The World Financial Report – July 10th, 2012
July 10, 2012
-CHART OF THE WEEK: Must See Gold Charts From FRED. A huge development happened in the world of economic chart-making. FRED, the brilliant economics data and charts site that’s run by the St. Louis Federal reserve, has finally added gold prices to the database. Now at the tip of your fingers is gold priced in dollars and pounds going back to 1968, and gold priced in euros going back to 1999. Not only is gold a fascinating commodity/quasi-money in its own right, there are so many myths about what gold is, and what its price represents, the inclusion of gold in this very easy-to-use database will prove to be incredibly useful. See more here-http://read.bi/Nbu3OG
-“We view gold as a currency, not a commodity. Its importance as a currency will continue to increase as the major central banks around the world continue to print money.” He adds that as the market keeps shuddering, demand for gold will stay high, and soon enough all of his depressed gold holdings should shoot up. He also thinks that anyone in Greece, Italy, and France should pull all their money out of the banking system and purchase gold bars before the Continent collapses. John Paulson
-”I have consistently told people told people for over a decade to put up to 50% of their money into physical gold stored outside of the banking system. I now believe investors should consider putting even more of their liquid assets into physical gold. In my view this is the best way to protect against the risks the financial system faces today, and the chaos that is still in front of us.” Egon von Greyerz
-”Asia is accumulating Gold. Russia is accumulating Gold. “Backward” nations all over the world are accumulating Gold on both an individual and a government level. While the “developed” world has developed an idea of monetary safety which turns all history on its head, the rest of the world is not going along with them. We’ll leave it to you to decide which are the credulous and which are not.” Bill Buckler, Gold This Week, 30 June 2012
-”I firmly believe that those who succumb to the noise of the gold bears right now will miss more than 50% of the gold bull market.” Jim Sinclair
-”Printing money electronically to infinity is simple. Be assured everything that is required money wise, here and there, will without any doubt be provided. That is the thesis of gold that will never, in our lifetimes, fail. The politician that will be thrown out is the one that would do the right thing if he lived to the end of his term. QE to infinity is certain everywhere in the West, except in Iceland that already died from it and was reincarnated.” Jim Sinclair
-”The most important event of today in Europe was Mrs. Merkel’s transformation from “over my dead body” to “bowing to the pressure of markets,” demonstrating what every politician will eventually do. Please note Hollande’s recent role in EU finance. Expect the same thing at the Fed. QE will go to infinity. The price of gold will meet Alf’s expectations.” Jim Sinclair
-”I have received more than likely every bearish case written on gold out there over the past few weeks. My answer to you is that the thesis upon which the gold price bullishly sits is performing exactly as anticipated. Six times in the recent weeks there has been a defined program to break the price of gold and it has failed each time. The manipulators constantly run into major primary buyers in the physical market, more than likely governments with a bullish gold outlook.” Jim Sinclair
-Gold will go to and above $3500. This is the most important message I have sent you since 2001. There are very few of us dynamic thinkers that see everything as a trend constantly in motion. Anyone can be a static thinker, quoting recent economic figures or news headline (MSM), and coming up with a usually wrong opinion. The change today is that the “Rig Is Up.”
The Bank of England turning their backs on Barclays, the company who did their bidding, will be the event in time marking the trend change. Many of us in our areas of activity will successfully fight the Riggers. The many complaints that so many of you kindly sent in to fight manipulation released the Kraken in me.
The Kraken is back in its cage where it belongs. The paper trail is there. The worm has turned. Even more importantly is that this fight in the $1540 gold price area was not for regaining the old high in gold. The six attempts to kill gold, supported by some gold writers looking for favors from the riggers was a now failed attempt to keep gold from trading above $3500.
The battle to stop gold has been lost. The start, like all starts towards the old high and well above, should be slow with more unfolding drama. It will build on itself but gold will trade at and above $3500. I am now as certain of this as I was over ten years ago when I told you gold was headed for $1650. I knew that as fact and to me from $248 gold was trading at $1650.
My job now is to define gold’s full valuation for you when it occurs. The timing is no less than one year from now to a maximum of three years from now. I believe I will be able to do that for you. This is the most important message I have written you since early in 2001. I write this with total intellectual and spiritual certainty. Jim Sinclair
-Singapore is abolishing the 7% tax on gold purchase from October this year. It seems the government here wants to encourage its citizens to hold gold as a part of their saving/national reserve as seen in China. Jim Sinclair
-”However, since the debt of Europe and the U.S. is only going to increase in both nominal terms and in terms of GDP, their economies will continue to deteriorate. The behavioral history of central bankers in Europe and America has clearly illustrated that massive debt monetization will be inevitable. Therefore, a new nominal high in the price of gold, in euros and dollars, is an eventuality as well.” Michael Pento
-”With all of the bearish reports on the metals, some investors are scared. Still, others call up and say, ‘If they’re going to give me this stuff, this cheap, I’m buying.’ Let me tell you, this feels like 2000. Remember those days, gold below $300, silver below $5, and we were (called) ‘idiots’ for buying it.” Bill Haynes, President and owner of CMI Gold & Silver
-Rick Rule: We Are Seeing Dislocations In Many Financial Markets. With specific regards to the gold trade, you are seeing a continuation of private buying of gold, and institutional selling of gold. I think some of the institutional holders are credit-constrained, but there’s strong, strong underlying demand from individuals, wealthy people if you will.
