U.S. banks will no longer be able to make big trading bets with their own money after regulators on Tuesday finalized the Volcker rule and shut down what was a hugely profitable business for Wall Street before the credit crisis.
After struggling for more than two years to craft the complex rule, five regulatory agencies signed off on the nearly 900-page reform that included new tough sections narrowing carve-outs for legitimate trades.
In the final wording, banks could still engage in market-making and take on positions to help clients trade but their inventories should not exceed "the reasonably expected near-term demands of customers," the regulators said.
Regulators also extended the deadline by which banks have to fully comply with the new regulations by one year to July 2015, a widely expected move after they repeatedly missed deadlines for the rule. Further delays were also possible, the regulators said in the text of the rule.
So, what have we got in the end, dear reader? Beats me, but from what I've read in the above four paragraphs I've cut and paste from this Reuters story, I could drive a Greyhound bus through it. For the moment, it appears that it's "business as usual" for JPMorgan, HSBC USA and Citigroup. I thank Manitoba reader Ulrike Marx for today's first story.
Five federal agencies on Tuesday issued final rules developed jointly to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”).
The final rules prohibit insured depository institutions and companies affiliated with insured depository institutions (“banking entities”) from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account. The final rules also impose limits on banking entities’ investments in, and other relationships with, hedge funds or private equity funds.
Like the Dodd-Frank Act, the final rules provide exemptions for certain activities, including market making, underwriting, hedging, trading in government obligations, insurance company activities, and organizing and offering hedge funds or private equity funds. The final rules also clarify that certain activities are not prohibited, including acting as agent, broker, or custodian.
This is part of the short press release that as posted on the cftc.gov Internet site yesterday...and I thank Ted Butler for sending it along.
A certain amount of fatalism always seems to creep in whenever the government promises a new fix for something perceived to be ailing the financial system and capital markets. Back in 2002, when Congress passed the Sarbanes-Oxley Act, the big problem was the auditing profession, which had been exposed as an oxymoron by Enron Corp. and other corporate frauds. Today the hot topic is the banking industry and the matter of proprietary trading, the definition of which is evolving.
After Sarbanes-Oxley was adopted, the Securities and Exchange Commission and a new regulator, the Public Company Accounting Oversight Board, passed a bunch of rules on everything from new audit reports on companies' internal accounting controls to new restrictions on the types of non-audit services that firms could sell to audit clients. It would be hard to make the case today that audit quality has improved.
Now comes the Volcker rule from the SEC and four other federal regulatory agencies, acting in response to instructions by Congress in the Dodd-Frank Act. (That would be the 2010 law that promised to end too-big-to-fail and didn't.) The Volcker rule promises to end proprietary trading by federally insured banks, except in those instances when it doesn't. And there's some merit to having a ban: Lots of people dislike the idea of banks gambling with federally insured customer deposits, because they might blow themselves up and either cause damage to others or require a taxpayer bailout.
This short op-ed piece by Jonathan was posted on the Bloomberg website early yesterday morning EST...and it's worth reading. I thank Ulrike Marx for her second offering in today's column.
J.P. Morgan Chase & Co. has applied for a patent for a digital-payment network that would allow for anonymous payments like the virtual currency bitcoin, according to a patent application dated Nov. 28. The application was first highlighted by Let's Talk Bitcoin.
"Embodiments of the invention include a method and system for conducting financial transactions over a payment network," the application said. "The method further includes freely publishing the payment address and making it available to users of an internet portal or search engine." A J.P. Morgan media contact didn't immediately respond to an emailed request for comment.
These two paragraphs are all there is to this marketwatch.com story from early yesterday afternoon EST...and it's courtesy of reader "Andres A".
The current malaise of news, data, and spin is "meaningless," David Stockman tells Bloomberg's Tom Keene, adding that markets are exhibiting "the kind of speculative froth you get at the top of a cycle where valuation loses any anchor in the real world; from earnings or the prospects of the economy."
As he argued before, "owning stocks here is very dangerous," and despite Keene's best efforts to denigrate Stockman's "of course it's a bubble," perspective; the former inside-man exposes the hard mathematical truths of valuations, performance, and reality in this brief clip. Who is to blame - The Fed or Wall Street? "It is a question of who has taken whom hostage," Stockman concludes ominously, "it's a co-dependency...it's very dangerous."
This short Zero Hedge story from early Monday evening has the 1:43 minute Bloomberg clip embedded in it...and I thank reader "G. Roberts" for bringing it to our attention.
When the BIS’s Claudio Borrio warns about the return of “search for yield”, everyone should sit up and take notice.
The BIS’s latest quarterly review points out that yield compression is back with a vengeance, and in some respects is actually now worse than it was in the lead-up to the crisis. With interest rates at rock bottom, lenders are again throwing caution to the wind, and investing indiscriminately. There was a brief return to saner conditions last summer when the Fed suggested it might end quantitative easing, but the consequent widening of spreads was viewed as so alarming by policymakers that the threat was soon withdrawn, and now we are back to where we were.
Unconventional monetary policy is meant to work on the “hair of the dog that bit you” principle. By fighting a crisis caused by too much money with yet more money, the central bank hopes to restore the economy to a “normally” functioning machine, at which point saner voices are meant to take over and a more sustainable form of growth establishes itself.
Unfortunately, the near free money environment has gone on for much longer than anyone anticipated. What’s more, we seem quite incapable of easing ourselves off the life support.
This commentary by Jeremy Warner, who is sounding an awful lot like Doug Noland, was posted on the telegraph.co.uk Internet site early Monday evening GMT...and it's the first offering of the day from Roy Stephens. It's definitely worth reading.
The International Monetary Fund has poured cold water over claims that the eurozone is safely recovering, calling on the European Central Bank to take pre-emptive action to alleviate the credit crunch for small business and head off the risk of deflation.
Christine Lagarde, the IMF's managing director, said it is "premature to declare victory", warning that EU governments may have to ditch austerity policies and switch to fiscal stimulus to kick-start growth and avert lasting damage to the underlying economy.
"Looking past the headlines, there are clearly signs that not all is well," she told a forum in Brussels, highlighting the risk of a "vicious cycle" in which depressed demand and stagnant investment feed on each other.
The warning came as fresh data showed Greece's recovery may be stalling again, with mounting risks of a relapse into recession over the winter. The Greek statistics office said industrial output had fallen 5.2pc in October, a sharp deterioration from minus 1.3pc in September.
Here's a commentary from Ambrose Evans-Pritchard that was posted on The Telegraph's website yesterday afternoon GMT. It's another contribution from Roy Stephens, for which I thank him, and it's definitely worth reading as well.
Authorities around the world are taking action against large banks for questionable practices including collusion and rate manipulation, but the power of these financial institutions continues to grow. Germany's Deutsche Bank in particular finds itself under fire.
Government agencies around the globe are taking an aggressive approach toward the financial industry. In London regulators are investigating banks that allegedly manipulated the price of gold. In Brussels the European Commission has slapped financial institutions with billions in penalties for rigging key interest rates.
A handful of financial companies dominate the trading of currencies, natural resources and interest-rate products. Although millions of investors and companies participate in these deals, buy and sell, hedge their bets and speculate, these transactions are handled by an exclusive club of global institutions like Deutsche Bank, J.P. Morgan or Goldman Sachs. These are also the financial giants that determine the reference rates that serve as a benchmark for deals worth trillions.
The main profiteers of these deals write important rules of the game themselves -- and the events of recent weeks have shown that they often abuse their power in the process.
This 2-page must read essay was posted on the German website spiegel.de during the lunch hour in Europe yesterday...and it's another offering from Roy Stephens.
Anti-government protesters in Ukraine calling for the government to step down are working from a playbook, following to the letter a manual for regime change through popular revolutions, said RT political analyst and columnist, Nebojsa Malic.
RT: Is there any chance of a compromise between the government and the opposition at this point?
