The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System

Most people have no idea that Wall Street has become a gigantic financial casino. The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end.

http://theeconomiccollapseblog.com/archives/the-coming-derivatives-crisis-that-could-destroy-the-entire-global-financial-system

Monster Prediction From BofA: Another US Debt Downgrade Is Coming In Just A Few Weeks

We expect a moderate slowdown in the beginning of next year, as two small policy shocks—another debt downgrade and fiscal tightening—hit the economy. The “not-so-super” Deficit Commission is very unlikely to come up with a credible deficit-reduction plan. The committee is more divided than the overall Congress. Since the fall-back plan is sharp cuts in discretionary spending, the whole point of the Committee is to put taxes and entitlements on the table. However, all the Republican members have signed the Norquist “no taxes” pledge and with taxes off the table it is hard to imagine the liberal Democrats on the Committee agreeing to significant entitlement cuts. The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan. Hence, we expect at least one credit downgrade in late November or early December when the super Committee crashes.

http://www.businessinsider.com/huge-prediction-from-bofa-another-us-debt-downgrade-is-coming-in-just-a-few-weeks-2011-10

EU bank failures will crash Wall Street — again

Worst-case scenario’s closing fast: Occupy Wall Street growing. But no political power or allies yet. Feared yes, attacked by GOP proxy tea party. Soon the Occupation will explode into a new American Revolution.

http://www.marketwatch.com/story/eu-bank-failures-will-crash-wall-street-again-2011-10-18

'Solving eurozone crisis is a long way off': Warning leads global stock markets to tumble

Stock markets around the world slammed into reverse yesterday after Germany warned that a solution to the debt crisis in the Eurozone was a long way off.
German Chancellor Angela Merkel warned the deadlock might not be broken until next year – dashing hopes of a comprehensive rescue plan emerging this weekend.
It came as a leading forecaster in London said the crisis in the single currency bloc will plunge Britain back into recession.

Read more: http://www.dailymail.co.uk/news/article-2050327/Eurozone-crisis-Recession-warning-leads-global-stock-markets-tumble.html#ixzz1bIJYyYQa


http://www.dailymail.co.uk/news/article-2050327/Eurozone-crisis-Recession-warning-leads-global-stock-markets-tumble.html

S&P downgrades 24 Italian banks, financial firms

Standard & Poor's on Tuesday downgraded 24 Italian banks and financial institutions, citing renewed "market tensions" and lower economic growth prospects.

The action was taken after a review of the implications of a tougher-than-previously-anticipated macroeconomic and financial environment for the Italian banks, the credit rating agency said.

"In our opinion, renewed market tensions in the euro zone's periphery, particularly in Italy, and dimming growth prospects have led to further deterioration in the operating environment for Italian banks," it said in a statement.

http://www.reuters.com/article/2011/10/18/us-italy-ratings-sp-idUSTRE79H4RZ20111018

10 Essential Fiscal Charts Demonstrating America's Disastrous Condition

With stagnating economic conditions and the passage of new legislation, especially the Budget Control Act of 2011, the outlook for the deficit and debt has changed considerably over the past six months.

http://www.zerohedge.com/news/10-essential-fiscal-charts-demonstrating-americas-disastrous-condition

Moody's warns France on possible negative outlook

Moody's warned on Monday it may slap a negative outlook on France's Aaa credit rating in the next three months if the costs for helping to bail out banks and other euro zone members stretch its budget too much.

http://www.reuters.com/article/2011/10/18/us-france-ratings-moodys-idUSTRE79G6XT20111018

Ron Paul’s Economic Plan: Cut 5 Cabinet Agencies, Cut Taxes, Cut President’s Pay

GOP presidential candidate Rep. Ron Paul will unveil his economic plan Monday afternoon, calling for a lower corporate tax rate, cutting spending by $1 trillion during his first year in office and eliminating five cabinet-level agencies, including the Education Department, according to excerpts released to Washington Wire.

Mr. Paul’s “Restore America” plan calls for a drastically reduced federal government to help spur American business — a familiar theme for the Texas Republican and many of the GOP White House hopefuls. But unlike some of his Republican rivals who have released economic plans, the libertarian congressman mostly avoids the weeds of tax and trade policy, according to excerpts.

http://blogs.wsj.com/washwire/2011/10/17/ron-pauls-economic-plan-cut-5-cabinet-agencies-cut-taxes-cut-presidents-pay/?mod=google_news_blog

Greece Faces 'Hellish Week' as Debt Crisis Tests Nation

The national newspapers proclaim in large 40-point type “Hellish Week,” or more sarcastically “It Begins — the Week of Thrills.” Both are a reference to a massive 48-hour strike, beginning Wednesday, that may bring out as many as 50,000 to 60,000 protestors.

The protest is timed for a controversial vote in parliament, scheduled for Thursday, that would effectively eliminate the minimum wage for millions of workers.

http://www.cnbc.com/id/44931473

Stocks End Sharply Lower on Recession Fears

Stocks came off their worst levels, but still finished sharply lower Thursday in heavy-volume trading as a gloomy outlook from the Federal Reserve in addition to ongoing economic jitters fueled concerns of a recession.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, soared above 41.

All 10 S&P sectors finished firmly in the negative territory, led by materials and energy.

The Fed announced it would launch a new $400 billion program in a move to rebalance its $2.87 trillion portfolio—a version of the widely expected Operation Twist—by selling shorter-term notes and using those funds to purchase longer-dated Treasurys.

http://www.cnbc.com/id/44624491

Warnings mount on euro crisis, BRICS mull more aid

World leaders and finance chiefs pushed Europe to quell its debt crisis and big emerging economies said they might provide more money to help stop the chaos from spreading.

As finance ministers and central bankers gathered for talks amid growing concern about sharply slowing growth and plunging stock markets, the leaders of seven big economies stressed the need to contain the euro zone crisis.

"Euro zone governments and institutions must act swiftly to resolve the euro crisis and all European economies must confront the debt overhang to prevent contagion to the wider global economy," the leaders of Australia, Canada, Indonesia, Britain, Mexico, South Africa and South Korea wrote in an open letter to France, chair of the Group of 20 leading economies.

Separately, officials from the so-called BRICS countries, including heavyweights China, Brazil and India, said they would consider giving more funds to the International Monetary Fund to boost global stability.

http://www.gmanews.tv/story/233185/business/warnings-mount-on-euro-crisis-brics-mull-more-aid

Fear gauge enters the red zone

Key indicators of credit stress have reached the danger levels seen before the Lehman Brothers failure three years ago, with Markit's iTraxx Crossover index – or "fear gauge" – of corporate bonds surging 56 basis points to 857 on Thursday.

Societe Generale led a further rout of bank shares, crashing 9pc in Paris on concern that it might need recapitalisation to cope with losses on Italian and Spanish debt.

The yield spread between Italian 10-year bonds and Bunds reached a fresh record of 408 basis points before the European Central Bank (ECB) intervened in late trading. It is near the level at which LCH.Clearnet raises margin requirements, the trigger that forced Greece, Portugal and Ireland to request bail-outs.

Global investors appear shaken by the refusal of the US Federal Reserve to come to the rescue yet again with quantitative easing (QE3) even though it was never likely the bank would launch fresh stimulus with core inflation running near 2pc or in the face of protests from Capitol Hill.

http://www.telegraph.co.uk/finance/financialcrisis/8783067/Fear-gauge-enters-the-red-zone.html

Europe's Problem Is Decidedly Not the Euro

"The sole use of money is to circulate consumable goods" - Adam Smith, The Wealth of Nations, p. 370

With the health of Europe's economy increasingly in question, a great deal of ink is being spilled as to its causes. Most unfortunate and wrongheaded is the growing view that the creation of a common currency - the euro - is behind the continent's troubles.

http://www.realclearmarkets.com/articles/2011/08/25/europes_problem_is_decidedly_not_the_euro_99208.html

Panic & Anxiety Swirl a Storm

Something big is going on in the United States in a sentiment change, an altered state of psychology, a growing sense of panic. My opinion is that the nation has entered the early stage of comprehension among the population of systemic failure. The most immediate measures are the rash of heavy selling down days in the US Stock market, the strong purchases in Gold, as well as the reactions to constant news of sovereign debt in trouble, and the big banks teetering.

http://news.goldseek.com/GoldenJackass/1314216000.php

In An Unsustainable System, A Warning of Collapse

August 24 2011: The meaning of the social security and medicare cuts, the continuing influence of the Council on foreign Relations, no real Consumer Price Index to go by, Euro zone not fully aware of the problem they have, a massive exposure for them, extended and unpayable debt.

http://beforeitsnews.com/story/1003/550/In_An_Unsustainable_System,_A_Warning_of_Collapse.html

We've been warned: the system is ready to blow

To understand the mess we are in, it's important to know how we got here. Today marks the 40th anniversary of Richard Nixon's announcement that America was suspending the convertibility of the dollar into gold at $35 an ounce. Speculative attacks on the dollar had begun in the late 1960s as concerns mounted over America's rising trade deficit and the cost of the Vietnam war. Other countries were increasingly reluctant to take dollars in payment and demanded gold instead. Nixon called time on the Bretton Woods system of fixed but adjustable exchange rates, under which countries could use capital controls in order to stimulate their economies without fear of a run on their currency. It was also an era in which protectionist measures were used quite liberally: Nixon announced on 15 August 1971 that he was imposing a 10% tax on all imports into the US.

http://www.guardian.co.uk/business/2011/aug/14/larry-elliott-global-financial-system

World Bank chief: Global economy in 'new danger zone'

The head of the World Bank warned Sunday that many key market players have lost confidence in recent weeks, pushing the fragile global economy into a "new danger zone."

Speaking to members of the Asian Society in Sydney, Australia, Robert Zoellick said events the past few weeks in Europe and the United States already have had an adverse impact, and could signal even bigger problems ahead. Several European nations continue to struggle with high debt, slow economies and other issues, while U.S. politicians went to the wire before they raised its debt ceiling -- only to see credit agencies downgrade its credit rating, and stock markets flounder.

"There was a convergence of some events in Europe and the United States that has led many market participants to lose confidence in the economic leadership of some of the key countries," Zoellick said.

http://www.cnn.com/2011/BUSINESS/08/14/world.bank.danger/

U.S. economy's wild ride is far from over

Congratulations on surviving the U.S. stock market's wildest week ever -- when the Dow registered some of its biggest ups and downs, gold briefly surged above $1,800 an ounce and interest rates on downgraded U.S. Treasury bonds fell to record lows.

In the end, the Dow closed down 1.5% for the week.

That was after stocks rose for a second straight day Friday after investors were drawn to the more positive of two economic reports. The monthly retail report showed consumers spent more on autos, furniture, clothing and gas in July, pushing up retail sales by the largest amount in four months. That seemed to outweigh concerns over a key consumer sentiment index falling to its lowest reading in more than 30 years.

http://www.freep.com/article/20110813/BUSINESS07/108130414/U-S-economy-s-wild-ride-far-from-over

Employees Bid Farewell to Corporate America

With the U.S. unemployment rate at 9.1 percent as of July 31 and a fragile economic recovery underway, many workers feel they are left with no choice but to take their careers into their own hands.

