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The World Financial Report – June 15, 2010

June 15, 2010

-Gold Headed for $10,000 by 2012

-An unprecedented crisis in the silver market could easily hand you a long series of double, triple, and even quadruple investment gains

-Richard Daughty: Insufficient Silver to Supply China’s Growing Demand.

GOLD

-Watch World Wide Precious Metals power point presentation on investing in precious metals. Watch video here-http://www.youtube.com/watch?v=qJ_cjvb-eMo&feature=youtu.be and http://www.youtube.com/user/thegoldbugg

-World Wide Precious Metals Live Metals Quotes. See quotes here-http://www.wwpmc.com/quotes.aspx

-Read Testimonial letters from World Wide Precious Metals clients. Read letters here-http://www.wwpmc.com/testimonials.html

-The long 11-year first stage of the gold and silver bull market has been completed. The second stage should move up to $2,500 to $3,000. Stage three should take gold to $7,100 to $7,500 based just on real inflation since 1980. The speculative processes have begun as fiat currencies are abandoned. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1275890940.php and http://news.goldseek.com/InternationalForecaster/1276093512.php

-Gold Headed for $10,000 by 2012, Arnold Block

No wishful thinking here! As I see it gold is going to a parabolic top of $10,000 by 2012 for very good reasons – sovereign debt defaults, bankruptcies of “too big to fail” banks and other financial entities, currency inflation and devaluations – which will all contribute to rampant price inflation.

Not surprisingly, I have company in that view:

Money manager, Peter Schiff, told Business Week recently that, “Gold could reach $5,000 to $10,000 per ounce in the next 5 to 10 years” and highly respected economist David Rosenberg is of the opinion that “There is no doubt that gold can easily double from here.” 

The causes:

1. History is No Guide

Gold has only been trading freely since President Nixon’s 1971 decision to deny gold to the French and others attempting to repatriate their paper dollars for the metal.  As such, there has been a scant forty years of gold production and trading since it was detached from supporting paper money. This period has also been marked by substantially higher monetary and price inflation as well as currency devaluation.

2. Market Manipulation

The Commodity Futures Trading Commission (CFTC) recently held a major hearing which blew the doors off bullion metals futures trading markets in terms of what was revealed publicly. I predict this public hearing will be viewed in the period ahead as the precious metals price liberation event of the decade.

It is commonly known that JP Morgan Chase is the major player in commodities futures markets trading. Not only do they take massive naked short positions (betting that prices will fall), they do it with large substantial leverage.  What isn’t as well known though is that Chase acts as the agent for the Federal Reserve Board and other central banks in “managing” the markets on their behalf. Central banks want “orderly” precious metals markets and prices and currencies which don’t gyrate wildly. Only then can they achieve stealth inflation in their monetary policy which is so beneficial in servicing debt.  It also makes for good (meaning effective) politics. 

3. Insufficient Physical Inventories

While it is normal for traders to roll their expiring contracts over into new paper trades, some traders accept cash in settlement rather than the metal. To the amazement of everyone, the recent hearing of the CFTC — specifically Jeffrey Christian’s comments — inadvertently confirmed that there is little bullion in storage at the London Metal Exchange or New York’s Comex to back the metals trading. He justified this fact by noting that only one ounce of one hundred traded is paid out in physical metal. This revelation confirmed a much worse reality than even critics, such as the Gold Anti-Trust Action Committee (GATA), had expected. It seems that the Asian and Mid East buyers and owners of bullion have been removing gold from their dealers’ vaults and are taking it “home” thus leaving much less than previously thought in the London, New York and Toronto vaults. 

In addition to what looks like a production peak in the gold mining industry (production has fallen in five of the last eight years), central banks have for the first time recently become net purchasers (having bought more gold last year – 425 tons – than at any time since 1964).

The single largest purchasers of metal these days, other than central banks, are the bullion ETF’s (exchange traded funds) which ostensibly have their metal inventories in vaults. These relatively new investment vehicles, unfortunately, are not transparent in their business practices. Regular audits by reputable accounting firms and allocated and segregated bullion inventories stored in reputable vaults are opaque at best. This begs the question: “Do the large ETF bullion funds actually have the metal they purport to own, or is their inventory more the ‘paper gold’ variety in which bullion trading exchanges seem to specialize?”

The effect:

1.     The revelations, outlined above, that there is insufficient physical inventory to meet new investment demand for ownership and delivery of physical bullion, is about to blow the price lid skyward.

2.     As public awareness of sovereign debt mounts, it will drive home the reality of mounting government insolvency. 

3.     Confidence in currencies will wilt commensurately.  

4.     Investment demand for real gold and real money as a safe haven investment will expand exponentially. 

5.     These events should take place from mid 2011 through 2012 and extend further out toward 2015 before demand is satiated.

6.     The dramatic price increases in gold and silver will at that point also satisfy the unstated desire of central banks and politicians to devalue their currencies in order to assist them in meeting their debt and unfunded liabilities.

af    After the 2008/2009 crash, governments bailed out their failing financial institutions and investment banks through a variety of innovative measures. The next time round most governments will not be in a position to do so – again. Even more troubling, the IMF (International Monetary Fund) will not be capable of rescuing the increasing number of insolvent governments and their financial institutions.

You may think my aforementioned views are crazy or perhaps just that my imagination is way out of hand or, at best, that I don’t have access to the appropriate reality checks. Be that as it may, I am increasingly confident that the consequences of fragile sovereign debt, precious metals market manipulation, insufficient physical supply, and the need for a safe haven investment refuge, will drive precious metals bullion and mining stock to unimagined heights.

The circumstances immediately ahead are largely unprecedented. History is therefore only marginally useful as our guide to the future price of precious metals. We are now in genuinely unchartered territory.

Get yourself positioned to take advantage of this event of a lifetime. Protect your assets from the next and more serious leg of the ‘Greater Depression’ directly ahead.  Get a running start NOW on growing your future wealth.

-It may simply be a pure coincidence, but since mid-2007, the Fed’s balance sheet has ballooned from $850 billion to $2.3 trillion and during that time, the gold price has risen from $650/oz to $1,250/oz. In other words, about two-thirds of the bull market in gold has occurred in just the past three years. David Rosenberg-Gluskin/Sheff

-Investor Marc Faber said cash and bonds will be “very dangerous” in the next 10 years as governments increase money supply to cover fiscal deficits. “There’s no other way out but to print money,” Faber, the publisher of the Gloom, Boom & Doom report, said at a forum in Seoul today. “In the long run, all paper money will go exactly to its intrinsic value, which is zero.” Faber advised investors to protect themselves with assets such gold and silver. Read more here-http://www.businessweek.com/news/2010-06-09/marc-faber-says-cash-bonds-will-be-very-dangerous-update1-.html

-Demand for gold coming from many sources. It is no longer about investor demand through ETFs and the like that have been driving the gold price physical demand for gold coins and bars has also been very strong. The U.S. mint has been busy supplying investors with 23,000 American Eagles so far in June after a run of 190,000 in May.

