Just want to show you how serious the financial markets worldwide is, banks doesn't want to lent money among themselves. So far the entire crisis developing before our naked eyes majority of the banks currently are having crisis of confidence not only to normal lending facilities but also worry of counter parties risk when lending among themselves. Did the US650billion pump into the financial market by the Feds through or coincides with other worldwide central banker will provide the magic to unshackled the capital market? If we look closely all the pumping it's absolved by the majority of banker but they didn't lent it out, fear of counter parties risk and consumers ability to borrow and repay stock the financial market.
As someone said the banking sector or industries currently didn't have liquidity problems but solvency problems! It's the banking still solvent? Having lost US600billion up to today from the current derivatives crisis and unassure futures losses, solvency it's the biggest headache. Europe just nationalised two banks in the last 48hours; Fortis in Europe and B&B in England. Read the below cut out article :-
By Simone Meier
Sept. 30 (Bloomberg) -- Demand for cash from the European Central Bank soared as the global credit crisis deepened and banks stopped lending to each other.
The ECB today lent banks 190 billion euros ($273 billion) for seven days after initially estimating it needed to drain 40 billion euros from the system. Demand for dollars in Europe also surged, forcing the ECB to announce an additional auction of $50 billion in one-day funds. It lent $30 billion earlier at a marginal rate of 11 percent, almost six times the Federal Reserve's 2 percent benchmark interest rate. Banks had asked for $77.3 billion.
``The ECB is the only port of call at the moment,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. ``The money market is barely working. Central banks are increasingly playing the role of a clearing house.'' ``Funding markets are in complete disarray, central banks are unable to get banks to lend to one another, not to mention the outside world,'' said Christoph Rieger, a fixed-income strategist at Dresdner Kleinwort in Frankfurt. The flow of credit will be seriously impaired for some time.''
London interbank offered rate, or Libor, that banks charge each other for loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers' Association said.
The euro interbank offered rate, or Euribor, for one-month loans climbed to record 5.05 percent, the European Banking Federation said. The Libor-OIS spread, a gauge of the scarcity of cash, advanced to a record.
How we know banks don't trust one another? Well look at the inter banks offered rate (Libor), 6.88 percent today in England and 5.05 in Europe!
Big time banker is hoarding cash, if bank don't even trust their own peers who do they trust? Hard time is upon the financial market be prepare for the next six months or so they will be a lots of fireworks to see.
Buy gold ........................ definitely you didn't have counter parties headache.
Disclaimer/Comments Policy.
Tuesday, September 30, 2008
A Horrible Mess, and How We Got There!
A horrible mess, for the pass two weeks it's have been an exciting time for any economics knowhow. Cause amount happening in the financial markets will made good future study materials. Read below and find out how we got there.............
Bud Conrad, chief economist at Casey Research, wrote about the beginnings of our current problems back in March of 2007... before most people were even aware of the storms brewing just over the horizon.
"Faced with historic levels of debt, falling housing prices, and weaker economy, the pressure on housing would gain momentum as desperate homeowners either hand their keys back to the banks, or simply hit the bid on the best (low) offer they can get. A vicious cycle would set in, threatening to shove the economy into uncharted and unpredictable waters.
"The impending calamity - mass housing foreclosures, failing banks, Fannie Mae and Freddie Mac in ashes, millions of personal bankruptcies - is so dire, most people can't even conceive of it. And indeed, it may not hit us this year, or next, but the market always corrects itself, and this time will be no exception - sooner or later... That's why the coming crisis is so predictable: there's no way to avoid it."
I actually wish that his analysis had been flawed.
I also wish that the government officials had been right who have consistently claimed since then that the subprime crisis was contained and the markets would rebound in the second half of the year.
Unfortunately, this is not the case.
The Fed's recent attempts at quick fixes have not worked, and current events are reinforcing what Bud Conrad prognosticated almost two years ago: that this is much more than a normal cyclical correction. This is a disaster of biblical proportions.
As the Fed and the Treasury continue to intervene in the market, they continue to lose ground and credibility, caught between a sharp recession and strong inflationary pressures. In an effort to bail out the financial sector, they have no choice but to start injecting hundreds of billions in liquidity into a contracting market place.
This will contribute to the creation of a stagflation period that will make the '70s look like a tea party.
The Fed's never-ending injection of liquidity into the market has, and will continue to, devalue the dollar.
Ordinarily, a country threatened with currency collapse would lean toward tight money, perhaps contracting its domestic money supply. That would push interest rates upward and compensate foreigners for holding on to the currency despite the depreciation risk. And it would soften that risk.
But this time, things aren't ordinary... there is a difference that has turned what might otherwise be a disturbance into a disaster: the U.S. economy's inability to endure high interest rates.
Because of the corrections taking place now in the grossly distorted U.S. housing, commercial real estate, and personal credit markets, raising interest rates to protect the dollar would prove as calamitous as not raising interest rates.
The housing bubble fueled a blockbuster business in first mortgages, and then home equity loans. Homeowners drew down their equity to splurge on consumer goods, including shiploads of imports.
The relative attractiveness of U.S. financial instruments kept the game going into overtime. The foreigners who received all those U.S. dollars put them back into U.S. Treasury bills and other dollar-denominated instruments, thereby underwriting low interest rates for all U.S. borrowers.
The net result? Foreigners funded our housing boom. The amount of mortgage growth annually matched the amount of trade deficit, which foreigners dutifully invested back into the U.S.
And subprime lending was no mere sideshow. It was big business. In 2005, it accounted for 25% of all new mortgages - about $600 billion of high-risk paper, most of it with adjustable interest rates.
The collapse of the subprime market soon spread into other mortgage sectors... and the derivatives created on top of all those subprime mortgages made everything much worse. Given that the annual GDP of the U.S. economy is just $13 trillion, the $250 trillion in derivatives should have been seen as an accident waiting to happen.
The Feds is caught between the devil and the deep blue sea, Feds can continually poured money into the market that's will not helps until unless the US housing had bottomed out. Sad news is it will not bottomed out for at least another year or two. Losses currently form the housing market it's around US500billion, figure will or can go up to US2trillion in losses. At US500billion losses the financial system almost at meltdown level just think if it's reached peak at US2trillion the next few years.
This coming financial problems will be an epic proportions comparing with the 1930 great depression, therefore Buy Gold safe haven!
Disclaimer/Comments Policy.
Bud Conrad, chief economist at Casey Research, wrote about the beginnings of our current problems back in March of 2007... before most people were even aware of the storms brewing just over the horizon.
"Faced with historic levels of debt, falling housing prices, and weaker economy, the pressure on housing would gain momentum as desperate homeowners either hand their keys back to the banks, or simply hit the bid on the best (low) offer they can get. A vicious cycle would set in, threatening to shove the economy into uncharted and unpredictable waters.
"The impending calamity - mass housing foreclosures, failing banks, Fannie Mae and Freddie Mac in ashes, millions of personal bankruptcies - is so dire, most people can't even conceive of it. And indeed, it may not hit us this year, or next, but the market always corrects itself, and this time will be no exception - sooner or later... That's why the coming crisis is so predictable: there's no way to avoid it."
I actually wish that his analysis had been flawed.
I also wish that the government officials had been right who have consistently claimed since then that the subprime crisis was contained and the markets would rebound in the second half of the year.
Unfortunately, this is not the case.
The Fed's recent attempts at quick fixes have not worked, and current events are reinforcing what Bud Conrad prognosticated almost two years ago: that this is much more than a normal cyclical correction. This is a disaster of biblical proportions.
As the Fed and the Treasury continue to intervene in the market, they continue to lose ground and credibility, caught between a sharp recession and strong inflationary pressures. In an effort to bail out the financial sector, they have no choice but to start injecting hundreds of billions in liquidity into a contracting market place.
This will contribute to the creation of a stagflation period that will make the '70s look like a tea party.
The Fed's never-ending injection of liquidity into the market has, and will continue to, devalue the dollar.
Ordinarily, a country threatened with currency collapse would lean toward tight money, perhaps contracting its domestic money supply. That would push interest rates upward and compensate foreigners for holding on to the currency despite the depreciation risk. And it would soften that risk.
But this time, things aren't ordinary... there is a difference that has turned what might otherwise be a disturbance into a disaster: the U.S. economy's inability to endure high interest rates.
Because of the corrections taking place now in the grossly distorted U.S. housing, commercial real estate, and personal credit markets, raising interest rates to protect the dollar would prove as calamitous as not raising interest rates.
The housing bubble fueled a blockbuster business in first mortgages, and then home equity loans. Homeowners drew down their equity to splurge on consumer goods, including shiploads of imports.
The relative attractiveness of U.S. financial instruments kept the game going into overtime. The foreigners who received all those U.S. dollars put them back into U.S. Treasury bills and other dollar-denominated instruments, thereby underwriting low interest rates for all U.S. borrowers.
The net result? Foreigners funded our housing boom. The amount of mortgage growth annually matched the amount of trade deficit, which foreigners dutifully invested back into the U.S.
And subprime lending was no mere sideshow. It was big business. In 2005, it accounted for 25% of all new mortgages - about $600 billion of high-risk paper, most of it with adjustable interest rates.
The collapse of the subprime market soon spread into other mortgage sectors... and the derivatives created on top of all those subprime mortgages made everything much worse. Given that the annual GDP of the U.S. economy is just $13 trillion, the $250 trillion in derivatives should have been seen as an accident waiting to happen.
The Feds is caught between the devil and the deep blue sea, Feds can continually poured money into the market that's will not helps until unless the US housing had bottomed out. Sad news is it will not bottomed out for at least another year or two. Losses currently form the housing market it's around US500billion, figure will or can go up to US2trillion in losses. At US500billion losses the financial system almost at meltdown level just think if it's reached peak at US2trillion the next few years.
This coming financial problems will be an epic proportions comparing with the 1930 great depression, therefore Buy Gold safe haven!
Disclaimer/Comments Policy.
Monday, September 29, 2008
Happy "Unwinding" Mr Paulson
Ah finally US Congress had agreed on the draft for the US700billion mother of all bailout, at the hearts of this problems is the mortgage backed securities derivatives. How to unwind this multi billion derivatives? Well you can ask Warren Buffet, this is what he said after unwinding General Re couple of years back ,
" long ago, Mark Twain said: " A man who tries to carry a cat home by it's tail will learn a lesson that can be learned in no other way." If Twain were around now, he might try winding up a derivatives business. After a few days, he would opt for cats!" ( Cost of unwinding General Re is US400million )."
The problems is not in the US700billion bailout plan but it's in the underlying derivatives assets which had questionable values as, Buffet once said, " mark to market; no it's mark to myth".