Employees are bidding farewell to corporate America in the hope of finding a more secure, or at least fulfilling, future. They are reinventing themselves by starting their own companies or by pursuing long-put-off dreams that include creative or charitable endeavors.

While it might seem like a bold move, countless workers believe the abundance of uncertainty in today’s job market mitigates the fear factor.

http://www.cnbc.com/id/42822615

0% Interest Rates Lock in Inflation

The decision by the Fed, last week, to keep a key interest rate at near zero percent for 2 years is historic because the Fed has never done this before. This action will have profound negative effect on the U.S. dollar and its buying power. It also signals that even the Fed thinks the economy is not going to get better for at least 2 years. This action will affect every American and telegraphs a policy of inflation by the government. In November of 2009, I predicted this very path in a post called “The Fix is In.” Back then, I said, “It appears the “fix” is in as far as the road plan for the U.S. dollar and economy. The government and the Fed appear to have chosen a path of inflation for America and the world. This is not an official announced plan but it might as well be.”

http://usawatchdog.com/zero-interest-rates-lock-in-inflation/

A big bounce, ounce by ounce, as gold takes off

Welcome to the new American gold rush. The price of gold is on a remarkable run, setting a record seemingly every other day. Stomach-churning volatility in the stock market this month has only made investors covet gold more.

Some want it as a safe investment for turbulent times. What worries some investors is that many others are buying simply because the price is rising and they want to make money fast.

http://finance.yahoo.com/news/A-big-bounce-ounce-by-ounce-apf-2335343368.html?x=0

What went wrong with the global recovery?

As recently as six months ago, mainstream economic forecasters were expecting real GDP growth to be comfortably above trend in 2011, and surveys of business activity were hitting new peaks. Of course, everyone knew that the underlying condition of the western economies was still very weak, but that did not seem to be sufficient to prevent a continuing normalisation of economic activity, with GDP returning slowly towards pre-recession trends.

http://blogs.ft.com/gavyndavies/2011/08/18/what-went-wrong-with-the-global-recovery/#axzz1VRnaQ4NG

Credit-rating agencies still threaten US debt recovery

As many had predicted, the deadlock over the US debt ceiling was broken at the very last moment.

On Monday night the House of Representatives approved the deal and Tuesday's senate vote is almost certain to go through.

But as the fears of a default on US debt are now receding, America faces the task of dealing with its huge deficit.

Credit-rating agencies have not yet commented on the deal, and their threat to downgrade the United States' credit rating remains.

http://www.bbc.co.uk/news/business-14372355

Debt Ceiling Agreement to Trigger Hyperinflation

President Obama just announced late this evening that a deal has been reached to cut government spending and raise the debt ceiling in order to avoid a debt default. If the deal is approved on Monday, it will raise the debt ceiling by between $2.1 and $2.4 trillion in three installments: $400 billion immediately, $500 billion this fall subject to a disapproval vote by Congress, and $1.2 to $1.5 trillion more after a special committee agrees on a matching amount of spending cuts that will be in addition to $900 billion in spending cuts proposed in the bill. With no tax increases included in this plan, all of this additional debt will eventually be monetized and paid for through monetary inflation.

http://www.rightsidenews.com/2011080114194/us/politics-and-economics/debt-ceiling-agreement-to-trigger-hyperinflation.html

Glenn Beck puts the Federal debt cap deal in prepper terms.

http://www.glennbeck.com/content/videos/?uri=channels/451373/1428412

China downgrades America

"China's credit rating agency Dagong downgraded the U.S. to A from A+ with a negative outlook, citing the increased debt limit and questions over creditor protection in the current political and economic environment."

America, you've been Dagonged.
The move "suggests that China may be getting more concerned about its U.S. exposure and that it may be stuck holding the bag should another financial or political crisis flare up," according to CMC Markets analyst Colin Cieszynski. China's problems have been well-documented -- including, depending on whom you talk to, a residential real estate bubble, rising inflation and questionable corporate governance. But the Asian powerhouse is also the top foreign holder of U.S. debt. That would be the debt that narrowly escaped getting downgraded by American ratings agencies in the wake of the theatrical U.S. debt ceiling fiasco.

So China has a direct stake in what happens south of the border, just as the rest of the world -- including Canada, increasingly -- has a direct stake in China's economy. Some commentators contend that the Chinese economy is sailing along on a bubble inflated by cheap government money and real estate speculation -- sound familiar, Canada? But it's hard to argue that in a world where the power balance is shifting from west to east, China's economic clout is rising as quickly as America's is falling.

http://communities.canada.com/vancouversun/blogs/yourmoney/archive/2011/08/04/china-downgrades-america.aspx

Unemployment rose in nearly all US cities

WASHINGTON (AP) -- Unemployment rates rose in more than 90 percent of U.S. cities in June, mirroring a national slowdown in hiring.

The Labor Department said Wednesday that unemployment rates rose in 345 large metro areas. They dropped in 20 cities and were unchanged in seven. That's worse than May, when rates rose in only 210 cities. And it is a sharp reversal from April, when unemployment rates fell in nearly all metro areas.

The biggest increase was in Joplin, Mo, which was hit by a major tornado on May 22. The city lost 9,400 jobs in June, and the unemployment rate jumped nearly 2 percentage points, to 9.6 percent.

The national unemployment rate ticked up to 9.2 percent in June, the highest level this year.

http://finance.yahoo.com/news/Unemployment-rose-in-nearly-apf-3394283988.html?x=0

Can't get no relief: Economic news sours investors

BOSTON (AP) -- What relief rally? Hope that the stock market would surge on news of Washington's debt ceiling deal has given way to pessimism. Increasingly defensive-minded investors are adapting to the reality that the economic recovery is stalling, if not ending.

Stocks rose slightly on Wednesday to snap an eight-day string of declines that sent prices down nearly 7 percent.

That stumble complicates matters for investors who recently pulled cash from the market, fearing a government default was a strong possibility. With that worry behind, the question is what to do next.

Richard Shortt had expected to be buying stocks, putting his sidelined money back to work. Yet he was at his home computer Wednesday, selling some of his stocks, and trimming investments in stock mutual funds. The 66-year-old from Somerville, Mass. put the proceeds into safer money-market mutual funds -- the same actions he took last week, when he sold stocks before Congress and President Obama reached the debt ceiling deal.

http://finance.yahoo.com/news/Cant-get-no-relief-Economic-apf-3742787640.html?x=0

US Yield Curve Flattening To Prompt Fed Easing and $1800 Gold

Weaker economic data from the US has caused the yield curve for US Treasuries to flatten significantly in recent months. However when the July manufacturing ISM came in at 50.9, well below the predictions of around 55.5, the curve flattened to a level not seen since August 2010. It was in August 2010 that the Fed first hinted at QE2 and therefore the fact that the curve has got back to this level puts pressure on the Fed to embark on another round of monetary easing. Whether this will be through QE3 or some other mechanism we do not know, however we are confident that further easing of US monetary policy is very bullish for gold prices.

http://www.skoptionstrading.com/updates/2011/8/3/us-yield-curve-flattening-to-prompt-fed-easing-and-1800-gold.html

Jim Rogers: Fed Will Launch QE3 by Q3

The head of Rogers Holdings expects this will happen "in the fall or early next year,” Rogers told CNBC, as FT Adviser reported.

http://www.moneynews.com/StreetTalk/JimRogers-Fed-Launch-QE3/2011/07/19/id/404095?s=al&promo_code=CA65-1

Poor Man's Gold is Breaking Out -- Sell Your House and Buy Silver?

Investors have pushed silver above the recent channel high at around $39 or so per ounce and I fully expect a retest of $50 if any more talk is given about QE3 — Silver rises because of the rising digital money supply, not from speculation. Owning cash is speculative whereas owning metals is conservative or a safe haven at current prices.

http://www.businessinsider.com/poor-mans-gold-is-breaking-out-sell-your-house-and-buy-silver-2011-7

The Fed Is Now More Leveraged That Lehman Brothers Was

The 2008 Crisis occurred when private US banks became so distrustful of one another’s balance sheet risk that interbank liquidity dried up triggering a systemic implosion in the unregulated derivatives market, particularly in Credit Default Swaps (which was a $50-60 trillion market at the time).

The Federal Reserve dealt with this situation by suspending accounting policies (permitting banks to lie about their true balance sheet risk), offering to backstop those banks with the greatest derivative exposure (JP Morgan, Bank of America, Goldman Sachs, and Citigroup), shifting trillions of dollars’ worth of toxic debt to the US balance sheet and then funneling trillions of new dollars into the banks most at risk of a derivative collapse (the banks I listed before).

http://gainspainscapital.com/?p=591

Get Ready for a 70% Marginal Tax Rate

President Obama has been using the debt-ceiling debate and bipartisan calls for deficit reduction to demand higher taxes. With unemployment stuck at 9.2% and a vigorous economic "recovery" appearing more and more elusive, his timing couldn't be worse.

Two problems arise when marginal tax rates are raised. First, as college students learn in Econ 101, higher marginal rates cause real economic harm. The combined marginal rate from all taxes is a vital metric, since it heavily influences incentives in the economy—workers and employers, savers and investors base decisions on after-tax returns. Thus tax rates need to be kept as low as possible, on the broadest possible base, consistent with financing necessary government spending.

http://online.wsj.com/article/SB10001424052702304911104576443893352153776.html?mod=WSJ_Opinion_LEADTop

A New Surge In Job Layoffs

Companies are laying off employees at a level not seen in nearly a year, hobbling the job market and intensifying fears about the pace of the economic recovery.

Cisco Systems Inc., Lockheed Martin Corp. and troubled bookstore chain Borders Group Inc. are among those that have recently announced hefty cuts, while recent government numbers underscore how companies have shifted toward cutting jobs.

The increase in layoffs is a key reason why the U.S. recorded an average of only 21,500 new jobs over the past two months, far below the level needed to bring down unemployment, which now stands at 9.2%.

http://www.declineoftheempire.com/2011/07/a-new-surge-in-job-layoffs.html

Audit: Fed gave $16 trillion in emergency loans to foreign banks

The U.S. Federal Reserve gave out $16.1 trillion in emergency loans to U.S. and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, according to figures produced by the government’s first-ever audit of the central bank.

Last year, the gross domestic product of the entire U.S. economy was $14.5 trillion.

http://runronpaul.com/mainstream-media/audit-fed-gave-16-trillion-in-emergency-loans-to-foreign-banks/

Iran Opens Oil Bourse - Harbinger of Trouble for New York and London?