So I think you are seeing a change in the holders of gold, away from the hot money, small hedge fund type of commodity speculator, who was buying gold in a momentum driven greed trade, to private holders who are buying gold as I have always bought gold, in the context of a fear trade. And I think that’s sort of an interesting metaphor for the market’s overall. Read more here-http://bit.ly/Pf5vHl
-Eric Sprott: People should, rightly, have fear of having their money in paper instruments, whether it’s in a bank account or a bond. If they had any sense they would be buying (physical) gold and/or silver. That’s the only way to maintain your purchasing power. Bill Gross, in his June letter, was complaining about the financial repression of a 1.64% yield on a US bond over ten years, and came to the conclusion that people should consider owning gold.
The sooner we resolve this financial crisis, and get these central planners out of the gold market, the sooner gold will get to the price that it so richly deserves. Gold deserves to be way higher than it is today because the currencies aren’t worth the paper they are printed on.” Read more here-http://bit.ly/M282EL
-Richard Russell: Is Anything Safe In Our New World? I believe the gold bull market is still intact. If gold cannot make a new high in the year 2012, be prepared to hear the anti-gold element scream to high heaven that the gold bull market is over. They will be wrong. We still have not seen the third speculative phase of the gold bull market, but that phase lies ahead. Read more here-http://bit.ly/M7Egce
-Robert Fitzwilson: Relative to paper currencies, gold has compounded in the neighborhood of 18% per year. If one were standing on one of the currency stools, looking up at the one with gold, it would be easy to remark at how high gold had risen. The opposite is true. Gold has not gone up, it is the currency stools that have gone down. This will continue to be the case until the printing stops. The current path of debased currency will collapse, as before, and gold and silver will regain the role of preserving wealth as it has done for thousands of years.” Read more here-http://bit.ly/NpK821
-James Turk: Frightening Situation, The World Is On A Knife’s Edge. “The precious metal markets feel just like the summer of 2010. In fact, this weekend I spent some time going through the KWN archives and listening to my interviews from that time period (2010). It was eerie, because just about everything I was saying back then also applies to our present situation, particularly sentiment being at rock bottom.
We had big rallies in both gold and silver starting in the summer of 2010. These are the rallies that took gold over $1900 and silver to $50. Last week’s big move should mean that massive rallies are starting again, and because the banking and economic situation is so much worse today, on this new rally, gold and silver are going to break their old highs.
The world is on a knife’s edge. The geopolitical situation is worrying. Economic activity around the world is rapidly deteriorating, and this is having the effect of putting more and more people out of work. It is noteworthy that the eurozone jobless rate, in May, hit a record-high of 11.1%. If we then factor bank runs into this toxic brew, the opportunity for the fear event I have been worrying about seems all the more likely.
As that fear event begins to manifest itself, physical gold and silver will be your best safe-haven. It is extremely important that KWN readers, around the world, position themselves into the metals ahead of the coming chaos.” Read more here-http://bit.ly/NaWBIl
-John Embry: Fixes From The 70s Won’t Stop This Disaster. Read more here-http://bit.ly/Pksult
-Mark Hulbert: Has a major bear market in gold begun? A major new study of commodity bull markets since 1800 suggests that the bull market that began around the turn of this century is not yet over. And since the underlying factors that lead to a commodity bull market are largely the same as those that would propel gold higher, this finding is good news for gold in particular. The study was conducted by two commodity analysts at Ned Davis Research: John LaForge and Warrien Pies.
They studied all major commodity bull markets over the last two centuries, and came up with six themes that were largely present when those past bull markets came to an end. Because just one of the six is present today, and only one more is even close, they conclude that it’s unlikely that “commodities have met their final end.” Read more here-http://on.mktw.net/MBJMZK
-Lawrence Williams: Where is gold headed? Downwards to $700 or upwards to $7,000. Depending which ‘expert’ you listen to there is a huge difference in opinion on the likely direction of the gold price. Read more here-http://bit.ly/NaQcwK
Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
Gold to silver ratio at 60 to 1 with gold at $2,500 the silver price would be $41.67
Gold to silver ratio at 50 to 1 with gold at $2,500 the silver price would be $50.00
Gold to silver ratio at 40 to 1 with gold at $2,500 the silver price would be $62.50
Gold to silver ratio at 30 to 1 with gold at $2,500 the silver price would be $83.33
Gold to silver ratio at 20 to 1 with gold at $2,500 the silver price would be $125.00
Gold to silver ratio at 15 to 1 with gold at $2,500 the silver price would be $166.67
-’Massive short-covering rally’ likely in silver, GGR’s Arensberg says. Analyzing futures trading data and finding the big commercial traders the least short in silver in a decade, Gene Arensberg of the Got Gold Report expects a “massive short-covering rally.” Watch more here-http://www.gata.org/node/11535
-Silver Futures May Rise 25% on Double Bottom: Technical Analysis. Silver prices, which slumped for four straight months, may rebound 25 percent after hitting a “double bottom,” according to technical analysis by Steel Vine Investments LLC. A double bottom is a chart pattern showing a drop in price, followed by a rebound and then another decline to near the same level, usually indicating support. “We have jumped back from the inflection point telling us that prices are now headed higher,” Patton said. The first “psychological” level the market will test is $30, he said. Read more here-http://bloom.bg/OuKAi2
-’Silver likely to double to $50/oz in 2 years.’ Silver prices is likely to double to $50 an ounce in a two-year period, said Bombay Bullion Association President Prithviraj Kothari. According to Kothari, “I am more bullish on silver compared to gold, driven by heavy usage of the white metal in the solar industry.