How much it's the values of this mortgage backed securities assets worth it's the biggest headache, buy at too cheap the bank will suffer; buy at too high the tax payer will suffer. this problem was highlighted by the Director of Congressional Budget Office Mr Orszag, read below:-
The director of the Congressional Budget Office said yesterday that the proposed Wall Street bailout could actually worsen the current financial crisis.
During testimony before the House Budget Committee, Peter R. Orszag -- Congress's top bookkeeper -- said the bailout could expose the way companies are stowing toxic assets on their books, leading to greater problems.
"Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values," Orszag said in his testimony. "Establishing clearer prices might reveal those institutions to be insolvent."
In an interview later yesterday, Orszag explained using the following example: Suppose a company has Asset X, whose value is recorded on the books as $100. Because of the current economic decline, Asset X's real value has dropped to $50. If the company takes part in the government bailout and sells Asset X for $50, the company has to report a $50 loss on its books. On a scale of millions of dollars, such write-downs could ruin a company.
Such companies "look solvent today only because it's kind of hidden," Orszag said. "They actually are insolvent" already, he said. Read in full.
So whether the mother of all bailout works or not ultimately is not the concern at the moment, the most pressing issues right now it's by bringing those toxic assets out in the open it will reveal even more underlyin problems instead of solving it, a reverse effects of blowing up the banking financial problems even further. The scary parts it's they have no values, their values are like Buffet said, "mark to myth"!
Well let's opt for cats .......................... buy gold because the hidden values it's stronger then the Rock Of Gibraltar!
Disclaimer/Comments Policy.
" long ago, Mark Twain said: " A man who tries to carry a cat home by it's tail will learn a lesson that can be learned in no other way." If Twain were around now, he might try winding up a derivatives business. After a few days, he would opt for cats!" ( Cost of unwinding General Re is US400million )."
The problems is not in the US700billion bailout plan but it's in the underlying derivatives assets which had questionable values as, Buffet once said, " mark to market; no it's mark to myth".
How much it's the values of this mortgage backed securities assets worth it's the biggest headache, buy at too cheap the bank will suffer; buy at too high the tax payer will suffer. this problem was highlighted by the Director of Congressional Budget Office Mr Orszag, read below:-
The director of the Congressional Budget Office said yesterday that the proposed Wall Street bailout could actually worsen the current financial crisis.
During testimony before the House Budget Committee, Peter R. Orszag -- Congress's top bookkeeper -- said the bailout could expose the way companies are stowing toxic assets on their books, leading to greater problems.
"Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values," Orszag said in his testimony. "Establishing clearer prices might reveal those institutions to be insolvent."
In an interview later yesterday, Orszag explained using the following example: Suppose a company has Asset X, whose value is recorded on the books as $100. Because of the current economic decline, Asset X's real value has dropped to $50. If the company takes part in the government bailout and sells Asset X for $50, the company has to report a $50 loss on its books. On a scale of millions of dollars, such write-downs could ruin a company.
Such companies "look solvent today only because it's kind of hidden," Orszag said. "They actually are insolvent" already, he said. Read in full.
So whether the mother of all bailout works or not ultimately is not the concern at the moment, the most pressing issues right now it's by bringing those toxic assets out in the open it will reveal even more underlyin problems instead of solving it, a reverse effects of blowing up the banking financial problems even further. The scary parts it's they have no values, their values are like Buffet said, "mark to myth"!
Well let's opt for cats .......................... buy gold because the hidden values it's stronger then the Rock Of Gibraltar!
Disclaimer/Comments Policy.
Sunday, September 28, 2008
Gold Price To Hit US2,000/oz!
"Gold is the safest vehicle," said Afshin Nabavi, vice president of the MKS Finance division of the Swiss refining group, to Bloomberg this morning."People don't have much trust right now in the banking system...There's a lack of confidence in stocks."
Investor in US it's already talking on who is the next bank to fall, can't trust the bank and stock market going flat. Precious metal purchasing remains the logical choice.
Longer-term, says Roland Duss - co-chief investment officer at Gonet & Cie, the Swiss private bank based in Geneva - the price of Gold Bullion could reach $2,000 or more per ounce over the next decade.
Full story read here.
To those gold bugs outside there kindly hold on to your golds ...................if got spare cash Buy Gold!
Disclaimer/Comments Policy.
Investor in US it's already talking on who is the next bank to fall, can't trust the bank and stock market going flat. Precious metal purchasing remains the logical choice.
Longer-term, says Roland Duss - co-chief investment officer at Gonet & Cie, the Swiss private bank based in Geneva - the price of Gold Bullion could reach $2,000 or more per ounce over the next decade.
Full story read here.
To those gold bugs outside there kindly hold on to your golds ...................if got spare cash Buy Gold!
Disclaimer/Comments Policy.
Saturday, September 27, 2008
Earth To Feds; Please Stop It ( Part 2 )
Senator Jim Bunning hit it right to the dot, the problems it's Feds over the years of pumping cheap money to the financial system in keeping it afloat since the busting of tech bubble in the nineties that cause the current housing bubble to burst.
So by printing and pumping more money into the system will not solved the current credit crisis instead it'll worsen it in the long run as it has been proven since the tech bubble.
Read it here.
Buy gold!
Disclaimer/comments Policy.
So by printing and pumping more money into the system will not solved the current credit crisis instead it'll worsen it in the long run as it has been proven since the tech bubble.
Read it here.
Buy gold!
Disclaimer/comments Policy.
Earth To Feds; Please Stop It!
US700 Billion to bailout Wall Street, question it's not on the US700 billion but how the US government will going to fork out that amount of money! Having trade deficits running few hundred billions, saving at almost zero level the American government only left with two choices in rising this US700 billion that is to raise taxes and or run the Feds printing machine.
By the look at it "Helicopter Ben" printing machine will have to work overtime once congress approved the bailout plan by Paulson, cause to raise taxes in an American Presidential election years it's unthinkable.
Massive devaluation of the USD will happens once this US700 billion hit the street, how much it'll hurts the real economy when inflation rear it's ugly heads through this injection is anybody guess work. Definitely the world will never be the same again especially when the out look of the USD as the world reserve currency it's threatened by devaluation.
China official media had sounded their official displeasure on the devaluation of the USD, "the Bush administration today announced a plan to use hundreds of billions of dollars of taxpayer money to buy up up bad mortgages and other debts. The process of injecting more fiat money into an already over-inflated system had the desired effect - the Dow Jones shot up 450 points - but the dollar, following a brief jump, began to plummet.
According to numerous Chinese state media news sources today, the Federal Reserve’s continued zeal for propping up the market by injecting illusory liquidity is part of an agenda to gain trust and grease the skids for increased government intervention in financial markets.
China Finance , China News and Chaobao Financial News, all state owned media outlets, slammed the Fed for taking action that will only make long term economic conditions worse and devalue the dollar by “creating money that does not exist which leads to the inflation of liquidity,” a policy contrary to China’s position as a holder of vast reserves of US dollars."
China it's already urging for a new currency order, having holding more then One Trillion in US government treasury bonds, devaluation of the USD in such a massive scales will damper the bond long term price.
At current level of 17% increment of USD circulation p.a worldwide inflation level of average around 20%, with this massive increment of US700 billion only time will tell how much the entire earth will have to bear the consequences of double digit inflation through direct or indirect commodities push inflation.
Therefore the entire earth it's shouting please stop monetization the problems at Wall Street!
Earth to Feds; please stop monetization of Wall Street excessiveness.
When inflation gone north pole, gold price will follow the same direction.
Buy Gold!
Disclaimers/Comments Policy.
By the look at it "Helicopter Ben" printing machine will have to work overtime once congress approved the bailout plan by Paulson, cause to raise taxes in an American Presidential election years it's unthinkable.
Massive devaluation of the USD will happens once this US700 billion hit the street, how much it'll hurts the real economy when inflation rear it's ugly heads through this injection is anybody guess work. Definitely the world will never be the same again especially when the out look of the USD as the world reserve currency it's threatened by devaluation.
China official media had sounded their official displeasure on the devaluation of the USD, "the Bush administration today announced a plan to use hundreds of billions of dollars of taxpayer money to buy up up bad mortgages and other debts. The process of injecting more fiat money into an already over-inflated system had the desired effect - the Dow Jones shot up 450 points - but the dollar, following a brief jump, began to plummet.
According to numerous Chinese state media news sources today, the Federal Reserve’s continued zeal for propping up the market by injecting illusory liquidity is part of an agenda to gain trust and grease the skids for increased government intervention in financial markets.
China Finance , China News and Chaobao Financial News, all state owned media outlets, slammed the Fed for taking action that will only make long term economic conditions worse and devalue the dollar by “creating money that does not exist which leads to the inflation of liquidity,” a policy contrary to China’s position as a holder of vast reserves of US dollars."
China it's already urging for a new currency order, having holding more then One Trillion in US government treasury bonds, devaluation of the USD in such a massive scales will damper the bond long term price.
At current level of 17% increment of USD circulation p.a worldwide inflation level of average around 20%, with this massive increment of US700 billion only time will tell how much the entire earth will have to bear the consequences of double digit inflation through direct or indirect commodities push inflation.
Therefore the entire earth it's shouting please stop monetization the problems at Wall Street!
Earth to Feds; please stop monetization of Wall Street excessiveness.
When inflation gone north pole, gold price will follow the same direction.
Buy Gold!
Disclaimers/Comments Policy.
Tuesday, September 23, 2008
Fed Is The Systemic Risk?
Bunning Statement To The Senate Banking Committee On The Federal Reserve Monetary Policy Report.
Thank you, Mr. Chairman. I know we have a lot of ground to cover today, but I want to say a few things on the topic of this hearing and of the next.First, on monetary policy, I am deeply concerned about what the Fed has done in the last year and in the last decade. Chairman Greenspan’s easy money the late nineties and then following the tech bust inflated the housing bubble and created the mess we are in today. Chairman Bernanke’s easy money in the last year has undermined the dollar and sent oil to new record highs every few days, and almost doubling since the rate cuts started. Inflation is here and it is hurting average Americans.Second, the Fed is asking for more power. But the Fed has proven they can not be trusted with the power they have. They get it wrong, do not use it, or stretch it further than it was ever supposed to go.
As I said a moment ago, their monetary policy is a leading cause of the mess we are in. As regulators, it took them until yesterday to use power we gave them in 1994 to regulate all mortgage lenders. And they stretched their authority to buy 29 billion dollars of Bear Stearns assets so J.P. Morgan could buy Bear at a steep discount.Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem. I am not going to go along with that and will use all my powers as a Senator to stop any new powers going to the Fed. Instead, we should give them less to do so they can do it right, either by taking away their monetary policy responsibility or by requiring them to focus only on inflation.