The last three years of global recession have dealt a major blow to American capitalist ideas trumpeted throughout the world on the value of “free markets.” Wall St has been revealed as a form of casino economy, with the bankster insiders gambling with other people’s, and eventually, the government’s money in the form of bailouts. As the Republicans in Congress, scenting victory in the 2012 presidential elections, hold a gun to the Obama administration’s head and rating agencies consider downgrading U.S. government bonds in light of Washington’s possible defaulting, many ideas around the world that previously seemed implausible because of the dominance of the U.S. economy are garnering renewed interest.

http://oilprice.com/Energy/Crude-Oil/Iran-Opens-Oil-Bourse-Harbinger-of-Trouble-for-New-York-and-London.html

Fitch reiterates warning on U.S. credit rating

Fitch Ratings on Monday reiterated its view that if the U.S. debt ceiling is not raised prior to August 2, the agency will place the U.S. AAA rating on what it terms "ratings watch negative," meaning it could downgrade it within three to six-months.
Fitch prefaced its statement by saying it still believes an agreement on the debt ceiling will met before the deadline set by the U.S. Treasury.

"Agreement on a credible fiscal consolidation strategy will secure the U.S. 'AAA' status; failure to do so will inevitably weaken the sovereign credit profile and may result in a sovereign rating downgrade," Fitch said.

The U.S. Treasury Department has said if the debt ceiling is not raised by August 2, it will have to start prioritizing payments.

http://finance.yahoo.com/news/Fitch-reiterates-warning-on-rb-1114763265.html?x=0

How to make sense of the gold-to-silver ratio

Silver’s recent climb has significantly outpaced gains made by gold. But a closely watched ratio based on the two prices suggests silver has even more catching up to do, analysts say.

http://www.marketwatch.com/story/how-to-make-sense-of-the-gold-to-silver-ratio-2011-07-19

Europe's Contagion Effect: Prepare for a Global Economic Collapse

Europe is on the brink of a major financial disaster. Moody’s has downgraded Irish and Portuguese debt to junk, a status until now reserved for Greece. This in turn has led interest rates on Spanish and Italian debt to spike. Contagion of these two major economies is now imminent. If it happens, the global economy will plunge into a crisis that will make the 2008 bankruptcy of Lehman Brothers look like a cakewalk.

http://nationalinterest.org/commentary/europes-contagion-effect-prepare-global-economic-collapse-5640

Return of the Gold Standard as world order unravels

As the twin pillars of international monetary system threaten to come tumbling down in unison, gold has reclaimed its ancient status as the anchor of stability. The spot price surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8638644/Return-of-the-Gold-Standard-as-world-order-unravels.html

Bernanke Fights Ron Paul In Congress: Gold Isn’t Money

Chairman Ben Bernanke faced-off with Fed-hating Representative Ron Paul during his monetary policy report to Congress on Wednesday. The head of the Fed was forced to respond to accusations of enriching already rich corporations while failing to help Main Street, while he was pushed on his views on gold. When asked whether gold is money, Bernanke flatly responded “No.”

http://blogs.forbes.com/afontevecchia/2011/07/13/bernanke-fights-ron-paul-in-congress-golds-not-money/

Bernanke: Fed May Launch New Round of Stimulus

Federal Reserve Chairman Ben Bernanke told Congress Wednesday that a new stimulus program is in the works that will entail additional asset purchases, the clearest indication yet that the central bank is contemplating another round of monetary easing.

Bernanke said in prepared remarks that the economy is growing more slowly than expected, and should that continue the central bank stands at the ready with more accommodative measures.

"Once the temporary shocks that have been holding down economic activity pass, we expect to again see the effects of policy accommodation reflected in stronger economic activity and job creation," he said

http://www.cnbc.com/id/43739458

Dollar in full retreat, NZD storms 30-year peak

(Reuters) - The U.S. dollar was on the run in Asia on Thursday after a ratings warning from Moody's and a hint of further policy easing from the Federal Reserve unleashed a wave of panic selling, much to the relief of the hard-pressed euro.

http://www.reuters.com/article/2011/07/13/us-markets-forex-idUSTRE74U02L20110713

Moody’s Places U.S. on Review for Downgrade As Debt Talks Stall

Moody’s Investors Service put the U.S. under review for a credit rating downgrade as talks to raise the government’s $14.3 trillion debt limit stall, adding to concern that political gridlock will lead to a default.

The Aaa ratings of financial institutions directly linked to the U.S. government, including Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks, were also put on review for cuts, Moody’s said in a statement today.

The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.

http://www.bloomberg.com/news/2011-07-13/u-s-rating-placed-on-review-for-downgrade-by-moody-s-as-debt-talks-stall.html

Huge rare earth deposits found in Pacific: Japan experts

TOKYO (Reuters) – Vast deposits of rare earth minerals, crucial in making high-tech electronics products, have been found on the floor of the Pacific Ocean and can be readily extracted, Japanese scientists said on Monday.

"The deposits have a heavy concentration of rare earths. Just one square kilometer (0.4 square mile) of deposits will be able to provide one-fifth of the current global annual consumption," said Yasuhiro Kato, an associate professor of earth science at the University of Tokyo.

http://old.news.yahoo.com/s/nm/20110704/ts_nm/us_rareearth_japan

Enough of this Greek farce: everyone knows default is coming

The “Greek tragedy” metaphor has proved irresistible to columnists, but what is taking place in Athens owes less to Sophocles than to Ionesco.

No one seriously thinks that the measures adopted by the Greek parliament will end the crisis. In Brussels and in Athens, officials are conniving at an official suspension of disbelief.

In their imaginary world, Greece has now turned the corner. Tax evasion will stop. Public expenditure will fall. Privatization will bring in an extraordinary €50 billion. The county’s creditors will be satisfied, and Greece will return to growth.

In the real world, none of these things will happen – certainly not while Greece remains caged by the euro. Never mind the credibility of the fiscal reforms. Look at what ought to be the easy bit: the sale of state assets. Greece is proposing to denationalize a water company, a gas supplier, a rail operator, an airport, a casino, a nickel mine and much else. Good. The fact that all these concerns are owned by the state goes some way to explain why the Hellenic Republic is in its present mess and, in the long term, their transfer to the private sector will indeed boost growth.

http://blogs.telegraph.co.uk/news/danielhannan/100094699/what-is-happening-in-athens-is-a-farce-everyone-knows-that-a-default-is-coming/

As Plastic Reigns, the Treasury Slows Its Printing Presses

The number of dollar bills rolling off the great government presses here and in Fort Worth fell to a modern low last year. Production of $5 bills also dropped to the lowest level in 30 years. And for the first time in that period, the Treasury Department did not print any $10 bills.

The meaning seems clear. The future is here. Cash is in decline.

http://www.nytimes.com/2011/07/07/business/07currency.html?_r=1&hp

Pat Buchanan: Overextended U.S. Empire Is Coming Down

"The United States is strategically overextended worldwide. What are we doing borrowing money from Japan to defend Japan. Borrow money from Europe to defend Europe. Borrow money from the Persian Gulf to defend the Persian Gulf. This country is over extended. It is an empire and the empire is coming down," Pat Buchanan said on "Morning Joe" today.

"Well you're not going to get the revenue, so you might as well end the war," he added.

http://realclearpolitics.com/video/2011/07/06/pat_buchanan_overextended_us_empire_is_coming_down.html

Landmark US-Mexico trucking agreement resolves 15-year conflict

After years of wrangling, US and Mexican officials signed an agreement Wednesday that allows trucks from each nation to travel on the other country’s highways – a key provision of NAFTA.

http://www.csmonitor.com/USA/Foreign-Policy/2011/0706/Landmark-US-Mexico-trucking-agreement-resolves-15-year-conflict

Taleb’s Universa Bets on Black Swan Deflation, Hyperinflation

June 1 (Bloomberg) -- Universa Investments LP, the hedge- fund firm advised by “Black Swan” author Nassim Taleb, is adding a new strategy, betting that government efforts to pump money into economies around the world won’t prevent deflation or could result in hyperinflation.

Universa manages $6 billion under investment chief Mark Spitznagel, offering funds and accounts wagering on extreme market moves. The Santa Monica, California-based firm is investing client funds on the premise that no one knows where inflation is headed, Taleb said in an interview today.

“Policy makers have no control over the outcome of their actions,” Taleb said. “The plane they are flying will either hit the mountain, which is hyperinflation, or crash in the ocean, which is deflation. There is a chance of the pilot hitting the runway. But if he’s not skilled, it’s less than he thinks.”

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDVgqxiT9RSg

General Mills sees 2012 profit hit by food costs

General Mills Inc (NYSE:GIS - News) forecast weaker fiscal-year earnings than Wall Street expected as higher ingredient and fuel costs hammer the food company.

The maker of Cheerios cereal and Progresso soups said on Wednesday that it expects costs to rise 10 percent to 11 percent in the 2012 fiscal year, which began May 30. That is more than double the inflation it had forecast for the previous year.

The inflation will be the most intense in the first quarter. As a result, General Mills expects quarterly profit to fall in the current quarter and rise in the remaining three.

General Mills shares were up 1.2 percent in afternoon trading on Wednesday, outperforming the Standard & Poor's Packaged Food index and the S&P 500.

http://finance.yahoo.com/news/General-Mills-sees-2012-rb-756642526.html?x=0&.v=7

Obama’s Economists: ‘Stimulus’ Has Cost $278,000 per Job

When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.

The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.

In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.

http://www.weeklystandard.com/blogs/obama-s-economists-stimulus-has-cost-278000-job_576014.html

Get Ready for $150 Oil

After a decline this summer, crude's price is likely to rise sharply by next spring. It will hurt the economy, but it won't be a disaster.

The U.S. economy is never completely ready for higher oil prices, which is one reason they take a nasty economic toll when they arrive. But readiness can be enhanced by awareness of the likely outlook for petroleum prices–and the outlook today is relatively grim, although probably not disastrous.

Despite the recent 20% decline from April highs, new highs on crude, heating oil, diesel fuel, jet fuel and gasoline seem likely over the next 12 months. Following some further easing over the summer, the second leg of the long-term bull market in petroleum–the first occurred in 2007-08–probably will begin this fall.

http://online.barrons.com/article/SB50001424053111903617204576411791590055646.html?mod=TWM_pastedition_1

Amazon ends deal with 25,000 California websites

Gov. Jerry Brown has signed into law California's tax on Internet sales through affiliate advertising which will immediately cut small-business website revenue 20% to 30%, experts say.

The bill, AB 28X, takes effect immediately. The state Board of Equalization says the tax will raise $200 million a year, but critics claim it will raise nothing because online retailers will end their affiliate programs rather than collect the tax.

http://www.ocregister.com/articles/amazon-306409-affiliate-california.html

Fed's Massive Stimulus Had Little Impact: Greenspan

The Federal Reserve's massive stimulus program had little impact on the U.S. economy besides weakening the dollar and helping U.S. exports, Federal Reserve Governor Alan Greenspan told CNBC Thursday.

In a blunt critique of his successor, Fed Chairman Ben Bernanke, Greenspan said the $2 trillion in quantative easing over the past two years had done little to loosen credit and boost the economy.

"There is no evidence that huge inflow of money into the system basically worked," Greenspan said in a live interview.

http://www.cnbc.com/id/43598606

Forecasts for Growth Drop, Some Sharply

A drumbeat of disappointing data about consumer behavior, factory sales and weak hiring in recent weeks has prompted economists to ratchet down their 2011 economic forecasts to as little as half what they expected at the beginning of the year.