The Rand refinery in South Africa, according to the Financial Times, is running at full capacity. The World Gold Council is projecting a new high for investor gold demand in 2010 (after the 1,910 tons in 2009, which also was a record).

Moreover, demand is not just coming from private investors remember, central banks have very deep pockets as well. We see in the WSJ that Russia bolstered its gold reserves by $1.8 billion in May and there are also unconfirmed reports that Iran has also been in buying the yellow metal. David Rosenberg-Gluskin/Sheff-Read more here-http://online.wsj.com/article/SB10001424052748703302604575294093148400182.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

-Eric Sprott: Gold Running in Short Supply. I don’t have a good price target. We get involved in themes that play out for a long time. Interest rates and reported inflation started going down in the 1980s. No one dreamed of buying gold in 2000. You were an idiot talking about it. I was initially attracted to it because I thought there was a physical shortage then. There still is.

Central governments were selling gold 10 years ago. This put a burden on a very small market. Today, central governments are buying, the miners are unhedged, you have big gold ETFs, you have coin sales going crazy. Some central banks are even telling their people to buy gold.

I’ve got to believe that a physical shortage will manifest itself somewhere soon. There’s only 162,000 tons of it out there and I don’t know anyone selling it. Someone’s going to try to buy a bar of gold sometime and it won’t be there.

My partner, John Embry, went into gold many years ago because he thought it would become a substitute for fiat currencies. Governments are printing money and, sooner or later, people will realize that it’s better to own gold than any bank deposits. This theme is obviously massively playing out as we speak.

You look at the quantitative easing (QE) programs, budget deficits. The global fiscal irresponsibility plays into the hands of the gold owner. More people will figure it out and they’ll go there. We now have large investors John Paulson, to name one putting their money into gold. If everyone started putting 5% of their portfolios in gold, there wouldn’t be enough.

I’m convinced the upside for gold is still quite positive. When I see some projections for $2,000, $3,000, or $5,000 per ounce, none of them bothers me. We don’t know where the price will go but it will be the inverse of QE. The more they print, the more it will go up.

The all-time high of 1980 in today’s numbers is something like $2,300, but our world is different today. They didn’t print money as irresponsibly then as we do now. They didn’t have deficits as a percentage of GDP as large as we have today. And there’s 162,000 tons of gold in the world. That’s it. Part 1 of interview here-http://www.thestreet.com/print/story/10775194.html Part 2 of interview here-http://www.thestreet.com/print/story/10775220.html

-With 8,133 tons of gold in its reserves, the United States rates as the world’s largest sovereign holder. In fact, as of March 2010, gold made up 70% of official U.S. reserves. Pretty good, eh? Now, let’s break it down.

8,133 tons of gold=287 million ounces.

287 million ounces x $1,000=$287 billion held in gold reserves.

If $287 billion is 70% of total U.S. reserves, then total U.S. reserves=$410 billion.

Total U.S. government debt, not including unfunded obligations, comes to $14 trillion, so total reserves (of all categories) as a percentage of debt=.029.

And the gold component of those reserves, as a percentage of total government debt=.02.

I think the technical term is a “drop in the bucket.” Even so, one doesn’t want to be naïve about these things 29,000 tons of gold is roughly the equivalent of seven years’ supply. Which is another way of saying that it would be a mistake to completely discount the possibility that desperate governments won’t eventually attempt to dump their gold to defend their currencies, as counterproductive as that might be, given that it would send the price sharply lower. For the time being, however, the central banks are net buyers and so very supportive to gold’s price. Read more here-http://www.caseyresearch.com/displayCdd.php?id=451

-Credit Suisse Helps Alleviate Bernanke’s Gold Confusion, Sees Gold Going To $1,360. Read more here-http://www.zerohedge.com/article/credit-suisse-helps-aleviate-bernankes-gold-confusion-sees-gold-going-1360

-Deutsche Bank’s Lewis Says Gold May Rally Past Record on Crisis. Gold, which touched a record of $1,249.70 last month, may rally another 36 percent as Asian central banks buy for the first time in two decades, said Michael Lewis, head of commodities research at Deutsche Bank AG.

The precious metal may rise to as much as $1,700 an ounce over the next year on concerns that budget deficits will weaken major currencies, Lewis said in an interview yesterday in Lima. Read more here-http://www.businessweek.com/news/2010-06-04/deutsche-bank-s-lewis-says-gold-may-rally-past-record-on-crisis.html

-Gold May Jump to $1,300 on Double Dip, GFMS’s Walker Forecasts. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=a1R93Ab7SHdw

-Gold to Reach Parabolic Top of $10,000 by 2012, Yes, $10,000 by 2012! Read more here-http://www.kitco.com/ind/Bock/jun072010.html

-Kelvin Tay, chief investment strategist at UBS Wealth Management, expects gold prices to hit $1500 in 12 months. Read and watch more here-http://www.cnbc.com/id/15840232?video=1517991477&play=1

-Chris Mayer: $7,000 gold. During a week when almost everything went wrong, the gold market went very right. In fact, gold has been going very right for more than a decade. The gold price has more than quadrupled during the last 10 years. So is it too late to buy the stuff? My short answer is, “No.” Read more here-http://www.dailyreckoning.com.au/gold-7000/2010/06/08/ and http://www.moneyweek.com/investments/precious-metals-and-gems/why-no-price-is-too-high-for-gold-02307.aspx

-Gold’s ‘Real Move’ to $7,000 Coming: Asset Manager. The “real move” in gold is to come, predicted Egon von Gruyerz, founder of precious metals investment and storage company GoldSwitzerland.com, on Monday.

He told CNBC he sees the inflation-adjusted price of gold “easily” rising to six times its current price ($1,250) to around $7,000 an ounce in the future on “normal” inflation. “Adjusted for real inflation (as per shadowstats.com) the 1980 gold peak in today’s prices corresponds to around $7,200 today.

So gold could easily go up 6 times from the current price of $1,220 and still be within normal parameters,” von Gruyerz’s latest report for GoldSwitzerland.com said. But von Gruyerz told CNBC gold could go higher if the world encounters hyperinflation. The fears stemming from the European debt crisis will enhance gold’s safe haven appeal, according to von Gruyerz.