Third and finally, since I expect we will try to get right to questions in the next hearing, let me say a few words about the G.S.E. bailout plan. When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turns out socialism is alive and well in America. The Treasury Secretary is asking for a blank check to buy as much Fannie and Freddie debt or equity as he wants. The Fed’s purchase of Bear Stearns’ assets was amateur socialism compared to this.And for this unprecedented intervention in the markets what assurances do we get that it will not happen again? None. We are in the process of passing a stronger regulator for the G.S.E.s, and that is important, but it allows them to continue in the current form. If they really do fail, should we let them go back to what they were doing before?
I will close with this question Mr. Chairman. Given what the Fed and Treasury did with Bear Stearns, and given what we are talking about here today, I have to wonder what the next government intervention in private enterprise will be. More importantly, where does it stop? (15/7/08).
You are right Senator, it's doesn't stop there! The American tax payer will have to fork out another US1.8Trillion to rescue Wall Street. A trillion here a trillion there very soon fed printing machine will make Weimer Republic hyperinflation look like minnow and then we will have a modern day United States Of Zimbabwe! If by printing more money, instead of letting those toxic mortgages or toxic assets liquidated, can solved Wall Street current financial crisis Robert Mugabe definitely will be one of the most influential or powerful president in the world.
"We must take care of Main Street. Small businesses in Ashland, Bowling Green, and Paducah are hurting because of high taxes, and energy costs. Those small businesses are the economic engines that fuel our economy. I hope in the closing days of this Congress we can pass legislation to help those good people on Main Street rather than helping the power brokers on Wall Street." Senator Bunning.
Amen to that Senator Bunning it time for U.S Congress to bailout business in main street not power brokers on the Wall Street! Spending US1.8Trillion to bailout some bondholder who during their heyday doesn't recognised what it's prudence investment instead of control by absolute greed. Putting the USD as a global world reserve currency hanging in the air because the Feds printing machine it's running very high just to cover some Wall Street greed it's a very high price to pay.
Buy Gold ....................... a bedrock standard bearer of world stability when everything else fails!
Disclaimer/Comments Policy.
Thank you, Mr. Chairman. I know we have a lot of ground to cover today, but I want to say a few things on the topic of this hearing and of the next.First, on monetary policy, I am deeply concerned about what the Fed has done in the last year and in the last decade. Chairman Greenspan’s easy money the late nineties and then following the tech bust inflated the housing bubble and created the mess we are in today. Chairman Bernanke’s easy money in the last year has undermined the dollar and sent oil to new record highs every few days, and almost doubling since the rate cuts started. Inflation is here and it is hurting average Americans.Second, the Fed is asking for more power. But the Fed has proven they can not be trusted with the power they have. They get it wrong, do not use it, or stretch it further than it was ever supposed to go.
As I said a moment ago, their monetary policy is a leading cause of the mess we are in. As regulators, it took them until yesterday to use power we gave them in 1994 to regulate all mortgage lenders. And they stretched their authority to buy 29 billion dollars of Bear Stearns assets so J.P. Morgan could buy Bear at a steep discount.Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem. I am not going to go along with that and will use all my powers as a Senator to stop any new powers going to the Fed. Instead, we should give them less to do so they can do it right, either by taking away their monetary policy responsibility or by requiring them to focus only on inflation.
Third and finally, since I expect we will try to get right to questions in the next hearing, let me say a few words about the G.S.E. bailout plan. When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turns out socialism is alive and well in America. The Treasury Secretary is asking for a blank check to buy as much Fannie and Freddie debt or equity as he wants. The Fed’s purchase of Bear Stearns’ assets was amateur socialism compared to this.And for this unprecedented intervention in the markets what assurances do we get that it will not happen again? None. We are in the process of passing a stronger regulator for the G.S.E.s, and that is important, but it allows them to continue in the current form. If they really do fail, should we let them go back to what they were doing before?
I will close with this question Mr. Chairman. Given what the Fed and Treasury did with Bear Stearns, and given what we are talking about here today, I have to wonder what the next government intervention in private enterprise will be. More importantly, where does it stop? (15/7/08).
You are right Senator, it's doesn't stop there! The American tax payer will have to fork out another US1.8Trillion to rescue Wall Street. A trillion here a trillion there very soon fed printing machine will make Weimer Republic hyperinflation look like minnow and then we will have a modern day United States Of Zimbabwe! If by printing more money, instead of letting those toxic mortgages or toxic assets liquidated, can solved Wall Street current financial crisis Robert Mugabe definitely will be one of the most influential or powerful president in the world.
"We must take care of Main Street. Small businesses in Ashland, Bowling Green, and Paducah are hurting because of high taxes, and energy costs. Those small businesses are the economic engines that fuel our economy. I hope in the closing days of this Congress we can pass legislation to help those good people on Main Street rather than helping the power brokers on Wall Street." Senator Bunning.
Amen to that Senator Bunning it time for U.S Congress to bailout business in main street not power brokers on the Wall Street! Spending US1.8Trillion to bailout some bondholder who during their heyday doesn't recognised what it's prudence investment instead of control by absolute greed. Putting the USD as a global world reserve currency hanging in the air because the Feds printing machine it's running very high just to cover some Wall Street greed it's a very high price to pay.
Buy Gold ....................... a bedrock standard bearer of world stability when everything else fails!
Disclaimer/Comments Policy.
Monday, September 22, 2008
The Shadow Banking System Is Unravelling
The shadow banking system is unravelling written by Nouriel Roubini.
Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.
Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they carry the risk that an otherwise solvent but liquid institution may be subject to a self-fulfilling and destructive run on its liquid liabilities.
But unlike banks, which are sheltered from the risk of a run – via deposit insurance and central banks’ lender-of-last-resort liquidity – most members of the shadow system did not have access to these firewalls that prevent runs.
A generalised run on these shadow banks started when the deleveraging after the asset bubble bust led to uncertainty about which institutions were solvent. The first stage was the collapse of the entire SIVs/conduits system once investors realised the toxicity of its investments and its very short-term funding seized up.
The next step(second stage) was the run on the big US broker-dealers: first Bear Stearns lost its liquidity in days. The Federal Reserve then extended its lender-of-last-resort support to systemically important broker-dealers. But even this did not prevent a run on the other broker-dealers given concerns about solvency: it was the turn of Lehman Brothers to collapse. Merrill Lynch would have faced the same fate had it not been sold. The pressure moved to Morgan Stanley and Goldman Sachs: both would be well advised to merge – like Merrill – with a large bank that has a stable base of insured deposits.
The third stage was the collapse of other leveraged institutions that were both illiquid and most likely insolvent given their reckless lending: Fannie Mae and Freddie Mac, AIG and more than 300 mortgage lenders.
The fourth stage was panic in the money markets. Funds were competing aggressively for assets and, in order to provide higher returns to attract investors, some of them invested in illiquid instruments. Once these investments went bust, panic ensued among investors, leading to a massive run on such funds. This would have been disastrous; so, in another radical departure, the US extended deposit insurance to the funds.
The next stage(fifth stage) will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible. Hundreds of smaller, younger funds that have taken excessive risks with high leverage and are poorly managed may collapse. A massive shake-out of the bloated hedge fund industry is likely in the next two years.
Even private equity firms and their reckless, highly leveraged buy-outs will not be spared. The private equity bubble led to more than $1,000bn of LBOs that should never have occurred. The run on these LBOs is slowed by the existence of “convenant-lite” clauses, which do not include traditional default triggers, and “payment-in-kind toggles”, which allow borrowers to defer cash interest payments and accrue more debt, but these only delay the eventual refinancing crisis and will make uglier the bankruptcy that will follow. Even the largest LBOs, such as GMAC and Chrysler, are now at risk.
We are observing an accelerated run on the shadow banking system that is leading to its unravelling. If lender-of-last-resort support and deposit insurance are extended to more of its members, these institutions will have to be regulated like banks, to avoid moral hazard. Of course this severe financial crisis is also taking its toll on traditional banks: hundreds are insolvent and will have to close.
The real economic side of this financial crisis will be a severe US recession. Financial contagion, the strong euro, falling US imports, the bursting of European housing bubbles, high oil prices and a hawkish European Central Bank will lead to a recession in the eurozone, the UK and most advanced economies.
European financial institutions are at risk of sharp losses because of the toxic US securitised products sold to them; the massive increase in leverage following aggressive risk-taking and domestic securitisation; a severe liquidity crunch exacerbated by a dollar shortage and a credit crunch; the bursting of domestic housing bubbles; household and corporate defaults in the recession; losses hidden by regulatory forbearance; the exposure of Swedish, Austrian and Italian banks to the Baltic states, Iceland and southern Europe where housing and credit bubbles financed in foreign currency are leading to hard landings.
Run to Gold safe haven!
Disclaimers/Comments Policy.
Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.
Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they carry the risk that an otherwise solvent but liquid institution may be subject to a self-fulfilling and destructive run on its liquid liabilities.
But unlike banks, which are sheltered from the risk of a run – via deposit insurance and central banks’ lender-of-last-resort liquidity – most members of the shadow system did not have access to these firewalls that prevent runs.
A generalised run on these shadow banks started when the deleveraging after the asset bubble bust led to uncertainty about which institutions were solvent. The first stage was the collapse of the entire SIVs/conduits system once investors realised the toxicity of its investments and its very short-term funding seized up.
The next step(second stage) was the run on the big US broker-dealers: first Bear Stearns lost its liquidity in days. The Federal Reserve then extended its lender-of-last-resort support to systemically important broker-dealers. But even this did not prevent a run on the other broker-dealers given concerns about solvency: it was the turn of Lehman Brothers to collapse. Merrill Lynch would have faced the same fate had it not been sold. The pressure moved to Morgan Stanley and Goldman Sachs: both would be well advised to merge – like Merrill – with a large bank that has a stable base of insured deposits.
The third stage was the collapse of other leveraged institutions that were both illiquid and most likely insolvent given their reckless lending: Fannie Mae and Freddie Mac, AIG and more than 300 mortgage lenders.
The fourth stage was panic in the money markets. Funds were competing aggressively for assets and, in order to provide higher returns to attract investors, some of them invested in illiquid instruments. Once these investments went bust, panic ensued among investors, leading to a massive run on such funds. This would have been disastrous; so, in another radical departure, the US extended deposit insurance to the funds.
The next stage(fifth stage) will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible. Hundreds of smaller, younger funds that have taken excessive risks with high leverage and are poorly managed may collapse. A massive shake-out of the bloated hedge fund industry is likely in the next two years.
