Saturday, March 28, 2009
Thursday, March 26, 2009
This is absolutely big:
Wednesday, March 25, 2009
I find next passage interesting. Geither is asking Congress for increaseing power to regulate the hedge fund and the key word is the derivative market. No question he is going to use this power to shovel all of Wall Street's toxic derivatives and place them under AIG's control. AIG will be a multi trillion dollar derivative landfill by the time this policy is in completion. Study this passage carefully:
By Robert Schmidt
March 25 (Bloomberg) -- Treasury Secretary Timothy Geithner will ask Congress to bring large hedge funds, private- equity firms and derivatives markets under federal supervision for the first time as part of a revamp of U.S. financial rules.
The Treasury chief will present his proposed framework at a House Financial Services Committee hearing in Washington tomorrow. Under the new so-called rules of the road, the government would get powers to seize and wind down any financial company big enough to destabilize the banking system.
The Obama administration is counting on public anger over the taxpayer-financed rescues of American International Group Inc., Bear Stearns Cos. and other firms to help it win approval for the changes, which could be the most sweeping since the 1930s. Policy makers want to improve the oversight of the financial system now rather than wait until the crisis is over, administration officials said on condition of anonymity.
“We have a moment now where there is broad-based will to change things that people did not want to change in the past,” Geithner said earlier today at a speech in New York. “We want to begin the process now of trying to build consensus while people recognize and are feeling so acutely the damage caused by those basic failures in regulation.”
Ladies and gentlemen. It is late so I think I better get some sleep. Tonight, i was assisted by my son Stephen in preparing this commentary.
Tuesday, March 24, 2009
In this report we find that the total OTC derivatives in gold of a maturity of less than 1 year have a notional value of 94.589B$. Of this total JPMorganchase and HSBC hold 94.014B$ which equates to 99.392% of all gold derivatives held by US commercial banks and Trust Companies for maturity of less than 1 year. I haven’t done any arithmetic that the CFTC might argue with; this is straight from the report. I would think that controlling 99.392% of any market could only be considered manipulative and it didn’t take me 6 months to work that out! In the "precious metals" category which is not defined but is probably mainly silver the same two banks control 88% of the less than 1 year maturity derivatives. The notional value of gold derivatives that these two banks control represents 150% of annual global gold production. Now if you control 99.4% of a derivatives market that is 150% of the ENTIRE underlying physical market what do you think will happen next? When we look at the COMEX we find out; according to CFTC latest reports 3 banks or less control 62% of the commercial net short position (without subtracting spreads). What a surprise! I would be willing to bet that it is actually less than three banks, I would also be willing to bet that it is two banks, I would also be willing to bet that the names of the two banks are drum roll please…JPMorganChase and HSBC.
If I am correct that the "precious metals" category is predominantly silver then the position of JPM and HSBC represents 176% of total annual global production of silver. On COMEX we find that two banks or less control 86.2% of the commercial silver net short position. I would also be willing to bet that the names of the two banks are also JPMorganChase and HSBC.
I don’t know if Mr. Chilton has noted that silver has been in mild backwardation for 43 days. This is unprecedented in history and suggests a coming physical shortage in the wholesale market that has already been present in the retail market for over 12 months, yet the price of silver can not seem to rise above its cost of production (no mining company is making any profit worth talking about). I would suggest that with massive positions being held by two entities on the COMEX and the OTC derivatives market there is a very good reason for that. Price discovery of silver is controlled by the massive over-supply of paper substitutes for silver and NOT by the supply and demand of physical silver. This can continue only as long as there is no shortage in the physical market that exposes the obvious fraud. The backwardation is indicating that the day of reckoning is coming where Samsung will have to find a way to make cell phone batteries out of Paper-Mache! Time is running out for the CFTC to solve this crime before it becomes obvious to everyone.
OK back to business:
Gold closed down by 29.70 to 923.30. Silver fell by 52 cents to 13.34 The reason for the cartels attack is options expiry which is this Thursday. This is when the April gold goes off the board. There are huge calls and puts at around 900 and 925 so the cartel need the price at around 900 to avoid losing considerable dollars and or the metal. This is of prime concern for them.
