Saturday, April 18, 2009

april 18.09 commentary.

Good morning Ladies and Gentlemen
Gold yesterday fell by 10,30 to 867.10.  Silver fell by 44 cents to 11.81.
The open interest on gold comex rose by 3600 to 339000.  The silver Oi  also went up by 394 to 95000.  Since the gold and silver markets got hammered on Thursday, one can assume that massive short sales was the order of the day with some long liquidation.  It is becoming evident that it is impossible to play in this arena as you have manipulators dominating the trading and blowing up any speculator long positions.
It is clear that the manipulators wished to break the 200 day moving average of gold once the 100 day was breached.  They may succeed as there is a total disconnect between the physical market and paper market.
The Gold ETF< GLD, finally announced a small 8 tonne drop on friday.  Its new holding is 1118 tonnes.  Silver remains the same at 270 million oz.
Here are the inventory movements out of the comex yesterday afternoon
COMEX Warehouse Stocks April 17, 2009


ZERO ozs withdrawn from the dealer’s inventory. 
600,434 ozs deposited in the customer inventory
Total dealer inventory 62.96 Mozs
Total customer inventory 52.99 Mozs,br> Combined Total 115.36 MOZ


500 ozs deposited in the dealers (registered) category
96 ozs withdrawn from the customer (eligible) category
Total dealer inventory 2.54 Mozs
Total customer inventory 5.9 Mozs
Combined Total 8.44 MOZ

After only one day we are back to comatose movements in gold inventory despite 1.13 Mozs in delivery notices being outstanding.




As for the gold comex, approximately 1.1 million oz has been delivered upon with an additional .2 million waiting to be hit.

It is strange that only 1 brick of gold (96 oz) left. With respect to silver, the dealer inventory (registered) is the smallest in quite some time.


Yesterday, Citibank released its earnings:

Citigroup Profit Exceeds Estimates on Trading Gains

April 17 (Bloomberg) -- Citigroup Inc., the U.S. bank rescued by $45 billion in U.S. taxpayer funds, ended a five- quarter losing streak with a $1.6 billion profit on trading gains and an accounting benefit for companies in distress…"We’ve seen good trading results from JPMorgan, from Goldman Sachs and now from Citi," said Gary Townsend, chief executive officer of Hill-Townsend Capital LLC…




However, on closer examination, the profit was fictitious, as the clowns gave themselves a non-cash balance sheet adjustment profit based on the low trading of their own bonds.  They adjusted their profits upwards by 2.5 billion dollars.  This is nothing but a flagrant fraud and total misrepresenation to the public.  The bank stated in Jan and Feb were great trading months for the bank and the strong growth translated into profits.  This is a total lie.


Please read below the real story:

Citi/Vik Pandit Commit Legalized Fraud

Citi reported $1.6 billion in "profits" today. Before you get excited we have AT LEAST one non-cash bogus accounting to gain to strip out. I say "AT LEAST" because we won't be able to put together the rest of the LIES until they release their 10-Q (They have 45 days from the end of their quarter).

Citi recognized a NON-CASH profit on a DECLINE in the market value of their debt. HUH? Some moron at FASB (most-likely some whore Congressman who received large donations from Wall Street who forced this on FASB) decided that if the market value of a company's bonds and bank debt declines, the company might buy them back at a discount and thus save some money vs. waiting to pay them off at par. FASB decided that because of this remote buyback possibility, the company can recognize and accounting gain (not a bona fide economic-based, cash gain) by the amount that value of the debt declines.

Let's do an example. Citi issues $100mm of bonds in December 2008 at par (100). The market value of those bonds declines to 90 (i.e. falls to 90% is issue value) because of the perceived risk of Citi's business model by the market. Vik Pandit, Citi CEO says to his CFO: "hey man, if we were to have any TARP money left and we bought back that $100mm of debt of $90 million, we could recognize $10 million in profits."See where this going? To begin with, Citi doesn't have the cash available to spend 100's of millions required to buy back their debt, let alone enough to buy back the amount of debt required to generate a $2.5 billion accounting gain. THAT $2.5 BILLION, LIKE EVERYTHING ELSE ON WALL STREET AND ESPECIALLY WITH CITIGROUP, IS PURE FANTASY.In summary, Citi has actually lost AT LEAST $900 million this quarter ($1.6 billion less the $2.5 billion accounting fantasy/fraud). I would bet anyone anything that Citi's real loss is closer to the $5 billion loss they reported in Q1 2008. Citi's earnings are emblematic of the fraud and fairy tales being perpertrated at the highest levels of our system, beginning with the White House and Wall Street. Vik Pandit is a complete fraud, the Company he runs is hopelessly insolvent, and the best we can hope for is that the individual investor does not get sucked into buying Citi stock thinking it's a great buy here, because I guatantee everyone reading this, that the smart money is dumping their Citi stock and I will be we will eventually see millions of shares dumped by insiders. 