Even private equity firms and their reckless, highly leveraged buy-outs will not be spared. The private equity bubble led to more than $1,000bn of LBOs that should never have occurred. The run on these LBOs is slowed by the existence of “convenant-lite” clauses, which do not include traditional default triggers, and “payment-in-kind toggles”, which allow borrowers to defer cash interest payments and accrue more debt, but these only delay the eventual refinancing crisis and will make uglier the bankruptcy that will follow. Even the largest LBOs, such as GMAC and Chrysler, are now at risk.
We are observing an accelerated run on the shadow banking system that is leading to its unravelling. If lender-of-last-resort support and deposit insurance are extended to more of its members, these institutions will have to be regulated like banks, to avoid moral hazard. Of course this severe financial crisis is also taking its toll on traditional banks: hundreds are insolvent and will have to close.
The real economic side of this financial crisis will be a severe US recession. Financial contagion, the strong euro, falling US imports, the bursting of European housing bubbles, high oil prices and a hawkish European Central Bank will lead to a recession in the eurozone, the UK and most advanced economies.
European financial institutions are at risk of sharp losses because of the toxic US securitised products sold to them; the massive increase in leverage following aggressive risk-taking and domestic securitisation; a severe liquidity crunch exacerbated by a dollar shortage and a credit crunch; the bursting of domestic housing bubbles; household and corporate defaults in the recession; losses hidden by regulatory forbearance; the exposure of Swedish, Austrian and Italian banks to the Baltic states, Iceland and southern Europe where housing and credit bubbles financed in foreign currency are leading to hard landings.
Run to Gold safe haven!
Disclaimers/Comments Policy.
Wednesday, September 17, 2008
AIG In Controlled Bankruptcy!
The ``punitive'' interest rate on the two-year loan ``makes it extremely clear that this is not a subsidy extended to keep the company afloat but rather a stranglehold that makes AIG unviable while ensuring that its obligations will be met,'' said Marco Annunziata, an analyst at UniCredit SpA, in a note to clients. ``This is to all extents and purposes a controlled bankruptcy.''
Yes, dear gold bugs the recent US85Billion loan from Fed extended to AIG for two years at interest rate of 11% ( give a big cry #*#@* ), with Feds market interest rate is at 2%, daylight robbery if you want to said it.
It was very clear the Feds is not "bailing out" as we thought so few hours back, as news coming in it is very clear what the Feds want is an orderly manner of selling AIG assets to cover losses it's incurred in the credit default swaps market. If AIG is to files for bankruptcy now, all it's assets will be put under hammer or force fire sells which will drive down even further it's core values assets.
At 11%p.a rates, spreads is definitely very high for comfort. Whichever way the AIG group it's toast for good having more then US400billion in derivatives holding in it's balance sheet plus another US57billion in securities tied up with sub prime mortgages back up by only US1.1Trillion in assets. Two years from now AIG will definitely cease to exist, it's assets will be strip off and sell off to the open market first to repay the US85billion loan @ 11% rates and then to it's debtors and etc.
How on earth a major company like AIG involved in such high leverage in derivatives market only can answered in one word GREED! If AIG allows to fail today it will cost the entire market a minimum sum of US180Billion, well this is where greed will leads you too eventually.
On realisation the shareholders will be wipe out eventually, AIG shares drop around 50% today, investors it's dumping AIG shares lock stock and barrel. GAME OVER FOR AIG!
DJIA drops another 3% (time of blogging ), but yellow metal rise more then 6%( give a big cry.....hurray I told you so! ).
Buy Gold!
Disclaimer/Comments Policy
Yes, dear gold bugs the recent US85Billion loan from Fed extended to AIG for two years at interest rate of 11% ( give a big cry #*#@* ), with Feds market interest rate is at 2%, daylight robbery if you want to said it.
It was very clear the Feds is not "bailing out" as we thought so few hours back, as news coming in it is very clear what the Feds want is an orderly manner of selling AIG assets to cover losses it's incurred in the credit default swaps market. If AIG is to files for bankruptcy now, all it's assets will be put under hammer or force fire sells which will drive down even further it's core values assets.
At 11%p.a rates, spreads is definitely very high for comfort. Whichever way the AIG group it's toast for good having more then US400billion in derivatives holding in it's balance sheet plus another US57billion in securities tied up with sub prime mortgages back up by only US1.1Trillion in assets. Two years from now AIG will definitely cease to exist, it's assets will be strip off and sell off to the open market first to repay the US85billion loan @ 11% rates and then to it's debtors and etc.
How on earth a major company like AIG involved in such high leverage in derivatives market only can answered in one word GREED! If AIG allows to fail today it will cost the entire market a minimum sum of US180Billion, well this is where greed will leads you too eventually.
On realisation the shareholders will be wipe out eventually, AIG shares drop around 50% today, investors it's dumping AIG shares lock stock and barrel. GAME OVER FOR AIG!
DJIA drops another 3% (time of blogging ), but yellow metal rise more then 6%( give a big cry.....hurray I told you so! ).
Buy Gold!
Disclaimer/Comments Policy
They're All Toast
This news article appear in the month of July this year by Roubini predicted then Lehman, Merill Lynch, Goldman and Morgan Stanley will ALL go bust in the coming months.
'They're All Toast': Roubini Says Brokers, Even Goldman, Can't Stay Independent.
Well less then two months later we see Lehman go bust, Merill force to merge with Bank Of America and Goldman and Morgan next on news................................
Meanwhile Buy Gold in this time of financial uncertainties.
Disclaimer/Comments Policy
'They're All Toast': Roubini Says Brokers, Even Goldman, Can't Stay Independent.
Well less then two months later we see Lehman go bust, Merill force to merge with Bank Of America and Goldman and Morgan next on news................................
Meanwhile Buy Gold in this time of financial uncertainties.
Disclaimer/Comments Policy
Global Market Turmoil, Gold Price Trend Upwards.
"In a total disaster," said Peter Bernstein, "where there is a run on paper currency, you'll get your biggest bang for your buck in gold…if everything hits the fan, gold should be worth several thousands dollars for an ounce.
Lehman files for bankruptcy, AIG got "bail out" by FEDS ( US85Billion), the questions in the market nowadays is who will be the next in line.
Washington Mutual(WaMu) the saving and loan bank next to come, watch out for the news as it's unfold it will cost the FEDs easily another US100billion if it's happen.
Freddie and Fannie has already cost the Federal Government in total US5.7Trillion in debts and liability, our questions is where on earth the Feds or US Treasury get all this money to rescued or bailouts all the financial mess, with no end in sight for next coming few years.
For the last 13 years, the U.S. money supply has been increasing at about 2 times the rate of GDP. This is known, to monetary sticklers, as "inflation." Inflation's is exported throughout the entire world because the USD it's world reserve currency, buying of commodities or business arrangement it's quoted at USD any increased in it's circulation will definitely bring about global inflation. The Feds non longer published M3 figure since March 2006, something sinister is happening because M3 shown the total money in circulation by hiding it the Feds can print as much USD bills without rising an eyebrow from foreign investor. An increased in monetary circulation will certainly cause inflation to jump.
Investors buy gold to protect themselves from inflation and future declining USD . Gold never overstates its earnings, understates its liabilities or declares bankruptcy. When everything else goes to Hell, gold is still there…still doing its job.
With the Federal debts currently close to US10Trillion, Uncle Sam got no money but it can turn to one of the Feds' tricks, one is particularly dangerous: they can print money or"helicopter money", that's right the US government with the collaboration of Feds can print unlimited amount of USD to save or bailout any of it's Wall Street honchos.
Well guys, when the going gets rough, the Feds always turn on the printing press because they can create money out of thin air, scary yet it's truth. How much inflation it will bring to our home for the next few years only God knows.
That's when owning gold really pays off..........................Buy Gold.
Disclaimer/Comments Policy.
Lehman files for bankruptcy, AIG got "bail out" by FEDS ( US85Billion), the questions in the market nowadays is who will be the next in line.
Washington Mutual(WaMu) the saving and loan bank next to come, watch out for the news as it's unfold it will cost the FEDs easily another US100billion if it's happen.
Freddie and Fannie has already cost the Federal Government in total US5.7Trillion in debts and liability, our questions is where on earth the Feds or US Treasury get all this money to rescued or bailouts all the financial mess, with no end in sight for next coming few years.
For the last 13 years, the U.S. money supply has been increasing at about 2 times the rate of GDP. This is known, to monetary sticklers, as "inflation." Inflation's is exported throughout the entire world because the USD it's world reserve currency, buying of commodities or business arrangement it's quoted at USD any increased in it's circulation will definitely bring about global inflation. The Feds non longer published M3 figure since March 2006, something sinister is happening because M3 shown the total money in circulation by hiding it the Feds can print as much USD bills without rising an eyebrow from foreign investor. An increased in monetary circulation will certainly cause inflation to jump.
Investors buy gold to protect themselves from inflation and future declining USD . Gold never overstates its earnings, understates its liabilities or declares bankruptcy. When everything else goes to Hell, gold is still there…still doing its job.
With the Federal debts currently close to US10Trillion, Uncle Sam got no money but it can turn to one of the Feds' tricks, one is particularly dangerous: they can print money or"helicopter money", that's right the US government with the collaboration of Feds can print unlimited amount of USD to save or bailout any of it's Wall Street honchos.
Well guys, when the going gets rough, the Feds always turn on the printing press because they can create money out of thin air, scary yet it's truth. How much inflation it will bring to our home for the next few years only God knows.
That's when owning gold really pays off..........................Buy Gold.
Disclaimer/Comments Policy.
Tuesday, September 16, 2008
Financial Weapons OF Mass Destructions.
The Coming Disaster In The Derivatives Markets.
"The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear....[They] are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."
-- Warren Buffett, Chairman and Chief Executive, from his Letter to Shareholders, 2002 Berkshire Hathaway annual report.
Speaking as a man who lost around US400 million few years back in unwinding one of it's subsidiaries General Re who got involved in derivatives market. Mark to market; no mark to myth said Warren Buffet when ask about the values of the world derivatives values. Do listen to a man who got his hand burned, whatever Lehman Brothers it's facing was so mind boggling. Trust Buffett will not be available for any advice on how to unwind the massive derivatives markets.
Who got burned and which dealers annihilated will be paraded in the next few months, the most worried part it's the size of the markets exposure of the major bank or investment bank in America
Read yourself above articles form Financial Sense.
Buy Gold!
Disclaimer/Comments Policy.
"The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear....[They] are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."
-- Warren Buffett, Chairman and Chief Executive, from his Letter to Shareholders, 2002 Berkshire Hathaway annual report.