Two months ago, Goldman Sachs projected that the economy would grow at a 4 percent annual rate in the quarter ending in June. The company now expects the government to report no more than 2 percent growth when data for the second quarter is released in a few weeks.

Macroeconomic Advisers, a research firm, projected 3.5 percent growth back in April and is now down to just 2.1 percent for this quarter.

Both these firms, well respected in their analysis, have cut their forecasts for the second half of the year as well. Then this week, the Federal Reserve downgraded its projections for the full year, to under 3 percent growth. It started the year with guidance as high as 3.9 percent.

http://www.cnbc.com/id/43534613

Consumer spending breaks 10-month rising streak

Consumer spending failed to rise in May, breaking a string of 10 straight months of gains, as households struggled with rising prices and automakers could not deliver the models Americans wanted.

When adjusted for inflation, spending slipped 0.1 percent, the Commerce Department said on Monday. It was the second consecutive monthly drop.

The report, which confirmed that underlying inflation had quickened, suggested consumer spending would offer little support to the economy in the second quarter. In the first three months of the year, it advanced at a modest 2.2 percent annual rate, held back by the weak U.S. labor market.

http://old.news.yahoo.com/s/nm/20110627/bs_nm/us_economy

US budget office warns on debt explosion

The US Congressional Budget Office (CBO) has warned that an explosion in public borrowing could lead to debt levels as high as 100 per cent of the gross domestic product by 2021, if the current course remains unchanged.

The report by the independent budgetary think tank, released overnight, notes that US federal debt will reach roughly 70 per cent of GDP by the end of the year, the highest percentage since just after World War II.

That figure compares with a debt level of 40 per cent of GDP at the end of 2008, which compares favourably with the 40-year average of 37 per cent.

Advertisement: Story continues below The non-partisan CBO also said that if tax cuts enacted since 2001 continue to be extended, the country’s debt could be nearly twice the GDP by 2035.

The country’s total debt reached its legal limit of $US14.29 trillion ($13.58 trillion) in mid-May, and pressure has grown to raise that level ahead of an August 2 deadline. After that, says the US Treasury Department, the United States would be in default.

http://www.smh.com.au/business/world-business/us-budget-office-warns-on-debt-explosion-20110623-1ggeo.html

Federal Reserve admits US economy is struggling

The Federal Reserve has again cut its growth forecasts for the US economy and admitted that "longer-lasting" factors may help explain the current slowing in the recovery.

http://www.telegraph.co.uk/finance/economics/interestrates/8592432/Federal-Reserve-admits-US-economy-is-struggling.html

Bernanke Lies Half Life Reduced To Under One Day As Aflac Scrambling To Shore Up Liquidity On European Exposure

Yesterday during his press conference, the Chairman uttered his latest lie: "We have asked the banks to essentially do stress tests and ask, looking at all their positions, all their hedges, what would the effect on their capital be if -- if Greece defaulted...The answer is that the effects are very small.” Enter Aflac to prove that the half life of Bernanke's lies is now under 24 hours. From Bloomberg: "Aflac Inc. (AFL), the largest seller of supplemental health insurance, may issue as much as 100 billion yen ($1.24 billion) in debt as it records losses tied to investments in banks from Greece, Ireland and Portugal.

http://www.zerohedge.com/article/bernanke-lies-half-life-reduced-under-one-day-aflac-scrambling-shore-liquidity-european-expo

Geithner: Taxes on ‘Small Business’ Must Rise So Government Doesn’t ‘Shrink’

Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.”

The administration’s plan to raise the tax rate on small businesses is part of its plan to raise taxes on all Americans who make more than $250,000 per year—including businesses that file taxes the same way individuals and families do.

http://www.cnsnews.com/news/article/geithner-taxes-small-business-must-rise

Releasing Oil Reserves Called a 'Sign of Desperation'

The announcement by the US Department of Energy and the International Energy Agency that the latter would be releasing 60 million barrels of government-held stocks, immediately increasing global supply by nearly 2.5 percent, is "a sign of desperation. You don't do this if you have anything left in your arsenal," Mark Fisher, founder and CEO of MBF Clearing, told CNBC Thursday.

"This is a psychological mechanism. I think that in this case, the government is bringing a knife to a gun fight, when in reality there's only an 'x' amount of supply," Fisher said.

"I mean what happens if there is, God forbid, another Katrina this summer or there's another disaster someplace else in the world, and you really need to release the reserves?"

http://www.cnbc.com/id/43511270

BIS warns low rates may create 'financial distortions'

The Bank for International Settlements (BIS) has warned that low interest rates across the globe are a threat to world financial stability.

The BIS warned low cost of borrowing had resulted in a credit and property price boom that was fuelling inflation, especially in emerging economies.

Central banks across the globe have cut interest rates in an attempt to boost growth after the 2008 financial crisis.

However, BIS warned that the policy may prove to be counterproductive.

http://www.bbc.co.uk/news/business-13922857

Dollar seen losing global reserve status

The US dollar will lose its status as the global reserve currency over the next 25 years, according to a survey of central bank reserve managers who collectively control more than $8,000bn.

More than half the managers, who were polled by UBS, predicted that the dollar would be replaced by a portfolio of currencies within the next 25 years.

http://www.ft.com/cms/s/0/23183a78-a0c6-11e0-b14e-00144feabdc0.html#axzz1QWvsglhO

Treasury Auctions To Take US Over Debt Ceiling on Monday

The Treasury Department auctioned $56 billion in new debt Tuesday and Wednesday, enough to take the U.S. over its federal debt ceiling when the three- and 10-year notes settle on Monday.

Treasury officials last month flagged May 16 as the day the government would hit the $14.294 trillion debt limit.

The U.S. is selling $72 billion in new debt over three days this week. The Treasury auctioned $32 billion in three-year notes Tuesday and $24 billion in 10-year notes Wednesday, and will sell $16 billion in 30-year bonds Thursday. All of the auctions will settle Monday.

As of Tuesday, total debt subject to the limit was $14.274 trillion, according to the Treasury Department.

The Obama administration has asked Congress to raise the limit, warning that failure to act could lead the government to default by Aug. 2--and could spook investors even before then.

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201105111542dowjonesdjonline000477&title=treasury-auctions-to-take-us-over-debt-ceiling-on-monday

Roubini: Jobless Rate Will Jump to Near 10 Percent as Economy Slows

Expect unemployment to return to nearly 10 percent within a year and for the economy to hit the brakes, slowing to 2 percent, says NYU economist Nouriel Roubini.

The U.S. economy faltered to 1.8 percent growth in the first quarter, although some Federal Reserve members still expect growth on the order of 3 percent or higher in 2011.

“Things are going to be much more difficult than they’ve been so far,” Roubini said at a panel debate on alternative investments taking place in Las Vegas, reported CNBC. The error being made is not taking into account the seriousness of the Europe’s debt problems, Roubini said.

http://www.moneynews.com/StreetTalk/Roubini-us-economy-fed/2011/05/12/id/396131

Housing crash is getting worse

Average home prices are down 8% from a year ago, 3% over the quarter, and are falling at about 1% every month, according to Zillow.

And the percentage of homeowners in negative-equity positions — with a home worth less than its mortgage — has rocketed to 28%, a new crisis high.

Zillow now predicts prices will fall about 8% this year and says it no longer expects the market to bottom before 2012.

http://www.marketwatch.com/story/housing-crash-is-getting-worse-2011-05-09?link=MW_latest_news

Smithfield CEO: Higher Food Prices Are Here to Stay

The CEO of Smithfield Farms, the largest pork producer in the US. Among other things he said:

“Maybe to someone in the upper incomes it doesn’t matter what the price of a pound of bacon is, or what the price of a ham, or the price of a pound of pork chops is,” he says. “But for many of the customers we sell to, it really does matter.” Workers can share cars when the price of oil rises, he quips, but “you can’t share your food.”

Mr. Pope also worries about the impact on farmers, who are leveraging up operations to afford the ever-rising price of land and fertilizer that has resulted from the increased corn demand. “There are record prices for livestock but farmers are exiting the business!” he exclaims. “Why? Farmers know they won’t make money.”

Weather is a factor, too. “We’ve had the luxury for the last three years of extremely good corn crops, with high yields and good growing conditions. We are just one bad weather event away from potentially $10 corn, which once again is another 50% increase in the input cost to our live production.”

…Not all companies will survive this economic whirlwind. Mr. Pope recalls what happened the last time there was a surge in corn prices, in 2008: “The largest chicken processor in the United States, Pilgrim’s Pride, filed for bankruptcy.” They “couldn’t raise prices, so their cost of production went up dramatically.” Could it happen again? “It darn well could!” Mr. Pope exclaims.

…Mr. Pope says the “losers” here “are the consumer, who’s going to have to pay more for the product, and the livestock farmer who’s going to have to buy high-priced grain that he can’t afford because he’s stretching his own lines of credit. The hog farmer . . . is in jeopardy of simply going out of business ’cause he doesn’t have the cash liquidity to even pay for the corn to pay for the input to raise the hog. It’s a dynamic that we can’t sustain.”

http://gainspainscapital.com/?p=309

Government Raids PRIVATE Pensions To Pay For Spending

The Irish government plans to institute a tax on private pensions to drive jobs growth, according to its jobs program strategy, delivered today.

Without the ability sell debt due to soaring interest rates, and with severe spending rules in place due to its EU-IMF bailout, Ireland has few ways of spending to stimulate the economy. Today's jobs program includes specific tax increases, including the tax on pensions, aimed at keeping government jobs spending from adding to the national debt.

The tax on private pensions will be 0.6%, and last for four years, according to the report.

Read more: http://www.businessinsider.com/irish-bombshell-government-raids-private-pensions-to-pay-for-jobs-program-2011-5#ixzz1MIT8sFjP


http://www.businessinsider.com/irish-bombshell-government-raids-private-pensions-to-pay-for-jobs-program-2011-5

PIMCO raises bet against U.S. government debt

The increase, albeit small, follows Gross' move to ratchet up his bearishness in March by taking his initial short position in U.S. government-related debt, which includes Treasuries, TIPS, agencies, interest rate swaps, Treasury futures and options and FDIC-guaranteed corporate securities.

The $240 billion Total Return fund also raised its cash position to 37 percent in April from 31 percent in March, added Pacific Investment Management Co, which oversees $1.2 trillion in assets.

The Total Return fund took down its mortgage exposure to 24 percent in April from 28 percent the previous month.

The fund also decreased its allocation in investment-grade credit to 17 percent in April from 18 percent in March and junk bonds to 5 percent in April from 6 percent the previous month.

http://www.reuters.com/article/2011/05/09/us-investing-pimco-fund-idUSTRE7486LU20110509

China May Buy $1 TRILLION of Gold: Bloomberg

In an otherwise quiet article about central banks today, Bloomberg quoted an analyst who says China may use up to a third of their $3 trillion in foreign reserves to purchase gold.

China has been moving away from the dollar, and into alternative stores of wealth for years now.

