied greatly through history :
• 90 Was the ratio of silver to gold when the price of an ounce of silver was at a low in 1991. With one kilogram of gold one could buy 90 kilograms of silver.
• 51 Was the average ratio of the price of gold to silver in 2007.
• 17 Was the gold / silver ratio at the time of the record gold and silver prices in 1980.
• 15 Was the official ratio of gold to silver during the great period of Bi metallism, 15 ½ for France (1803), 15.68 for the USA (1800), 14.29 for England (1806).
• 12 Was the gold/silver ratio in Antiquity in Rome.
• 12.5 Was the ratio in Greece at the time of the death of Alexander the Great in 323 BC.

The ratio of production and reserves of gold and silver :

• 13 Is the ratio of world production from 1493 to 1931. For this 400 year period 13 times more silver than gold was produced.
• 8 Was the ratio of silver to gold production in the world in 2006. What is being said is that eight times more silver than gold was produced in 2006.
• 7.64 It the ratio of all production of gold and silver during one century (1900-2003).
  In the 103 year period, there was 7.64 times more silver than gold produced in the world.
• 6.4 Was the ratio of the ground reserves of silver to gold in 2000.
  
  
• It is astonishing to see that we produce 8 times more silver than gold, that the reserves are 6 times larger, but that the price of the silver is 50 times lower.
• Over the period of the history one kilo of gold was exchanged between 10 and 90 kilograms of silver, today it is exchanged at 51.
• During the raw materials bear market, silver suffered much more than gold. Silver has already caught up with part of the lag in its price, but there still is a way to go.
  
  
  
  The price of an ounce of silver will continue to increase more quickly than that of gold. For example, if the gold price rises 100%, the price of silver can increase between 100 and 600% depending on the evolution of the ratio. With gold at 2000 dollars, the price of an ounce of silver may be between 40 and 100 dollars. As more time passes it is more probable that the ratio will go lower, be patient. Dr. Thomas Chaize
• Is Dishoarding Massive Quantities of Silver from India Likely? NO!
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PLATINUM-PALLADIUM

• Platinum Futures Rise to Record on Increasing Investment Demand. Platinum futures surged to a record on soaring demand for commodities as a hedge against inflation. Palladium rose to the highest in more than six years. "All the commodities are just exploding," Edward Meir, a commodity analyst at MF Global Ltd. in Darien, Connecticut, said in an interview. "It's really investment money, funds coming into this market.
  
  Some of the precious metals, such as gold and platinum, are fairly undervalued." Record prices for gold, crude oil, corn and soybeans led the UBS Bloomberg Constant Maturity Commodity Index to the highest ever. The gauge of 26 raw materials has gained 38 percent in the past year, compared with a 7.9 percent drop in the Standard & Poor's 500 Index. Platinum has jumped 77 percent in the past 12 months amid South African supply disruptions.
  
  Platinum futures for April delivery soared $49.50, or 2.3 percent, to $2,188.20 an ounce on the New York Mercantile Exchange Thursday. Earlier, the price reached a record $2,194.80. Palladium futures for March delivery jumped $21.30, or 4.3 percent, to $515.50 an ounce Thursday. Earlier, the price reached $526, the highest for a most-active contract since July 2001. The metal is up 48 percent in the past 12 months. Platinum and palladium are used in jewelry and pollution control devices in vehicles.
  
  World platinum supplies may fall 400,000 ounces short of demand this year because of South African output disruptions, compared with a deficit of 265,000 ounces last year, Standard Bank Group Ltd. said last week in a report. "We are looking at a deficit again this year," Meir said. "There are lots of problems in South Africa with energy. So the crunch is sort of hitting these markets from both the supply side and the demand side."
  
  Most South African mines shut for five days last month after state-owned utility Eskom Holdings Ltd. couldn't guarantee power supplies. Eskom later agreed to provide industrial users with 90 percent of their usual requirements and said that will continue until 2012. The nation supplied about 78 percent of the world's platinum in 2006. "Increased investor interest keeps driving" the market amid speculation that "South Africa will continue to have power problems," said Miguel Perez-Santalla, vice president for sales at Heraeus Precious Metals in New York. "Overall, the regular players in the market are expecting a correction in the near future." Bloomberg

COMMODITIES-OIL-GAS-GASOLINE

• Commodities to Again Outperform Stocks. Investors who ignore commodities and precious metals do so at their peril. Numerous academic studies have shown that investing in commodities can be less risky than investing in stocks, contrary to the most persistent fantasy of all about commodities. Commodities are not just a good way to diversify a portfolio of stocks, property and bonds; they often offer better returns and importantly they are not correlated to stocks and bonds.
  