Nebojsa Malic: The opposition has said that it doesn’t want any compromise, that it is not interested in anything short of a regime change. But the thing we have to keep in mind is that this is being played straight out of a playbook. This is following a script and the opposition’s activities are generally geared to create as much unrest and show as possible. But there is very little substance behind both their demands and their posturing.
We have evidence today that repeated reports of an incoming crackdown failed to materialize, not because there was supposed to be any sort of crackdown, but because that’s how they keep the people wound up.
This news item was posted on the Russia Today website early yesterday afternoon Moscow time...and once again I thank Roy Stephens for sending it our way. It's required reading for all students of the New Great Game.
Russia will create forces in the Arctic in 2014 to ensure military security and protect the country’s national interests in the region, which President Vladimir Putin has named among the government’s top priorities.
Russia is returning to the Arctic and “intensifying the development of this promising region” so it needs to “have all the levers for the protection of its security and national interests,” Putin said on Tuesday at an expanded meeting of the Defense Ministry Board.
He ordered the ministry to complete the formation of new military units and infrastructure in the Arctic next year.
This is another Roy Stephens contribution from the Russia Today website. This story was posted on their Internet site yesterday afternoon Moscow time.
It's been a source of endless fascination to follow the game of geopolitical Go being played since China declared an air defense identification zone (ADIZ) in the East China Sea.
The spin in the United States is relentless; this was no less than "saber-rattling", a "bellicose" posture and a unilateral "provocation". The meeting last week between Chinese President Xi Jinping and US Vice-President Joe Biden in Beijing may have done nothing to dispel it.
This is what the White House says Xi and Biden talked about; Beijing did not release a transcript. In the hysteria front, this op-ed in the Financial Times - reflecting a warped consensus in the City of London - even managed to crank it up to pre-World War II levels.
The whole drama is far from being just about a few islets and rocks that China calls Diaoyu and Japan Senkaku, or the crucial access to the precious waters that surround them, harboring untold riches in oil and natural gas; it concerns no less than the future of China as a sea power rivaling the US.
This essay by Pepe that was posted on the Asia Times website yesterday. It's certainly worth reading for all students of the New Great Game...and I thank Roy Stephens for finding it for us. It's his last contribution to today's column.
1. James Turk: "Metals War Rages and Today's Rally in Gold and Silver". 2. Dr. Marc Faber: "The Asset Class Hated Even More Than Gold and Silver". 3. William Kaye: "Absolutely Stunning Developments in the War on Gold". 4. The audio interview is with Dr. Marc Faber.
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
Gold and silver are extending yesterday's gains as US markets awake this morning. The crack higher at around 8:07ET caused the futures market to be halted after 3,000 Gold Futures contracts traded in one second at 08:07:45 on December 10, 2013 sending the price up $10 and tripping circuit breakers for 10 seconds.
This sort of thing is happening far too often: see also the drops on April 12, 2013, September 12, 2013, October 11, 2013, November 20, 2013 and November 25, 2013 which also resulted in trading halts.
That's about all there is to this Zero Hedge piece from early yesterday morning...but the charts and graphs are worth looking at. I thank Ulrike Marx for sharing it with us.
Gold production by U.S. mines dropped 5% in September, compared to 20,400 kg (655,875 troy ounces) of output reported in August 2013.
U.S. gold mine production was down slightly in September with 19,300 kilograms (620,509 troy ounces) of production compared to 19,600 kg (630,154 oz) for September of 2012, says the U.S. Geological Survey.
The state of Nevada led U.S. gold output in September with 14,500 kg (466,185 oz) of production, followed by Alaska at 2,680 kg (86,164 oz) and other states at 2,170 kg (69,797 oz).
This short news item was posted on the mineweb.com Internet site earlier this morning...and I found it there just before I hit the send button on today's column.
In my column last Friday, I posted a very excellent article by Alex Stanczyk with the above headline...and it's linked here.
Since then, the audio interview from which the above story was transcribed, is now available. It was posted on the physicalgoldfund.com Internet site yesterday...and it runs for just under 19 minutes.
I thank reader Harold Jacobsen for bringing it to our attention.
Pitting monetary philosopher Jean-Baptiste Say against the economist John Maynard Keynes, GoldMoney research director Alasdair Macleod predicts that Say will be vindicated, insofar as economics and economies will continue, if inconveniently, when those in charge of money manage to destroy it.
This short essay by Alasdair was posted on the goldmoney.com Internet site on Monday...and is worth reading. I found it embedded in a GATA release yesterday.
The Finance Ministry in a written reply addressed to the lower house of the Indian Parliament has clarified that the government has never banned gold coin sales by banks in the country.
Towards end-November, the All India Gems and Jewellery Trade Federation allowed its members to sell gold coins of smaller denominations. The relaxation of the self-imposed ban saw coins of 2 gram, 3 gram and 5 gram flocking at jewellery outlets.
In was in the midst of renewed coin sales by jewellers that the Deputy Minister of Finance Namo Narain Meena clarified the government’s standpoint on the matter. According to him, the government has not officially put any ban on gold coin sales by jewellers or banks.
This story, filed from Mumbai, was posted on the scrapmonster.com Internet site early yesterday morning IST. A bit is lost in the translation, but it's worth skimming nonetheless. My thanks go out to Ulrike Marx for bringing this article to our attention.
Despite pleas from government to lower gold purchases in a bid to bring down the current account deficit, India's politicians appear to have been soaking up significant quantities of the precious metal.
Though gold appears to have lost its glimmer across global markets, the frenzy at which Indian politicians have been buying gold over the past few years has been laid bare with elections around the corner in India.
As is the practice, candidates standing for election as well as those belonging to political parties have to submit affidavits declaring all their assets - and gold has tumbled out of many closets.
This interesting read, filed from Mumbai as well, was posted on the mineweb.com Internet site yesterday...and I thank Ulrike Marx for her final contribution to today's column.
L: That's interesting. But I'm not sure gold bugs would find this to be bad news. The thing they're afraid to hear is that the market has peaked already—that the $1,900 nominal price peak in 2011 was the top, and that it's downhill for the next two decades. To hear you say that there is a basis in more than one type of analysis for arguing that we're still in the middle of the bull cycle—and that it should go upwards over the next 10 years—that's actually quite welcome.
Petrov: Yes, it's great news. But we're still not going to get to the Mania Phase for at least another two, but more likely four to six years from now.
Now, we should clarify what we mean by the Mania Phase. Last time, it was the 1979 to early 1980 period. It's the last phase of the cycle when the price goes parabolic. Past cycles show that the Mania Phase is typically 10% or 15% of the total cycle. So it's important to pick the proper dates for defining a gold bull market. I prefer to date the previous one from 1966 as the beginning of the market, to January of 1980 as the top of the cycle. That means that the previous bull market lasted 14 years, and it's fair to say that the Mania Phase lasted about 18 months, or just under 15% of the cycle.
So I expect the Mania Phase for the current bull cycle to last about two to three years, and it's many years yet until we reach it.
This longish interview features Professor Krassimir Petrov...and Casey Research's Louis James...and was posted on the CR website very early yesterday morning EST. Needless to say, I agree with very little that the good professor has to say, as the precious metal prices are 100 percent controlled by JPMorgan et al in the Comex futures market...and it's entirely up to them as to how high and how fast precious metal prices are allowed to rise; and when it will all begin. I'll let you be judge and jury on this one.
As a student of market history, I’ve seen that maxim made true time and again. The cycle swings fear back to greed. The overcautious become the overzealous. And at the top, the story is always the same: Too much credit, too much speculation, the suspension of disbelief, and the spread of the idea that this time is different.
It doesn’t matter whether it was the expansion of railroads heading into the crash of 1893 or the excitement over the consolidation of the steel industry in 1901 or the mixing of speculation and banking heading into 1907. Or whether it involves an epic expansion of mortgage credit, IPO activity, or central-bank stimulus. What can’t continue forever ultimately won’t.