If I have money, I’ll buy silver instead of buying gold as it is cheaper.” Silver has around 50% of its demand from its industrial applications; from cell phones to automobiles, to its place in medical applications. Silver’s properties of being malleable, withstanding high temperatures and conductivity, separate it from other metals; making silver a leading favorite for investors. Read more here-http://bit.ly/PeANhj
-Jim Rogers: If I had to buy just one precious metal, it would be silver. Read more here-http://bit.ly/N8Tptl
-Myra P. Saefong: Where does silver price go from here? Read more here-http://on.mktw.net/O9Qb9S
-Hubert Moolman: Silver, Gold and The Coming Deflation. Read more here-http://bit.ly/L4cPUH
-Jim Otis: The Silver Two Year Cycle Continues. Read more here-http://bit.ly/PexUNI
-Dr. Jeffrey Lewis: The Gold to Silver Price Ratio and the Surge in Silver Jewelry Buying. Read more here-http://bit.ly/OuG3Ms
-Dr. Jeffrey Lewis: Precious Metals Paper Sellers Conveniently Trapped. Read more here-http://bit.ly/MXoQem
-Clive Maund: Silver Market Update. Read more here-http://bit.ly/LzTVSw
-Silver market manipulation taken for granted by CNBC host and panelists. Read more here-http://www.gata.org/node/11532
-Peter Cooper: $15m Roman silver hoard uncovered in Jersey, wealth preserved for 2,000 years. Read more here-http://bit.ly/ND1zd6
-Silver-Decked Rolls-Royce Fetches Record $7.3M. Watch more here-http://bloom.bg/N2u9rC
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: Dylan Grice, The Next Crisis Will Be Born Out Of The US Treasury Market. SocGen investment strategist Dylan Grice does not think “safe-haven” assets are very safe. In Grice’s latest note to clients, he compares the illusion of safety created by faulty regulation before the 2008 financial crisis to the new, impending wave of financial regulation on the table like Dodd-Frank in the U.S. and Basel requirements on a global scale. Grice warns “madness is going on in the government bond markets” today, furnishing this long term chart of US Treasury yields going back to 1800. Read more here-http://read.bi/Pb1JPe
-CHART OF THE WEEK: Fourth of July Grillers Pay for Record Burgers. Consumers are set to pay the most ever for hamburgers and steak for this year’s Fourth of July holiday as rising demand pushes beef prices to a record and increases the cost of a basket of barbecue staples. Read more here-http://bloom.bg/Ly95Yo
-Food inflation fears as US crop prices surge. Worries about world food prices are increasing, stoked by a 10pc rise in US corn and wheat prices in just a week. Read more here-http://bit.ly/LTBLcw
-”We have long held that gold would reach its inflation adjusted high of $2,400/oz and silver its inflation adjusted high at $140/oz and the equivalent in euros, pounds and other fiat currencies. Gold at just over $1,600/oz today remains 33% below its record inflation-adjusted high in 1980. Silver at just over $28/oz today remains 80% below its record inflation-adjusted high in 1980.” Goldcore
-IMF warns on U.S. economy. Boost the U.S. economy now and worry about cutting deficits later, the International Monetary Fund recommended Tuesday. The U.S. recovery remains “tepid” and according to the IMF, is expected to grow only 2% this year. Meanwhile, the fiscal cliff looms in 2013, threatening to reduce the economy’s growth to only 1% next year. Meanwhile, the IMF predicts the job market will improve only at a snail’s pace. It expects the unemployment rate to average 8.2% this year and 7.9% in 2013. Read more here-http://cnnmon.ie/M6kH48
-Berkshire’s Pederson Says U.S. Businesses Scaling Back. Berkshire Hathaway Inc. furniture-rental unit saw a slowing in demand from business clients in the second quarter, indicating that firms are curbing spending on projects amid less optimism about the U.S. economy. Demand is “simmering compared to where it was at the beginning of the year, when it looked like the recovery, at least from our perspective, would have been pretty robust,” said Jeff Pederson, the new chief executive officer of Berkshire’s CORT Business Services Corp., the world’s largest provider of rental furniture. “It’s not flat-lining, by any stretch of the imagination, but it has slowed down.” Read more here-http://bloom.bg/L0VcoA
-Quirky Trouble Signs: Office Chairs, Caustic Soda. Two of the quirkier indicators of where the economy is headed are pointing downward. Office furniture leasing seems to be cooling off. And orders for industrial chemicals are slowing. Those may seem like trivial items to focus on, but many economists regard them as good barometers of the outlook for the economy as a whole. Read more here-http://buswk.co/Rd0Eos
-Manufacturing shrinks, first time in nearly three years. Manufacturing shrank in June for the first time in nearly three years as new orders plummeted, according to one measure of the sector that provided a stark sign of the economic recovery’s slowdown. Read more here-http://reut.rs/LZmnBL