  The highly respected 2004 study from the Yale School of Management's Center for International Finance, "Facts and Fantasies about Commodity Futures," is very important in this regard. Professors Gary Gorton, of the University of Pennsylvania's Wharton School and the National Bureau of Economic Research, and Professor K. Geert Rouwenhorst, of the Yale School of Management, did research that confirms that:
  • Since 1959, commodities futures have produced better annual returns than stocks and outperformed bonds even more. Commodities have also had less risk than stocks and bonds, as well as better returns.
  • During the 1970s, commodities futures outperformed stocks; during the 1980s the exact opposite was true evidence of the "negative correlation" between stocks and commodities. Bull markets in commodities are accompanied by bear markets in stocks, and vice versa.
  • The returns on commodities futures in the study were "positively correlated" with inflation. Higher commodity prices were the leading wave of high prices in general (i.e., inflation), and that's why commodity returns do better in inflationary times, while stocks and bonds perform poorly.
  • The volatility of the returns of commodities futures they examined for a 43-year period was "slightly below" the volatility of the S&P 500 for the same period.
  • While investing in commodities companies is one rational way to play a commodity bull market, it is not necessarily the best way. The returns of commodities futures examined in the study were "triple" the returns for stocks in companies that produced those same commodities. Also companies have significantly more risk than owning the actual commodity or tangible asset itself.
  Mining shares have accounting and company risk in the form of depending on the performance of employees, management and auditors and considerable risk in the form of political interference and nationalisation, environmental risk, natural disasters, mining accidents and depleting resources. Gold.ie
• Commodity prices still expected to rise on demand growth Investec. Development and urbanization in Asia and under-investment in the West will drive further growth in commodity demand.
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• Commodity bull run has a long way to go. With oil again nudging $100 a barrel, platinum above $2,000 an ounce, and even coffee, cocoa and tea at multi-year highs, the commodities market may appear overly exuberant. There are, however, still many opportunities in the sector if one is selective.
  
  The main factors driving my conviction are the various balances of supply and demand. Few claim to see an end in sight to precipitous growth in emerging markets and notwithstanding some short-term pauses for thought (and profit taking), I believe this to be a secular trend, helping to fuel a long-term bull market in commodities.
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• Chavez Says Venezuela Can Sell Oil Anywhere, Not Just to U.S. Venezuelan President Hugo Chavez, who has threatened to cut off oil sales to the U.S., said reports that making such a decision would hurt his country's economy are false, and that Venezuelan oil can be sold anywhere. Chavez denounced an editorial published this week in the Washington Post, which said the president's government would be the "first victim" if he decided to cut off oil sales to the U.S.
  
  "If the U.S. didn't need the oil, they would have boycotted us a long time ago," Chavez said last night in an interview on state television, according to an e-mailed statement from the information ministry. "Try it then. We've got more buyers than we can handle in the first place." Chavez's threat to cut off the U.S. stemmed from a conflict between Petroleos de Venezuela SA and Exxon Mobil Corp.
  
  The U.S. company last month got court orders freezing $12.3 billion of the Venezuelan state oil company's assets to ensure it will be compensated for its stake in a heavy crude joint venture that was nationalized last year. Venezuelan Oil and Energy Minister Rafael Ramirez said on Feb. 13 that the U.S. State Department, which is trying to carry out an "economic war" with the South American country, was behind the Exxon move.
  
  The State Department has said it had no part in Exxon's actions. PDVSA, as the state oil company is known, and Exxon are in arbitration to resolve the dispute. Venezuela, the fourth-biggest supplier of foreign crude oil to the U.S., is already increasing oil exports to other countries, including China, Portugal and Japan, Chavez said, according to the statement. Bloomberg
• Iran opens oil products exchange, plans one for oil itself. Iran established its first oil products bourse Sunday in a free-trade zone on the Persian Gulf Island of Kish, the country's oil ministry said. A statement posted on the ministry's Web site said 100 tons of polyethylene consignment were traded at the market's opening on the island, which houses the offices of about 100 Iranian and foreign oil companies.
  
  Oil and petrochemical products will be traded in Iranian rials, as well as all other hard currencies, the statement quoted Iranian Oil Minister Gholam Hossein Nozari as saying. About 20 brokers are already active in the market, it said. "The bourse provides an economic opportunity for Iranians, other countries and foreign customers," Nozari was quoted as saying.
  
  Iran produces more than 20 million tons of petrochemical products per year. Iran has already registered for another oil bourse, in which it has said it hopes to trade oil in Euros instead of dollars, to reduce any American influence over the Islamic Republic's economy.
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• Iran Starts Oil, Petrochemicals Exchange in Tehran.
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• Iran's ambassador to Russia said here Friday that Iran and Russia, as major energy suppliers, can rid the world of the U.S. dollar's slavery by promoting oil and gas deals using other currencies. In an interview with Echo Moscow Radio, the ambassador, Gholam-Reza Ansari, further emphasized, "We have been trying to launch an oil market in Iran and trying to find substitute currencies for Iran's oil sales.
  