The weaknesses of the human heart and mind means the swings will always exist. Our rudimentary understanding of the forces of economics, which in turn, reflect ultimately reflect the fallacies of people making investing, purchasing, and saving decisions, means policymakers will never defeat the vagaries of the business cycle.
This 2-page commentary was posted on the martketwatch.com Internet site just before lunch EST last Friday...and reader Eric Gould slid it into my in-box on Saturday morning.
When U.S. regulators adopt the Volcker rule on Tuesday...[That's today. - Ed]...they will make good on a promise by politicians to rein in banks' ability to gamble with their own money.
The coordinated action by five separate regulatory agencies is seen sparking a court challenge as Wall Street tries once again to avoid one of the harshest elements of the post-financial crisis crackdown.
The rule, championed by former Fed Chairman Paul Volcker, was a last-minute addition to the 2010 Dodd-Frank Wall Street reform law and takes aim at a business that had been a big money spinner for banks before the crisis.
The measure bans banks from making bets for their own profits, an activity known as proprietary trading that regulators deemed too risky for banks that enjoy government backstops.
One wonders if that will include the precious metals, dear reader? Despite Deutsche Bank giving up commodity trading last week, it still has its precious metal trading desk, so one has to wonder. We won't have long to wait to find out. This story was posted on The New York Times website early Sunday morning EST...and it's courtesy of Phil Barlett. It's definitely worth reading.
The most curious thing of all about the November jobs report released on Friday was the huge drop in the unemployment rate — and the fact that the Labor Department chose not to disclose that the data going into that figure are under investigation for falsification.
On Nov. 19, I broke the news in my column that the Census Bureau, which collects data that goes into the jobless rate on behalf of Labor, had caught one of its enumerators fabricating interviews in 2010.
The culprit said back then (and to me during an interview) that he was told to do so by Census supervisors who were in the position to instruct others to make similar fabrications.
In fact, a source who I haven’t named but who is familiar with the Census data accumulation process has told me that falsifications have been occurring on a regular basis.
Why should anyone be surprised? This short commentary by John was posted on the New York Post website very early on Saturday morning...and it's courtesy of reader Mark Hagen.
Federal authorities have obtained confidential documents that shed new light on JPMorgan Chase's decision to hire the children of China's ruling elite, securing emails that show how the bank linked one prominent hire to "existing and potential business opportunities" from a Chinese government-run company.
The documents, which also include spreadsheets that list the bank's "track record" for converting hires into business deals, offer the most detailed account yet of JPMorgan's "Sons and Daughters" hiring program, which has been at the center of a federal bribery investigation for months. The spreadsheets and emails -- recently submitted by JPMorgan to authorities -- illuminate how the bank created the program to prevent questionable hiring practices but ultimately viewed it as a gateway to doing business with state-owned companies in China, which commonly issue stock with the help of Wall Street banks.
No surprises here, either. This news item appeared on The New York Times website early Saturday afternoon EST...and I found the story [and the headline] in a GATA release.
The world's leading technology companies have united to demand sweeping changes to U.S. surveillance laws, urging an international ban on bulk collection of data to help preserve the public's “trust in the internet”.
In their most concerted response yet to disclosures by the National Security Agency whistleblower Edward Snowden, Apple, Google, Microsoft, Facebook, Yahoo, LinkedIn, Twitter and AOL have published an open letter to Barack Obama and Congress on Monday, throwing their weight behind radical reforms already proposed by Washington politicians.
“The balance in many countries has tipped too far in favour of the state and away from the rights of the individual – rights that are enshrined in our constitution,” urges the letter signed by the eight US-based internet giants. “This undermines the freedoms we all cherish. It’s time for change.”
This longish, but must read article, was posted on theguardian.com Internet site yesterday afternoon GMT.
The head of German telecommunications giant Deutsche Telekom has called for Europe to do more to protect privacy and combat international spying. Rene Obermann's words come as eight of the world's largest technology companies appealed to President Barack Obama and the US Congress to enact sweeping changes to spying laws and put a stop to mass collection of data.
Obermann, who became chairman of the Deutsche Telekom board in 2006, told German business daily Handelsblatt that politicians in the European Union are not doing enough in response to the spying scandal uncovered by NSA whistleblower Edward Snowden earlier this year. The documents from his archive include allegations that the NSA and the British intelligence agency GCHQ hacked into internal connections between data centers belonging to Google and Yahoo, while millions of pieces of data were gathered. It was also revealed that the NSA was keeping track of mobile phones across the world -- and had even eavesdropped on German Chancellor Angela Merkel.
Obermann pulled no punches in criticizing the data gathering carried out by intelligence agencies in the US and beyond, and said: "I was angered most of all because confidence in two pillars of our society, free communication and privacy, has been shaken to such an extent. I think what is happening is in the long term even dangerous to democracy."
This article was posted on the German website spiegel.de yesterday afternoon Europe time...and I thank Roy Stephens for bringing it to our attention.
As bonds and stocks soar, and Europe's leaders continue to proclaim victory, despite Draghi's downbeat jawboning as EUR surges to growth-crushing levels, it is well known that the employment situation remains abysmal in the real economy.
However, what is worse that the red-flashing-headlines of record youth (and total) unemployment is, as Bloomberg's Niraj Shah notes, 125 million people in the E.U. were at risk of poverty or social exclusion. According to Eurostat, that is 24.8% of the population. Almost half of Bulgarians faced economic hardship and Greece had the highest poverty rate in the euro area at 34.6% (though if Stournaras was to be believed this weekend, their problems are solved).
That's all there is to this short Zero Hedge piece from yesterday morning...but the chart is a must to view. I thank Manitoba reader Ulrike Marx for sending it our way.
They are not sleeping in tents in Independence Square, but Ukraine’s ultra-wealthy businessmen, known as the oligarchs, perhaps pose as grave a threat to President Viktor F. Yanukovich as the demonstrators on the streets of this capital city.
“Do you think there is a big difference between people on the street and people with big business?” said the most visible, and the most pro-Western, of the oligarchs, Petro Poroshenko, a shipping, confectionery and agriculture magnate whose television station has been broadcasting round the clock from Independence Square.
“There is no difference in their love of their own country,” he said in an interview in the lobby of the Ukraine Hotel, overlooking the square, where the protesters appeared as miniature silent figures, waving flags and milling about bonfires. “At the end of the day, we are all talking about the modernization of the economy and the country.”
This 2-page article was posted on The New York Times website on Friday sometime...and it's definitely worth reading, especially if you're a student of the New Great Game. It's the second offering of the day from Roy Stephens.
Public protests thundered into a full-throttle civil uprising in Ukraine on Sunday, as hundreds of thousands of protesters answered President Viktor F. Yanukovich’s dismissiveness with their biggest rally so far, demanding that he and his government resign.
At the height of the unrest on Sunday night, a seething crowd toppled and smashed a statue of Lenin, the most prominent monument to the Communist leader in Kiev. The act was heavy with symbolism, underscoring the protesters’ rage at Russia over its role in the events that first prompted the protests: Mr. Yanukovich’s abrupt refusal to sign sweeping political and free-trade agreements with the European Union.
After an electrifying assembly in Independence Square in the center of Kiev, the main focus of the protests, the huge crowd surged across the capital, erecting barriers to block the streets around the presidential headquarters and pitching huge tents in strategic intersections. They were not challenged by the police, who have largely disengaged since their bloody crackdown on a group of protesters on Nov. 30 sharply increased outrage at the government.
This is another story from The New York Times. This one showed up on their Internet site on Sunday sometime...and it's another contribution from Roy Stephens. It's also a must read for all students of the New Great Game.
The French planned operation in the Central African Republic is a part of the ongoing inner-imperialist rivalry between France and the United States for control of post-colonial Africa, Abayomi Azikiwe, editor of Pan-African News Wire, told RT.
President Hollande has said that France will take immediate military action as sectarian violence escalates in the Central African Republic.