“Gold is at this point not a bubble,” he added. “It is not overbought.” An important barrier for gold is $1,220 an ounce and that barrier will be broken and it’s “going to shoot up by probably $100 very quickly,” von Gruyerz told CNBC.

“There will be nowhere near sufficient gold to satisfy demand at current prices. We had been expecting gold to start its acceleration in March 2010 and this is exactly what is happening. We expect the move to be relentless during most of this year with very few major corrections but with high volatility.

Moves of $100 in one day could easily happen. So gold is likely to make a top in the next few years between $5,000 and $10,000,” his report stated. “Gold reflects governments’ deceitful actions in destroying paper money,” he said. “At certain points gold is a commodity. Right now it’s money.” Von Gruyerz sees the dollar collapsing, as well as many other currencies.

“You can only measure the value of currencies now against gold because gold has an absolute value,” he said. “Clueless governments still don’t understand that their ruinous actions have created a credit-infested and bankrupt world. They will continue to prescribe the same remedy that caused the problem in the first place, namely more credit and more printed money.

The consequences are clear: Inflation, hyperinflation, economic and human misery as well as social unrest,” von Gruyerz’s latest report for GoldSwitzerland.com said. Read and watch more here-http://www.youtube.com/watch?v=NRD3-BPbN74 and http://www.cnbc.com/id/37550457

-European gold demand Bernhard Schnellmann: Director for Precious Metals Services Argor-Heraeus. “We see a huge demand for smaller denominations, starting actually from something like 10 grams, 20 grams, one ounce up to 100 gram and most of it is demand coming from all over Europe.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page96985?oid=106014&sn=2010+Detail&pid=102055

-Frank Holmes: Europeans believing in gold. Gold hit a new intra-day high in U.S. dollars this week, but has been doing so in the European currencies for some weeks now. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=106006&sn=Detail&pid=33

-James Turk: Germans are voting with their pocketbook. Icelanders voted in a referendum to address their debt problem. Germans have a problem too, but they are voting with their pocketbook. They are dumping the euro and buying physical gold, the demand for which is soaring in Germany. Read more here-http://www.fgmr.com/germans-voting-with-their-pocketbook.html

-Krugerrand Output Jumps to 25-Year High on European Debt Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=ap.smnaduXJQ&source=patrick.net

-Gold Sales to Europe Jump on Crisis, Perth Mint Says. Read more here-http://www.businessweek.com/news/2010-06-03/gold-sales-to-europe-jump-on-crisis-perth-mint-says-update1-.html

-Gold-Coin Haven Demand Saps Supply, Raises Premiums. Demand for gold coins is tightening supplies and boosting premiums as mounting concern over Europe’s debt crisis and a proposed increase in U.K. capital-gains tax spur purchases, according to GoldCore Ltd.

Wholesale premiums on British sovereigns, added to the price of immediate-delivery bullion, have jumped to about 7 percent from as little as 2.5 percent in early May, the broker and dealer said. For the more popular Krugerrands, they have risen between 1 percent and 1.5 percent in the past month. May bullion sales almost tripled from a year earlier, GoldCore said.

Gold climbed to a record $1,252.11 an ounce in London this week on investor demand for an alternative to currencies and on speculation that debt-cutting measures across Europe will slow growth. Gold sales to Europe from the Perth Mint in Australia surged in May, and South Africa’s Rand Refinery Ltd. raised production of blank Krugerrands to a 25-year high.

“We’re finding it difficult to get sovereigns in large volumes,” Mark O’Byrne, executive director of GoldCore in Dublin, said yesterday by phone. “People see the crisis getting worse, not better, and demand is increasing. There’s still a bit of doubt in the market about the capital-gains tax, and sovereigns are exempt” from the levy, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid=a7LdH2t3vfd0

-Bill Fleckenstein: Mainstream media still against gold. Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/6/7_Mainstream_Media_Still_Against_Gold.html

-Gold ‘debate’ at Vancouver conference fizzles. Read more here-http://www.gata.org/node/8717

-TheStreet.com interviews GATA secretary on gold price suppression. Read more here-http://www.gata.org/node/8712

-Ron Paul: Why Governments Hate Gold. Read more here-http://news.goldseek.com/RonPaul/1275940800.php

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,700 the silver price would be $21.25

Gold to silver ratio at 70 to 1 with gold at $1,700 the silver price would be $24.29

Gold to silver ratio at 60 to 1 with gold at $1,700 the silver price would be $28.33

Gold to silver ratio at 50 to 1 with gold at $1,700 the silver price would be $34.00

Gold to silver ratio at 40 to 1 with gold at $1,700 the silver price would be $42.50

Gold to silver ratio at 30 to 1 with gold at $1,700 the silver price would be $56.67

Gold to silver ratio at 20 to 1 with gold at $1,700 the silver price would be $85.00

Gold to silver ratio at 15 to 1 with gold at $1,700 the silver price would be $113.33

-Let’s put it this way, silver is about 70% below its all-time high. Gold is making all-time highs. Often, one is better off investing in things that are down 70%, rather than things that are making all-time highs. Jim Rogers-Read more here-http://www.321gold.com/editorials/hera/hera060410.html

-An unprecedented crisis in the silver market could easily hand you a long series of double, triple, and even quadruple investment gains. Here’s how. You probably already know that every commodity fortune ever made was created by an imbalance of supply and demand.

When the demand for a certain commodity is high and supplies are low, prices skyrocket. And investors holding the commodity in question get rich. This is exactly what has happened in the case of many natural resources just in the past decade alone.

* Crude oil shot up 620% in 6 years

* Gold is now up over 380% since 2001

* Natural gas soared more than 550% in 4 years

* Uranium spiked 830% in 4 years

* Copper increased nearly 530% in 7 years

* Palladium more than tripled in 3 years

* Platinum prices grew 430% in 6 years

As demand grew and supplies dwindled, the prices for these natural resources ballooned in value. But none of these commodities experienced the supply/demand crisis that silver is currently facing. Take a moment to chew on this. According to GFMS Limited the world’s leading authority on precious metals markets the total amount of above-ground silver supplies dropped by 86% last year.

This left the world with just about 20 million ounces of silver reserves. At the same time, the world demands about 2.5 million ounces of silver per day. That means the entire global supply of above-ground silver could be completely wiped out in just eight days!

Fortunately, silver production companies have been able to keep up with demand but just barely. Last year, silver miners were only able to increase production by just over 3%. And for the past 10 years, there has been no surplus in silver supplies.