  That can be Russia's ruble." He said he appreciated Friday's remarks by the Russian prime minister's first deputy, Dimitri Medoviv, on Russia's intention to sell its oil in rubles, saying, "That was a brave move."
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WHEAT SHORTAGE SENDS BREAD AND PASTA PRICES SOARING

• Soaring wheat prices have Canadian bakeries struggling, farmers rejoicing and customers digging deeper at the till to pay for their bread and pasta purchases.
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• The biggest rally in the history of wheat trading defied even some of the best conventional wisdom, humbling forecasters Goldman Sachs Group Inc. and the U.S. government.
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• Bread will cost more.
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NEXT CRISIS OVER FOOD

• The next crisis will be over food.
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INFLATION

• U.S. Economy: Housing Slump Fails to Quell Inflation.
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• That '70s Look: Stagflation.
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• Watch inflation now! Worries about 1970s-style stagflation have moved to the forefront to rival recession fears.
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• China's Inflation Quickens to Fastest in 11 Years.
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• Inflation in Zimbabwe soars past 100,000 per cent.
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GLOBAL FINANCIAL CRISIS-NO END IN SIGHT

• US subprime crisis costs global 7.7 trillion dollars: bank. The meltdown in the US subprime real-estate market has led to a global loss of 7.7 trillion dollars in stock-market value since October, a report by Bank of America showed Thursday.
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• America's economy risks the mother of all meltdowns.
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• BMO facing $12bn costs. Canada's BMO Financial will provide up to US$12.2bn, or about 3 per cent of its assets, in liquidity support for two structured investment vehicles that it is seeking to wind down. The group, centered on the Bank of Montreal, will take C$490m in pre-tax charges on its exposure to ACA, the monoline insurer, and other investments hit by credit market turbulence.
  
  The latest charges follow a C$680m loss last year on natural-gas trading. The bank also announced the appointment of a new chief risk officer and shifted the chief executive of its investment banking division, Yvan Bourdeau, to vice-chairman. The charges are expected to lower earnings by 70 cents a share, or C$325m, for the first quarter ended January 31. FT.com
• Societe Generale swings to $4.9 billion loss. French bank hit by trading scandal also warns of further writedowns.
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• Societe Generale SA, France's second-largest bank, failed to follow up 75 warnings on bets by Jerome Kerviel that led to a trading loss of 4.9 billion euros ($7.2 billion), independent board members concluded in a report.
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• Credit Suisse Group discovered pricing errors on bonds that will cut first-quarter profit by about $1 billion, prompting the biggest share decline in more than five years. Switzerland's second-largest bank took $2.85 billion of writedowns on asset-backed securities after an internal review found "mismarkings" by a group of traders and credit markets worsened. The Zurich-based bank said in a statement today that it's assessing whether 2007 earnings were also affected.
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• Credit Suisse has suspended a "small number" of traders suspected of inflating the value of mortgage-backed bond investments by $2.85bn (£1.5bn). The Swiss firm blamed pricing errors for its actions, which would cut $1bn from expected first-quarter profit. It also blamed "adverse market conditions" for the write-down.
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• Credit Suisse Group was forced to increase the interest rate on $2 billion of subordinated bonds after the bank said writedowns will cut first-quarter profit by about $1 billion.
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• Dresdner Rescues $19 Billion SIV, Follows Citigroup.
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• US banks borrow $50bn via new Fed facility.
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• Wall Street Abandons Neediest Clients, Cuts Credit.
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• Lax banks blamed for defaults.
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• State regulators are scrutinizing sales of auction-rate securities by closed-end mutual funds as investors complain they can't get out of the investments, which were billed as the equivalent of cash.
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• Legislation to nationalize Northern Rock Plc cleared all its stages in the lower chamber of the U.K. Parliament. The House of Commons passed the bill on a vote of 293-167, paving the way for the government to have the power to nationalize the bank.
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• Finger pointing over bond insurer crisis. Congress drills into crisis that has shaken Wall Street. New York governor: 'The problems in this market will affect many average Americans.'
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• The cost of protecting corporate bonds from default soared to a record as investors purchased credit-default swaps to hedge against mounting losses in the $2 trillion market for collateralized debt obligations.
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• The extra yield that investors demand to own agency mortgage-backed securities over 10-year U.S. Treasuries rose to an eight-year high as record spreads on other debt hurt demand.
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U.S. RECESSION