-GE Halts Construction on Solar Plant as Prices Plunge. General Electric Co. is suspending construction of a Colorado thin-film solar factory, slated to be the biggest in the U.S., as prices for the panels tumble amid a manufacturing-capacity glut. Work will be halted for at least 18 months, Danielle Merfeld, the general manager of solar technologies. Read more here-http://bloom.bg/PeXB1K
-How The Global Economy Changed In One Month. Global manufacturing remained deeply depressed in Europe and much of the developed world, even as North America largely showed strength this June, new data out of Markit Economics shows. The firm released PMI readings for some two dozen countries over the past twenty-four hours, with continued weakness across the euro area, and difficulty resonating in Asian strongholds like Japan and China. Read more here-http://read.bi/O6gRZj
-CITI: 10 Reasons Why We’re Worried About The US Consumer. 1) Leading macro indicators point down; 2) unemployment ticks up; 3) consumer confidence moves lower; 4) falling markets create negative wealth effect; 5) home prices remain pressured; 6) consumer balance sheet is shaky; 7) economic weakness abroad; uncertainty surrounds the U.S. presidential election; 9) Broadlines SSS have slowed; and 10) growing retail inventories point to cautious spending. Read more here-http://read.bi/OoTKNb
-David Chapman: The $289 Trillion Problem. Two hundred and eighty-nine trillion dollars. An unimaginable amount. That is the total of derivatives outstanding at the top five US bank holding companies as of March 31, 2012, according to the Office of the Comptroller of the Currency. Read more here-http://bit.ly/MUIMf2
-Greg Hunter: One on One with John Williams. Anyone who thinks the U.S. is in recovery should stop listening to the mainstream media and listen to John Williams. He heads up Shadowstats.com, and is one of the few economists who crunches the numbers to give unvarnished true statistics. Adjusted for real inflation of about 7%, Williams says, “GDP has plunged, and we have been bottom bouncing” ever since the financial crisis started.
Williams says, “The next crash will be a lot worse (than 2008) because it will push us into the early stages of hyperinflation.” He predicts this will happen “by the end of 2014 at the latest.” Long before 2014, Shadowstats.com thinks there is a good chance of “panic selling of the U.S. dollar,” if the Federal Reserve starts another round of money printing (QE3) to save the system and the big banks. Read and watch more here-http://bit.ly/RfBZ2z
-There Has Been A Stunning Collapse In Vending Machine Revenue. Read more here-http://read.bi/N9N9Fm
-Should You Take Stock Market Tips From Jim Cramer? “If you watch Mad Money and follow Jim Cramer’s top recommendations, you will lose almost one-third of your money in less than two months.” Read more here-http://read.bi/O5S5ID
-The Greatest Economic Collapses In History. Read more here-http://read.bi/LPpwlI
-Why More And More Americans Are Abandoning Their US Citizenship. Read more here-http://read.bi/N81BKf
-Peter Madoff Admits Aiding Brother’s Ponzi Scheme. Peter Madoff pleaded guilty to enabling his brother Bernard Madoff to pull off the biggest Ponzi scheme in U.S. history though Peter denied knowing the business was a sham until the firm collapsed. Read more here-http://bloom.bg/LZ7O14
-Particle Discovery May Help Scientists Understand Mass. Scientists seeking to explain the origins of matter discovered a particle that may support a decades-old theory of physics, bringing people closer to understanding unseen parts of the universe. Read more here-http://bloom.bg/MXimL6
-El Nino May Form by September, Possibly Curbing Atlantic Storms. An El Nino may be about to form in the equatorial Pacific Ocean, which may create a curb on hurricanes in the Atlantic as the storm season reaches its most active phase. Read more here-http://bloom.bg/MLM6wJ
-Esfandiari Wins Record $18.3 Million in World Series of Poker. Antonio Esfandiari outlasted 47 rivals to win poker’s biggest payout of $18.3 million in the $1 million buy-in charity tournament at the World Series of Poker. Read more here-http://bloom.bg/PeyGeQ
-These Casinos In Macau Make Las Vegas Look Like A Dump. Read more here-http://read.bi/LxE9Ym
-Dubai’s Burj Khalifa Is A Complete Flop With Buyers. The building has been a huge flop with investors, and real estate prices there have plummeted from highs of $2,450 per-square-foot to around $721 per-square foot. Read more here-http://read.bi/NyMOrK
-QE2 Ocean Liner to Be Turned Into 300-Room Hotel Moored in Dubai. The Queen Elizabeth II ocean liner, whose passengers included Britain’s royal family, will be converted into a 300-room hotel in a Dubai port, according to the owner. Read more here-http://bloom.bg/KTPyjF