This extremely tight supply/demand dynamic of the silver market has been terrific for investors that own the physical metal. Silver prices have increased nearly 350% since 2002. Luke Burgess-Read more here-http://www.wealthdaily.com/articles/top-silver-stocks/2527

-Silver ‘will outperform gold.’ Silver will outperform gold as the yellow metal becomes ever more expensive and investors focus on silver’s industrial demand, according to a fund manager. Demand from investors concerned that loose monetary policy will produce inflation would push the price of both metals higher, Moonraker Fund Management said, but silver, which had fallen behind gold in recent years, was likely to catch up in view of the long-term correlation between the two prices.

“Gold outperformed silver by 46pc over the three years to May 31 2010 and silver, given the long-term correlation between the two metals, is due a catch-up,” the company said. “As gold becomes ever more expensive, investors will turn to silver as an alternative precious metal.”

Jeremy Charlesworth, manager of the Moonraker Commodities fund, said: “If you mass produce something then it will lose value at some stage. Quantitative easing is undermining the value of Western currencies and assets.

“Yet the European Union has decided that the solution to the debt crisis is even more debt and confidence in the recovery package has now evaporated. When people abandon bonds and Western currencies they will look for real assets, which can’t be created at the touch of a button.

Rises in the price of gold and silver did not represent bubbles while confidence in Western currencies continued to deteriorate, the company said. “The euro is currently under pressure because of the debt crisis and sterling is next in line, before attention will finally turns to the US dollar.

“Western currencies will continue to be derated versus the currencies of non-indebted countries such as China and Brazil.” Mr. Charlesworth said silver, which is trading at around $18-$19 an ounce, had an additional attribute over gold in that it is continually consumed for industrial purposes.

He said: “Silver has lots of practical applications and is widely used for example in plasma screens, mobile phones and coins. I am more bullish on silver than gold in that when it moves it shifts very quickly and it is due a catch-up with gold.”

He said gold, now trading at around $1,225 per ounce, was set to go much higher, “quite possibly in excess of $5,000”, although the price was impossible to predict for certain. “The gold market really does have the bit between its teeth at the moment but a pullback in prices would only be a buying opportunity. It won’t be until gold is going up by $150 a day that the bubble will burst,” he said.

“It might only reach $5,000 or more for one day but at that point there will be a real crisis of confidence in Western currencies caused by colossal debt and governments will be forced to bring their deficits under control.” Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/gold/7803924/Silver-will-outperform-gold.html

-Silver now almost completely bullish, Ted Butler tells King World News. Listen here-http://www.gata.org/node/8706

-Richard Daughty: Insufficient Silver to Supply China’s Growing Demand. Read more here-http://news.silverseek.com/SilverSeek/1276059840.php

-Gene Arensberg: Gold outperforming silver but silver may be better buy. Read more here-http://www.gata.org/node/8713

-Eric King of King World News has interviewed Hugo Salinas Price, president of the Mexican Civic Association for Silver, about the collapsing world monetary system and the prospects for the precious metals. Listen here-http://www.gata.org/node/8716

-Robert Kiyosaki: Silver is the #1 investment. Watch more here-http://www.youtube.com/watch?v=WnZHxyIkJ3A and http://www.youtube.com/watch?v=7D4zjkv1Ssw&feature=related

-Mike Maloney: $1,500 silver. Watch more here-http://www.youtube.com/watch?v=7zUiAw2PBfA

-China encourages Silver Bullion for investment. Watch more here-http://www.youtube.com/watch?v=PqFpl31UwPI&feature=related

-A Silver Shortage? Watch more here-http://www.youtube.com/watch?v=HGPvVjfNYgs&feature=related

-Howard Ruff: Gold and Silver Insurance. Read more here-http://www.kitco.com/ind/Ruff/ruff_may242010.html

-Clive Maund: Implications of the gold and silver divergence. Read more here-http://news.goldseek.com/CliveMaund/1275891240.php

-Taking a Shine to Silver. Read more here-http://www.thestreet.com/print/story/10779041.html

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: The Scariest Job Chart Ever Just Got Even Scarier. We’ve dubbed this chart the “Scariest Job Chart Ever,” as it shows how the decline in employment is WAY uglier than in past recessions.

Calculated Risk has updated it with the latest numbers from this morning, and now it looks even scarier. Why? Check out the two red lines at the bottom. The solid one includes Census hiring, while the dotted line doesn’t include it.

What’s clear is that while we still have a rebound including Census hiring, we’re already flattening out on the dotted line. This is a shape not seen on the other lines. suggesting that the fall is extremely deep, and the recovery is shallow. Read more here-http://www.businessinsider.com/chart-of-the-day-the-scariest-job-chart-ever-just-got-even-scarier-2010-6

-Last Friday, the Labor Department reported that nonfarm payrolls increased by 431,000 in May. It is worth noting that a large majority of last month’s gain in payrolls was due to the hiring of temporary workers for the 2010 census. Today’s chart provides some perspective on the US job market.

Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery, however, job growth was unable to get back up to its long-term trend (first time since 1961). More recently, nonfarm payrolls have pulled away from its 40-year trend (1961-2001) by a record percentage (bottom chart).

In fact, the number of US jobs is currently at level first reached in early 2000. Read more here-http://www.chartoftheday.com/20100604.htm?T

Source: www.chartoftheday.com

-Chart of the week: Take a look at Chart 1 and you will see that the market, like life and the seasons, moves in cycles 16 to 18 year cycles, in fact. Sadly, this secular down-phase in the equity market began in 2000 when the major averages hit their peak in real terms, and so the best we can say is that we are probably 60% of the way into it.

This by no means suggests that we cannot get periodic rallies along the way, but in a secular bear market, these rallies are to be rented, not owned. In contrast, corrections in a secular bull market, as we saw in 1987 (as scary as it was), are opportunities to build long-term positions at more attractive pricing.

In secular bear markets, the indices do hit new lows during the recessions (2002, 2009), when they occur; in secular bull markets, you do not make new lows they are just corrections (ie: 1987, 1990, 1994, 1998). David Rosenberg-Gluskin/Sheff

-Another great day for Jim Cramer, another loss for his viewers. After telling his fans to Buy BP on May 21, Cramer, “mesmerized” by its fall, pulls the plug. The cost to those who followed his advice: -33%. Read more here-http://www.zerohedge.com/article/cramer-goes-buy-bye-bye-bp-loses-fans-33-two-weeks

-It’s been a painful 30 days for equities with the S&P 500 down about 13-14%. In the past, such a sharp sell-off didn’t usually end well, unfortunately. We dug through the history books, looking at the past 70 years and found that in the 21 instances when the S&P 500 fell 13-14% in 30 days, the market sold-off by an additional 10%, on average.