I would also like to point out that the CEO Pandit did not appear on the telephone conference talking about the results of Citibank.  The firm did not offer an excuse where he was hiding.

There may be other non cash adjustments on the first quarter.  They have 45 days from the end of the quarter to adjust and I will bet there are more.  Their earnings as I have suspected, were total fantasy and for that matter fraudulent!!  Many investors have bought into the theory that the market is turning around.  We do not think so.

Actually, their financial position is worsening:

Citi's Net Credit Losses are rapidly increasing. In fact, just on Consumer debt (credit cards and mortgages), their losses jumped from 8% of assets to 10% of assets from the 4th Qtr of 2008 to the 1st Qtr of 2009. That's a massive jump.



Wait until commercial losses start to appear, and then the jumbo mortgages etc and the downward spiral will continue.

OK lets go for other news of the day:


Bloomberg reported that Goldman Sachs in now estimating that the Treasury will need 3.5 trillion dollars not the 2.5 trillion they reported would be needed in early Feb:


Today Bloomberg reported that Goldman is now estimating the Treasury financing need for this year to be $3.25T. Their last estimate I saw was $2.5T: "Treasuries Fall as Supply, Economy Overshadow Fed Debt Purchase….The U.S. needs to raise $3.25 trillion this fiscal year, according to primary dealer Goldman Sachs Group Inc., as the government seeks to finance bank bailouts, stimulate the economy and service deficits….."


The National Debt lowered to 11.19 trillion dollars as tax dollars were credited to the treasury.

The Fed announced yesterday that they purchased 62 billion dollars of agency paper;

Today The Federal Reserve announced they purchased $62.6B worth of Agency, Mortgage Back and Treasury Security’s in one week:



Janet Yellin, Governor of the Fed bank in San Francisco is also sounding the alarm bells:

Yellen says policymakers need to pop bubbles - Vindicates GATA

This article quotes Janet Yellen, a sitting Federal Reserve Governor. For those who haven’t spotted it yet she confirms that the Bond market is a bubble….


Yellin is a non voting member of the FOMC. She believes that the bond market is becoming a bubble and must be broken.


The next area of great concern was the complete collapse in yield on the 1 month treasury bill to .04% per annum.  If you parked 1 million dollars in this treasury bill you would earn a grand total of 31.00 for the one month for the priviledge of using your money.


However the longer term 10 year bond rose in yield to 2.95%.


I will reproduce the story:

This tells you all you need to know - there is another big problem that is going to soon hit:

YET, the yield on the 10 yr T note shot up to 2.95%!

I know it’s premature, as the government does ANYTHING possible, legal or illegal, to get their way.

But what I am watching now in the Treasury market is truly incredible.

The way I read it, the entire basis of the government’s bailout plan is printing money and keeping interest rates down. They even announced they will be buying back their own bonds in seemingly limitless quantities.

Yet, today the long bond has fallen to nearly the same level as when the quantitative easing announcement was made. Actually, TLT (the ETF for government long bonds) had fallen to a year-low of about 100.5 when the QE announcement was made, at which point it immediately rocketed up to 107.5.

However, it has continued to work down since then (no more than a month ago), and today is at 101.5, down 1.25. And this is occurring despite an apparent increase in Chinese buying last month.



Dave from Denver writes:

I had not noticed until today how low 1 month/3 month T-Bill rates are, and they've been dropping by quite a bit during this rally in the stock market. If this rally were bona fide based on fundamentals and real investor enthusiasm, shouldn't short rates be going a lot higher as investors move money out of cash-equivalents and into stocks? I think this is quite ominous for the stock market.


If the economy was improving, then we would see one month treasuries rise in yield.  The opposite is happening.  It is as if an ecnonomic calamity is about to happen.  Mexico Mike believes that the collapse in General Motors will trigger massive credit default swaps.  First :  his commentary and mine will follow:


from Mexico Mike...