-Bentley ‘Blower’ Sells for 5 Million Pounds at Bonhams. A 1929 Bentley single-seat racer that once reached 137 miles per hour sold today for 5 million pounds ($7.8 million), making it the most expensive example of the U.K.-made marque ever sold at public auction. Read more here-http://bloom.bg/N9Mjsb
-British Painting Sells For Record $35 Million After Causing Uproar In Spain. John Constable’s “The Lock” sold for $35 million, a record for the artist and one of the most expensive British paintings ever sold, according to ArtInfo. Read more here-http://read.bi/Lnsobv and http://bloom.bg/LxIGKe
-The 10 Most Outrageous Luxury Items Rich People Bought In June. Read more here-http://read.bi/O5lKSf
-Apple Will Launch A Smaller, Cheaper iPad This Year. Read more here-http://read.bi/NaAMbC
-Manchester United Files for U.S. Share Sale of Soccer Club. Manchester United Ltd., the English soccer team with a record 19 national championships, filed to raise $100 million in a U.S. initial public offering. Read more here-http://bloom.bg/N96hTt
-Rarecoloreddiamonds.com Featured Diamond of the Week. This week’s Diamond is a 1.81 Carat Oval Cut Fancy Yellow Internally Flawless Diamond. Harold Seigel-See video of the featured Diamond here-http://bit.ly/Ov3yVW
-Jubilee diamonds: Spectacular gems from the Queen’s private collection go on display at Buckingham Palace. It is the most valuable and glittering exhibition ever created at Buckingham Palace. Ten thousand priceless diamonds on display, many for the first time ever, to mark the Queen’s Jubilee. Here is the Queen’s Williamson Pink Diamond Brooch. Read more here-http://bit.ly/LZoh5s
LIBOR RIGGING-MARKET MANIPULATION
-LIBOR: Everything You Wanted To Know But Were Afraid To Ask. Read more here-http://read.bi/MZmtF9
-Diamond Says Rivals Lowballed Libor, Blames Regulators. Robert Diamond, who quit this week as chief executive officer of Barclays Plc, sought to blame other banks for misleading markets about their ability to borrow and regulators for turning a blind eye. Read more here-http://bloom.bg/M87BoF
-Bank of England dragged into rate-rigging row.’ Barclays stepped up its efforts to rig interest rates after its chief executive personally spoke to the deputy governor of the Bank of England. Bob Diamond had a conversation with Paul Tucker about how much Barclays was claiming it had to pay to borrow money during the financial crisis in 2008.
After Mr. Diamond spoke to Mr. Tucker, Barclays staff came to believe the Bank of England wanted them to falsify this data which was used to calculate Libor, the interest rate that banks pay to each other. The bank’s traders then escalated their secret attempts to manipulate the markets and make it appear that the bank was paying less to borrow money than was actually the case, documents show. Read more here-http://bit.ly/RcUlRZ
-Diamond Quits as Pressure Mounts on Barclays Over Libor. Robert Diamond, the architect of Barclays Plc investment banking expansion, resigned as chief executive officer, succumbing to political pressure to go after the bank admitted to rigging global interest rates. Barclays was hit by a record 290 million-pound ($455 million) fine last week for rigging the benchmark for more than $360 trillion of securities. Read more here-http://bloom.bg/M6oyzF and http://bloom.bg/PdWHCN
-Diamond’s Exit Shows Libor Only What Each Bank Says It Is. The resignation of Barclays Plc Chief Executive Officer Robert Diamond for the firm’s role in rigging the London interbank offered rate underscores the disconnect between the market’s perception of bank borrowing costs and the benchmark for $360 trillion of global securities. Read more here-http://bloom.bg/NyNWM2
-JPMorgan Probed Over Potential Power-Market Manipulation. JPMorgan Chase & Co. refusal to turn over e-mails in a federal probe of potential energy-market manipulation is the latest challenge for Chief Executive Officer Jamie Dimon as the bank faces multiple investigations.
The U.S. Federal Energy Regulatory Commission sued JPMorgan July 2 to release 25 e-mails in an investigation of possible manipulation of power markets in California and the Midwest by J.P. Morgan Ventures Energy Corp., according to court filings by the Washington-based agency. FERC opened the probe in August after complaints from California and Midwest grid operators that JPMorgan’s bidding practices were abusive, the documents show. Read more here-http://bloom.bg/LZ78c3
-Morgan Stanley Got S&P to Inflate Ratings, Investors Say. Morgan Stanley successfully pushed Standard & Poor’s and Moody’s Investors Service Inc. to give unwarranted investment-grade ratings in 2006 to $23 billion worth of notes backed by subprime mortgages, investors claimed in a lawsuit, citing documents unsealed in federal court.