Earlier the U.N. Security Council voted to allow French troops to join an African peacekeeping force.
Fresh clashes between local militias in the capital Bangui have killed about 100 people and wounded scores more.
This story was posted on the Russia Today website during the Moscow lunch hour last Friday...and my thanks go out to South African reader B.V.
The U.S. will airlift African Union forces to the Central African Republic as part of an effort to aid French troops who are in the country to put down rising violence, defense officials said.
Defense Secretary Chuck Hagel authorized the deployment of the U.S. transport planes and pilots Sunday night, responding to a request for assistance from France. The planes will be used to carry troops from Burundi to the Central African Republic, where France has deployed 1,600 troops to try to quell rising violence.
Fighting has increased in the Central African Republic since March when a rebel group seized power. The rebel leader, Michel Djotodia, named himself president.
Turmoil has escalated in recent days, claiming 400 lives and prompting the French intervention. On Monday, French soldiers began disarming fighters in the Central African Republic.
This Zero Hedge piece was posted on their Internet site early yesterday afternoon EST...and I thank reader 'David in California' for sharing it with us.
The bulldozers started up with a rumble this year in this bucolic corner of southern Japan, unleashing a construction frenzy — and a sinking feeling of déjà vu.
The traffic cones and “under construction” signs alongside Saga’s roads and waterways are about the only visible change brought about by “Abenomics,” Prime Minister Shinzo Abe’s much-lauded plan to put Japan back on the path to growth. Residents here say the building boom is a throwback to Japan’s troubled 1990s, when far-flung regions across the country tried to build their way back to prosperity.
And they worry that, like previous attempts, growth will not last.
“How long before all this winds down again? That’s what everyone’s worried about,” said Masataka Matsuo, a construction worker reinforcing an irrigation ditch several miles away from the city center.
This very interesting 2-page New York Times essay was something Phil Barlett sent my way early Sunday evening...and it's worth your while if you have the time.
South Korea on Sunday declared an expanded air defence zone that overlaps with one recently announced by China that has sharply increased regional tensions.
Seoul's defence ministry said its new zone, which will take effect on December 15, would cover Ieodo -- a submerged rock reef in waters off its south coast which China calls Suyan.
These two paragraphs are all there is to this AFP story posted on the france24.com Internet site on Sunday evening Europe time...and it's another offering from South African reader B.V.
The US is ramping up pressure to secure a Trans-Pacific Trade Deal with conditions that could undermine the national interests of nations involved. WikiLeaks documents say talks are “paralyzed,” with the U.S. refusing to compromise on disputed issues.
Anti-secrecy group WikiLeaks has released two documents revealing the state of negotiations for the Trans-Pacific Partnership (TPP). The deal in question includes 12 countries – the United States, Japan, Mexico, Canada, Australia, Malaysia, Chile, Singapore, Peru, Vietnam, New Zealand and Brunei – which represent more than 40 percent of the world’s gross domestic product.
The 12 nations are in Singapore this week to discuss the trade agreement. Following a closed-door meeting in Singapore, Japan's trade minister Yasutoshi Nishimura told press he would like “the United States to show flexibility.”
"I've already mentioned the parts we can't budge on, so the issue is what both sides can do based on that,” Nishimura said.
"With conditions that could undermine the national interests of nations involved"...The American Empire never sleeps. This must read article was posted on the Russia Today website yesterday morning Moscow time, which was just after midnight in New York.
1. Dr. Marc Faber [#1]: "His Stunning 2014 Predictions". 2. John Embry: "This Will Bring Down the Entire Financial System". 3. Dr. Marc Faber [#2]: "The Super-Rich and Shocking Surprises For 2014". 4. Richard Russell: "U.S. May Destroy the World Monetary System". 5. Bill Fleckenstein: "How the U.S. Can Solve its Massive Problems". 6. Robert Fitzwilson: "Gold, Silver and the Desperation of Western Governments". 7. Eric Sprott: "The End Game is Absolutely Horrifying". 8. Michael Pento: "This is Going to Shock Investors Around the Globe". 9. The first audio interview is with Eric Sprott...and the second audio interview is with Bill Fleckenstein.
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
Norman Rockwell’s Saying Grace became the most expensive American painting ever sold at auction last week, fetching $46m (£28m) at Sotheby’s in New York.
The following day at Christie’s, an anonymous buyer set a record for a painting by Rockwell’s contemporary, Edward Hopper, whose Depression-era work, East Wind Over Weehawken, sold for $40.5m.
And yet, as recent sales go, both seem like small fry. Over 48 hours in November, Manhattan’s two leading auction houses saw more than $1.1bn spent on 20th-century art, setting new records for the most-expensive work ever sold at auction, the most expensive work by a living artist ever sold at auction and – with $691m splurged in a single evening at Christie’s – the highest ever total for a single auction.
You know everything is going off the rails when you read stuff like this. This news item was posted on the independent.co.uk Internet site on Sunday...and I thank reader M.A. for finding it for us.
Gold analysts are bearish for a third week, the longest stretch since February 2010, as prices approach $1,200 an ounce and a stronger U.S. economy improves the chance that the Federal Reserve will reduce fiscal stimulus.
Sixteen analysts surveyed by Bloomberg News expect gold to fall next week, 11 are bullish and two neutral. Prices tumbled 26 percent this year, heading for the first annual drop in 13 years and the biggest in more than three decades. Bullion last traded below $1,200 on June 28.
U.S. growth seems to be gathering momentum,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. “Gold has been suffering again lately as taper talk and a friendly risk environment have provided better investment opportunities elsewhere.”
This b.s. Bloomberg article about gold and its prospects was posted on their website Friday afternoon Denver time...and reader Ken Hurt sent it our way.
Revenu-Québec is seeking prison sentences and fines totalling $750-million for Kitco Metals Inc. founder Bart Kitner and directors with several other gold trading firms following one of the biggest tax fraud investigations in provincial history.
Quebec’s revenue department on Monday said it filed a total of 1,920 charges against Kitco and 11 other companies as well as their directors and an accountant implicated in an alleged fraud scheme linked to gold processing. Some 120 charges were filed against Kitco and another 120 against Mr. Kitner involving total fines of $454.6-million.
“This is an investigation that’s lasted several years and the evidence is significant,” said Revenu-Québec spokesman Stéphane Dion. “Without a doubt, it’s one of the largest investigations we’ve ever done.”
This very interesting Financial Post story, filed from Montreal, found a home on theprovince.com Internet site yesterday...and silver analyst Ted Butler was the first reader through the door with it.
An Indian wedding without gold is an unheard of thing. With the nation moving into wedding season mode, gold importers are making hay across the country, asking for extremely strong premiums from jewellers, who have been rushing to get hold of the precious metal.
"Imports are down to a trickle. There is absolutely no gold available anywhere in the country. Most jewellers have been making do with recycled gold, but given the wedding season that is upon us, many of us are finding it difficult to keep pace with the soaring demand for gold,'' said Manish Kedia, bullion retailer.
While some retailers said they paid up premiums as high as $120 an ounce last week, on December 6, premiums crossed $180 an ounce higher than London prices.
This news item, filed from Mumbai, was posted on the mineweb.com Internet site yesterday...and I thank reader M.A. for bringing it to our attention.
Economist and market analyst Alasdair Macleod today outlines what he sees as China's strategy toward the West, the Middle East, and Asia, a strategy in which gold plays what could become the decisive role.
Macleod writes: "Physical gold is being cornered, leaving Western capital markets operating as little more than casinos backed only by hot air. The dollar will one day be a bit-player in international trade, meaning that enormous quantities are becoming redundant and will have to be sold for something else. After the inevitable upward explosion in the dollar price of gold, we shall be left wondering at what price we will need to offer our goods and services to get some of it back from Asia."
It's posted at his Internet site financeandeconomics.org and it's something I found in a GATA release yesterday. It's an absolute must read...especially for all serious students of the New Great Game.