GM bankruptcy pending

Hi Bill!
I have noticed that there has been a clear inverse relationship lately between the spot price for gold and the perception of GM approaching bankruptcy. On the surface there is not much to support that observation. GM has always been considered a driving force in the American economy, but most pundits are now willing to acknowledge that there must be some form of restructuring in order for the auto industry to survive on this continent. Its already all but priced in, so why is gold being adversely affected?

I think the key here is the unknown derivitive exposure for credit swaps related to GM and other auto sector companies. If we get the confirmation that GM has opted for Chapter 11, then I believe tens of billions of dollars in default swaps will be triggered, with AIG as the counterparty for a lot of that paper. Guess what? AIG is already in trouble and has been bailed out several times, and each time has triggered some form of selloff across the financial sector and spawned more financial uncertainty. Meanwhile, the administration is busy selling the story that we have reached a bottom and all is well. This next wave of angst over yet another huge handout to AIG will put a stop to all that propaganda yet again.

So why hit gold now? It has to be assumed that the dollar is going to take a hit when GM implodes and a big bailout package for AIG has to be paid for. By driving gold down into technical breakdown territory, the corresponding flight into gold after all of this settles out will just put the metal back where it was before the wheels came off. Say what you want about the crooks, I think we can at least admit that this is brilliant crisis management strategy.

I would have to assume that we will see a sudden blip higher in gold and the mining stocks right before the GM bankruptcy is announced. That would be from the short covering when all of the easy money has been stripped. I am looking for that day when we get a strong rally in the metals and the stocks for no apparent reason. Then we can expect the bomb to go off on the rest of the market shortly thereafter. Lets see how this all goes down in the days ahead, but as usual there is plenty of smoke out there to know there must be a fire around somewhere and it would not be the first time that extensive rigging in the gold sector was tied to an unrelated bad news disclosure somewhere else.

Those who are buying the dips for the metals will come out as clear winners in the long term. I think so much frustration is geared towards the trading in gold because people expect that just by getting the message out on the manipulation we could expect that something would be done to bring the scam to an end. Unfortunately, like the skinny kid in the lunchroom, its does not do any good to report bullying if the adminstration says "Go back and work it out for yourself". What needs to happen is for someone to take on the Cartel and create so much financial pain that they are forced to back down.

If GATA is right there is very limited physical bullion left for the CBs to dispose of. Meanwhile the reckless monetary policy that is in play worldwide has assured more paper money is floating around than at any other time in history. How long can it be until someone is willing to throw a few billion towards buying up every ounce of gold or silver left in circulation and driving the metals higher for good?

We can describe what is going on in the markets and complain all we want about the abuses, manipulation, insider trading, regulatory incompetence, etc. Sooner or later the situation will be resolved by direct confrontation and the paper rigging games will come to an end for good. Until then, we put up with little raids and traps like we have seen this week.



General Motors, as has been reported has over 1.3 trillion of credit default swaps written on it.  That means bets have been placed by various financial institutions on whether it will succeed or go bankrupt.  This figure is over 1 and 1/2 years ago.  I will bet that it must be 1.5-2 trillion dollars by now.

Then you add Chrysler to the mix.  They had over 200 billion dollars of CDS's written on them.


The bulk of the underwriting of these instruments was done by AIG with secondary help from JPMorgan.  So we are now going to enter a very tricky phase if GM goes bust.  Will the USA government pony up more money to AIG who will deliver more money to the financial institituions with the taxpayer footing the bill?

Taxpayers are getting fed up with this nonsense.  Tea parties are springing up all over the usa. Getting additional monies to rescue the banks will be difficult.

On top of GM and Chrysler, they will need to rescue over 100 firms that supply parts to GM.

On top of that, the GM debt alone is over 100 billion dollars.

The Credit Default Swap is really revenue neutral to the banks.  They own a huge chunk of the 100 billion of debt and the CDS was written to offset the risk of a default.

When Goldman Sachs announced to the world that AIG was small to them in revenue, they were right.  They owned 12 billion dollars of notes from Lehman and had a corresponding 12 billion CDS swap to offset that risk.

Can you imagine the following scenario:  GM defaults and congress refuses to give any more money for AIG.  Then the banks will take a loss on its GM bonds and then lose the revenue from the AIG as they would then default.


Life would get very interesting from there.