According to the plaintiffs, the documents reveal that what the ratings companies describe as independent judgments were actually unsupported by evidence and written in collaboration with the bank that was packaging the securities. Morgan Stanley and the ratings companies deny the allegations. Read more here-http://bloom.bg/Nzd7hN
-BOE Restarts QE as Euro Crisis Threatens to Prolong Slump. The Bank of England restarted bond purchases two months after halting its expansion of stimulus as the deteriorating outlook spurred policy makers to ramp up efforts to kick start a recovery. The Monetary Policy Committee led by Governor Mervyn King raised its asset-purchase target by 50 billion pounds ($78 billion) to 375 billion pounds and said the purchases will take four months to complete. Separately, the European Central Bank cut its key interest rate below 1 percent for the first time and China lowered benchmark rates for the second time in a month. Read more here-http://bloom.bg/O9jbic
-Europe’s bad debts ‘will bite in 2013.’ Bad debts in the eurozone are a “ticking time bomb” for the continent’s economy, with the worst effects expected to be felt next year, a report has warned. Banks’ balance sheets will contract by a record margin in 2012, further constraining the supply of credit to businesses and consumers, according to Ernst & Young, but the “real impact” of Europe’s debt crisis will not arrive until 2013. Read more here-http://bit.ly/O7cRaQ
-Byron Wien: I Spoke To The Smartest Man In Europe, And What He Had To Say Was Terrifying. So what does TSMIE see now? Basically that massive amounts of debt will bring the decline of Western Civilization, but that in the meantime, before that happens, policy makers would pull every trick they could in order to stave off a catastrophic event. So what am I doing with my money? It is hard to hide in stocks. I think gold is going much higher. I am buying energy stocks because I want to own something real. Preserving capital is my focus now, not making money. Read more here-http://read.bi/M6zVpI
-Richard Koo Talked To Some German Politicians, And They Admitted To What They Really Think About Greece. There was a unanimously held belief that nothing will improve without extensive structural reforms and that any aid provided in the absence of such reforms will do little more than buy time. One influential parliamentarian, for example, argued forcefully that Greece was not yet a modern nation-state and that it continued to operate under the ideas and systems of the Byzantine and Ottoman empires. He felt this had to change before further aid could be provided.
Greece’s tax collection system was singled out for special criticism. The same politician spoke of a Greek friend who tried to report to the local tax authorities that he had a pool at his house but was told not to declare it since the paperwork was so troublesome. Another individual remarked that many of Greece’s democratic institutions are run on the basis of personal and historical connections and that it was difficult to believe that elections were decided on the basis of policy debate.
This comment prompted one person to note that Greece had been allowed into the euro because it was the cradle of Western democracy, but today’s Greece shared little with that nation. He felt it had clearly been a mistake to let the country into the euro. Another representative said that, regardless of what happens in the short term, Greece should ultimately leave the eurozone, devalue its currency, and rebuild its economy to restore competitiveness. Read more here-http://read.bi/Lo2W5C
-Greenspan Says Europe Like a ‘Leaking Boat’ With Holes. Alan Greenspan, a former Federal Reserve chairman, compared Europe to a “leaking boat” and said political consolidation is the only solution to the region’s financial crisis. “The problems in Europe are the fiscal deficits of all the various countries that are involved,” Greenspan said in an interview on CNBC television. “It’s like a leaking boat in which we keep bailing it out and we’re very pleased with ourselves that we’d be able to keep bailing it out. The problem is we haven’t fixed the holes yet.” Read more here-http://bloom.bg/M6l2DZ
-Financial ‘Armageddon’ Will Happen Despite EU Deal: Rogers. Even as markets cheered the agreement by European leaders to allow the direct use of the bloc’s bailout funds to recapitalize struggling banks, well-known investor Jim Rogers told CNBC the move does nothing to help solve the region’s biggest problem, which is its high debt levels. Read more here-http://bit.ly/PgiYzS
-Spaniards Eat Into Savings as Banking Crisis Hits Homes. Spaniards are burning through their savings at the fastest rate in more than ten years, in a sign that the effects of the banking crisis may yet worsen as more consumers’ resources are drained. Read more here-http://bit.ly/N7o2z7
-France Raises Taxes on Rich, Companies to Narrow Budget Gap. France’s two-week-old Socialist government unveiled 7.2 billion euros ($9 billion) of tax increases to meet deficit-reduction goals and avoid bond-market punishment. The 2012 measures, approved at a Cabinet meeting, presage even larger tax increases and spending cuts next year in an economy that’s barely expanding. Read more here-http://bloom.bg/NywYgP
-UK’s borders ‘will be closed’ to refugees from Greece and other failing countries if eurozone collapses. David Cameron will close Britain’s borders to EU citizens if the Euro collapses. The Prime Minister said he is prepared to ban refugees from Greece and other failing economies from flooding the UK. Mr. Cameron has been told that he can make use of extraordinary legal powers to close the doors to European migrants who immigration officers cannot usually prevent coming to Britain. Read more here-http://bit.ly/M7iLde
-Mammoth Lakes, California, Seeks Bankruptcy Protection. Mammoth Lakes, the High Sierra mountain resort, became the second California municipality in a week to seek court protection from creditors, filing bankruptcy to shield itself from a $43 million court judgment. Mammoth Lakes listed assets of more than $100 million and debt of more than $50 million in papers filed yesterday in Sacramento, California, under Chapter 9 of the U.S. Bankruptcy Code, which is reserved for public entities such as cities, counties and special taxing districts. Read more here-http://bloom.bg/LZlXv3
-Congress Said to Consider Delaying Automatic Budget Cuts. Republican and Democratic congressional leaders are weighing whether to delay automatic federal spending cuts until March 2013, according to a House aide and industry officials who were briefed on the discussions.