And after the way equities responded to the Fed’s retreat from September tapering, I expect Fed officials will be more hesitant to pamper the markets next time around.
How will the global leveraged speculators game this? Play for further “how crazy do things get” speculative excess at the “core”? Push the melt-up dynamic in U.S equities for all it’s worth – squeezing the shorts and hedgers at each and every opportunity? Or does the unfolding “risk off” dynamic continue to expand, as was the case for much of this week? Are we in the early stages of a problematic de-leveraging throughout global fixed income, a predicament exacerbated by the ongoing Bubbles in “core” equities and corporate debt?
As the marginal source of buying and selling pressure in many global markets, the now $2.5 Trillion hedge fund industry will undoubtedly set the tone. If the hedge funds get through year-end, they will then have January to contend with. They surely would like to avoid having to de-risk into a June-like backdrop of heavy mutual fund and ETF outflows. The current backdrop would seem to imply the return of unstable markets for some weeks to come.
Doug's weekly missive over at the prudentbear.com Internet site is a must read for me every week. Here is his latest commentary from yesterday evening.
The nemesis of Wall Street’s high-frequency traders operates out of an apartment-sized office above the Bliss Salon -- manicure/pedicure $45 -- on Elm Street in the Chicago suburb of Winnetka.
Staring at four computer monitors, Eric Scott Hunsader, the founder of market-data provider Nanex LLC, looks for hints of illicit trading hidden in psychedelic images of triangles dancing with dots that represent quotes to buy and sell U.S. stocks broken down by the millisecond.
Charts of trading produced by Hunsader’s eight-person firm have captivated everyone from regulators to art gallery owners. One stunt involved a computerized piano piece mimicking quotes for an exchange-traded fund. He infuriates some traders, who say Nanex draws unwarranted conclusions and spreads conspiracy theories.
To Hunsader, the images created from market feeds are evidence of high-frequency trading firms exploiting market rules to turn a profit in a lawless environment. Though others in the industry see his reports and charts as propaganda, Nanex’s interpretations are helping to drive the public debate about the fundamental fairness of the modern stock market.
This longish but interesting Bloomberg essay was sent to me last Saturday by reader U.D...and it's the sort of piece that had to wait for a spot in a Saturday column. It was posted on their Internet site twelve days ago.
Billions of dollars annually are being used to fund operations conducted by the United States intelligence community, the likes of which allow the government to eavesdrop on emails, listen to world leaders’ phone calls and about everything in-between.
One thing that budget hasn’t bought, however, is subtlety. The US National Reconnaissance Office launched a top-secret surveillance satellite into space Thursday evening, and the official emblem for the spy agency’s latest mission is, well, certainly accurate, to say the least.
The latest spy satellite to be sent into orbit by the NRO can be recognized by its seal: a malevolent octopus with furrowed brows that also happens to be wrapping its tentacles around all corners of the Earth.
This Russian Today story, filed from Moscow early Friday evening, was sent to me by South African reader B.V...and even if you don't read it, you should at least look at the picture so you can see the mindset of the psychopaths running the NRO.
Italian communications have been targeted through the US’s Special Collection Service sites in Rome and Milan, according to Italy’s l’Espresso. The same service allegedly tapped into German Chancellor Angela Merkel’s cellphone.
The new leak, revealed by Glenn Greenwald with l’Espresso, alleges that the National Security Agency subjected Italy’s leadership to surveillance, although not specifying which people within the country’s “leadership” were monitored, via US diplomatic missions in Rome and Milan. The spying went on from 1988 to at least 2010.
The NSA conducted snooping in Italy via its Special Collection Service, which came under scrutiny after the snooping scandal involving Chancellor Angela Merkel. The report on Friday reveals the service kept whole two sites running in Italy: one in Milan, the country’s main economic hub, and one in Rome (staffed with agents). Of all European nations, only Italy and Germany had two SCS sites working simultaneously, according to the leak.
Here's another story from the Russia Today website. This one was posted late Friday afternoon Moscow time...and it's the first offering of the day from Roy Stephens.
Former US intelligence contractor Edward Snowden is set to make a pre-recorded video appearance at the European Parliament’s civil liberties committee around 18 December.
“The meeting will be live-streamed but the statement will be recorded answers of our questions, which will we send in advance,” said German Green MEP Jan Phillip Albrecht on Friday (6 December).
Albrecht noted that a live stream of Snowden himself would risk revealing his location.
The American is currently in Russia where he is said to be working at the country's version of Facebook, VKontakte.
This news item, filed from Brussels, showed up on the euobserver.com Internet site on Friday afternoon Europe time...and it's the second offering in a row from Roy Stephens.
Ukraine's President Viktor Yanukovych and his Russian counterpart Vladimir Putin have held surprise talks on a "strategic partnership treaty".
Mr Yanukovych flew from China to Sochi in southern Russia for the meeting. He also cancelled a visit to Malta.
Last month he shelved a partnership deal with the EU, triggering angry protests in Ukraine's capital Kiev.
This short article put in an appearance on the bbc.co.uk Internet site late Friday morning GMT...and it's another contribution from reader B.V.
Much has been said about the defeat the European Union suffered with Ukraine’s sudden refusal to sign a trade and association agreement. The contrary is true: The EU has had a lucky escape and so have the Ukrainian people.
Ukraine has a dysfunctional economy that faces imminent default. It cannot afford another destabilizing revolution. Rather than make a grand geostrategic choice between East and West, the country needs round-table talks similar to the ones that helped bring about a peaceful end to communism in Poland in 1989. These negotiations should resolve Ukraine’s political logjam and reach agreement on reforms to resuscitate the economy.
The to-do list for Ukraine has been known for a long time: a functioning democracy and a market economy with firm and transparent rules. Yet there has been no political will to take the steps required, because doing so would endanger the vested interests of too many of Ukraine’s political leaders and business leaders. Short of a miracle, Ukraine will continue muddling its way down.
This opinion piece by Finnish professor Pekka Sutela was posted on the Bloomberg website yesterday morning Denver time. I consider it a must read for all students of the New Great Game. It's the third offering of the day from Roy Stephens, for which I thank him.
When the United Nations Climate Change Conference wrapped up in Warsaw the weekend before last, it did, despite what most observers and disappointed NGO representatives believe, yield a result. It just wasn't officially announced: the termination of the at-least symbolic general agreement that urgent action must be taken to counter global warming. In other words, climate change has been definitively removed from the global policy agenda.
The intense concern over climate change triggered by Intergovernmental Panel on Climate Change reports in 2007 and widely popularized by Al Gore's movie, "An Inconvenient Truth" -- a concern that led even Angela Merkel to make an appearance in the Arctic as the "climate chancellor," decked out in a red all-weather jacket -- actually dissipated a while ago, but no one wanted to say so out loud.
This issue has finally gone away, at least for the moment. It was all b.s. right from the beginning, and I said so. In case you've forgotten, dear reader, I spent seven years in Canada's high arctic with Environment Canada about forty-odd years ago, and I still have good connections inside the service today. This is an issue with which I am intimately familiar, and it's nice to see it given the burial it has long deserved.
I'm not sure whether the whole article is worth reading or not, as I don't really agree with the rest of what the author has to say, but the two paragraphs I cut and paste above made this spiegel.de essay worth posting. This is another contribution from Roy Stephens for which I thank him.
On a dusty parade ground outside Tripoli, young recruits march and bark out slogans for the new Libyan army that Western powers hope can turn the tide on militias threatening to engulf the North African country in anarchy.
Their boots are new and their fatigues pressed, but Libya's army recruits will need more than drills to take on the hardened militiamen, Islamist fighters and political rivalries testing their OPEC nation's stability.
Two years after NATO missiles helped rebels drive out Muammar Gaddafi, Libya is under siege from former rebel fighters who now flex their military muscle to make demands on the state, seize oilfields and squabble over post-war spoils.