• Philadelphia Fed Index Falls to Lowest Since 2001.
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• Greenspan: Recession chances '50% or better'. Former Fed chairman, speaking at Houston conference, also promotes nuclear power and electric cars.
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INTEREST RATES

• Fed Saw Need for 'Relatively Low' Interest Rates 'For a Time'.
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• Australian Central Bank Says It Mulled 50-Point Boost.
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DAVID WALKER GOVERNMENT ACCOUNTABILITY CHIEF RESIGNS

• One of government's chief internal watchdogs resigned yesterday as Comptroller General David M. Walker, an outspoken gadfly and frequent witness on Capitol Hill, announced his plans to lead a new foundation focused on U.S. fiscal responsibility. Walker has led the Government Accountability Office, Congress's investigative agency, for a decade.
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BILL GROSS SAYS U.S. BUDGET DEFICIT MAY REACH $800 BILLION

• Bill Gross, manager of the world's biggest bond fund, said the U.S. federal budget deficit will widen to as much as $800 billion during the next presidential administration.
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REAL ESTATE

• Real estate prices are still rising across Canada the record high reached only two years ago.
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• Home price plunge accelerates: 2007 year-end results are in and the news is bad: Major housing markets were down even more than anticipated.
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• Banks unloading abandoned houses at cut-rate prices.
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• In A Down Market, Cash Is King.
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• Incredible Pent-Up Demand Is Still Sitting On The Fence.
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• Out Of All Destruction Can Come Construction.
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• Part Of The Real Estate Gamble.
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• The $100,000 Profit Is Gone.
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• The Only Way To Recover From This Crazy Market.
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• There Is A Major Lack Of Common Sense Everywhere.
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FORECLOSURES-MORTGAGES

• Foreclosure prevention plan under attack. Lenders trying to derail legislation that would allow bankruptcy judges to reduce mortgage balances for home owners.
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• Countrywide foreclosures at record, refinancing up.
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• Alliance & Leicester profit falls 41%. UK mortgage lender hit by turmoil in credit markets.
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• Subprime loans defaulting even before resets.
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GEOPOLITICAL TENSION

• In yet another verbal attack against Israel, Iranian President Mahmoud Ahmadinejad called the Jewish state a "filthy bacteria" whose sole purpose was to oppress the other nations of the region. "The world powers established this filthy bacteria, the Zionist regime, which is lashing out at the nations in the region like a wild beast," the Iranian president told supporters at a rally in southern Iran. "[Israel] won support [from the other nations] which created it as a scarecrow, so as to keep the people of this area under control," Ahmadinejad said.
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• The Iranian president said on Wednesday Iran's determination to continue its disputed nuclear program had brought major powers "to their knees". In another defiant speech ahead of an International Atomic Energy Agency report on Iran due on Friday, Mahmoud Ahmadinejad said Iran would ignore calls by major powers to halt sensitive nuclear work that has led to two rounds of U.N. sanctions.
  
  "The Iranian nation will not allow any power to trample even on its smallest (national) right," he said in a televised address to a rally in the southern port city of Bandar Abbas. As well as worrying the West, Ahmadinejad's uncompromising speeches have stoked concerns among moderate politicians in Iran ahead of a March parliamentary election. Critics say he is pushing Iran into international isolation.
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• Iran's supreme leader Ayatollah Ali Khamenei said Sunday that God would punish Iranians if they do not support the country's disputed nuclear program, state radio reported. "The Iranian people openly announce that they will defend their rights. God will reprimand them if they do not do so," state radio quoted Khamenei as saying.
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• "The cancerous growth Israel will soon disappear," Iran's Revolutionary Guards Corps commander Muhammad Ali Jafari wrote to Hizbullah leader Sheikh Hassan Nasrallah, the FARS news agency reported Monday. In a letter of condolences following last week's assassination of Hizbullah terror chief Imad Mughniyeh, Jafari said: "I am convinced that with every passing day Hizbullah's might is increasing and in the near future, we will witness the disappearance of this cancerous growth Israel by means of the Hizbullah fighters' radiation therapy."
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• Fidel Castro resigned as president and commander-in-chief of Cuba, after almost 50 years as the country's leader, the official daily Granma said. "I neither will aspire to nor will I accept, the position of president of the council of state and commander-in-chief," Castro wrote, according to Granma in its online edition. "My only desire is to fight as a soldier for my ideas."
  
  Castro, 81, the world's longest serving president, seized power in Cuba almost a half-century ago promising liberty and economic justice only to turn the Caribbean island into a communist bastion and a flashpoint of the Cold War.
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© 2008, Worldwide Precious Metals.
www.wwpmc.com

The GoldBugg Report - Protection from Stagflation, own Precious Metals
Posted by Worldwide Precious Metals on Tuesday, February 26, 2008