This happened in 18 of the 21 instances that we studied (in other words, 85% of the time when the market was down by 13-14% in 30 days, it continued to slide). Each cycle may be different, but it always pays to tip your hand to the historical record. David Rosenberg-Gluskin/Sheff

-We are still in year 10 of a classic 16-18 year secular bear phase; last we looked, the S&P 500 is still in the hole by 27% over the past decade. Historically, during a bear market or a corrective phase for that matter, the S&P 500 bottoms 24% below the 200-day m.a. on average that is the best buying opportunity. As of today, that would mean 840. David Rosenberg-Gluskin/Sheff

-The S&P 500 and the Dow are now just basis points away from making this a 15% decline from the peak and the historical record from 1946 shows that when this occurs, the stock market enters into an official bear market fully 80% of the time.

This correction, in all probability, has further to run. We repeat that the last two times we had an 80% rally off a depressed low in a short 12-13 months span was in the 1930s, and both times the market corrected hard after the parabolic rebound we are talking here about an average pullback of 40%. David Rosenberg-Gluskin/Sheff

-IMF Says Risks to Global Economy Have Risen ‘Significantly’. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=afwB7INWExaM&pos=5

-Got Gold? Head Of IMF Policy-Steering Committee Says Fund Needs $320 Billion To Be “Properly Resourced”. Read more here-http://www.zerohedge.com/article/got-gold-head-imf-policy-steering-committee-says-fund-needs-320-billion-be-properly-resource

-Martin Armstrong: The IMF Is Nuts, And Doesn’t Understand How It’s Recreating The Second Half Of The Great Depression. Read more here-http://www.businessinsider.com/martin-armstrong-the-imf-is-nuts-and-doesnt-understand-how-its-recreating-the-second-half-of-the-great-depression-2010-6

-‘Liquidity Seizure’ May Renew Recession, Nomura Says. A “liquidity seizure” arising from Europe’s worsening debt crisis could drag the global economy back into recession, according to Paul Schulte, head of multi- asset strategy in Asia excluding Japan at Nomura Holdings Ltd. Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=a9U5td0KH0eE

-Illinois A State In Crisis. Years of Mismanagement Pushed Illinois Over the Edge. Read more here-http://rense.com/general91/dd.htm

-10 States Where An Absurd Percentage Of The Population Works For The Government. Read more here-http://www.businessinsider.com/10-states-where-an-insane-percentage-of-people-work-for-uncle-sam-2010-6

-In Brutal Job Market, More Than a Million Quit Looking. Read more here-http://www.cnbc.com/id/37554163?source=patrick.net

-Teens Face Worst Summer Job Market in 41 Years. Read more here-http://www.cnbc.com/id/37573330

-Census Worker Claims Job Numbers Are Being Inflated. Watch more here-http://www.realclearpolitics.com/video/2010/06/03/census_worker_claims_job_numbers_are_being_inflated.html

-Duration of Unemployment in U.S. Rises to Record 34.4 Weeks. Unemployed Americans are facing the longest wait on record to find work, a sign faster economic growth is needed to reduce the jobless rate from close to a 26- year high.

The average duration of unemployment jumped to 34.4 weeks in May from 33 weeks the prior month and 16.5 weeks in December 2007, when the recession began, a Labor Department report showed today in Washington. The number of unemployed has almost doubled to 15 million since the start of worst slump since the 1930s. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a8ejQjQlXY1Q&pos=2

-U.S. bankruptcy filing rate near 5-year high. The pace of U.S. bankruptcy filings edged up in May to the second-highest daily level since 2005, reflecting the difficulty Americans have in working off excess debt. Read more here-http://www.reuters.com/article/idUSN0320197720100603?type=marketsNews and http://www.usatoday.com/money/economy/2010-06-09-bankruptcy09_CV_N.htm

-The oil market is signalling that prices have nowhere to go but up as the biggest spill in U.S. history curbs drilling and makes it more expensive to develop new fields. Read more here-http://www.bloomberg.com/apps/news?pid=20601010&sid=ai3jktd3quA0

-Matt Simmons: BP is headed for bankruptcy. Read more here-http://money.cnn.com/2010/06/09/news/companies/simmons_gulf_oil_spill.fortune/index.htm

-Matt Simmons: The Real Nightmare Will Be When A Hurricane Picks Up The Oil And Paints The Gulf Coast Black. Read more here-http://www.businessinsider.com/matthew-simmons-on-oil-hurricane-2010-6

-As China’s Wages Rise, Export Prices Could Follow. Read more here-http://www.nytimes.com/2010/06/08/business/global/08wages.html?pagewanted=print

-Osama bin Laden and top aides are hiding in Sabzevar, Iran. Read more here-http://www.debka.com/article/8841/

-Iran Sanctions Imposed by UN; Turkey, Brazil Vote No. United Nations sanctions on Iran adopted this week by the Security Council include restrictions on financial transactions, a tighter arms embargo and authority to seize cargo linked to nuclear or missile programs.

The 15-nation council voted 12 to 2, with one abstention, to approve a resolution that also freezes the assets of 40 companies, banks and government agencies, and bars the foreign travel of Javad Rahiqi, head of a branch of the Atomic Energy Organization of Iran. Turkey and Brazil voted against the measure, and Lebanon abstained. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a62mP2u4efIk&pos=9

-As reported by The Fiscal Times, President Obama’s commission to study the problem of what to do about the government running short of money is running short of money. Read more here-http://www.americanthinker.com/blog/2010/06/the_commission_to_study_defici.html

-As the Sun Awakens, NASA Keeps a Wary Eye on Space Weather. “The sun is waking up from a deep slumber, and in the next few years we expect to see much higher levels of solar activity. At the same time, our technological society has developed an unprecedented sensitivity to solar storms. Read more here-http://science.nasa.gov/science-news/science-at-nasa/2010/04jun_swef/

-Cash-Strapped CA to Build $1M ‘Fish Ladder’. Watch more here-http://www.breitbart.tv/cash-strapped-ca-to-build-1m-fish-ladder/

-I Pledge to Write Funnier Columns on Goldman: Michael Lewis. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid=aDqGneoy9vj8

-A Room With a View, and a Price. For $35,000 a Night, a Butler, a Waterfall and Free Room Service (Caviar May Be Extra). Read more here-http://online.wsj.com/article/SB10001424052748704256604575294621593546414.html?mod=WSJ_hp_editorsPicks_2

-Don’t sleep longer sleep smarter. Worried that you don’t get the fabled eight hours? That’s your first mistake, says Dr Nerina Ramlakhan, who thinks it’s quality, rather than quantity, that counts. Read more here- http://www.independent.co.uk/life-style/health-and-families/features/dont-sleep-longer-ndash-sleep-smarter-1994018.html

WWW.RARECOLOREDDIAMONDS.COM

 

-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/HistoricalPriceTrackingsystem.html

 

-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.rarecoloreddiamonds.com/watchnow.html and http://www.b-tv.com/features/watch-now.html?id=326

-Auction results for Christies Jewels: The Hong Kong Sale June 1 2010 Hong Kong.