U.S.-sponsored regime changes are always messy affairs, and this one is proving no exception. This Reuters story, filed from Tripoli, was posted on their Internet site in the wee hours of Thursday morning EST...and it's a worthwhile read for all students of the New Great Game. It's also another offering from Roy Stephens.
NATO chief Anders Fogh Rasmussen has joined the US in urging Afghan President Hamid Karzai to sign a security agreement with Washington by year’s end. Karzai has so far been reluctant to sign the deal, which would grant US troops legal immunity.
Rasmussen said that ratifying the Afghan-US bilateral security agreement was an indispensable condition for NATO’s multinational International Security Assistance Force (ISAF) to continue its military mission in Afghanistan beyond 2014.
“Let me be very clear: It is a prerequisite for our presence in Afghanistan beyond 2014 that an appropriate legal framework is in place,” Rasmussen told reporters at a briefing at NATO headquarters in Brussels.
Without the deal “it will not be possible to deploy a train, advise, assist the mission to Afghanistan after 2014,” Rasmussen said. NATO previously announced plans to leave up to 12,000 soldiers in Afghanistan on a training mission after 2014.
This is another story from the Russia Today website. This one was posted there very early on Tuesday afternoon Moscow time, and had to wait for a spot in today's column. I thank reader B.V. for sending it our way.
Nearing the tail end of his Asian tour on Friday, Vice President Joe Biden set in stone the United States’ stance on a budding conflict there regarding ownership of airspace in the East China Sea.
Amid growing tensions in the region, Mr. Biden said during a stop in Seoul, South Korea this week that the US wholeheartedly rejects China’s self-declared right to control airspace above the Diaoyu islands — a small section of the sea off Taiwan’s northern coast which has recently attracted international tension due to a row that’s erupted between regional powers.
Speaking at Yonsei University on Friday, Biden said, according to Reuters, "I was absolutely clear on behalf of my president: We do not recognize the zone. It will have no effect on American operations. None. Zero.”
This news item was also posted on the Russia Today website late yesterday afternoon Moscow time...and it's the final offering of the day from reader B.V.
China is taking the highly unusual step of refusing to participate in a United Nations arbitration process over a territorial conflict with the Philippines, one of five countries challenging Beijing’s claims of ownership over the oil-rich South China Sea.
The legal dispute underscores the tough geopolitical approach China is adopting in the Pacific region. It has adopted an aggressive approach toward neighbours over a 2,000-mile stretch that also includes the East China Sea, over which it recently declared the air defence identification zone that has inflamed tensions with Japan and South Korea.
China sent its only aircraft carrier to the disputed waters off the coast of the Philippines for the first time last week, in a move Manila said raised tensions. China’s military said the carrier Liaoning will conduct drills in the area, accompanied by two destroyers and two frigates.
This story appeared on theguardian.com Internet site early yesterday evening GMT...and is the final offering of the day from Roy Stephens, for which I thank him.
1. Eric Sprott: "Terrifying Threat to the Financial System". 2. Tom Fitzpatrick: "2 Fantastic Charts Show Why Gold May Quickly Surge $200". 3. Bill Fleckenstein: "Global Meltdown and Why Bitcoin Will Go to Zero". 4. Egon von Greyerz: "The Frightening Problems Facing the U.S. and the World".
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
It wouldn't be a non-farm-payrolls (or for that matter any government report) without the ubiquitous "early" move in precious metals before the report is given to the general public. As Nanex shows, Gold's price moved in a 'correct' downward (taper-on) way on the "good" news that jobs are 'improving' 7 seconds before the report hit...
That's all there is to this short Zero Hedge piece from yesterday morning, but the charts are worth a look. I thank Manitoba reader Ulrike Marx for sharing it with us.
Sprott Money News interviewed Sprott Asset Management CEO Eric Sprott yesterday about the unfunded liabilities that sent Detroit into bankruptcy...and that means that the U.S. government is essentially insolvent, and then interviewed Chris Powell about the comparative advantages of bitcoin and gold. The audio clip is ten minutes long...and is posted on the soundcloud.com Internet site. I found this in a GATA release yesterday evening.
Turkey’s gold imports have surged to their highest on record so far this year after a hefty drop in bullion prices, with further progress signposted if restrictions on trade with Iran are formally eased.
Turkey imported 270.7 tonnes of gold in the first 11 months of the year, data from Borsa Istanbul showed, more than double 2012’s full-year imports of 120.8 tonnes.
The rise stemmed chiefly from this year’s sharp drop in gold prices, which have fallen 26 percent since December 2012 after 12 straight years of gains.
“Turkey, like most of the price-sensitive markets, saw this year’s lower price level as an opportunity to replenish stocks and release some of the pent-up demand that has been building as consumers have been priced out of the market,” Cameron Alexander, an analyst with Thomson Reuters GFMS, said.
This short story, co-filed from London and Ankara, was posted on thepeninsulaqatar.com Internet site very early yesterday morning in Qatar. My thanks go out to Ulrike Marx for digging up this story on such an obscure website. It's definitely worth your while.
Writing for Chris Martenson's Peak Prosperity Internet site, economist and former banker Alasdair Macleod has produced a masterful history of the geo-politics of gold over the last four decades, much of which involves the policy of price suppression adopted by Western central banks and implemented through the expansion of "paper gold" by their agents, the bullion banks.
Macleod deduces that since their smashing of the gold market in April, Western central banks have been supplying much metal surreptitiously to hold the price down. From import and official reserve data he calculates that the Western central banks have little metal left and that their control of the gold market is nearly at an end.
Macleod's commentary is pretty much a state paper for the gold community and is not to be missed. It is titled "There Is Too Little Gold in the West -- The History of Gold's Flight to the Developing World".
This is another news item I found in a GATA release yesterday...and it's definitely worth reading.
Today, anyone who talks about hyperinflation is treated like the shepherd boy who cried wolf. When the wolf actually does show up, though, belated warnings will do little to keep the flock safe.
The current Federal Reserve strategy is apparently to wait for significant price inflation to show up in the consumer price index before tapering. Yet history tells us that you treat inflation like a sunburn. You don’t wait for your skin to turn red to take action. You protect yourself before leaving home. Once inflation really picks up steam, it becomes almost impossible to control as the politics and economics of the situation combine to make the urge to print irresistible.
The hyperinflation of 1790s France illustrates one way in which inflationary monetary policy becomes unmanageable in an environment of economic stagnation and debt, and in the face of special interests who benefit from, and demand, easy money.
Even though it's not about precious metals directly, this short essay falls into the absolute must read category...and it was posted on the mises.org Internet site on Tuesday...and I thank Dr. David Richardson for today's last story.
As we reported earlier, while on the surface the headline revised Q3 GDP number was a stunner coming at 3.6%, the reality is that more than 100% of the growth from the initial estimate came from a revised estimate of how many private Inventories were stockpiled in the quarter. The reality was that of the $230 billion in total increase in SAAR GDP, $146 billion of this, or over 63%, was due to inventory stockpiling.
But where the scramble to accumulate inventory in hopes that it will be sold, profitably, sooner or later to buyers either domestic or foreign, is seen most vividly, is in the data from the past 4 quarters, or the trailing year starting in Q3 2012 and ending with the just released revised Q3 2013 number. The result is that of the $534 billion rise in nominal GDP in the past year, a whopping 56% of this is due to nothing else but inventory hoarding.
The problem with inventory hoarding, however, is that at some point it will have to be "un-hoarded." Which is why I expect many downward revisions to future GDP as this inventory overhang has to be de-stocked.
That's about all there is to this Zero Hedge story from yesterday, but the embedded charts are definitely worth your time...and I thank Manitoba reader Ulrike Marx for today's first news item.
Treasury Secretary Jacob J. Lew will assert on Thursday that the Obama administration’s vast overhaul of the financial system is close to accomplishing its goal of shielding society from the dangers posed by giant banks.
In a broad policy speech intended to signal the administration’s views on financial regulations, Mr. Lew will also make it clear that more measures may be needed to strengthen the global system. In comments that will most likely upset foreign governments, he will call on overseas regulators to make their rules tougher.