Speaking as a man who lost around US400 million few years back in unwinding one of it's subsidiaries General Re who got involved in derivatives market. Mark to market; no mark to myth said Warren Buffet when ask about the values of the world derivatives values. Do listen to a man who got his hand burned, whatever Lehman Brothers it's facing was so mind boggling. Trust Buffett will not be available for any advice on how to unwind the massive derivatives markets.
Who got burned and which dealers annihilated will be paraded in the next few months, the most worried part it's the size of the markets exposure of the major bank or investment bank in America
Read yourself above articles form Financial Sense.
Buy Gold!
Disclaimer/Comments Policy.
Lehman Brothers Files For Bankruptcy
So Uncle Sam decided not to save Lehman Brothers, at risk here not only the company as a investment bank but also the credit defaults swaps derivatives market that Lehman it's holding in it's balance sheet.
The derivatives market it's so huge it dwarfs any other financial instruments, last count it's about USD500 Trillion markets worldwide. It's created to add more liquidity to the market end up destroying the very reasons it was created that is to add liquidity for banks to offer more credit and subsequently more debts. Lehman Brothers rank around 6 in market exposures.
``We've fallen so far off the edge of the earth right now that we can't even begin to describe what we are seeing,'' said Jim Bianco, president of Bianco Research LLC in Chicago. ``Nobody begins to know what will happen because we've never come to anything remotely close to this before.''
Will it create a systemic meltdown of the financial institutions at Wall Street? Stay tuned there will be a lots of side and main shows to see from now onwards, fasten your seat belts!
Meanwhile price of gold rose almost 2% today, investor look for safe haven to park their funds.
Buy Gold!
Disclaimer/Comments Policy.
The derivatives market it's so huge it dwarfs any other financial instruments, last count it's about USD500 Trillion markets worldwide. It's created to add more liquidity to the market end up destroying the very reasons it was created that is to add liquidity for banks to offer more credit and subsequently more debts. Lehman Brothers rank around 6 in market exposures.
``We've fallen so far off the edge of the earth right now that we can't even begin to describe what we are seeing,'' said Jim Bianco, president of Bianco Research LLC in Chicago. ``Nobody begins to know what will happen because we've never come to anything remotely close to this before.''
Will it create a systemic meltdown of the financial institutions at Wall Street? Stay tuned there will be a lots of side and main shows to see from now onwards, fasten your seat belts!
Meanwhile price of gold rose almost 2% today, investor look for safe haven to park their funds.
Buy Gold!
Disclaimer/Comments Policy.
Sunday, September 14, 2008
Paper Metal and Real Metal Diverge
So, what happened during August? The financial stocks rallied, and the US dollar also rocketed higher. The CNBC types have now concluded that the "bubble" in precious metals and in commodities is over. The financials are supposedly a "screaming buy."
In the end, has anything changed? No! If anything, the fundamentals for the banking sector and for the US economy as a whole are still not good. It is almost as if we are seeing a great "disconnect" between the mainstream investment world and what is actually going on in the world. War in Georgia? Declining oil reserves? Declining gold production? The CPI now at 5.6% (even using our government's bogus figures) and almost 13% (using honest methods)? Sell oil! Sell gold! Sell silver! Buy financials and Apple! Buy the dollar! Well, I don't buy it! I'll discuss this later. Except from The Richter Report.
Well guys if you still believe in Wall Street and it's spin media, kindly read this article above.
Don't trust paper metal trust instead Real Metal like ..........................GOLD!
Disclaimer/Comments Policy.
In the end, has anything changed? No! If anything, the fundamentals for the banking sector and for the US economy as a whole are still not good. It is almost as if we are seeing a great "disconnect" between the mainstream investment world and what is actually going on in the world. War in Georgia? Declining oil reserves? Declining gold production? The CPI now at 5.6% (even using our government's bogus figures) and almost 13% (using honest methods)? Sell oil! Sell gold! Sell silver! Buy financials and Apple! Buy the dollar! Well, I don't buy it! I'll discuss this later. Except from The Richter Report.
Well guys if you still believe in Wall Street and it's spin media, kindly read this article above.
Don't trust paper metal trust instead Real Metal like ..........................GOLD!
Disclaimer/Comments Policy.
Saturday, September 13, 2008
The Greenback And The Commodities Prices.
Great article about the effect of the weak greenback on commodities prices, read it here.
It's not the speculators who drive the commodities prices it's the weak USD, Feds will not like to hear neither their media spinning doctor will report about it. From the tech bubble to the current housing bubble Feds hot "helicopter money" had cause the entire world on the verge of sinking into a great recession if we are lucky, if not depression will visits us.
Years of pumping hot USD money into the markets to keep the "bubble afloat" or from busting had cause commodities price increment, causing a double digits inflation figure, visiting almost to every corner of the globe.
The biggest culprit for the commodities price increased pass few years or months it's the weak USD make through indiscriminate wholesale printing by the Feds to save it's cohorts at Wall Street. The only way to end this serious problems it's decoupling or ending of the USD as the world reserve currency and replacing it with another currency/currencies which must be back by a gold standard.
USD avoid it at all cost instead Buy Gold!
Disclaimer/Comments Policy.
It's not the speculators who drive the commodities prices it's the weak USD, Feds will not like to hear neither their media spinning doctor will report about it. From the tech bubble to the current housing bubble Feds hot "helicopter money" had cause the entire world on the verge of sinking into a great recession if we are lucky, if not depression will visits us.
Years of pumping hot USD money into the markets to keep the "bubble afloat" or from busting had cause commodities price increment, causing a double digits inflation figure, visiting almost to every corner of the globe.
The biggest culprit for the commodities price increased pass few years or months it's the weak USD make through indiscriminate wholesale printing by the Feds to save it's cohorts at Wall Street. The only way to end this serious problems it's decoupling or ending of the USD as the world reserve currency and replacing it with another currency/currencies which must be back by a gold standard.
USD avoid it at all cost instead Buy Gold!
Disclaimer/Comments Policy.
Friday, September 12, 2008
2 Million "Jingle Mails" And The Demise Of USD
Christmas ALL year long in America, read on...........
“We are looking at the worst set of macroeconomic conditions since the Great Depression. I don’t know where the bottom is… The most dangerous part in my judgment is what is going on in the housing world, where we’re now running foreclosures at the rate of two million a year, where nine million homes, according to the government, just slightly under nine million homes, have either no equity in them or negative equity. That will go up to 15 million if housing prices continue to go down this year as they’ve done last year.”
Mort Zuckerman, co-founder of Boston Properties, quoted by Bloomberg, March 12, 2008
Definitely a lots of "jingle mails" was sent to the bankers lately. By the way "jingle mail" it's the terms used in U.S for home owners who can't service their loan, eventually sending the house keys in an envelope to the banker for "safekeeping" means owner's surrendering their house to the bank concern.
How it will affects the financial situation in America it's left to be seen, Lehman got no buyer, Washington Mutual(WAMU) downgraded to junk level by Moody today. Freddie and Fannie just nationalised costing America taxpayer billions of dollar, who is next on the line you might asked?
Well I've a better idea discard USD ................buy gold safe haven!
Disclaimers/Comments Policy.
“We are looking at the worst set of macroeconomic conditions since the Great Depression. I don’t know where the bottom is… The most dangerous part in my judgment is what is going on in the housing world, where we’re now running foreclosures at the rate of two million a year, where nine million homes, according to the government, just slightly under nine million homes, have either no equity in them or negative equity. That will go up to 15 million if housing prices continue to go down this year as they’ve done last year.”
Mort Zuckerman, co-founder of Boston Properties, quoted by Bloomberg, March 12, 2008
Definitely a lots of "jingle mails" was sent to the bankers lately. By the way "jingle mail" it's the terms used in U.S for home owners who can't service their loan, eventually sending the house keys in an envelope to the banker for "safekeeping" means owner's surrendering their house to the bank concern.
How it will affects the financial situation in America it's left to be seen, Lehman got no buyer, Washington Mutual(WAMU) downgraded to junk level by Moody today. Freddie and Fannie just nationalised costing America taxpayer billions of dollar, who is next on the line you might asked?
" The tale of how the two GSE’s(Freddie/Fannie ) got to this point is a long and sorry one. It is a story of quite staggering ineptitude on the part of company management, the financial regulators, the Federal Reserve, the US Treasury, and the US Congress. I believe it is a seminal moment in the ongoing demise of the US Dollar as the world’s reserve currency. "Rob Lee on GSE Bailout.
The demise of the dollars as world reserve currency? For those who thinking of buying dollars better think twice as the former Kuwait Oil Ministers once said the US dollars it's an unguaranteed currency.
Well I've a better idea discard USD ................buy gold safe haven!
Disclaimers/Comments Policy.
Thursday, September 11, 2008
Global Currency Debasement!
Currency debasement or competitive currency devaluation it's happening worldwide. Today New Zealand had just cut their interest rate causing it's currency fell.
Looking nearer at home, Bank Negara had been maintaining the interest rate for pass two to three months causing the ringgit losing around 5% of it's total value. Question it's why majority of the Central Banker of the world it's devaluing it's home currency? Answer :-
1. By devaluing it's currency export products will look cheaper overseas therefore it will help the local economy to recover.
2. Global downturn had raised the prospects of recession back at home, having a cheaper currency might just help to avoid it.
3. Slowing or stagnant growth had cause great pains and uncertainty into local market by lowering down interest rates, cost of borrowing for doing business will be lower thus encourage local economy to growth.
Draw backs of having lower interest rates and subsequently debasing the local currency it's higher import cost, and it will further fuel inflation. Which currently running double digit worldwide.
By having a negative interest rates environment will cause foreign funds pulling out their funds from the local economy cause cost or profit of owning the local currency will not be attractive. Foreign Direct Investment (FDI ) it's very important to stimulate growth having it fleeing away will have a great impact on the economy.
At current scenario majority of the world Central Bankers it's debasing their own currencies rather then raising interest rates to tame inflation that will raise the local currency values.
Main problem at the moments its large number of Central Banker it's cutting interest rates for the pass few months to shore up the local economy, bringing in a scenario whereby everybody it's trying to outdo one another on having cheaper currencies by slashing interest rates!
The world Central Bankers it's having nightmare currently cause to raise interest rates to combat inflation economy will slip into recession, reducing interest rates inflation will go north pole. In short there are caught between the devil and the deep blue sea!
What they call the "perfect financial storm", raising the spectre of stagflation worldwide. High inflation plus stagnant growth.
And we have global currency debasement plus stagflation all at the same time, all fiat money values will deteriorates further indeed ..............buy gold!
Disclaimers/Comments Policy.