-Lot 2436-Lot description-A colored diamond and diamond ring set with a marquise-cut fancy pink diamond weighing 3.08 carats, within a pavé-set diamond surround, accented by marquise-cut diamond shoulders weighing 0.83 and 0.80 carat, to the pavé-set diamond bifurcated half-hoop, mounted in 18k white and rose gold, ring size 5½. Estimate HK$2,400,000-HK$3,200,000 ($310,616- $414,155). Price Realized HK$3,980,000 ($513,044). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318656&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2433-Lot description-A colored diamond and diamond ring, by Van Cleef & Arpels set with a marquise-cut fancy blue diamond weighing 2.00 carats, flanked on either side by three-rows of tapered baguette-cut diamonds, mounted in platinum, ring size 5¼, with French assay mark for platinum, in light green leather Van Cleef & Arpels case. Estimate HK$640,000-HK$950,000 ($82,831-$122,952). Price Realized HK$2,420,000 ($311,952). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318653&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2431-Lot description-A colored diamond and diamond ring set with a brilliant-cut fancy intense yellow diamond weighing 6.48 carats, to the pavé-set diamond bifurcated half-hoop, mounted in platinum and 18k yellow gold, ring size 5¾. Estimate HK$1,450,000-HK$2,000,000 ($187,664-$258,847). Price Realized HK$2,300,000 ($296,483). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318651&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2426-Lot description-A pair of colored diamond and diamond earrings one set with a heart-shaped fancy yellow diamond weighing 3.08 carats, to the pavé-set yellow diamond surround and hook, the other set with a heart-shaped colourless diamond weighing 2.51 carats, to the pavé-set diamond surround and hook, mounted in 18k white and yellow gold, 2.0 cm long. Estimate HK$600,000-HK$800,000 ($77,654-$103,539). Price Realized HK$920,000 ($118,593). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318646&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2364-Lot description-An important colored diamond and diamond ring, by Van Cleef & Arpels set with a cushion-shaped fancy yellow diamond weighing 16.05 carats, within a brilliant-cut diamond surround, flanked by two marquise-cut diamonds, to the single-cut diamond bifurcated quarter-hoop, mounted in platinum and 18k yellow gold, ring size 6½, in navy blue suede Van Cleef & Arpels case. Estimate HK$1,600,000-HK$2,400,000 ($207,077-$310,616). Price Realized HK$3,260,000 ($420,232). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318584&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2363-Lot description-A colored diamond and diamond ring set with a rectangular-shaped fancy light yellow diamond weighing 22.88 carats, flanked on either side by a heart-shaped diamond, mounted in 18k gold, ring size 6. Estimate HK$1,450,000-HK$2,000,000 ($187,664-$258,847). Price Realized HK$2,180,000 ($281,014). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318583&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2362-Lot description-A colored diamond ring set with a brilliant-cut light yellow diamond weighing 17.56 carats, mounted in 14k gold, ring size 5. Estimate HK$800,000-HK$1,200,000 ($103,539-$155,308). Price Realized HK$1,280,000 ($164,999). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318582&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2356-Lot description-A colored diamond and diamond ring by Mitsuo Kaji set with an oval-shaped intense yellow diamond weighing 2.39 carats, flanked on either side by a tapered pentagon-cut diamond, within brilliant and marquise-cut diamond surround accented by light pink diamonds, mounted in platinum, ring size 6½. Estimate HK$320,000-HK$480,000 ($41,415-$62,123). Price Realized HK$572,000 ($73,734). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318576&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2350-Lot description-A colored diamond and diamond ring set with a modified square-shaped fancy intense yellowish green diamond weighing 6.09 carats, to the pavé-set diamond gallery and three quarter-hoop, mounted in 18k gold, ring size 5½. Estimate HK$550,000-HK$800,000 ($71,183-$103,539). Price Realized HK$956,000 ($123,234). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318570&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

-Lot 2346-Lot description-A colored diamond and diamond ring set with a rectangular-shaped light pink diamond weighing 3.96 carats, to the pavé-set diamond hoop, mounted in 18k rose gold, ring size 5¼. Estimate HK$320,000-HK$480,000 ($41,415-$62,123). Price Realized HK$680,000 ($87,656). Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID=5318566&sid=7cb75f07-4e8b-4375-b68c-e94b843c4ec7

U.S. DEFICIT-DEBT CRISIS

-The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress. The report that was sent to lawmakers Friday night with no fanfare said the ratio of debt to the gross domestic product would rise to 102 percent by 2015 from 93 percent this year. Read more here-http://www.reuters.com/article/idUSTRE65765820100608 and http://www.bloomberg.com/apps/news?pid=20601109&sid=aa0cI64Gx.4E&pos=15

-Charting The Treasury’s Delusions: Tim Geithner’s Latest Projections For US Public Debt. Read more here-http://www.zerohedge.com/article/charting-treasurys-delusions-tim-geithners-latest-projections-us-public-debt

-Bernanke: I Don’t Know Yet How The U.S. Will Fix Its Deficit. Read more here-http://www.businessinsider.com/bernanke-i-dont-have-a-plan-to-bring-down-the-deficit-yet-2010-6

-Nassim Taleb: Debt Spreading ‘Like a Cancer.’ The economic situation today is drastically worse than a couple years ago, and the euro is doomed as a concept, Nassim Taleb, professor and author of the bestselling book “The Black Swan,” told CNBC on Thursday.

“We had less debt cumulatively (two years ago), and more people employed. Today, we have more risk in the system, and a smaller tax base,” Taleb said. “Banks balance sheets are just as bad as they were” two years ago when the crisis began and “the quality of the risks hasn’t improved,” he added.