Earlier this year, I said if we could not with a straight face say we ended ‘too big to fail,’ we would have to look at other options,” he says. “Based on the totality of reforms we are putting in place, I believe we will meet that test, but to be clear, there is no precise point at which you can prove with certainty that we have done enough.”
Mr. Lew’s comments come as regulators are scheduled to meet next week to finally approve the Volcker Rule, a cornerstone of the overhaul that tries to stop banks from speculatively trading with depositors’ money and other funds. In recent months, the Treasury Department has pressed the five agencies that worked on the rule to finish it before the end of the year.
This article was posted on The New York Times website two minutes after midnight on Thursday morning in New York...and I thank Phil Barlett for finding it for us. It's worth reading.
As we have been covering for the past year and a half, most explicitly in "A Record $2 Trillion In Deposits Over Loans - The Fed's Indirect Market Propping Pathway Exposed", when it comes to the pathway of the Fed's excess deposits propping up risk levels, it has nothing to do with reserves sitting on bank balance sheets as assets, and everything to do with excess deposits (of which there are now $2.4 trillion thanks to the Fed) which are used as Initial collateral by banks such as JPM and then funding such derivatives as IG9 in a failed attempt to cover a segment of the corporate bond market. These deposits originate at the Fed as a liability at the commercial banking sector to the excess reserve asset.
That much is clear and undisputed, and was admitted by none other than JPM itself.
Which is why the news overnight from the WSJ that the Volcker Rule (if and when it is implemented) will do away with such "portfolio hedging" trades may have truly major, and potentially very risk adverse, consequences.
The WSJ reports: "In a defeat for Wall Street, the "Volcker rule" won't allow banks to enter trades designed to protect against losses held in a broad portfolio of assets, according to people familiar with the rule. The practice, known as portfolio hedging, has become a focal point of regulators drafting the rule, a controversial plank of the 2010 Dodd-Frank financial law that seeks to prevent banks from putting their own capital at risk in pursuit of trading profits.
But it won't contain language permitting portfolio hedging, which has been "expunged" from earlier drafts of the rule, according to a person familiar with the matter. Regulators decided to remove portfolio hedging from the rule after J.P. Morgan Chase disclosed billions of dollars in losses from its so-called London whale trades in 2012."
This Zero Hedge piece from yesterday is a bit of heavy reading, but is definitely worth your time if you have it. It's the second offering of the day from Ulrike Marx.
Three Wall Street trade groups sued the U.S. Commodity Futures Trading Commission on Wednesday to stop tough overseas trading guidelines that they fear could hurt markets and reduce their profits.
The groups accused the CFTC in their lawsuit of circumventing a more rigorous rule making process by issuing its cross-border regulations as "guidance.'
They also said they filed the lawsuit to stop the CFTC from what they described as an "unceasing effort'' to regulate the global swaps market through unpredictable advisory documents instead of formal rules.
This short article, along with an embedded 43 second video clip was posted on the cnbc.com Internet site on Wednesday shortly after the markets closed...and I thank West Virginia reader Elliot Simon for sending it our way.
It wasn't long after three former General Electric Co. executives were convicted of rigging auctions for municipal-bond investment contracts that they received the ultimate sendoff: A 7,400-word torching in Rolling Stone magazine by Matt Taibbi, the writer who branded Goldman Sachs Group Inc. with the nickname "vampire squid."
"Someday, it will go down in history as the first trial of the modern American mafia," Taibbi began his June 2012 opus about Dominick Carollo, Steven Goldberg and Peter Grimm. "Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street."
Then came a surprise last week, right before Thanksgiving. A federal judge ordered the men released from prison. An appeals court had reversed their convictions the day before, without explanation. An opinion would be issued "in due course," it said. Bloomberg News ran a short story this week. The rest of the news media barely noticed.
This rather short op-ed piece by Jonathan was posted on the Bloomberg website yesterday morning...and is definitely worth skimming. I thank Washington state reader S.A. for sending it along.
"There are going to be consequences to central bank balance sheet expansion all over the world," Kyle Bass tells Steven Drobny in his new book, The New House of Money, adding "It’s a beggar-thy-neighbor policy, but everyone is beggaring thy neighbor." The Texan remains concerned at QE's effects on wealth inequality and worries that "at some point this is going to ignite and set cost pressures off." While Gold-in-JPY is his recommended trade for non-clients, his hugely convex trades on Japan's eventual collapse remain as he explains the endgame for his thesis, "won't buy back until JPY is at 350," and fears "the logical conclusion is war."
This commentary by Kyle is embedded in another Zero Hedge story...and this one was filed on their website late yesterday afternoon EST. I thank Ulrike Marx for sending this one our way as well.
The National Security Agency and its allies face a long, painful drip of classified documents relating to their intelligence operations.
The quantity and range of leaks facilitated by Edward Snowden have become clear in recent news stories.
First, The Australian reports that Edward Snowden stole as many as 20,000 Aussie signals intelligence files from the NSA's systems. Australia's attorney general called the disclosures the most damaging in the country's history.
This news item was posted on the businessinsider.com Internet site yesterday morning EST...and I thank Roy Stephens for his first offering of the day.
The Channel is getting ever wider. While George Osborne plans to push Britain's retirement age to 70, Europe's big two are going the other way.
The German coalition deal has pencilled in a cut in the retirement age from 65 to 63, for those who have put in 45 years of contributions. (The overall plan to push the pension age gradually up to 67 remains in place.)
President François Hollande has cut the reversed Nicolas Sarkozy's rise in the retirement age to 62 in France. Workers with 41 years of contributions can now retire at 60.
This Ambrose Evans-Pritchard blog was posted on the telegraph.co.uk Internet site yesterday sometime...and it's the second contribution in a row from Roy Stephens.
France's unemployment rate rose to a 16-year high of 10.9 percent in the three months to September, the INSEE national statistics agency said Thursday, adding to pressure on President Francois Hollande in his battle to tackle France’s unemployment.
The jobless rate rose 0.1 percentage points from the previous three months, the new data showed.
The unemployment rate for metropolitan France, which excludes overseas territories and is more closely watched domestically, also rose by 0.1 percentage point in the same period to 10.5 percent.
This story appeared on the france24.com Internet site yesterday sometime...and I thank Roy Stephens for sliding this into my in-box in the wee hours of this morning.
Europe is one shock away from a deflation trap. A surprise anywhere in the world is all that it needs: an upset in China as the credit bubble pops, or a global bond shock as the US Federal Reserve winds down monetary stimulus.
Producer price inflation (PPI) fell to -1.4pc in the eurozone in October. This is how deflation becomes lodged in the price chain.
"Prices are sticky for a while as you approach zero inflation, but once you break through the ice into deflation things can move fast, as we've seen in Greece," said Julian Callow, global strategist at Barclays. "The European Central Bank needs to act before the horse has already bolted."
This longish commentary is also by Ambrose Evans-Pritchard...and it's definitely worth reading. It was posted on The Telegraph website late Wednesday evening GMT...and it's another offering from Roy Stephens.
From Mario Drahgi's perspective, the euro zone has already been split for some time. When the head of the powerful European Central Bank looks at the credit markets within the currency union, he sees two worlds. In one of those worlds, the one in which Germany primarily resides, companies and consumers are able to get credit more cheaply and easily than ever before. In the other, mainly Southern European world, it is extremely difficult for small and medium-sized businesses to get affordable loans. Fears are too high among banks that the debtors will default.
For Draghi and many of his colleagues on the ECB Governing Council, this dichotomy is a nightmare. They want to do everything in their power to make sure that companies in the debt-plagued countries also have access to affordable loans -- and thus can bring new growth to the ailing economies.
The only problem is that all those low interest rates have so far barely been put to use. Lending to companies in the euro zone is still in decline. In October, banks granted 2.1 percent less credit to companies and households than in the same period last year.