But $1 trillion into gold? If it happens, such a large move would further threaten the dollar's status as reserve currency. It would also provide further buying pressure in gold for years to come (as the dollar crumples into a pitiful heap on the floor).

http://www.wealthwire.com/news/headlines/1090

Our taxes barely cover our social-welfare programs; everything else is on credit.

All federal revenues—from income taxes, Social Security and Medicare payroll taxes, corporate taxes, excise taxes, customs duties, estate and gift taxes and user fees—are consumed to pay Americans myriad federal benefits. These include Social Security, Medicare, Medicaid, veterans' benefits, food stamps, farm subsidies and the many other forms of social insurance and welfare, including economic stimulus and job-creation.

Put another way: The federal government borrows everything it needs to operate what we ought to think of as the government as an institution, such as defense (including the support of troops in Afghanistan and Iraq); highway construction; foreign aid; aid to states and localities; land management and pollution control; regulation of this, that and all the other things; scientific research; payment of federal employees' salaries; and payment of interest on the national debt.

http://online.barrons.com/article/SB50001424052970203703404576291230749135162.html

10 States Where Pensions Are Running Out of Money

Corporate pensions, municipal pensions, state pensions — each category has funds that have run out of money and certainly many are running low. The fate of the UAW pensions was a critical part of the US bailout of the auto industry. Eventually, the unions received equity in Chrysler and GM, among other things. They are not the only large American companies with underfunded pensions; they are just the most recent and visible examples.

http://finance.yahoo.com/retirement/article/112640/states-pensions-public-sector-247

World Food Prices Rise to Near-Record High as Inflation Speeds Up, UN Says

An index of 55 commodities rose to 232.1 points from 231 points in March, the United Nations’ Rome-based Food and Agriculture Organization said in a report on its website today. The gauge climbed to an all-time high of 237.2 in February before dropping 2.6 percent in March.

The cost of living in the U.S. rose at its fastest pace since December 2009 in the 12 months ended in March, the same month in which Chinese consumer prices rose by the most since 2008. The European Central Bank raised interest rates on April 7, joining China, India, Poland and Sweden in a bid to control inflation partly blamed on food costs. Costlier food also contributed to riots across northern Africa and the Middle East that toppled leaders in Egypt and Tunisia this year.

http://www.bloomberg.com/news/2011-05-05/food-prices-approach-record-high-as-grain-prices-fuel-inflation-worldwide.html

Obamaflation Arrives

President Obama's approval numbers in a state he carried by over ten points in 2008 has him with a disapproval rating of 52% -- and within the margin of error with three potential Republican presidential candidates.

http://spectator.org/archives/2011/04/26/obamaflation-arrives/1

U.S. States Pension Fund Deficits Widen by 26%

The deficits, or the difference between the retirement and health-care benefits states have promised their employees and the assets set aside to fund them, grew to $1.26 trillion by the end of the 2009 budget year from $1 trillion a year earlier, the Pew Center on the States said in a report released today. The fiscal year ends in June for all but four states.

The gaps are straining governments that have yet to fully recover from the recession and are stoking political fights in states such as New Jersey, Ohio and Wisconsin over the workers’ benefits. They have also drawn scrutiny in Congress, where Republicans have held hearings into the risks posed by underfunded pensions and backed legislation that would bar the federal government from bailing out any ailing funds.

“The states dug themselves a big hole before the recession ever hit,” Susan Urahn, the managing director of the Pew Center in Washington, said in a conference call with reporters yesterday. “We can see how the Great Recession and states’ severe budget problems made a serious problem even worse.”

http://www.bloomberg.com/news/2011-04-26/u-s-states-pension-fund-deficits-widen-by-26-pew-center-study-says.html

S&P cuts Japan rating outlook to negative

Standard & Poor’s cut its outlook on Japan’s sovereign rating to negative from stable Wednesday to reflect the potential for a downgrade if the country’s fiscal situation deteriorates more than expected in the wake of last month’s disaster.

http://www.marketwatch.com/story/sp-cuts-japan-rating-outlook-to-negative-2011-04-26

The 9 places where inflation is crushing us

The Federal Reserve would have you believe that everything is fine, focusing on core inflation rates and ignoring broader measures of inflation as they affect food and energy. These commodity-driven prices, as our central banking overlords would have you believe, are naturally more volatile and shouldn’t be overstated.

High gas prices could hurt ObamaNeil King looks at whether soaring gas prices will hurt President Obama's chances for re-election in 2012 and how Republicans in Congress are trying to put the blame on Obama for consumers' pain at the pump.

You would think after Fed bureaucrat William Dudley was castigated for talking up the affordability of iPads while ignoring real family expenses, our Federal Reserve officials would have woken up to reality. But after the publicity stunt by Chairman Ben Bernanke on Wednesday, it’s clear that the Fed — and perhaps many Americans as a result — is in denial when it comes to the inflationary trends crippling U.S. households.

http://www.marketwatch.com/story/the-9-places-where-inflation-is-crushing-us-2011-04-28?link=home_carousel

China creeps toward a crisis

China's leaders have turned an economic problem -- rising inflation that is projected to go from 5.4% in March to 6% in April -- into a political problem. They now face increasing protests over higher prices for everything from cooking oil to diesel fuel.

http://money.msn.com/investing/china-creeps-toward-a-crisis-jubak.aspx

China should cap forex reserves at 1.3 trillion U.S. dollars: China banker

China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.

The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

http://news.xinhuanet.com/english2010/china/2011-04/23/c_13842843.htm

The Best and Worst Run States In America: A Survey of All Fifty

How well run are America’s fifty states? 24/7 Wall St. has taken several months to consider that question. Our writers looked at hundreds of data sets ranging from debt rating agency reports to violent crime rates, unemployment trends and median income. Of those, we chose what we considered to be the 10 most important ranking of financial and overall government management. The best run state is Wyoming. The Worst is Kentucky. The standing of each is supported by their ranking in the data sets we considered, as are the rankings of all fifty states.

http://247wallst.com/2010/10/04/the-best-and-worst-run-states-in-america-a-survey-of-all-fifty/

$6 Gas? Could Happen if Dollar Keeps Getting Weaker

A dollar plumbing three-year lows is hitting Americans squarely in the gas tank, and one economist thinks it could drive prices as high as $6 a gallon or more by summertime under the right conditions.

With the greenback coming under increased pressure from Federal Reserve policies and investor appetite for more risk, there seems little direction but up for commodity prices, in particular energy and metals.

Weakness in the US currency feeds upward pressure on commodities, which are priced in dollars and thus come at a discount on the foreign markets.

http://www.cnbc.com/id/42683030

A Frightening Satellite Tour Of America's Foreclosure Wastelands

RealtyTrac is out with the total foreclosure numbers for 2010. On the whole things are getting worse.

72 percent of major metro areas saw an increase in foreclosure volume. Although some of the worst hit areas in Nevada, California and Florida improved from 2009, the foreclosure rate in these areas remains shockingly high. If not for some foreclosure suspensions due to the robosigning scandal, these numbers would have been higher.

For a frightening way to visualize the foreclosure crisis,
http://www.businessinsider.com/satellite-tour-foreclosure-cities-2011-1?op=1

US government’s fiscal plight, the numbers say it all

As the Republican and Democratic leadership in Washington suit up for the battle that will be the 2012 budget, a battle that will have a lot to say about the fiscal fate of the U.S. government, we here at THE CONTRARIAN TAKE will be watching like a hawk.

http://blogs.forbes.com/michaelpollaro/2011/04/22/us-governments-fiscal-plight-the-numbers-say-it-all/

The World Bank’s global Food Price Index remains close to its 2008 peak

Global food prices remain high, partly due to increasing fuel prices, and the World Bank’s Food Price Index is around its 2008 peak. Since June 2010, an additional 44 million people fell below the $1.25 poverty line as a result of higher food prices. Simulations show that a further 10% increase in the Food Price Index could lead to 10 million people falling into poverty, and a 30% increase could increase poverty by 34 million people.

http://www.worldbank.org/foodcrisis/foodpricewatch/april_2011.html

Downgrading of U.S. Credit Rating Just Tip of the Iceberg

credit-reporting agency Standard & Poor’s downgraded the U.S. “AAA” credit rating from “stable” to “negative.” It was one big, loud message: if the U.S doesn’t get spending under control, its credit rating will be jeopardized further.

So how did the markets react? They gave us the opposite of what is expected. Instead of the U.S. dollar falling in value, it rallied. Bond prices, instead of declining, rallied. And gold stock prices declined with crude oil prices.

Why would U.S.-dollar denominated assets rally on the news of a U.S. credit rating cut (aside from trying to confuse the heck out of investors)? The reality of the situation is that investors still foolishly flock to U.S. dollars in times of uncertainty—even when the debt rating of the country issuing the dollars, the U.S., has been downgraded.

http://wallstreetpit.com/71669-downgrading-of-u-s-credit-rating-just-tip-of-the-iceberg

McDonald's warns of higher food inflation

* Q1 profit $1.15 per share vs Street view $1.14

* Sees more food inflation in United States, Europe

* Plans small price increases this year

* Will sacrifice some margin to protect traffic

* Shares down 1.5 percent

http://www.reuters.com/article/2011/04/21/mcdonalds-idUSN2113482820110421

Killer Combo of High Gas, Food Prices at Key Tipping Point

The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession, according to Craig Johnson, president of Customer Growth Partners.

With gas prices now standing at about $3.90 a gallon, energy costs have now passed 6 percent of spending—a level that Johnson says is a "tipping point" for consumers.

"Energy is not quite as essential as food and water, but is a necessity in today's economy, and when gasoline costs more than bottled water—like now—then it takes a huge bite out of disposable spending," he said, in a research note.

Of the six US recessions since 1970, all but the "9-11 year 2001 recession" have been linked to—of not triggered by—energy prices that crossed the 6 percent of personal consumption expenditures, he said. (During the shallow 2001 recession, energy prices had risen to about 5 percent of spending, which is higher than the long-term 4 percent share.)

http://www.cnbc.com/id/42704213

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Bank Of America Analyst Advocates The “Unthinkable” — An Intentional Default On US Debt

No one need create the catastrophic event otherwise feared from a temporary deferral of interest payments on Treasury debt arising out of a political conflict. Politicians on both sides of the debate could help to avoid that outcome by setting market expectations. With appropriate direction from Treasury or Congress, holders of Treasury debt could accrue their missed interest payments while continuing to accrue future interest payments.

http://www.blacklistednews.com/Bank_Of_America_Analyst_Advocates_The_%E2%80%9CUnthinkable%E2%80%9D_%E2%80%94_An_Intentional_Default_On_US_Debt_/13560/0/0/0/Y/M.html

U.S. Companies Shrink Packages as Food Prices Rise

U.S. food prices have been rising in the last year, but it seems the growth is only just beginning. A sharp jump in commodities' prices this year will soon result in sticker shock for American consumers.

Large food companies have recently announced that they will raise the prices they charge grocery retailers for commodities-based products. For example, a chocolate bar will cost more soon: Hershey last week announced a 10% increase for most of its confectionery goods.

http://www.dailyfinance.com/2011/04/04/u-s-companies-shrink-packages-as-food-prices-rise/

Secret memos expose link between oil firms and invasion of Iraq

Plans to exploit Iraq's oil reserves were discussed by government ministers and the world's largest oil companies the year before Britain took a leading role in invading Iraq, government documents show.