The $1.2 trillion in automatic spending cuts over a decade, half of which would affect the Defense Department, are scheduled to begin in January 2013. At the same time, lawmakers must decide what to do about income tax cuts and other tax breaks scheduled to expire at the end of the year.
Leaders in both chambers are discussing whether to propose a catch-all bill that would delay the automatic cuts, fund the government through March or later and temporarily extend the George W. Bush-era tax cuts and other tax laws, said the House aide and industry officials, who asked to speak on condition of anonymity. Read more here-http://bloom.bg/LUv22b
-8,733,461: Workers on Federal ‘Disability’ Exceed Population of New York City. A record of 8,733,461 workers took federal disability insurance payments in June 2012, according to the Social Security Administration. That was up from 8,707,185 in May.
It also exceeds the entire population of New York City, which according to the Census Bureau’s latest estimate hit 8,244,910 in July 2011. There has been a dramatic shrinkage in the United States over the past 20 years in the number of workers actually employed and earning paychecks per worker who is not employed and is taking federal disability insurance payments.
In June 1992, according to the Bureau of Labor Statistics, there were 118,419,000 people employed in the United States, and, according to the Social Security Administration, there were 3,334,333 workers taking federal disability payments. That equaled about 1 person taking disability payments for each 35.5 people actually working.
When President Barack Obama was inaugurated in January 2009, there were 142,187,000 people employed and 7,442,377 workers taking federal disability payments. That equaled about 1 person taking disability payments for each 19.1 people actually working. In May of this year, there were 142,287,000 people employed, and 8,707,185 workers taking federal disability payments. That equaled 1 worker taking disability payments for each 16.3 people working. Read more here-http://bit.ly/MUmkp3
-Housing markets cooling in Toronto, Vancouver, but prices still high. Read more here-http://bit.ly/Rnyzed
-Rents keep rising, while home prices inch higher. As if record low mortgage rates and beaten down home prices weren’t enough to get prospective home buyers off the fence, there’s another factor that has made the case for buying even stronger: rising rents. U.S. rents rose an average of 5.4% over the 12 months ended June 30, according to real estate website Trulia.
Demand from former homeowners displaced by foreclosure and potential homebuyers who failed to qualify for mortgages have helped to send rents skyward. “With rents rising faster than prices in most markets, buying is getting even more affordable relative to renting,” said Jed Kolko, Trulia’s chief economist. Read more here-http://cnnmon.ie/MXB05z
-Apartment Rents in U.S. Rise Most Since 2007 as Vacancy Falls. Apartment rents in the U.S. climbed the most in almost five years in the second quarter as shrinking vacancies allowed landlords to charge more, Reis Inc. said. Effective rents, or what tenants paid after landlord giveaways are included, rose to an average $1,041 a month from $1,028 in the first quarter and $1,006 a year earlier, the New York-based real estate research firm said in a report.
The 1.3 percent gain from the previous three months was the biggest since the third quarter of 2007, before the recession began. Demand for apartments has jumped as insufficient income or bad credit deter many Americans from purchasing homes, while others prefer the flexibility of leasing. The national apartment vacancy rate fell to 4.7 percent in the second quarter, the lowest since the end of 2001.
The rate was 4.9 percent in the first quarter and 5.9 percent a year earlier. “For most markets, once vacancies tighten below 5 percent, effective rents tend to spike,” Ryan Severino, senior economist at Reis, said in the report. “It appears that rents are beginning to accelerate.” Read more here-http://bloom.bg/N8I645
-Manhattan First-Time Apartment Buyers Grab Deals in Slow Market. Manhattan home sales were dominated by studios and one-bedroom apartments in the second quarter as rising rents and low mortgage rates pushed first-time buyers into an otherwise stagnant market. Read more here-http://bloom.bg/PeAOmX
-Risk of foreclosure looms over 700,000 Californians. Report finds nearly 100,000 Bay Area homeowners delinquent on mortgages. California’s housing crisis isn’t over, with 11 percent of borrowers in the state at risk of foreclosure, according to a new report released this week by the nonprofit Center for Responsible Lending, a Washington-based think tank.