In addition to a further cut in interest rates to zero percent, the central bankers are considering new, drastic measures to combat the negative trend. Some of them are likely to be hotly debated when the Governing Council meets this Thursday in Frankfurt.
This must read article was posted on the German website spiegel.de early yesterday afternoon Europe time...and it's courtesy of Roy Stephens once again.
Mario Draghi said the ECB is studying what happened in Japan at the onset of its Lost Decade in the 1990s, insisting that Europe is unlikely to go the same way.
The European Central Bank has cut its inflation forecast for the next two years and promised “powerful artillery” to boost the eurozone economy if necessary, but offered no concrete measures to halt the drift towards deflation.
The euro punched to a five-week high of nearly $1.37 against the dollar and £0.84 against the pound as traders bet that the ECB’s governing council is too divided to take decisive action. Yields on 10-year Italian and Spanish bonds jumped seven basis points as credit tightened across the board.
This is another offering from Ambrose Evans-Pritchard. This story was posted on the telegraph.co.uk Internet site very late yesterday afternoon GMT...and is the final contribution of the day from Roy Stephens.
Russia voiced outrage Friday at charges in the United States against 49 current and former Russian diplomats and their wives over a $1.5 million fraud, saying it could not understand why the US had gone public with the allegations.
Deputy Foreign Minister Sergei Ryabkov said in a statement to Russian news agencies that Moscow had many claims against the behaviour of US diplomats in Moscow but had preferred not to bring them into the public sphere.
"We categorically reject the charges against the staff of Russian diplomatic institutions in the United States," he was quoted as saying by the ITAR-TASS news agency, saying it was "illegal" for diplomats to have been watched by the authorities in this way.
This AFP news item was posted on the france24.com Internet site early this morning Paris time...and I thank South African reader B.V. for sending it our way earlier this morning. It's certainly a must read for all students of the New Great Game.
1. Pierre Lassonde: "This Will Trigger Next Leg of the Gold Bull Market". 2. Dr. Stephen Leeb: "China Mining Some Gold for a Staggering $2,500 an Ounce". 3. John Ing: "Shanghai Exchange Has Delivered More Gold Than Fort Knox!".
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
The London Metal Exchange (LME) faces a tough job as it gears up to provide more data about long and short positions, including delivering what many investors crave - information on flows of speculative money that move markets.
The LME, the world's biggest and oldest marketplace for industrial metals, has launched consultations after last month promising to boost transparency at the same time it announced new proposals to cut backlogs at warehouses.
The exchange, owned by Hong Kong Exchanges and Clearing Ltd, is in a two-track process to provide detailed reports on positioning in metals futures as well as more data on warehouse inventories.
This Reuters story found a home over at the mineweb.com Internet site yesterday...and it's another contribution from Ulrike Marx.
Deutsche Bank AG pulled the plug on its global commodities trading business on Thursday, cutting 200 jobs as it becomes the first major bank to exit the once lucrative sector due to toughening regulations and diminished profits.
Germany's largest bank, which was one of the top-five financial players in commodities, said in a statement it will cease trading in energy, agriculture, base metals, coal and iron ore, retaining only precious metals and a limited number of financial derivatives traders.
The cuts are expected to largely fall on its main commodity desks in London and New York.
One has to wonder whether the Dodd-Frank regulations will still allow precious metal trading by the big U.S. banks once its passed next week. It sure wouldn't surprise me if JPMorgan Chase, HSBC USA and Citigroup were allowed to keep trading the monetary metals. We'll find out soon enough, I suppose. I found this Reuters story in a GATA release yesterday.
This 22-minute audio interview with Marc was done by Patrick MonesDeOca...and was posted over at the Equity Management Academy website about ten days ago. I haven't had the time to listen to the whole thing, but the parts I did hear were mostly precious metals related...and is the reason that this interview is posted in the precious metals section of the Critical Reads. I thank reader Ken Hurt for digging it up for us.
Is gold still in a bull market or a bear market? Opinions differ but in reality the answer to both questions could well be yes. It all depends where you start from! Over 12 years gold has risen from $250 to around $1,230 at the time of writing – definitely a bull market then? Over the past two and a bit years gold has fallen from around $1,900 to $1,220. That looks as though it may be a bear market then? Well yes – or is this just a major correction in a secular bull market? To an extent it depends on whether you are a gold bull or a gold bear as to which viewpoint you take.
It was thus interesting to listen to some of the views expressed at the Mines & Money conference in London which has just ended. Speakers were perhaps more biased to the major correction in an ongoing bull market angle and they certainly had some strong historical evidence to support their viewpoints. Whether history will again repeat itself is obviously the major question here, but it does have the uncanny ability to repeat itself and one suspects it will do so yet again with the markets and gold – the only real question being how much further will gold fall before the market turns, and then how far and fast it will rise when it does.
The question of "how far and fast" should be directed to JPMorgan Chase and two other U.S. bullion banks, as they are totally in command of the precious metal pricing structure in the Comex futures market...and until they say so, or are instructed to step aside, this price management scheme will continue unless the physical market dictates otherwise. This commentary by Lawrence was posted on the mineweb.com Internet site yesterday...and once again I thank Ulrike Marx for bringing this article to our attention. It's worth the read.
The world's most valuable jewellery retailer Chow Tai Fook, which counts Cartier and Tiffany & Co as competitors, is on a quest to conquer the hearts of China's future big spenders. Its weapons of choice: Hello Kitty and Winnie the Pooh.
Superman and the Angry Birds team also feature in Chow Tai Fook Jewellery Group's range of fashionable, and affordable, pieces which the company hopes will win over the millions of Chinese who live outside major cities but who are reaping the benefits of a rapidly growing economy and who remain enamoured by the gleam of gold.
Chow Tai Fook's fashion jewellery, which costs between HK$200 and HK$2,000 ($26 and $260), is a far cry from the luxury offerings that have traditionally accounted for over 80 percent of sales, and which on average cost about 10 times as much.
But the shift to expand mass-market retail is already paying off. Chow Tai Fook saw its net profit rise by a forecast-beating 92.3 percent in the six months ended September, with same-store sales growing 33.2 percent.
Between the time I read this Reuters story yesterday afternoon...and then got around to posting in today's column at 3:02 a.m. EST this morning, the original link had become inactive. I did a Google search of the headline, and it's obviously had a "Page 1 rewrite" in the interim. That's what you're seeing here, and I have no idea what changes were made between the two stories. I thank Ulrike Marx for her final contribution to today's column.
It has been a difficult year for silver investors with the metal falling by 36% year-to-date. While the Federal Reserve balance sheet continues to expand, ‘taper’ discussions by the Federal Open Market Committee have weighed heavily on the price performance of all the precious metals this year. By our calculations, over the last five years silver has a beta to the gold price of 1.5. This implies that price changes in gold are magnified in silver. Combine this with an 80% correlation in the price action between gold and silver over the same time frame and it’s easy to see that where the price of gold goes, the price of silver goes faster. As we break down the fundamentals for silver, market developments this year give rise to a curious conundrum – how can the case for silver be stronger while the price continues to languish?
Sprott's David Franklin, the author of this report, concludes his comments with this sentence..."The most curious part of this fundamental case for silver is why the price isn’t higher." David knows perfectly well why, as does everyone at Sprott, and that's because JPMorgan et al are sitting on the price. This commentary was posted on the sprottglobal.com Internet site yesterday...and it's definitely worth reading.
Interviewed by GATA consultant Koos Jansen, Anglo Far-East Bullion Co.'s Alex Stanczyk discusses his recent trip to a Swiss gold refinery whose managing director told of an unprecedented shortage of metal as China consumes it all.
The interview is headlined "Alex Stanczyk: Physical Supply Has Never Been Tighter" and it's posted on the Swiss Internet site ingoldwetrust.ch...and it's an absolute must read and today's most important story. I found it posted on the gata.org Internet site early yesterday morning.