Nobel Prize winner Sitglitz came out yesterday with a scathing attack on the banks.  Here is the report:


Stiglitz lays out it. As the American people come to understand this, THERE WILL BE RIOTS!

Stiglitz Says White House Ties to Wall Street Doom Bank Rescue 

By Michael McKee and Matthew Benjamin

April 17 (Bloomberg) -- The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said. 

"All the ingredients they have so far are weak, and there are several missing ingredients," Stiglitz said in an interview yesterday. The people who designed the plans are "either in the pocket of the banks or they’re incompetent." 

The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street. 

"We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control" of the banks, a set of constraints that will guarantee failure, Stiglitz said. 

The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. "The bank restructuring has been an absolute mess." 

Rather than continually buying small stakes in banks, weaker banks should be put through a receivership where the shareholders of the banks are wiped out and the bondholders become the shareholders, using taxpayer money to keep the institutions functioning, he said. 

Nobel Prize 

Stiglitz, 66, won the Nobel in 2001 for showing that markets are inefficient when all parties in a transaction don’t have equal access to critical information, which is most of the time. His work is cited in more economic papers than that of any of his peers, according to a February ranking by Research Papers in Economics, an international database. 

The Public-Private Investment Program, PPIP, designed to buy bad assets from banks, "is a really bad program," Stiglitz said. It won’t accomplish the administration’s goal of establishing a price for illiquid assets clogging banks’ balance sheets, and instead will enrich investors while sticking taxpayers with huge losses. 

"You’re really bailing out the shareholders and the bondholders," he said. "Some of the people likely to be involved in this, like Pimco, are big bondholders," he said, referring to Pacific Investment Management Co., a bond investment firm in Newport Beach, California. 

Bigger Losses 

Stiglitz said taxpayer losses are likely to be much larger than bank profits from the PPIP program even though Federal Deposit Insurance Corp. Chairman Sheila Bair has said the agency expects no losses. 

"The statement from Sheila Bair that there’s no risk is absurd," he said, because losses from the PPIP will be borne by the FDIC, which is funded by member banks. 

"We’re going to be asking all the banks, including presumably some healthy banks, to pay for the losses of the bad banks," Stiglitz said. "It’s a real redistribution and a tax on all American savers." 

Stiglitz was also concerned about the links between White House advisers and Wall Street. Hedge fund D.E. Shaw & Co. paid National Economic Council Director Lawrence Summers, a managing director of the firm, more than $5 million in salary and other compensation in the 16 months before he joined the administration. Treasury Secretary Timothy Geithner was president of the New York Federal Reserve Bank. 

‘Revolving Door’ 

"America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street," he said. "Even if there is no quid pro quo, that is not the issue. The issue is the mindset." 

Stiglitz was head of the White House’s Council of Economic Advisers under President Bill Clinton before serving from 1997 to 2000 as chief economist at the World Bank. He resigned from that post in 2000 after repeatedly clashing with the White House over economic policies it supported at the International Monetary Fund. He is now a professor at Columbia University. 

Stiglitz was also critical of Obama’s other economic rescue programs. 

He called the $787 billion stimulus program necessary but "flawed" because too much spending comes after 2009, and because it devotes too much of the money to tax cuts "which aren’t likely to work very effectively." 

"It’s really a peculiar policy, I think," he said. 

Plan Deficient 

The $75 billion mortgage relief program, meanwhile, doesn’t do enough to help Americans who can’t afford to make their monthly payments, he said. It doesn’t reduce principal, doesn’t make changes in bankruptcy law that would help people work out debts, and doesn’t change the incentive to simply stop making payments once a mortgage is greater than the value of a house. 

Stiglitz said the Fed, while it’s done almost all it can to bring the country back from the worst recession since 1982, can’t revive the economy on its own. 

Relying on low interest rates to help put a floor under housing prices is a variation on the policies that created the housing bubble in the first place, Stiglitz said. 

"This is a strategy trying to recreate that bubble," he said. "That’s not likely to provide a long run solution. It’s a solution that says let’s kick the can down the road a little bit." 

While the strategy might put a floor under housing prices, it won’t do anything to speed the recovery, he said. "It’s a recipe for Japanese-style malaise."