The root of the crisis over the past couple of years wasn’t recession, but debt, which has spread “like a cancer,” according to Taleb, who is now relived that public attention has shifted to debt, instead of growth. The world needs to prepare itself for austerity, he warned. “We need to slash debt. Unfortunately, that’s the only solution,” Taleb said. Read more here-http://www.cnbc.com/id/37610064

-One of the prevailing fictions of the moment is that the soaring deficit and knock-on debt load of these United States among other prominent nation-states is but a temporary necessity that, as soon as the crisis is resolved, will recede like a gentle evening tide.

Sticking one’s nose above the westerly horizon, however, provides a dose of reality on the lingering long-term effect of an unresolved sovereign debt crisis. The chart just below paints a crystal-clear portrait of a desperately sick economy, bedevilled by persistent debt caused by stubborn levels of elevated government spending against a steady downtrend in revenue. Read more here-http://www.caseyresearch.com/displayCdd.php?id=450

81 BANKS AND COUNTING

-Three banks with total deposits of almost $2.3 billion were seized by regulators amid losses stemming from soured real-estate loans, raising to 81 the number of U.S. lenders that have collapsed this year.

Banks in Nebraska, Mississippi and Illinois were shut, according to statements on the Federal Deposit Insurance Corp.’s website. The failures drained $313.6 million from the FDIC’s deposit-insurance fund.

Regulators are closing banks at the fastest pace since the 1990s amid loan losses tied to real estate. The FDIC’s list of “problem” lenders is the longest since 1992. FDIC Chairman Sheila Bair said the confidential list rose to 775 banks with $431 billion in assets in the first quarter. That’s an increase from 702 banks with $402.8 billion in assets at the end of the fourth quarter. Read more here-http://www.businessweek.com/news/2010-06-05/banks-seized-by-regulators-in-nebraska-mississippi-illinois.html

-FDIC Finds No Buyer For Failed Arcola Homestead Savings of Illinois. The FDIC, appointed as receiver for the failed bank, could find no willing buyer for the bank. Accordingly, depositors will be paid off with checks from the FDIC that will be mailed on Monday.

When the FDIC is unable to find a buyer for a failed bank, depositors with funds in excess of FDIC insurance limits face the potential loss of all funds in excess of insured deposit limits. Future recoveries of depositor losses will depend on the amount of proceeds from the final disposition of the bank’s assets. Read more here-http://problembanklist.com/fdic-finds-no-buyer-for-failed-arcola-homestead-savings-of-illinois-0107/

-Banking System Collapse: Wake Up America Your Banks Are Dying. Read more here-http://endoftheamericandream.com/archives/banking-system-collapse-wake-up-america-your-banks-are-dying

-Banks Say No. Too Bad Taxpayers Can’t. From the earliest days of the credit crisis, the nation’s big financial institutions have been less than forthcoming about ballooning loan losses buried inside their books.

To some degree this is understandable: denial is a powerful thing, after all, and writing off troubled loans during a period of severe stress is, for bankers, the equivalent of getting a root canal. Read more here-http://www.nytimes.com/2010/06/06/business/06gret.html?src=me&ref=business

-Six Giant Banks Made $51 Billion Last Year; The Other 980 Lost Money. Read more here-http://www.forbes.com/2010/06/03/goldman-sachs-citigroup-markets-lenzner-morgan-stanley.html

50 STATS ABOUT THE U.S. ECONOMY THAT ARE ALMOST TOO CRAZY TO BELIEVE

-50 Statistics About The U.S. Economy That Are Almost Too Crazy To Believe. Most Americans know that the U.S. economy is in bad shape, but what most Americans don’t know is how truly desperate the financial situation of the United States really is. The truth is that what we are experiencing is not simply a “downturn” or a “recession”.

What we are witnessing is the beginning of the end for the greatest economic machine that the world has ever seen. Our greed and our debt are literally eating our economy alive. Total government, corporate and personal debt has now reached 360 percent of GDP, which is far higher than it ever reached during the Great Depression era.

We have nearly totally dismantled our once colossal manufacturing base, we have shipped millions upon millions of middle class jobs overseas, we have lived far beyond our means for decades and we have created the biggest debt bubble in the history of the world. A great day of financial reckoning is fast approaching, and the vast majority of Americans are totally oblivious.

But the truth is that you cannot defy the financial laws of the universe forever. What goes up must come down. The borrower is the servant of the lender. Cutting corners always catches up with you in the end.

Sometimes it takes cold, hard numbers for many of us to fully realize the situation that we are facing. So, the following are 50 very revealing statistics about the U.S. economy that are almost too crazy to believe. Read more here-http://www.blacklistednews.com/news-9060-0-13-13–.html

#1) According to the Tax Foundation’s Microsimulation Model, to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4.  Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent.

GEORGE SOROS-WE HAVE JUST ENTERED ACT II OF CRISIS

-Billionaire investor George Soros said “we have just entered Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.

“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.” Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.

Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped out more than $4 trillion from global stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance, according to Bank of America Corp.

“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.

Soros gained fame in the 1990s when he reportedly made $1 billion correctly betting against the British pound.

He also wagered that Germany’s mark would appreciate after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to fall in the same year. His firm, Soros Fund Management LLC, manages about $25 billion.

Credit default swaps, which aim to protect bondholders against the risk of a default, are dangerous and a “license to kill,” Soros said today. CDSs should only be allowed if there is an insurable interest, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aSewDrZuj1Vg

EU CRISIS

-Three Signs That Europe’s Enormous Bailout Has Already Failed. Read more here-http://www.businessinsider.com/european-overnight-lending-2010-6

-Greek Default Seen by Almost 75% in Poll Doubtful About Trichet. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aq_vuFaKzuVI&pos=1

-Debtors’ Prism: Who Has Europe’s Loans? IT’S a $2.6 trillion mystery. That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid.

The problem is, alas, that no one not investors, not regulators, not even bankers themselves knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. And doubt, as it always does during economic crises, has made Europe’s already vulnerable financial system occasionally appear to seize up.

Early last month, in an indication of just how dangerous the situation had become, European banks which appear to hold more than half of that $2.6 trillion in debt nearly stopped lending money to one another. Read more here-http://www.nytimes.com/2010/06/06/business/global/06toxic.html?src=twt&twt=nytimesbusiness&pagewanted=print

-Euro ‘will be dead in five years’ The euro will have broken up before the end of this Parliamentary term, according to the bulk of economists taking part in a wide-ranging economic survey for The Sunday Telegraph. Read more here-http://www.telegraph.co.uk/finance/economics/7806064/Euro-will-be-dead-in-five-years.html

-End of the Euro? Not so Fast. Read more here-http://www.zerohedge.com/article/guest-post-end-euro-not-so-fast

-Spanish savings banks could need up to 24bln euros. Spanish Cajas, or savings banks, could need between 24 billion euros ($28.7 billion) and 34 billion euros to restore an 8% equity Tier 1 ratio for each of them, Citi analyst Ignacio Moreno said in a note to clients published Monday, after conducting a stress test of capital and real estate asset quality.