The papers, revealed here for the first time, raise new questions over Britain's involvement in the war, which had divided Tony Blair's cabinet and was voted through only after his claims that Saddam Hussein had weapons of mass destruction.

http://www.independent.co.uk/news/uk/politics/secret-memos-expose-link-between-oil-firms-and-invasion-of-iraq-2269610.html

BRICS Make Move to Shove Dollar Aside

China and four other leading high-growth economies have taken landmark steps toward lowering the importance of the dollar in international financial transactions — part of a seminal shift in the move towards a multicurrency reserve and trading system.

Mind you, you wouldn't get an idea of anything dramatic from reading the official Chinese press on the conclusion of a summit meeting of the so-called BRICS economies (Brazil, Russia, India, China and South Africa) in the southern resort twin of Sanya in southern China last week.

"Leaders call for peace and prosperity" was the front-page headline in the China Daily. Stirring stiff. Even more striking was the prominent story the previous day that China's President Hu Jintao and visiting Brazilian President Dilma Rousseff had agreed to quicken trade procedures for "gelatin, corn, tobacco leaf, bovine embryos and semen." At least we know there's no holding back the Chinese rhetorical flourishes on these issues.

http://finance.yahoo.com/banking-budgeting/article/112563/BRICS-move-dollar-aside-marketwatch?mod=bb-budgeting%20&sec=topStories&pos=3&asset=&ccode=

Wall Street shares slump as S&P downgrades US debt outlook

Ratings agency cuts long-term outlook from stable to negative for first time since Pearl Harbor attack 70 years ago

Shares fell heavily on Wall Street on Monday after a leading ratings agency fanned fears of Europe's debt crisis spreading across the Atlantic by issuing a strong warning about America's failure to tackle its budget deficit.

In a move seen by Wall Street as a "shot across the bows" of bickering politicians in Washington, Standard and Poor's (S&P) said it was cutting the outlook on the US's long-term rating from stable to negative for the first time since the attack on Pearl Harbor 70 years ago.

http://www.guardian.co.uk/business/2011/apr/18/us-economy-credit-rating

Insolvent and Going Deeper

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Insolvent and Going Deeper
Share46EmailWednesday, April 13, 2011, 6:45 pm, by cmartenson
The US budget process is entirely out of control. By extension, its fiscal future is rather bleak.

All one has to do is back up two steps, entirely ignoring the meaningless budget scuffles currently ongoing in DC, to see that the federal government's fiscal situation is in complete shambles. In fact, as things currently stand in terms of spending and revenues, the US government is insolvent - its liabilities vastly exceed its assets on a net-present-value basis.

Yes, Obama has just laid out a plan that calls for cutting some $4 trillion of new, incremental deficit additions over the next 12 years, but this merely obscures the fact that the deficit will still grow by a rather hefty amount nonetheless. Plans from both sides of the aisle call for adding more debt but at a slower pace. True, that's progress of a sort, but not the type of progress you want to bring home to meet your mother.

http://www.chrismartenson.com/blog/insolvent-and-going-deeper/56407

World Bank: Food prices have entered the 'danger zone'

Food prices have entered the “danger zone”, threatening to condemn a generation to extreme poverty and malnutrition, the World Bank has warned.

Robert Zoellick, World Bank president, said food prices are at “a tipping point”, having risen 36pc in the last year to levels close to their 2008 peak. The rising cost of food has been much more dramatic in low-income countries, pushing 44m people into poverty since June last year.

http://www.telegraph.co.uk/finance/economics/8451684/World-Bank-Food-prices-have-entered-the-danger-zone.html

Toxic Dollar: Why Nobody Seems to Want US Currency

Traders are warning of a dramatic change in dollar selling. They fear central banks from the Middle East may force their Asian rivals to more aggressively drive the dollar down.

In 10 months, the Dollar Index has lost 14% because the world keeps accumulating dollars it doesn’t want and sells them. Asian central banks are key.

Many Asian central banks have been forced into waging wars to keep their currencies from appreciating because of the influx of investors to emerging markets. They sell waves of their own currencies into the market in an attempt to keep exports competitive.

http://www.cnbc.com/id/42479791

Treasury may borrow federal retirement funds in debt emergency

The government could temporarily tap tens of billions of dollars from two federal employee retirement programs if Congress fails to raise the federal debt ceiling next month, Treasury Secretary Timothy Geithner told lawmakers.

The government expects to hit a $14.3 trillion debt ceiling on May 16 or before, Geithner said in a Monday letter.

Geither implored Congress to extend the debt ceiling by that deadline and said that if Congress does not, Treasury will be forced to borrow money from the Civil Service Retirement and Disability Fund, and the Thrift Savings Plan's Government Securities Investment Fund, or G Fund, both of which are invested in U.S. Treasury securities. Those two moves could free up $142 billion through early July.

The government has taken similar steps before with no effect upon federal retirees. If the debt ceiling is extended by Congress within a couple months of the deadline, retirees and TSP participants should have nothing to worry about, several experts said. By law, both funds have to be repaid with interest, said Susan Irving, director for federal budget analysis at the Government Accountability Office.

http://www.federaltimes.com/article/20110405/BENEFITS02/104050306/

Sales of wholesale goods slip in February

Wholesale businesses boosted inventories for the 14th consecutive month but sold fewer cars, pieces of furniture and petroleum products in February.

Sales at the wholesale level slipped 0.8 percent in February, the first setback since June 2010, the Commerce Department reported Friday.

Inventories rose 1 percent and have been rising for more than a year. The string of inventory gains pushed them to $438 billion, up 13.4 percent from the low reached in September 2009.

The drop in sales is likely temporary, given expectation for gains in consumer demand in coming months, supported by tax cuts and stronger employment growth.

Auto sales at the wholesale level dropped 2.2 percent, furniture sales fell 2.2 percent, and sales of petroleum products declined 1 percent. Sales of petroleum products had surged 10.8 percent in January, a rise that was heavily influenced by a spike in oil prices.

http://finance.yahoo.com/news/Sales-of-wholesale-goods-slip-apf-1004846056.html?x=0

PIMCO goes short US government debt, raises cash holdings

PIMCO has shifted to a short position in U.S. government-related debt in the world's largest bond fund, while also raising cash holdings in a sign of the asset manager's serious concerns about the U.S. fiscal outlook.

http://www.reuters.com/article/2011/04/11/pimco-bonds-short-idUSL3E7FB10S20110411

$5 Fees May Be Coming to an ATM Near You

J.P. Morgan Chase [JPM 46.35 0.25 (+0.54%) ] and other banks are trying to recoup approximately $30 billion a year in lost overdraft fee income by testing $5 ATM fees, Consumer Action spokesman Joe Ridout told CNBC.

These banks have "historically been reliant on overdraft fees," he said, so they're "coming up with new ways to make up the difference." He said higher ATM fees and other rising costs penalize small depositors.

http://www.cnbc.com/id/42357880

Jim Rogers Predicts Soaring Oil Prices

“The price of oil is going to go much higher over the next decade,” said Jim Rogers, Chairman of Rogers Holdings. He added the demand for oil and natural gas will rise in the next few years as nuclear demand falls in response to Fukushima, but “we need nuclear whether we like it or not.”

http://www.prisonplanet.com/jim-rogers-predicts-soaring-oil-prices.html

Dimon Says a Hundred Municipalities in U.S. Won’t ‘Make It’ Out of Debt

JPMorgan Chase & Co. (JPM) Chairman and Chief Executive Officer Jamie Dimon said some municipalities will need to renegotiate debt and a hundred may not “make it.”

“I wouldn’t panic about what I’m about to say,” Dimon, 55, said today at a U.S. Chamber of Commerce event in Washington. “You’re going to see some municipalities not make it. I don’t think it’s going to shatter America, I just think it’s a part of the credit cycle.”

Speculation about widespread municipal-bond defaults intensified in December when bank analyst Meredith Whitney predicted that “hundreds of billions” of dollars of municipal bonds may default in 2011 amid pressure to balance budgets.

http://www.bloomberg.com/news/2011-03-30/dimon-says-hundreds-of-municipalities-in-u-s-won-t-make-it-out-of-debt.html

Foreign Banks Tapped Fed’s Secret Lifeline Most at Crisis Peak

U.S. Federal Reserve Chairman Ben S. Bernanke’s two-year fight to shield crisis-squeezed banks from the stigma of revealing their public loans protected a lender to local governments in Belgium, a Japanese fishing-cooperative financier and a company part-owned by the Central Bank of Libya.

Dexia SA (DEXB), based in Brussels and Paris, borrowed as much as $33.5 billion through its New York branch from the Fed’s “discount window” lending program, according to Fed documents released yesterday in response to a Freedom of Information Act request. Dublin-based Depfa Bank Plc, taken over in 2007 by a German real-estate lender later seized by the German government, drew $24.5 billion.

http://www.bloomberg.com/news/2011-04-01/foreign-banks-tapped-fed-s-lifeline-most-as-bernanke-kept-borrowers-secret.html

Food inflation kept hidden in tinier bags

'It's sneaky, because they figure people won't know'

Chips are disappearing from bags, candy from boxes and vegetables from cans.

As an expected increase in the cost of raw materials looms for late summer, consumers are beginning to encounter shrinking food packages.

With unemployment still high, companies in recent months have tried to camouflage price increases by selling their products in tiny and tinier packages. So far, the changes are most visible at the grocery store, where shoppers are paying the same amount, but getting less.

http://www.msnbc.msn.com/id/42317990/

Oil climbs to highest since 2008 on Libya conflict

The price of oil rose to a 30-month high on Thursday as fighters loyal to Moammar Gadhafi pushed back rebels from key areas in eastern Libya.

Benchmark West Texas Intermediate crude rose $2.45, more than 2 percent, to settle at $106.72 a barrel on the New York Mercantile Exchange. At one point it hit $106.83, the highest it's been since September, 2008. In London, Brent crude rose $2.25 to settle at $117.20 per barrel.

http://finance.yahoo.com/news/Oil-climbs-to-highest-since-apf-1947152419.html?x=0&sec=topStories&pos=main&asset=&ccode=

Fed Official Sees Rates Inching Up This Year

The president of the Minneapolis Federal Reserve Bank said Thursday the Fed may need to increase short-term interest rates by year's end if underlying inflation rises as he anticipates.

In a interview, Narayana Kocherlakota said he expected "a big upward movement" in core inflation—inflation excluding volatile food and energy prices—from about 0.8% late last year to about 1.3% by year-end.

As a result, he said, it's "certainly possible" the Fed's target for short-term interest rates, now near zero, would be lifted by more than half a percentage point late this year.

http://online.wsj.com/article/SB10001424052748703806304576235033771422402.html?mod=googlenews_wsj

Wal-Mart CEO Bill Simon expects inflation

U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products, the head of Wal-Mart's U.S. operations warned Wednesday.