Looking nearer at home, Bank Negara had been maintaining the interest rate for pass two to three months causing the ringgit losing around 5% of it's total value. Question it's why majority of the Central Banker of the world it's devaluing it's home currency? Answer :-
1. By devaluing it's currency export products will look cheaper overseas therefore it will help the local economy to recover.
2. Global downturn had raised the prospects of recession back at home, having a cheaper currency might just help to avoid it.
3. Slowing or stagnant growth had cause great pains and uncertainty into local market by lowering down interest rates, cost of borrowing for doing business will be lower thus encourage local economy to growth.
Draw backs of having lower interest rates and subsequently debasing the local currency it's higher import cost, and it will further fuel inflation. Which currently running double digit worldwide.
By having a negative interest rates environment will cause foreign funds pulling out their funds from the local economy cause cost or profit of owning the local currency will not be attractive. Foreign Direct Investment (FDI ) it's very important to stimulate growth having it fleeing away will have a great impact on the economy.
At current scenario majority of the world Central Bankers it's debasing their own currencies rather then raising interest rates to tame inflation that will raise the local currency values.
Main problem at the moments its large number of Central Banker it's cutting interest rates for the pass few months to shore up the local economy, bringing in a scenario whereby everybody it's trying to outdo one another on having cheaper currencies by slashing interest rates!
The world Central Bankers it's having nightmare currently cause to raise interest rates to combat inflation economy will slip into recession, reducing interest rates inflation will go north pole. In short there are caught between the devil and the deep blue sea!
What they call the "perfect financial storm", raising the spectre of stagflation worldwide. High inflation plus stagnant growth.
And we have global currency debasement plus stagflation all at the same time, all fiat money values will deteriorates further indeed ..............buy gold!
Disclaimers/Comments Policy.
Monday, September 8, 2008
It's OPEC Going To Pump More Oil To Stablised Oil Prices?
Oil at USD105, everybody it's crying for the OPEC to supply more oil to the market to reduced oil price. However it's pumping more oil will solved the current situation of high oil price?
Pumping more oil former Kuwait Oil Minister might have the answer, "What'', sneered Abdurrahman Salim Atiqi, Kuwait's one-time oil minister, "is the point of producing more oil and selling it for an unguaranteed paper currency?'' He means the USD values depreciation since oil is traded in USD.
That's right what is the point of pumping or selling more oil for an inflated USD currency, the problem here was not producing more oil, it's the falling USD for the pass few years that concern the oil market as a whole since oil was traded in USD. USD it's an unguaranteed paper currency, years of "helicopter money" had destroyed the USD position as a dominant global trade currency. Plus the ever growing current account deficits of close to US700 billion p.a. Critics might point to the recent upside of the USD in global market currency trading, that's because all the major world economy is sliding into recession. Globalisation have spread the US economy weakness or recession into every corner of the world. Being an export orientated nations having your own currency devalued will definitely helps in your overall export market there in turn will slow or revive the local economy through selling your products cheaper overseas by currency comparison.
Falling USD will also push prices of ALL commodities to go higher just in order for it to offset the loses in exchange rate, commodities push inflation happened largely due to falling USD values whereby higher price will continue to happens in order to cover exchanged loses. How much of this commodities price increased come from the effect of falling USD will be remain to be seen, at current scenario, unless Fed's raise interest rates to arrest the decline of the USD, price of oil will be hard to go down in the near future. OPEC will not let oil prices falls into uncharted territories because the cost of oil extraction have been going up for the pass few years due to inflation cause by higher prices of commodities.
Mainly problem was not in the oil price but it's in the "unguaranteed USD paper currency". OPEC will definitely not trade the finite oil for an infinite USD currency ( no thanks to Fed's money printing machine ). With oil production almost at it's peak worldwide, OPEC might have to reduce pumping rather then increased pumping to increase oil prices in order to protects it's future interest.
Another scenario in solving the above problem it's the decoupling of USD as the global oil currency, a worldwide economy nightmare if or when it's happened. Cause the main questions is will the American going to let it happened( decoupling ) without a fight? It aint going to be easy, 90% of the world commodities plus oil is traded in USD!
Therefore bye bye cheap oil.........................buy gold!
Disclaimer/Comments Policy.
Pumping more oil former Kuwait Oil Minister might have the answer, "What'', sneered Abdurrahman Salim Atiqi, Kuwait's one-time oil minister, "is the point of producing more oil and selling it for an unguaranteed paper currency?'' He means the USD values depreciation since oil is traded in USD.
That's right what is the point of pumping or selling more oil for an inflated USD currency, the problem here was not producing more oil, it's the falling USD for the pass few years that concern the oil market as a whole since oil was traded in USD. USD it's an unguaranteed paper currency, years of "helicopter money" had destroyed the USD position as a dominant global trade currency. Plus the ever growing current account deficits of close to US700 billion p.a. Critics might point to the recent upside of the USD in global market currency trading, that's because all the major world economy is sliding into recession. Globalisation have spread the US economy weakness or recession into every corner of the world. Being an export orientated nations having your own currency devalued will definitely helps in your overall export market there in turn will slow or revive the local economy through selling your products cheaper overseas by currency comparison.
Falling USD will also push prices of ALL commodities to go higher just in order for it to offset the loses in exchange rate, commodities push inflation happened largely due to falling USD values whereby higher price will continue to happens in order to cover exchanged loses. How much of this commodities price increased come from the effect of falling USD will be remain to be seen, at current scenario, unless Fed's raise interest rates to arrest the decline of the USD, price of oil will be hard to go down in the near future. OPEC will not let oil prices falls into uncharted territories because the cost of oil extraction have been going up for the pass few years due to inflation cause by higher prices of commodities.
Mainly problem was not in the oil price but it's in the "unguaranteed USD paper currency". OPEC will definitely not trade the finite oil for an infinite USD currency ( no thanks to Fed's money printing machine ). With oil production almost at it's peak worldwide, OPEC might have to reduce pumping rather then increased pumping to increase oil prices in order to protects it's future interest.
Another scenario in solving the above problem it's the decoupling of USD as the global oil currency, a worldwide economy nightmare if or when it's happened. Cause the main questions is will the American going to let it happened( decoupling ) without a fight? It aint going to be easy, 90% of the world commodities plus oil is traded in USD!
Therefore bye bye cheap oil.........................buy gold!
Disclaimer/Comments Policy.
Saturday, September 6, 2008
Dead Man Still Speak
Bullion Committee 1810 - Headed By Francis Horner, if he still alive today he might be either hated or love by some of the Central Banker especially for those who lifted gold as a regulator and value of paper money. Indeed dead men do speak, it's vibration echo from and through the grave.
Bullion Committee was set up by British Parliament in the year 1810, rampant inflation had visited Britain those day. This Committee was set-up to look into the reasons and also find solutions to solve the inflation problems that threatened Britain during that times.
Below are some of the summary or excepts of the finding:-
1. Gold is not only the standard for the domestic currency, "bullion is the true regulator both of the value of a local currency and of rate of exchange."
2. The great evil growing out of the neglect of the above was the price inflation that was cutting so deeply into the purchasing power of money.
3. The solution therefore is to restore convertibility of the currency into gold at earliest possible moment ie money supply or rate of exchange must be back by gold.
4. The price of gold rose because of the "excessive quantity of circulating medium," in short too much money in circulation in the economy.( Fed will not like to read this or their version of "helicopter money" will be fly out of the window ).
Results of the finding by 1821, gold standard was established and enshrined in official legislation became the model for the rest of the world to follow for nearly 100 years.
By the way Nixon lifted the gold as regulator in the early 70's since then inflation in the US had been northwards bound, today problems that are besieging the US financial markets can be trace way back to Nixon era.
Gordon Brown sold almost all the gold in Britain treasury at US250/oz few years back, he should have visited Francis Horner grave to "hear" him speak before deciding to sell it because at current value of US800/oz ,the loses .......Ouch!
Gordon Brown should provides Fed Chief Bernanke the location of Francis grave giving him an opportunity to "listen" from his grave, it might then help him to think twice before using "helicopter money" to solve the financial woes at Wall Street. Fannie and Freddie nationalization will cost US tax payer US200 billion( estimated figure, actual figure can go up to US5.7Trillion ) ), where to get the money? US Treasury by issuing more treasury bonds (I.O.U)or Feds which got this technology call printing machine it cost less then US5 cent to print one US100 bill. With already nearly 17% annualised growth of money supply pass few years and adding this rescue figure, hard times it's definitely ahead of us.
Will it cause inflation after this nationalizing exercise? Kindly pay a visits to Francis Horner grave to find out, "dead man do speak" don't they!
Buy Gold!
Disclaimer/Comments Policy.
Bullion Committee was set up by British Parliament in the year 1810, rampant inflation had visited Britain those day. This Committee was set-up to look into the reasons and also find solutions to solve the inflation problems that threatened Britain during that times.
Below are some of the summary or excepts of the finding:-
1. Gold is not only the standard for the domestic currency, "bullion is the true regulator both of the value of a local currency and of rate of exchange."
2. The great evil growing out of the neglect of the above was the price inflation that was cutting so deeply into the purchasing power of money.
3. The solution therefore is to restore convertibility of the currency into gold at earliest possible moment ie money supply or rate of exchange must be back by gold.
4. The price of gold rose because of the "excessive quantity of circulating medium," in short too much money in circulation in the economy.( Fed will not like to read this or their version of "helicopter money" will be fly out of the window ).
Results of the finding by 1821, gold standard was established and enshrined in official legislation became the model for the rest of the world to follow for nearly 100 years.
By the way Nixon lifted the gold as regulator in the early 70's since then inflation in the US had been northwards bound, today problems that are besieging the US financial markets can be trace way back to Nixon era.
Gordon Brown sold almost all the gold in Britain treasury at US250/oz few years back, he should have visited Francis Horner grave to "hear" him speak before deciding to sell it because at current value of US800/oz ,the loses .......Ouch!
Gordon Brown should provides Fed Chief Bernanke the location of Francis grave giving him an opportunity to "listen" from his grave, it might then help him to think twice before using "helicopter money" to solve the financial woes at Wall Street. Fannie and Freddie nationalization will cost US tax payer US200 billion( estimated figure, actual figure can go up to US5.7Trillion ) ), where to get the money? US Treasury by issuing more treasury bonds (I.O.U)or Feds which got this technology call printing machine it cost less then US5 cent to print one US100 bill. With already nearly 17% annualised growth of money supply pass few years and adding this rescue figure, hard times it's definitely ahead of us.
Will it cause inflation after this nationalizing exercise? Kindly pay a visits to Francis Horner grave to find out, "dead man do speak" don't they!
Buy Gold!
Disclaimer/Comments Policy.
15 Reasons To Buy Gold
Adapted form Solid Gold Reasons To Own Gold by Gary North.
