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Good morning Ladies and Gentlemen:
Friday morning, the 1 month treasury rate was .10% . Yes, that is correct 1/10% annualized for 1 year. That is very eerie indeed.
The 10 year note has climbed to 3.96%. The 30 year bond price plummeted yesterday and finished at 112.90.
The Ted spread which measures bankers risk has now reversed and climbed upwards. The Libor rate for 3 months is 3.19% basis usa, a full 2.19% above normal levels. Banks are refusing to lend. The banks do not trust one another. Each know that the other has credit default swaps that can sink the entire globe.
Gold closed down by 19.90 to 717.90 and silver fell only by 3 cents to 9.75. Silver continues to be in backwardation which will cause nightmares to CFTC officials. Demand for physical metals are high but central authorities around the globe refuse to left citizens buy them.
The gold comex OI climbed by 3000 contracts to 306000 still very low. The silver OI dropped another 394 contracts to 94400.
It is obvious to all, that cartel members cannot shake any more leaves from the silver tree. Many silver comex holders will take delivery in December. Many option holders in the November silver comex will also stand and take delivery. Judging from the Oct contract expect an additional 7.0 million oz to leave comex vaults.
In December, I believe that 60-70 million oz of silver will stand which will break the comex.
On November 15 the Group of 20 nations meet to discuss currency alignment. There is a strong chance of a new Bretton Woods agreement with gold, oil, silver as principal backers to a new reserve currency.
Implementation of this prior to December 1 may prevent a comex default. However we will have a new reserve currency and all currencies throughout the world will trade against it. If this happens, all commodity countries will do quite well. The usa will not be a member of this reserve currency ending its highly vaulted status.
In economic news, the following items are very newsworthy:
NYC economic downturn continued in October-NY-NAPM
NEW YORK, Oct 31 (Reuters) - Business activity in New York City shrank in October, contracting for the ninth time in 10 months, according to an industry report released on Friday.
The National Association of Purchasing Management-New York's seasonally adjusted index of current business conditions fell to 35.6 in October, the lowest level since July 2007, from 39.1 in September. The 50 level separates growth from contraction.
Its index of local business activity fell to the lowest level of the year, slipping to 396.8 in October from 404.0 in September.
Future pessimism diminished, with the six-month outlook index bouncing back to 51.6 in October from 39.3 in September.
Still, "the choppiness in the outlook index in recent months makes purchasing managers appear uncertain about the near-term direction of the regional economy," said Jonathan Basile, the Credit Suisse economist who compiles the report.
Cost pressures fell for the first time in a year and purchasing volume plunged to a five-year low, the report said.
The prices paid index showed some easing cost pressures, falling to 47.8 in October from 68.1 in September… end
Then we heard this startling development on the Chicago’s Purchasing Management Report and the University of Michigan’s report on consumers:
09:45 Oct Chicago Purchasing Manager's Index reported 37.8 vs. consensus 48.0
Sep reading was 56.7.
* * * * *
09:55 Oct Univ. of Michigan reported 57.6 vs. consensus 57.5
Preliminary Oct figure was 57.5
US consumers' mood posts record drop in Oct-survey
NEW YORK, Oct 31 (Reuters) - U.S. consumer confidence suffered its steepest monthly drop on record in October, a survey showed on Friday, as the worst financial crisis in generations continued to take its toll.
The Reuters/University of Michigan Surveys of Consumers said its final reading of its index of confidence plunged to 57.6 in October from 70.3 in September.
That was just slightly below economists' expectations for a reading of 57.8, according to the median of their forecasts in a Reuters poll. It was up marginally from 57.5 recorded in the Surveys' of Consumers preliminary report released on Oct. 17.
"Consumers reported the most dismal assessments of their current financial situation ever recorded," the report said.
The index was its lowest since a reading of 56.4 in June of this year.
The report said there have previously only been four surveys that posted double-digit declines, "and all resulted from severe economic dislocations, with the losses accelerated by fear and panic."
From the very good newspaper journal came this story on the swindle of the American people re the bailout:
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Paulson's Swindle Revealed
October 29, 2008
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The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride--a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return.
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William Greider: United Steelworkers Union prez Leo Gerard cracks open the sweetheart deal that bailed out nine banks--and likely lined the Treasury Secretary's own pockets--with billions of taxpayer dollars. Does anybody care?
These are dynamite facts that demand immediate action to halt the bailout deal and correct its giveaway terms. Stop payment on the Treasury checks before the bankers can cash them. Open an immediate Congressional investigation into how Paulson and his staff determined such a sweetheart deal for leading players in the financial sector and for their own former employer. Paulson's bailout staff is heavily populated with Goldman Sachs veterans and individuals from other Wall Street firms. Yet we do not know whether these financiers have fully divested their own Wall Street holdings. Were they perhaps enriching themselves as they engineered this generous distribution of public wealth to embattled private banks and their shareholders?
Leo W. Gerard, president of the United Steelworkers, raised these explosive questions in a stinging letter sent to Paulson this week. The union did what any private investor would do. Its finance experts vetted the terms of the bailout investment and calculated the real value of what Treasury bought with the public's money. In the case of Goldman Sachs, the analysis could conveniently rely on a comparable sale twenty days earlier. Billionaire Warren Buffett invested $5 billion in Goldman Sachs and bought the same types of securities--preferred stock and warrants to purchase common stock in the future. Only Buffett's preferred shares pay a 10 percent dividend, while the public gets only 5 percent. Dollar for dollar, Buffett "received at least seven and perhaps up to 14 times more warrants than Treasury did and his warrants have more favorable terms," Gerard pointed out.
"I am sure that someone at Treasury saw the terms of Buffett's investment," the union president wrote. "In fact, my suspicion is that you studied it pretty closely and knew exactly what you were doing. The 50-50 deal--50 percent invested and 50 percent as a gift--is quite consistent with the Republican version of spread-the-wealth-around philosophy."
The Steelworkers' close analysis was done by Ron W. Bloom, director of the union's corporate research and a Wall Street veteran himself who worked at Larzard Freres, the investment house. Bloom applied standard valuation techniques to establish the market price Buffett paid per share compared to Treasury's price. "The analysis is based on the assumption that Warren Buffett is an intelligent third party investor who paid no more for his investment than he had to," Bloom's report explained. "It also assumes that Gold Sachs' job is to protect its existing shareholders so that it extracted from Mr. Buffett the most that it could.... Further, it is assumed that Henry Paulson is likewise an intelligent man and that if he paid any more than Mr. Buffett--if he paid $1 for something for which Mr. Buffett would have paid 50 cents--that the difference is a gift from the taxpayers of the United States to the shareholders of Goldman Sachs."
The implications are staggering. Leo Gerard told Paulson: "If the result of our analysis is applied to the deals that you made at the other eight institutions--which on average most would view as being less well positioned than Goldman and therefore requiring an even greater rate of return--you paid a$125 billion for securities for which a disinterested party would have paid $62.5 billion. That means you gifted the other $62.5 billion to the shareholders of these nine institutions."
If the same rule of thumb is applied to Paulson's grand $700 billion bailout fund, Gerard said this will constitute a gift of $350 billion from the American taxpayers "to reward the institutions that have driven our nation and it now appears the whole world into its most serious economic crisis in 75 years."
Is anyone angry? Will anyone look into these very serious accusations? Congress is off campaigning. The financiers at Treasury probably assume any public outrage will be lost in the election returns. I hope they are mistaken.
About William Greider
National affairs correspondent William Greider has been a political journalist for more than thirty-five years. A former Rolling Stone and Washington Post editor, he is the author of the national bestsellers One World, Ready or Not, Se