The nation's largest retailer needs to get back to its roots as the lowest priced one-stop shop for consumers, Walmart CEO Bill SImon said.
The world's largest retailer is working with suppliers to minimize the effect of cost increases and believes its low-cost business model will position it better than its competitors.

Still, inflation is "going to be serious," Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY's editorial board. "We're seeing cost increases starting to come through at a pretty rapid rate."

http://www.usatoday.com/money/industries/retail/2011-03-30-wal-mart-ceo-expects-inflation_N.htm

Traders Worry That April 27 Could Derail the Bull Market

Traders are saying the scariest moment of the second quarter will be on April 27, when Federal Reserve Chairman Ben Bernanke will hold the first ever press briefing following a monetary policy decision by the central bank.


http://www.cnbc.com/id/42362299

Private Corporation Official Admits Impending U.S. Bankruptcy

http://www.opinion-maker.org/2011/03/private-corporation-official-admits-impending-u-s-bankruptcy/

The Dollar Will Collapse Within 3-4 Months

The US Dollar's inflationary death spiral continues. We've now taken out the 2010 low leaving only two more lines of support before we're in completely uncharted territory.

At its current rate of collapse, the US Dollar will do this within the next 3-4 months. This means the greenback will break into a new all-time lows by 2H11, which will precipitate the coming inflationary collapse.

http://www.zerohedge.com/article/dollar-will-collapse-within-3-4-months

End of the Dollar?

In this new monetary world, moreover, the U.S. government will not be able to finance its budget deficits so cheaply, since there will no longer be as big an appetite for U.S. Treasury securities on the part of foreign central banks.

Nor will the U.S. be able to run such large trade and current-account deficits, since financing them will become more expensive. Narrowing the current-account deficit will require exporting more, which will mean making U.S. goods more competitive on foreign markets. That in turn means that the dollar will have to fall on foreign-exchange markets – helping U.S. exporters and hurting those companies that export to the U.S.

http://www.economics21.org/blog/end-dollar

Unsustainable budget threatens nation

Divided government is no excuse for inaction. The bipartisan National Commission on Fiscal Responsibility and Reform, under co-chairmen Erskine Bowles and Alan Simpson, issued a report on the problem in December supported by 11 Democrats and Republicans — a clear majority of the panel’s 18 members.

http://www.politico.com/news/stories/0311/51864.html

Moody's warns Britain over triple-A credit rating

Moody's, the ratings agency, said Britain's triple-A credit rating could be at risk if slower growth makes it harder for the government to rein in its budget deficit.

http://www.telegraph.co.uk/finance/economics/8403896/Moodys-warns-Britain-over-triple-A-credit-rating.html#

The Road of Inflation Will Only End in Tears

Cycles of booms and busts are planned, unpayable debts in many nations, we predicted the demise of the bond market months ago, Ron Paul looks at bogus CPI and PPI stats, world problems affect us here, recent low for the US dollar, near misses at leaky nuclear plant at home at Indian Point, a brutal labor war being waged in Wisconsin.

http://theinternationalforecaster.com/International_Forecaster_Weekly/The_Road_of_Inflation_Will_Only_End_in_Tears

US Cost of Living Hits Record, Passing Pre-Crisis High

A special index created by the Labor Department to measure the actual cost of living for Americans hit a record high in February, according to data released Thursday, surpassing the old high in July 2008. The Chained Consumer Price Index, released along with the more widely-watched CPI, increased 0.5 percent to 127.4, from 126.8 in January. In July 2008, just as the housing crisis was tightening its grip, the Chained Consumer Price Index hit its previous record of 126.9.

http://www.cnbc.com/id/42130406

Currency Meltdown Coming

The situation in Japan is getting worse, not better. There are shortages in food, fuel and warm dry shelter. To make matters exponentially worse, nuclear power plants there continue to burn out of control and emit high levels of radiation. Japan is a stark reminder of how fast a modern technologically advanced society can be brought to its knees by an unforeseen calamity.

http://usawatchdog.com/currency-meltdown/

Enron Accounting: D.C. Politicians "Just Wasting Time" on Budget, BU's Kotlikoff Says

The Senate on Thursday is expected to pass another continuing resolution that will fund the government until April 8 and avert a shutdown. But that won't solve the need for a budget to fund the remainder of the fiscal year, much less address America's true fiscal woes, says Boston University economics professor Laurence Kotlikoff.
The ongoing budget debate in Washington is "really a food fight between Democrats and Republicans in order to shield what's going on, which is we are stealing from our kids," Kotlikoff says. "What these guys in Washington are doing is just wasting time."

http://finance.yahoo.com/tech-ticker/enron-accounting-d.c.-politicians-%22just-wasting-time%22-on-budget-bu%27s-kotlikoff-says-536041.html;_ylt=A2KJjammK4JNUD4AqJOTmYlQ?tickers=^DJI,^GSPC,TBT,TLT,XLV,GLD,TIP&sec=topStories&pos=10&asset=&ccode=

U.S. Debt and Deficits Ensure Violent Dollar Sell-Off Ahead

Monetization can be done in two ways. First, there is outright monetization as is now being conducted by the Fed through its POMO program; that is, its daily purchase of $4–$8 billion of Treasury debt. Indeed, the Fed’s QE2 bond purchases have been so massive that it is literally buying Treasury paper in the secondary market almost as fast as new bonds are being issued. During January, for example, fully 40% of the Fed’s $100 billion bond buy was from CUSIP numbers less than 90 days old.

Needless to say, putting brand new treasury bonds in the Fed’s vault before they have paid even a single coupon is functionally equivalent to printing greenbacks. After all, under this type of high-speed round trip, virtually all the coupons from newly issued bonds will end up as incremental profit at the Fed and be remitted back to the Treasury at year end.

Stated differently, in the present era of massive quantitative easing, newly issued Treasury securities amount to non-interest bearing currency without the circulation privilege.

http://www.marketoracle.co.uk/Article26902.html

It's Not Your Imagination: The Number Of Disasters Just Keeps Rising

The seventh largest quake ever occurred this week. The eighth largest quake occurred last year. The third largest quake occurred in 2004. Add to this hurricanes and floods, and it seems like natural disasters are on the rise

http://www.businessinsider.com/rise-of-natural-disasters-2011-3

US backing for world currency stuns markets

US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is "quite open" to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.

http://www.telegraph.co.uk/finance/economics/5050407/US-backing-for-world-currency-stuns-markets.html#

The Silver Door Is Closing

A time will come when the value of silver is so strong and the value of the dollar so weak, that only a fool would ever trade silver for the dollar.

http://dont-tread-on.me/the-silver-window-is-closing/

This sums it up...

http://perotcharts.com/issues/

Bank of America says nearly half its mortgages are 'bad'

Bank of America Corp. is segregating almost half its 13.9 million mortgages into a “bad” bank comprised of its riskiest and worst-performing “legacy” loans, Bloomberg News reported, citing Terry Laughlin, who is running the new unit.

“We are creating a classic good bank, bad bank structure,” Laughlin told investors at a meeting in New York Tuesday, according to Bloomberg. He was promoted last month to manage the costs of resolving disputes stemming from the company’s 2008 purchase of Countrywide Financial Corp. “We’re going to get after this, we’re going to do it the right way and we’re going to put it to bed in the next 36 months,” he said.

http://www.bizjournals.com/washington/morning_call/2011/03/bank-of-america-says-nearly-half-its.html?ana=twt

Price INCREASE

The price of just about every major agricultural commodity has been absolutely soaring during the past year....
*The price of corn has doubled over the last six months.
*The price of wheat has more than doubled over the past year.
*The price of soybeans is up about 50% since last June.
*The price of cotton has more than doubled over the past year.
*The commodity price of orange juice has doubled since 2009.
*The price of sugar is the highest it has been in 30 years.

Financial dismantling of the American middle class in 8 charts

The American economy runs on high octane debt. Debt has been welcomed by many with open arms and things seemed to be going well until people realized they actually had to pay the debt back. Average Americans trying to keep up with the picket white fence image of Leave it to Beaver were largely relying on debt to keep up with this lifestyle that was unsustainable with current incomes.

http://www.mybudget360.com/financial-dismantling-of-the-american-middle-class-in-8-charts-peak-debt-credit-card-cash-banking-finance-wealth/

US Wants to Take Your Dollars -- and Replace Them With Coins

So in order to replace the paper currency with dollar coins -- a long-advocated move that could save the government an estimated $5.5. billion over 30 years -- the General Accountability Office called on Congress, the Federal Reserve and the Treasury to help yank the $1 note from circulation.

In the past 20 years, the GAO, Congress' investigative arm, has issued four recommendations for a switch to metal dollars in order to save all the money spent to replace worn-out dollar bills. Dollar bills last longer than they used to and now have a life span of up to 40 months. But the coins have an average life span of 30 years.

http://www.aolnews.com/2011/03/07/us-wants-to-take-your-dollars-and-replace-them-with-coins/

"No Way Out" of Debt Trap, Gross Says: U.S. Living Standards Doomed to Fall

In the U.S., states across the country face a collective $125 billion shortfall for fiscal 2012, while Congress is facing a budget gap nearly 10 times that size.

PIMCO founder Bill Gross -- one of the world's largest mutual funds managers, who focuses mostly on bonds -- has previously said that if the United States were a corporation, no one in their right mind would lend us money. For the last decade, we’ve been “relying on the kindness of strangers” to help cover our debts,

http://finance.yahoo.com/tech-ticker/%22no-way-out%22-of-debt-trap-gross-says-u.s.-living-standards-doomed-to-fall-536001.html?tickers=%5eDJI,%5eGSPC,%5eTNX,GLD,GDX,TLT,MUB

Maine gets break in federal health care overhaul

The federal government Tuesday granted Maine a waiver of a key provision in President Barack Obama's health care overhaul, citing the likelihood that enforcement could destabilize the state's market for individual health insurance.

The U.S. Health and Human Services department said in a letter it would waive the requirement that insurers spend 80 cents to 85 cents of every premium dollar on medical care and quality improvement. Instead, the letter said, the state could maintain its 65 percent standard for three years, with the caveat that HHS intends to review the figures after two years.

The decision makes Maine the first state to receive a waiver of the requirement. Similar requests are pending from Kentucky, Nevada and New Hampshire.

http://www.cnbc.com/id/41978227

Hoyer Says Federal Budget May Not Be Balanced for 20 Years

House Minority Whip Steny Hoyer (D-Md.) said on Tuesday that it may take as many as 20 years to balance the federal budget after years of deficit spending in Washington.

At Hoyer's weekly press briefing on Capitol Hill, CNSNews.com noted that President Obama's latest budget proposal does not balance at any time in the next 10 years

http://cnsnews.com/news/article/hoyer-says-federal-budget-may-not-be-bal#

Warning Of 'Food Price Riots In The UK

"Even in the developed world I think we have very, very low wage growth, so people aren't getting more in their pay packet to compensate them for food and energy, and I think we could see social unrest certainly in parts of the developed world and the UK as well."

http://news.sky.com/skynews/Home/Business/A-Senior-HSBC-Economist-Warns-Of-Food-Riots-In-The-UK-If-Prices-Continue-To-Soar/Article/201103215948496?lpos=Business_Employment_First_Article_Region_0&lid=ARTICLE_15948496_A_Senior_HSBC_Economist_Warns_Of_Food_Riots_In_The_UK_If_Prices_Continue_To_Soar

Traders ‘short’ dollar as currency loses attraction

Hedge funds and forex dealers are betting record amounts against the dollar, reflecting a growing belief that the US currency has lost its haven appeal and that eurozone interest rates will soon rise.