1. Global Currency Debasement:
The US dollar is fundamentally & technically very weak and should fall dramatically. However, other countries are very reluctant to see their currencies appreciate and are resisting the fall of the US dollar. Thus, we are in the early stages of a massive global currency debasement which will see tangibles, and most particularly gold, rise significantly in price.
2. Investment Demand for Gold is Accelerating:
When the crowd recognizes what is unfolding, they will seek an alternative to paper currencies and financial assets and this will create an enormous investment demand for gold. To facilitate this demand, a number of new vehicles like Central Gold Trust and gold Exchange Traded Funds (Elf’s) are being created.
3. Alarming Financial Deterioration in the US:
In the space of two years, the federal government budget surplus has been transformed into a yawning deficit, which will persist as far as the eye can see. At the same time, the current account deficit has reached levels which have portended currency collapse in virtually every other instance in history.
4. Negative Real Interest Rates in Reserve Currency (US dollar):
To combat the deteriorating financial conditions in the US, interest rates have been dropped to rock bottom levels, real interest rates are now negative and, according to statements from the Fed spokesmen, are expected to remain so for some time. There has been a very strong historical relationship between negative real interest rates and stronger gold prices.
5. Dramatic Increases in Money Supply in the US and Other Nations:
US authorities are terrified about the prospects for deflation given the unprecedented debt burden at all levels of society in the US. Fed Governor Ben Bernanke is on record as saying the Fed has a printing press and will use it to combat deflation if necessary. Other nations are following in the US’s footsteps and global money supply is accelerating. This is very gold friendly.
6. Existence of a Huge and Growing Gap between Mine Supply and Traditional Demand:
Gold mine supply is roughly 2500 tonnes per annum and traditional demand (jewelry, industrial users, etc.) has exceeded this by a considerable margin for a number of years. Some of this gap has been filled by recycled scrap but central bank gold has been the primary source of above-ground supply.
7. Mine Supply is Anticipated to Decline in the next Three to Four Years:
Even if traditional demand continues to erode due to ongoing worldwide economic weakness, the supply-demand imbalance is expected to persist due to a decline in mine supply. Mine supply will contract in the next several years, irrespective of gold prices, due to a dearth of exploration in the post Bre-X era, a shift away from high grading which was necessary for survival in the sub-economic gold price environment of the past five years and the natural exhaustion of existing mines.
8. Large Short Positions:
To fill the gap between mine supply and demand, central bank gold has been mobilized primarily through the leasing mechanism, which facilitated producer hedging and financial speculation. Strong evidence suggests that between 10,000 and 16,000 tonnes (30–50% of all central bank gold) is currently in the market. This is owed to the central banks by the bullion banks, which are the counter party in the transactions.
9. Low Interest Rates Discourage Hedging:
Rates are low and falling. With low rates, there isn’t sufficient contango to create higher prices in the out years. Thus there is little incentive to hedge, and gold producers are not only not hedging, they are reducing their existing hedge positions, thus removing gold from the market.
10. Rising Gold Prices and Low Interest Rates Discourage Financial Speculation on the Short Side:
When gold prices were continuously falling and financial speculators could access central bank gold at a minimal leasing rate (0.5–1% per annum), sell it and reinvest the proceeds in a high yielding bond or Treasury bill, the trade was viewed as a lay up. Everyone did it and now there are numerous stale short positions. However, these trades now make no sense with a rising gold price and declining interest rates.
11. The Central Banks are Nearing an Inflection Point when they will be Reluctant to Provide more Gold to the Market:
The central banks have supplied too much already via the leasing mechanism. In addition, Far Eastern central banks who are accumulating enormous quantities of US dollars are rumored to be buyers of gold to diversify away from the US dollar.
12. Gold is Increasing in Popularity:
Gold is seen in a much more positive light in countries beginning to come to the forefront on the world scene. Prominent developing countries such as China, India and Russia have been accumulating gold. In fact, China with its 1.3 billion people recently established a National Gold Exchange and relaxed control over the asset. Demand in China is expected to rise sharply and could reach 500 tonnes in the next few years.
13. Gold as Money is Gaining Credence:
Islamic nations are investigating a currency backed by gold (the Gold Dinar), the new President of Argentina proposed, during his campaign, a gold backed peso as an antidote for the financial catastrophe which his country has experienced and Russia is talking about a fully convertible currency with gold backing.
14. Rising Geopolitical Tensions:
The deteriorating conditions in the Middle East, the US occupation of Iraq, the nuclear ambitions of North Korea and the growing conflict between the US and China due to China’s refusal to allow its currency to appreciate against the US dollar headline the geopolitical issues, which could explode at anytime. A fearful public has a tendency to gravitate towards gold.
15. Limited Size of the Total Gold Market Provides Tremendous Leverage:
All the physical gold in existence is worth somewhat more than $1 trillion US dollars while the value of all the publicly traded gold companies in the world is less than $100 billion US dollars. When the fundamentals ultimately encourage a strong flow of capital towards gold and gold equities, the trillions upon trillions worth of paper money could propel both to unfathomably high levels.
Disclaimers/Comments Policy.
1. Global Currency Debasement:
The US dollar is fundamentally & technically very weak and should fall dramatically. However, other countries are very reluctant to see their currencies appreciate and are resisting the fall of the US dollar. Thus, we are in the early stages of a massive global currency debasement which will see tangibles, and most particularly gold, rise significantly in price.
2. Investment Demand for Gold is Accelerating:
When the crowd recognizes what is unfolding, they will seek an alternative to paper currencies and financial assets and this will create an enormous investment demand for gold. To facilitate this demand, a number of new vehicles like Central Gold Trust and gold Exchange Traded Funds (Elf’s) are being created.
3. Alarming Financial Deterioration in the US:
In the space of two years, the federal government budget surplus has been transformed into a yawning deficit, which will persist as far as the eye can see. At the same time, the current account deficit has reached levels which have portended currency collapse in virtually every other instance in history.
4. Negative Real Interest Rates in Reserve Currency (US dollar):
To combat the deteriorating financial conditions in the US, interest rates have been dropped to rock bottom levels, real interest rates are now negative and, according to statements from the Fed spokesmen, are expected to remain so for some time. There has been a very strong historical relationship between negative real interest rates and stronger gold prices.
5. Dramatic Increases in Money Supply in the US and Other Nations:
US authorities are terrified about the prospects for deflation given the unprecedented debt burden at all levels of society in the US. Fed Governor Ben Bernanke is on record as saying the Fed has a printing press and will use it to combat deflation if necessary. Other nations are following in the US’s footsteps and global money supply is accelerating. This is very gold friendly.
6. Existence of a Huge and Growing Gap between Mine Supply and Traditional Demand:
Gold mine supply is roughly 2500 tonnes per annum and traditional demand (jewelry, industrial users, etc.) has exceeded this by a considerable margin for a number of years. Some of this gap has been filled by recycled scrap but central bank gold has been the primary source of above-ground supply.
7. Mine Supply is Anticipated to Decline in the next Three to Four Years:
Even if traditional demand continues to erode due to ongoing worldwide economic weakness, the supply-demand imbalance is expected to persist due to a decline in mine supply. Mine supply will contract in the next several years, irrespective of gold prices, due to a dearth of exploration in the post Bre-X era, a shift away from high grading which was necessary for survival in the sub-economic gold price environment of the past five years and the natural exhaustion of existing mines.
8. Large Short Positions:
To fill the gap between mine supply and demand, central bank gold has been mobilized primarily through the leasing mechanism, which facilitated producer hedging and financial speculation. Strong evidence suggests that between 10,000 and 16,000 tonnes (30–50% of all central bank gold) is currently in the market. This is owed to the central banks by the bullion banks, which are the counter party in the transactions.
9. Low Interest Rates Discourage Hedging:
Rates are low and falling. With low rates, there isn’t sufficient contango to create higher prices in the out years. Thus there is little incentive to hedge, and gold producers are not only not hedging, they are reducing their existing hedge positions, thus removing gold from the market.
10. Rising Gold Prices and Low Interest Rates Discourage Financial Speculation on the Short Side:
When gold prices were continuously falling and financial speculators could access central bank gold at a minimal leasing rate (0.5–1% per annum), sell it and reinvest the proceeds in a high yielding bond or Treasury bill, the trade was viewed as a lay up. Everyone did it and now there are numerous stale short positions. However, these trades now make no sense with a rising gold price and declining interest rates.
11. The Central Banks are Nearing an Inflection Point when they will be Reluctant to Provide more Gold to the Market:
The central banks have supplied too much already via the leasing mechanism. In addition, Far Eastern central banks who are accumulating enormous quantities of US dollars are rumored to be buyers of gold to diversify away from the US dollar.
12. Gold is Increasing in Popularity:
Gold is seen in a much more positive light in countries beginning to come to the forefront on the world scene. Prominent developing countries such as China, India and Russia have been accumulating gold. In fact, China with its 1.3 billion people recently established a National Gold Exchange and relaxed control over the asset. Demand in China is expected to rise sharply and could reach 500 tonnes in the next few years.
13. Gold as Money is Gaining Credence:
Islamic nations are investigating a currency backed by gold (the Gold Dinar), the new President of Argentina proposed, during his campaign, a gold backed peso as an antidote for the financial catastrophe which his country has experienced and Russia is talking about a fully convertible currency with gold backing.
14. Rising Geopolitical Tensions:
The deteriorating conditions in the Middle East, the US occupation of Iraq, the nuclear ambitions of North Korea and the growing conflict between the US and China due to China’s refusal to allow its currency to appreciate against the US dollar headline the geopolitical issues, which could explode at anytime. A fearful public has a tendency to gravitate towards gold.
15. Limited Size of the Total Gold Market Provides Tremendous Leverage:
All the physical gold in existence is worth somewhat more than $1 trillion US dollars while the value of all the publicly traded gold companies in the world is less than $100 billion US dollars. When the fundamentals ultimately encourage a strong flow of capital towards gold and gold equities, the trillions upon trillions worth of paper money could propel both to unfathomably high levels.
Disclaimers/Comments Policy.
Avoid US Stocks And Dollar
For those out there who thinks this coming financial and economic turmoil is just a walk in a park, better starts to think again, whatever happened in the US currently it is just the beginning of an era of great unpredictability in the world economy health and financial systems capability to right this storms of stagflation( combination of high inflation and stagnant economy growth ). As the writer in The Daily Reckoning wrote today..........................
Avoid U.S. stocks. The U.S. market is in relative decline. And it's just going to get worse from here…
Avoid U.S. bonds and the U.S. dollar too - they're both too dangerous. Besides there's no margin of safety. If everything goes right, you won't earn very much. If it goes wrong, you'll be wiped out.