There is another big development occurring in the currency swap arena.  I will try and be brief.  A currency swap is basically an interest free swap between two countries.  Let us say  Britain wishes to swap with the USA.  The usa gives Britain say  100 million usa dollars and Britain gives the usa 65 million British pounds.  The interest is zero as they must return the same quantities borrowed in a fixed time period.


The usa has announced 2 swaps with the rest of Europe, Switzerland, England and Canada.  They reaffirmed the same deal with the exception of Canada. It seems that there are huge problems with dollars , pounds and Euros falling into the black holes of balance sheets of the banks. The deleveraging (the fall of debt from global accounts) is creating havoc for our central bankers.

Ambrose Evans Pritchard commented that England is in desparate shape as they have little foreign reserves. They have no usa reserves and they need dollars badly. The usa is seeking ways to get rid of the pounds and euros that they received from the swaps.

The reason, I bring this up is that the swaps are not returning and for that matter they are expanding which generally means trouble.


Speak to you on Monday






Thursday, April 16, 2009

april 16.09 commentary.

Good evening Ladies and Gentlemen:

I would like to draw attention to the next big bailout...the public pensions. This is an article written today by John Nothdurft:

Will public pensions be next bailout?

John Nothdurft

Along with the stock market, retirement savings, and taxpayers' sanity, state and municipal government employee defined-benefit pension funds are reeling from the financial meltdown.

The current economic turmoil and stock market downturn have caused government employee pension funds to lose hundreds of billions of dollars. The crisis only reinforces the need for states to move their pension systems from the onerous defined-benefit obligation to a more mobile and sustainable defined-contribution model.

It's a potentially catastrophic problem.

According to the Center for Retirement Research at Boston College, as of Dec. 16, 2008 public pensions in the United States were underfunded by nearly $1 trillion. Worst is Illinois, where the pension system has only 54 percent of the necessary funding and an unfunded liability of $54.4 billion.

Even before our current financial shakeup, more than 20 million state and local government employees' pensions nationwide were in dire fiscal shape.

For example, in June 2007 New Jersey's unfunded liability was already $28 billion. Since then the number has soared to more than $52 billion, with roughly 45 percent of the obligation unfunded.

Defined-benefit (aka "traditional") pension plans are falling apart because they're inherently flawed in design by guaranteeing employees a predetermined benefit upon retirement.

Public pension benefits are also much more lucrative than private-sector pensions and widely prone to "double dipping" abuse. And with vesting periods often being 10 years or more, government pension systems box many workers into a corner, forcing them to stay in jobs they don't like in order to keep their benefits.

The decades-long delay between promise and payout favors extravagant benefit commitments to government workers by politicians who will be out of office by the time the taxpayers are stuck footing the bill for them.

Due to these inherent flaws and a sliding economy, states are increasingly lagging behind the 80 percent funding threshold widely accepted as defining minimum adequacy.

A 2008 Government Accountability Office study found, "58 percent of 65 large public pension plans were funded to that level in 2006, a decrease since 2000 when about 90 percent of plans were so funded." By law these public pension obligations must eventually be fulfilled, leaving taxpayers to pay the bills down the line.

Without reform, these unfunded pension liabilities will continue to worsen as budget deficits grow and legislators delay pension fund payments in order to finance increasingly gluttonous current expenditures.

With more baby boomers retiring and living longer, these public pensions are building up massive open-ended liabilities. Recent multibillion-dollar losses in government-run pensions prove politicians are no more qualified than pensioners themselves to manage these plans.

This is another case where government is lagging behind the private sector, which has switched more than 80 percent of its pensions to defined-contribution plans such as 401(k)s. Under defined-contribution systems, workers are free to transport their pension from job to job without a vesting period. While offering workers more pension portability and individual control, this also allows government to eliminate open-ended liabilities.

State and local governments are ultimately going to have to follow the private sector's lead and switch their pension systems to a defined-contribution structure. It's the only way to prevent an ever-increasing burden from future liabilities and help make budgeting more stable and predictable.

Without an overhaul of these unsustainable pension systems, American taxpayers will be forced once again to bail out governments for their foolish, shortsighted decisions.

John Nothdurft ( is the budget and tax legislative specialist for The Heartland Institute.