This is the big news of the day:
In other words, the Fed is already to start the purchase of 300 billion dollars of treasuries. Everyone forgets that in order to buy these treasuries you need freshly minted dollars. Today, the Federal Debt is 11.041 trillion dollars. Another 300 billion and you immediately pass the debt ceiling.
This will be just another headache for Obama.
Today, the Dow succumbed falling 116 points as many have doubts on Geithners plan. It will certainly quadruple the Feds balance sheet from 2007 to over 4.8 trillion dollars.
Tonight, the Japanese government released their export sales. They were horrific!!!
Japanese Exports Plunge 49% as Global Slump Deepens (Update1)
By Jason Clenfield
March 25 (Bloomberg) -- Japan’s exports plunged by a record in February as deepening recessions in the U.S. and Europe sapped demand for the country’s cars and electronics.
Overseas shipments fell 49.4 percent from a year earlier, the sharpest decline since at least 1980, when the government started to keep comparable data, the Finance Ministry said today in Tokyo. Economists predicted a 47.6 percent drop.
Prime Minister Taro Aso is compiling his third economic stimulus package as a deepening slowdown in Japan’s overseas markets puts thousands out of work at home, threatening domestic demand. Finance Minister Kaoru Yosano said this week said that a new package of as much as 20 trillion yen ($203 billion) is “not out of line” as the economy heads for its worst recession since 1945.
“There’s been a structural shock to the manufacturing sector,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo. “So yes, the government can create demand temporarily, but that can’t fill the export gap forever.”
The yen traded at 98.23 per dollar at 8:56 a.m. in Tokyo from 98.25 before the report. The currency has weakened 7.8 percent this year, offering some relief to exporters whose profits were eroded by its 23 percent gain in 2008.
Exports of automobiles tumbled 70.9 percent from a year earlier and shipments of semiconductor parts and devices slid 51.1 percent, the ministry said.
In other developments, we have heard again that China may wish to new reserve currency. This is what they said today:
China ‘Super Currency’ Call Shows Dollar Concern (Update3)
By Li Yanping
March 25 (Bloomberg) -- China’s call for the creation of a new international reserve currency may signal its concern at the dollar’s weakness and ambitions for a leadership role at next week’s Group of 20 summit, economists said.
Central bank Governor Zhou Xiaochuan this week urged the International Monetary Fund to create a “super-sovereign reserve currency.” The dollar weakened after the Federal Reserve said it would buy Treasuries and the U.S. government outlined plans to buy illiquid bank assets
“China is concerned about the potential for a slide in the dollar as the U.S. attempts to stimulate its economy,” said Mark Williams, a London-based economist at Capital Economics Ltd. The “rare” sight of a Chinese official attempting to reframe an international debate may be “a sign of China becoming more engaged,” he said.
While Zhou didn’t call for the yuan to become the new reserve currency, his remarks may signal ambitions for China to play a bigger global role. The central bank this week signed a currency swap with Indonesia, adding to agreements since December with South Korea, Hong Kong, Malaysia and Belarus. It’s also preparing for trade settlement in the Chinese currency with Hong Kong, Macau and the Association of Southeast Asian Nations.
Frustration in Beijing
“There is concern and even frustration among top policymakers in Beijing about China’s high exposure to U.S. dollar-denominated financial assets,” said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong.
Yuan forwards rose the most in three months with traders betting on appreciation for the first time since September on speculation that the U.S. policies will weaken the dollar. The 12-month forward rate gained 0.9 percent.
U.S. policy makers testifying before lawmakers in Washington today affirmed their support for the dollar.
Treasury Secretary Timothy Geithner, asked at a House Financial Services Committee hearing whether he rejected moving toward a global currency, replied, “I would, yes.”
Premier Wen Jiabao called on March 13 for the U.S. “to guarantee the safety of China’s assets.” China’s Treasury holdings climbed 46 percent in 2008 and now stand at about $740 billion, according to U.S. government data. The nation is the biggest holder of U.S. debt.
I will be quite busy tomorrow, so my son Stephen will write the commentary.