Buy gold. We don't know what direction it is going, but it isn't going away. And if the world's monetary system is troubled - either by inflation or deflation - gold will be good protection.
Consider it an insurance policy. You pay for fire insurance on your house. If your house doesn't burn down you still don't regret having paid for fire insurance. If everything goes right in the world economy, gold will probably go down further. But if anything goes wrong - and our guess is that something will go wrong - you'll be happy to have some Krugerrands( gold coins ) in your pocket. Except from The Daily Reckoning.
Well go and buy your fire insurance/gold now!
Disclaimers/Comments Policy
Avoid U.S. stocks. The U.S. market is in relative decline. And it's just going to get worse from here…
Avoid U.S. bonds and the U.S. dollar too - they're both too dangerous. Besides there's no margin of safety. If everything goes right, you won't earn very much. If it goes wrong, you'll be wiped out.
Buy gold. We don't know what direction it is going, but it isn't going away. And if the world's monetary system is troubled - either by inflation or deflation - gold will be good protection.
Consider it an insurance policy. You pay for fire insurance on your house. If your house doesn't burn down you still don't regret having paid for fire insurance. If everything goes right in the world economy, gold will probably go down further. But if anything goes wrong - and our guess is that something will go wrong - you'll be happy to have some Krugerrands( gold coins ) in your pocket. Except from The Daily Reckoning.
Well go and buy your fire insurance/gold now!
Disclaimers/Comments Policy
Thursday, September 4, 2008
The Meaning Of Gold
Owning golds, it's conjure different meaning to different people. some owned it for security, some for it's intrinsic values and etc.
The Meaning Of Gold it's a great article written sometimes back, it's to reminds us the really truly reasons of having golds bullion in our possessions.
"The most important meaning of gold in human life is this: integrity, safety, and well-being.
Gold is, for all practical purposes, eternal. Gold is wealth in direct form that cannot be defaulted on. Gold-as-money replaces the scams of money-changers and of central banks with direct and honest value by weight. When used as money, the dollar value of gold is, by definition, unchanging, and the money thus has integrity. Because gold cannot be printed up or other wise dramatically and constantly increased in supply, price inflation is typically zero or less under a gold standard (as was true in America from the late 1700s through the early 1900s); your savings are thus safe in a way they can never be when central banks are at work inflating a fiat money supply. Even that most dangerous and violent of institutions, coercive government, is restrained and forced into a semblance of honesty by a functioning gold standard." Except from The Meaning Of Gold.
Golds can't be printed like the Fed's printing machine! Chances to create money "out of thin air" vaporised by gold. To mine an ounce of gold cost USD869 but to print a hundred dollar Uncle Sam bill cost less then 5 cent!
No government on earth can "create/print gold" out of thin air, long term prospects gold it's still the standard bearer in this uncertain times.
Well as for fiat money it's have been weighted, measured and found wanting.............. Buy Gold!
Disclaimer/Comment s Policy.
The Meaning Of Gold it's a great article written sometimes back, it's to reminds us the really truly reasons of having golds bullion in our possessions.
"The most important meaning of gold in human life is this: integrity, safety, and well-being.
Gold is, for all practical purposes, eternal. Gold is wealth in direct form that cannot be defaulted on. Gold-as-money replaces the scams of money-changers and of central banks with direct and honest value by weight. When used as money, the dollar value of gold is, by definition, unchanging, and the money thus has integrity. Because gold cannot be printed up or other wise dramatically and constantly increased in supply, price inflation is typically zero or less under a gold standard (as was true in America from the late 1700s through the early 1900s); your savings are thus safe in a way they can never be when central banks are at work inflating a fiat money supply. Even that most dangerous and violent of institutions, coercive government, is restrained and forced into a semblance of honesty by a functioning gold standard." Except from The Meaning Of Gold.
Golds can't be printed like the Fed's printing machine! Chances to create money "out of thin air" vaporised by gold. To mine an ounce of gold cost USD869 but to print a hundred dollar Uncle Sam bill cost less then 5 cent!
No government on earth can "create/print gold" out of thin air, long term prospects gold it's still the standard bearer in this uncertain times.
Well as for fiat money it's have been weighted, measured and found wanting.............. Buy Gold!
Disclaimer/Comment s Policy.
Tuesday, September 2, 2008
Cost Of Mining Per Ounce Of Gold Is USD869!
Something isn't right somewhere on current gold price listed at London or New York, current electronic trading price of an ounce of gold is around USD800 but yet the cost of mining an ounce of gold in S.Africa is a staggering USD 869/ounce! Read below :-
" The margins between costs and the Gold Price are shrinking," noted Nick Goodwin, an analyst at T-Sec in Johannesburg, to Reuters today, "as the companies try to dig out a wasting asset."This is not an easy business."South Africa's Gold Fields Ltd. – the world's fourth-largest gold miner – paid a total of $869 per ounce of production in the April-June period. The CEO, Nick Holland, says he wants to cut this "all-in cost" to $725 by March '09.After forecasting a Gold Price of $1,500 earlier this month, Holland told Creamer's Mining Weekly on Monday that "there’s not enough money today to replace the infrastructure that exists today at Gold Fields."If you tried to build these mines today, you would need a $2,000 price and higher to justify the investment."Replacement costs of all of the operations [mean] you could not recoup your investment today at these prices.
You could not build these facilities today anywhere."Mining-stock analyst Ian Henderson, manager of the $5-billion Natural Resources Fund at J.P.Morgan, told Reuters yesterday that Gold "should have a sustained price level of over $1,200 an ounce before we see any significant new mine build."Gold mining is a very complicated and expensive business and you really need to see the Gold Price a lot higher before you see any increase in gold production."
London Gold Market Report.
Adrian Ash.
Guys out there please don't trust the paper gold dealers, with the helps of few international bankers they had short sell or naked sell gold recently which in turns drive the gold price way too down for their own benefits. What there are selling/doing are merely shuffling of gold paper and not buying or selling physical gold bullion itself! With short term one month gold lease rate close to zero recently, gold dealers are turning the entire future gold markets into a scam . Manipulation of gold market price it's happening around the world currently beware holding on to your gold bullion it's the safest way to overcome the current crisis don't let them fool you!
In facts, India and other parts of the world like North America are facing gold shortage cause by rising demand and limiting supplies of physical gold coins and the like. Physical gold are in great demand yet the pricing of gold quoted in New York show price is going downward for past two weeks or so. Basic economics will tell you when demand go up price will follow upward also but then for gold it's reacted opposite direction. Take my advice start buying some for yourself now when the price it's at the downside before price go upward again.
If current situation persist long enough we will have to face with a rather daunting or worst kind of scenario that is gold mining firms shutting down their mines one after another in the long run because cost of running it far outstrip the current electronic paper gold price, which if happens will definitely drive up gold price even much further upwards!
Buy Gold.
Disclaimer/Comments Policy.
" The margins between costs and the Gold Price are shrinking," noted Nick Goodwin, an analyst at T-Sec in Johannesburg, to Reuters today, "as the companies try to dig out a wasting asset."This is not an easy business."South Africa's Gold Fields Ltd. – the world's fourth-largest gold miner – paid a total of $869 per ounce of production in the April-June period. The CEO, Nick Holland, says he wants to cut this "all-in cost" to $725 by March '09.After forecasting a Gold Price of $1,500 earlier this month, Holland told Creamer's Mining Weekly on Monday that "there’s not enough money today to replace the infrastructure that exists today at Gold Fields."If you tried to build these mines today, you would need a $2,000 price and higher to justify the investment."Replacement costs of all of the operations [mean] you could not recoup your investment today at these prices.
You could not build these facilities today anywhere."Mining-stock analyst Ian Henderson, manager of the $5-billion Natural Resources Fund at J.P.Morgan, told Reuters yesterday that Gold "should have a sustained price level of over $1,200 an ounce before we see any significant new mine build."Gold mining is a very complicated and expensive business and you really need to see the Gold Price a lot higher before you see any increase in gold production."
London Gold Market Report.
Adrian Ash.
Guys out there please don't trust the paper gold dealers, with the helps of few international bankers they had short sell or naked sell gold recently which in turns drive the gold price way too down for their own benefits. What there are selling/doing are merely shuffling of gold paper and not buying or selling physical gold bullion itself! With short term one month gold lease rate close to zero recently, gold dealers are turning the entire future gold markets into a scam . Manipulation of gold market price it's happening around the world currently beware holding on to your gold bullion it's the safest way to overcome the current crisis don't let them fool you!
In facts, India and other parts of the world like North America are facing gold shortage cause by rising demand and limiting supplies of physical gold coins and the like. Physical gold are in great demand yet the pricing of gold quoted in New York show price is going downward for past two weeks or so. Basic economics will tell you when demand go up price will follow upward also but then for gold it's reacted opposite direction. Take my advice start buying some for yourself now when the price it's at the downside before price go upward again.
If current situation persist long enough we will have to face with a rather daunting or worst kind of scenario that is gold mining firms shutting down their mines one after another in the long run because cost of running it far outstrip the current electronic paper gold price, which if happens will definitely drive up gold price even much further upwards!
Buy Gold.
Disclaimer/Comments Policy.
Disclaimer/Comments Policy
Disclaimer/Comments Policy.
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Disclaimer:The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
Comment Guidelines: Comments should be succinct, constructive and relevant to the story. We encourage engaging, diverse and meaningful commentary. Comments that include personal attacks, racial, religious, or ethnic slurs are not permitted. We continuously review and remove any inappropriate comments.
Thank You.
Monday, September 1, 2008
Wag The Dog
Wag The Dog
Are the Americans trying to hide their massive financial problems at home by creating a war in Georgia?
Or it is the signal of the end of pax Americana and the rise of China and Russia?
Above articles Wag The Dog are contributed by Ellen Brown through her blog site, author of the book title Web Of Debt. Great book, highly recommended for those who want to know the history of USD since it's inception until the present day problem that are besetting it. Want to know how the FED come about? It's the Congress own or control the FED's? "Helicopter money? FED money printing machine? Read her book to find it out yourself available at local bookstore.
Buy Gold.
Are the Americans trying to hide their massive financial problems at home by creating a war in Georgia?
Or it is the signal of the end of pax Americana and the rise of China and Russia?
Above articles Wag The Dog are contributed by Ellen Brown through her blog site, author of the book title Web Of Debt. Great book, highly recommended for those who want to know the history of USD since it's inception until the present day problem that are besetting it. Want to know how the FED come about? It's the Congress own or control the FED's? "Helicopter money? FED money printing machine? Read her book to find it out yourself available at local bookstore.
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