As a result, he said that the cajas should undergo “significant changes” in the next few months including mergers, downsizing and, further ahead, potential listings. Of the 46 cajas existing today, half will disappear, based on the transactions already announced, he noted.

More consolidation is likely in the foreseeable future, according to him, partly because the Bank of Spain’s new provisioning policies will lead to faster recognition of real estate-related losses. Read more here-http://www.marketwatch.com/story/spanish-savings-banks-could-need-up-to-24bln-euros-2010-06-07?dist=beforebell

-Scotland Will Lose 30,000 Public Sector Jobs, Item Club Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aCquwlREDzm0

PAUL FARRELL-AMERICAN INVESTORS PREDICTABLY STUPID LOSERS

-Yes, I am mad as hell again. Wall Street’s soulless, immoral, greedy bankers really believe that the vast majority of America’s 95 million investors are not only “predictably irrational” but “stupid,” as J.P. Morgan Chase’s chief investment officer put it in Forbes a while back.

Worse, Main Street investors are losers for continuing to trust Wall Street after they lost 20% of our retirement money the last decade. Now, worst of all, Wall Street’s traders have profiled Main Street investors in their algorithms: Yes, investors are “predictably stupid losers,” what Vegas croupiers call a mark, a dumb gambler that can be easily conned out of his money.

Why so blunt? Listen: Recently I explained why the Wall Street banks must kill financial reform, to preserve their multibillion dollar bonus pool. One reader commented: “I worked at the Bear Sterns … every word written here is true.

Fact is, bankers regard themselves as wolves and the public as prey, and speak about it openly, among themselves.” Then he added a sucker punch: “What is extraordinary to me is how willingly the sheep submit to this.” Yes, folks, Wall Street is certain that America’s 95 million investors are clueless sheep headed for the slaughterhouse.

But wait, that’s not news. Twenty years ago former bond trader Michael Lewis’ “Liar’s Poker” described the insanity of our addiction to gambling in a few memorable lines: “Men on the trading floor may not have been to school but they have Ph.D.s in man’s ignorance.”

They know that “in any market, as in any poker game, there is a fool. The astute investor Warren Buffett is fond of saying that any player unaware of the fool in the market probably is the fool in the market.” And as we now know, in the stock market the vast majority of America’s 95 million investors are fools predictably stupid losers. Read more here-http://www.marketwatch.com/story/story/print?guid=F22B6FE1-A7A1-4618-A148-6FCC7AE8C1BA

REAL ESTATE

-The housing-market recession is not over. Why you shouldn’t be overly optimistic about real estate right now. Read more here-http://www.marketwatch.com/story/story/print?guid=C4AFCD43-4A98-4F87-B277-95DC0B723136

-U.S. Home Foreclosures Climb 44% to Record in May. U.S. home foreclosures reached a record for the second consecutive month in May, with increases in every state, as lenders stepped up property seizures, according to RealtyTrac Inc.

Bank repossessions climbed 44 percent from May 2009 to 93,777, the Irvine, California-based data company said today in a statement. Foreclosure filings, including default and auction notices, rose about 1 percent to 322,920. One out of every 400 U.S. households received a filing.

“We’re nowhere near out of the woods,” Rick Sharga, RealtyTrac’s senior vice president for marketing, said in a telephone interview. “We’re likely to set a quarterly record for home seizures if June is anything like May.”

Lenders are completing the “inevitable progression” of taking properties from homeowners who stopped paying, Sharga said. He predicted last month that another 5 million delinquent mortgages will end in foreclosure in addition to properties that had already been repossessed.

Almost 3.1 million properties have been seized by banks since April 2005, Daren Blomquist, RealtyTrac’s marketing communications manager, said in an interview today. “The second quarter won’t be the peak,” Sharga said. “I’m not even sure 2010 will be.”

The previous record for seizures was 92,432 in April. Last month was the first in which every state had an increase in repossessions from a year earlier, according to RealtyTrac. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aF9v9t9hrr7Q

-May Home-Buying Activity Looks Worse Than Expected. How will housing sales fare without the benefit of big tax breaks for home buyers? The early indications are that sales are down very sharply in recent weeks, worse than most brokers and analysts expected.

Of course, economists and real estate analysts expected home sales to slow after the tax credit, of as much as $8,000, expired at the end of April. But early data from real estate brokers indicate that the sales declined as much as 25% to 30 from the year-earlier levels in some markets.

Without the tax bait, “consumers just don’t have that same sense they have to move quickly,” said Patrick Lashinsky, CEO of ZipRealty Inc., a big brokerage firm. Read more here-http://blogs.wsj.com/developments/2010/06/04/may-home-buying-activity-looks-worse-than-expected/?blog_id=36&post_id=12680&source=patrick.net

-Banks Face Short-Sale Fraud as Home ‘Flopping’ Schemes Spread. Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal. Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud.

Their crime involved persuading lenders to approve the sale of homes for less than the balance owed known as a short sale without disclosing that there were better offers. They then flipped the houses for a profit. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=avevHVg0VvHs

-Manhattan Empty Condos May Be Rentals as Leases Reign. When Richard J. Bailes and his family paid $4.1 million in March for a four-bedroom apartment in the glass and steel Georgica on Manhattan’s Upper East Side, just eight of the building’s 58 units were occupied, he said.

Bailes and his family had plenty of places to choose from. About 8,700 new condos sit empty in Manhattan, with 75 percent not even listed for sale yet, said appraiser Miller Samuel Inc. Priced at levels the market no longer supports, they’re selling so slowly it would take as long as seven years to find buyers for them all, said Jonathan Miller, president of Miller Samuel.

Miller teamed up with Westwood Capital LLC and developer Gerald Guterman to raise as much as $1 billion to buy empty condos and manage them as rentals. Guterman made his name in the 1980s doing just the opposite.

“Things are going to run out of steam at pretty predictable times,” said Daniel Alpert, managing partner of New York-based Westwood Capital. “In the case of these condos, it’s when the reserve funds run out.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aQ26jbABFaxA&pos=7&source=patrick.net

© 2012, Worldwide Precious Metals Canada Ltd.
www.wwpmc.com

The World Financial Report – June 15, 2010
Posted by Worldwide Precious Metals on Tuesday, June 15, 2010

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