As the crisis in the Middle East has worsened, the latest exchange data show that traders are selling “short” the currency. The big US fiscal deficit and concerns about the effect of rising oil prices have been blamed by some for the dollar’s slide.

http://www.ft.com/cms/s/0/e050b72e-4823-11e0-b323 00144feab49a.html#axzz1FsQ5F8cv

World Food Prices Climb to Record as UN Sounds Alarm on Further Shortages

Global food prices rose to a record in February and grain costs may continue to rise in the next several months, with only rice keeping the world from a repeat of the crisis three years ago, the United Nations said.

An index of 55 food commodities rose 2.2 percent to 236 points from 230.7 in January, the eighth consecutive gain, the UN’s Food and Agriculture Organization said today. Wheat rose as much as 58 percent on the Chicago Board of Trade in the past 12 months, corn gained 87 percent and rice added 6.5 percent.

http://www.bloomberg.com/news/2011-03-03/world-food-prices-climb-to-record-as-un-sounds-alarm-on-further-shortages.html

Manufacturing growing at fastest pace in 7 years

U.S. manufacturers expanded at the fastest pace in nearly seven years last month, but a sudden rise in the price of raw materials could threaten their profits.

The Institute for Supply Management said Tuesday that its index of manufacturing activity rose to 61.4 in February, up from 60.8 the previous month. That's the highest reading since it reached the same level in May 2004. The ISM's index bottomed out at 33.3 in December 2008, its lowest point in nearly 30 years.

http://finance.yahoo.com/news/Manufacturing-growing-at-apf-689542114.html?x=0

Oil prices jump on Middle East, Bernanke comments

Oil prices climbed Tuesday as Iran clamped down on anti-government protesters and unrest in the Middle East threatened to keep energy prices high for months to come.

Benchmark West Texas Intermediate for April delivery gained $2.66 to settle at $99.63 per barrel on the New York Mercantile Exchange. In London, Brent crude gained $3.62 to settle at $115.42 per barrel on the ICE Futures exchange.

The recent surge in oil has pushed up gasoline prices in the U.S. by nearly 20 cents per gallon in the past week. That's the sharpest increase since September 2008, when Hurricane Ike shut down Gulf Coast refineries, according to the Oil Price Information Service. In 2005, Hurricane Katrina sent prices soaring about 45 cents per gallon in one week.

http://finance.yahoo.com/news/Oil-prices-jump-on-Middle-apf-1296176780.html?x=0

Oil drops, but gasoline prices keep rising

Oil prices fell below $97 per barrel Monday just days after spiking above $100. Last week's surge continued to ripple through global pipelines, however, as gasoline prices jumped 8 cents over the weekend.

Crude dropped on reports that Libya was still exporting oil. Shipments were thought to have halted last week as protestors clashed with the government and strongman Moammar Gadhafi lost control of many of the country's oil fields. But industry officials said Monday that a tanker bound for China was loading oil in the Libyan port of Tobruk. Saudi Arabia also was boosting exports.

Benchmark West Texas Intermediate crude for April delivery lost 91 cents to settle at $96.97 per barrel on the New York Mercantile Exchange. In London, Brent crude fell 34 cents to settle at $111.80 per barrel on the ICE Futures exchange.

Traders said there is a "fear premium" of $15 to $20 per barrel built into the price of oil to account for further disruptions in shipments as pro-reform movements sweep through North Africa and the Middle East. Oil prices should slide as the situation in Libya stabilizes, analysts said.

http://finance.yahoo.com/news/Oil-drops-but-gasoline-prices-apf-489242950.html?x=0

History tells us that a surge in fuel costs makes a US recession likely

Ever since the early 1970s, every single time oil prices have spiked sharply (rising by 80pc or more), regular as clockwork the US has entered recession.

http://www.telegraph.co.uk/finance/comment/liamhalligan/8349612/History-tells-us-that-a-surge-in-fuel-costs-makes-a-US-recession-likely.html#

Oil drops, but gasoline prices keep rising

Oil prices fell below $97 per barrel Monday just days after spiking above $100. Last week's surge continued to ripple through global pipelines, however, as gasoline prices jumped 8 cents over the weekend.

http://finance.yahoo.com/news/Oil-drops-but-gasoline-prices-apf-489242950.html?x=0

What Are We Getting for an Extra $1 Trillion in Federal Spending?

As every constituency fights to protect its herd of sacred cows, there's certainly no shortage of political jockeying in the battle over the 2012 federal budget. What's missing, however, is this simple question: What exactly are we getting for the extra $1 trillion a year the federal government is now spending?

http://www.dailyfinance.com/story/what-are-we-getting-for-an-extra-1-trillion-in-federal-spending/19859822/

Oil prices could be game-changer for world economy

Soaring oil prices are reaching levels that could threaten to brake improving but tentative global economic recovery, with an outside chance of a new recession or that most destructive of conditions, stagflation.

http://www.reuters.com/article/2011/02/24/us-economy-oil-idUSTRE71N2SB20110224

The End of the US Dollar?

The turmoil across North Africa and the Middle East is threatening not only to overthrow aging dictatorships, autocracies and monarchies, but also to upset the geopolitical balance between the countries of that region and the Western powers that has existed since at least the 1950s. For the West, the issue has always been the security of oil. For the US there is a second issue, and that is the security of Israel. Now both are under threat.

http://news.goldseek.com/UnionSecurities/1298563200.php

State and local budget cuts are slowing US economy

Deep spending cuts by state and local governments pose a growing threat to an economy that is already grappling with high unemployment, depressed home prices and the surging cost of oil.

Lawmakers at state capitols and city halls are slashing jobs and programs, arguing that some pain now is better than a lot more later. But the cuts are coming at a price -- weaker growth at the national level.

The clearest sign to date was a report Friday on U.S. gross domestic product for the final three months of 2010. The government lowered its growth estimate, pointing to larger-than-expected cuts by state and local governments. The report suggested that worsening state budget problems could hold back the recovery by putting more people out of work and reducing consumer spending.

http://finance.yahoo.com/news/State-and-local-budget-cuts-apf-4195423316.html?x=0

U.S. crop boom not enough to rebuild thin supplies

ARLINGTON, Virginia (Reuters) – Huge U.S. corn and soybean plantings this spring will likely fail to refill razor-thin stocks enough to quell the surge in grain prices, the U.S. Agriculture Department said on Thursday.

In updated forecasts for the world's biggest crop exporter, the USDA warned that it could take several years to restore inventories to comfortable levels. It mostly maintained earlier forecasts on how many acres farmers would sow this spring, but said stocks at the end of the 2012 season would remain tight.

http://news.yahoo.com/s/nm/20110224/bs_nm/us_usda_forum

Companies concerned about rising fuel costs

Companies around the world have begun to warn about the impact of higher fuel costs on their businesses, raising fears about profits and inflation.

Companies in the most energy-intensive sectors, such as airlines, have been the first to raise the alarm, but analysts warned that a sustained period of high oil prices would have a widespread effect on earnings.

http://www.ft.com/cms/s/0/de612ac2-410f-11e0-bf62-00144feabdc0.html#axzz1F1fyO85o

US Will Be the World's Third Largest Economy

The world is going to become richer and richer as developing economies play catch up over the coming years, according to Willem Buiter, chief economist at Citigroup.

"We expect strong growth in the world economy until 2050, with average real GDP growth rates of 4.6 percent per annum until 2030 and 3.8 percent per annum between 2030 and 2050," Buiter wrote in a market research.

"As a result, world GDP should rise in real PPP-adjusted terms from $72 trillion in 2010 to $380 trillion dollars in 2050," he wrote.

http://www.cnbc.com/id/41775174

Cost of...everything...about to go up

A new report from The Labor Department indicates its concern about inflation, and businesses are claiming they can't absorb the rising cost of commodities alone. Many say they'll have no choice but to raise prices and shrink packages. Frustrating stuff for an economy that's supposed to be recovering.

http://www.wbtv.com/Global/story.asp?S=14071185

Higher Inflation Is On The Way

The stakes have seldom been higher. With the unemployment rate still above 9%, and federal debt at record levels, this latest error by the monetary authorities is likely to be the most costly since the Great Inflation of the 1970s. Monetary instability will slow employment growth and further erode confidence in government at the same time that higher interest rates will add billions of dollars to the interest cost on the national debt. Yet, failure to act in a timely basis will lead to an even greater crisis.

http://blogs.forbes.com/charleskadlec/2011/02/22/higher-inflation-is-on-the-way/

Markets get jitters as oil price heads for the sky

Fears that the unrest in North Africa and the Middle East could seriously disrupt oil supplies and throttle the world economy turned to reality yesterday and propelled the price of oil to more than $108 a barrel during trading, the highest since September 2008. It was $85 at the start of the year. The region supplies a third of the world's oil needs.

http://www.independent.co.uk/news/business/news/markets-get-jitters-as-oil-price-heads-for-the-sky-2222905.html#

Food/Financial Crisis of 2011

World food inflation is smashing down on the world’s populations as prices rise precipitously in the face of increasing shortages and absurd monetary policies. Prices are rising everywhere. It is not millions but billions of people who must tighten their belts because they have no choice but to eat less. Billions of people on our planet have no discretionary funds so they just cannot afford the increased prices. They have to get by with less to eat. They have no choice.

http://agriculture.imva.info/food-prices/foodfinancial-crisis-of-2011

Why Are Food Prices Going Crazy?

Global wheat prices more than doubled in the second half of last year, according to a new report from the World Bank. The price of corn, sugar and cooking oil also soared.

Why are global food prices skyrocketing? Who is going to go hungry as a result? And what does it mean for the U.S.?

http://www.npr.org/blogs/money/2011/02/16/133744524/why-are-food-prices-going-crazy?ps=cprs

Inflation makes comeback as prices rise for food, fuel

Inflation is making a quick comeback after touching the lowest levels in decades last fall.

Fast-rising prices for food, fuel and other basic necessities, stoked by rapid growth in emerging countries, are coming home to American consumers despite reluctance by U.S. businesses to raise their prices.

A report from the Labor Department on Thursday showed consumer prices rose by 0.4 percent in each of the past two months — or a 4 percent annual rate over the last quarter f fed by the biggest gains in food prices in two years and surging energy prices.

The report also showed a broadening of price pressures as airlines jacked up their fares by an average of 2.2 percent to pass on the cost of higher fuel and retailers raised clothing prices by 1 percent to reflect the higher costs of cotton and other fabrics.

http://www.washingtontimes.com/news/2011/feb/17/inflation-makes-comeback-prices-rise-food-fuel/