The report found nearly 700,000 California homeowners were at least 30 days delinquent on their mortgage payments. That number includes nearly 100,000 Bay Area homeowners, about half who live in the East Bay. In Los Angeles County, more than 180,000 borrowers are delinquent. Read more here-http://bit.ly/M6rNHr
-Housing recovery hindered by negative equity. Scott Andresen would love to sell his Seattle house. He just can’t afford to. The 41-year-old policeman and his wife, Rebecca, an environmental consultant, bought the house six years ago. Because of falling prices, they now owe at least $25,000 more on it than it’s worth. The couple would like to move to a better neighborhood with better schools for their children, ages 7 and 4.
But they’d have to write a check to cover the difference. “We can’t get out, because it would be too expensive,” Andresen says. “It’s very frustrating.” Homeowners like the Andresens inhabit just about every housing market nationwide, and their reluctance to sell is having an unexpected impact on the U.S. housing market, which is showing signs of stabilizing after years of declining prices. Read more here-http://usat.ly/O6keiH
-Texas Homeowner Wins $300,000 In 5-Year Court Battle Against Bank Of America. After nearly five years and three separate court battles, a Southeast Texas woman has been awarded $300,000 in a foreclosure lawsuit against Bank of America. Read more here-http://read.bi/MJurWo
-Asia’s Home Prices Rebound as Low Interest Rates Boost Sales. Home prices in China, Singapore and Australia rebounded as demand for property assets rose, boosted by low interest rates as investors sought real estate investments in the Asia-Pacific region. China’s new home prices in June increased for the first time in 10 months, while those in Australia’s eight major cities recorded their largest monthly increase in more than two years as lower mortgage rates encouraged buyers. Singapore prices rebounded to a record in the second quarter. Read more here-http://bloom.bg/M6zDPL
-Wen Eases Off as China’s Cities Seek to Revive Home Sales. Liu Xuejun, a building-equipment dealer, couldn’t restock his Shanghai showroom fast enough in 2009 as he sold an excavator every three days. Now he might wait six months between sales. Read more here-http://bloom.bg/MUwB4K
-Iran: ‘Long-Range’ Missiles Attack ‘Mock Enemy Bases.’ The Iranian military has launched a barrage of missiles at “mock enemy bases” as part of a major war games exercise aimed at dissuading any potential outsider attack, the nation’s state-run media reported. Read more here-http://abcn.ws/N9zuhi
-Iran says can destroy U.S. bases “minutes after attack.” Iran has threatened to destroy U.S. military bases across the Middle East and target Israel within minutes of being attacked, Iranian media reported on Wednesday, as Revolutionary Guards extended test-firing of ballistic missiles into a third day. Read more here-http://reut.rs/PfO5LX
-Iran drafts bill to block Hormuz for Gulf oil tankers. Iran’s National Security and Foreign Policy Committee has drafted a bill calling for Iran to try to stop oil tankers from shipping crude through the Strait of Hormuz to countries that support sanctions against it, a committee member said on Monday. Read more here-http://reut.rs/Lyt3SM
-U.S. Adds Forces in Persian Gulf, a Signal to Iran. The United States has quietly moved significant military reinforcements into the Persian Gulf to deter the Iranian military from any possible attempt to shut the Strait of Hormuz and to increase the number of fighter jets capable of striking deep into Iran if the standoff over its nuclear program escalates. Read more here-http://nyti.ms/N93ObN
-Already Plagued by Inflation, Iran Is Bracing for Worse. Bedeviled by government mismanagement of the economy and international sanctions over its nuclear program, Iran is in the grip of spiraling inflation. Just ask Ali, a fruit vendor in the capital whose business has been slow for months. Read more here-http://nyti.ms/NAdvMQ
-U.S. grants Iran sanctions exceptions to China. The United States gave China a six-month reprieve from Iran financial sanctions, avoiding a diplomatic spat with a country whose support it needs to try to quell violence in Syria and rein in Tehran’s nuclear ambitions. Read more here-http://reut.rs/LZiIE4
-India Said to Pay in Euros for Iran Oil Due to Rupee Hurdles. India is using euros to clear most of its purchases of Iranian oil through a Turkish bank because of hurdles in making rupee payments, according to three people with knowledge of the transactions. Read more here-http://bloom.bg/O9MRvy
-Japan to import no Iranian oil in July: sources. Japan will not import any Iranian crude in July as buyers held back to avoid any risk of running afoul of EU sanctions targeting insurance, which have severely disrupted the OPEC member’s supplies, industry and government sources said on Wednesday. Read more here-http://reut.rs/N7NPY0
© 2013, Worldwide Precious Metals Canada Ltd.
The World Financial Report – July 10th, 2012
Posted by Worldwide Precious Metals on Tuesday, July 10, 2012
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