Please note that one state, Illinois has only 54 per cent of the necessary funding and an ufunded liability of 54.4 billion dollars. This will be a huge disaster when the public employees cannot get the pension benefits.
Gold closed down by 13.00 and silver fell by 51 cents. The gold comex OI and the silver OI hardly budged from yesterday.
The newly created Julius Baie gold ETF has responded with initial success. This week alone, 60,000 oz of gold has been added. The fund holds 1.1 million oz of gold. Here is the report:

Update -Julius Baer sees gold ETF holdings at record 16/04/2009 - 14:48

LONDON, April 16 (Reuters) - Swiss bank Julius Baer

Href="QuoteRef">BAER.VX said it sees holdings of its gold-backed exchange-traded fund rising 60,000 ounces or 5.5 percent to record levels in the week to April 17.

The ETF would then hold 1.137 million ounces, it said, up from 1.077 million ounces on April 9, the final trading day of last week…

I do not if this ETF has gold behind it or not, but it is in Switzerland and the presumption is that it does.
On the other hand the GLD ETF for the 9th straight day kept the same gold inventory at 1127.4 tonnes. I doubt very much if it has the gold it claims its has. (ditto for SLV)
Strange movements:
gold declines by 100 dollars per oz, and this GLD fund neither releases or add gold. However the Julius Baer fund increases its inventory.
At the central fund of canada buys gold and silver at a premium of 8% of spot. Go figure!!
On the economic front, it is Thursday so we get the jobless numbers. The initial claims were down but total jobless remain at record levels.

08:30 Jobless claims for w/e 11-Apr 610K vs. consensus 660K
Prior week revised to 663K from 654K. Continuing claims for w/e 4-Apr 6.022M vs. consensus 5.893M. Prior week revised to 5.850M from 5.840M.
* * * * *

US jobless claims drop, continued claims at record

WASHINGTON, April 16 (Reuters) - The number of U.S. workers filing new claims for jobless benefits unexpectedly fell last week, government data on Thursday showed, but so-called continued claims rose to a fresh record as the recession bit.

Initial claims for state unemployment insurance benefits declined 53,000 to a seasonally adjusted 610,000 in the week ended April 11 from a revised 663,000 the week before, the Labor Department said.

Analysts polled by Reuters had forecast 655,000 new claims versus a previously reported count of 654,000 the week before.


Housing starts and permits continue to drag the ecconomy.

U.S. housing starts, permits fall in March

WASHINGTON, April 16 (Reuters) - New U.S. housing starts fell more than expected in March after a surprise surge the previous month, government data showed on Thursday, dealing a blow to hopes that housing market stability was on the horizon.

The Commerce Department said housing starts fell 10.8 percent to a seasonally adjusted annual rate of 510,000 units, the second lowest on records dating back to 1959, from February's downwardly revised 572,000 units.

House starts in the West region, which has been hit hard by the housing slump, fell 26.3 percent to a record low 73,000 rate.

Analysts polled by Reuters had expected an annual rate of 540,000 units for March.

New building permits, which give a sense of future home construction, dropped 9 percent to a record low 513,000 units, from 564,000 units in February. That was well below analysts' estimates of 550,000.

Building completions rose 3.5 percent to 824,000 units.


We are now starting to see the commercial sector of the economy falter: General Growth Properties is the second largest mall operator in the usa.

It is in chapter ll this morning:

General Growth Properties files for bankruptcy

Last update: 2:20 p.m. EDT April 16, 2009

NEW YORK (MarketWatch) -- After several rounds of waivers from creditors and a long struggle to stay afloat, the nation's second largest mall operator, General Growth Properties, on Thursday filed for bankruptcy protection, saying it couldn't reach an out-of-court consensus on how to restructure its $27 billion of outstanding debt.

The Chicago-based firm, which operates malls in 44 states, was brought low by an aggressive growth and acquisition strategy funded by debt, and is symbolic of the crisis growing in the commercial real estate market.

And the trouble for firms like General Growth are likely to continue, according to the latest report about U.S. economic conditions released this week in the so-called Beige Book….


Today, we got the Philly Manufacturing Index and it improved somewhat but still showing contraction:

Philly Fed factory activity shrinks less in April

NEW YORK, April 16 (Reuters) - Manufacturing contraction in the U.S. Mid-Atlantic area slowed in April, a regional Federal Reserve survey released on Thursday showed.

The Philadelphia Federal Reserve Bank said its business activity index came in at minus 24.4 in April compared with minus 35.0 in March. The median forecast among economists polled by Reuters was minus 32.0.

A reading below zero indicates contraction in the region's manufacturing sector.

The survey covers factories in a region encompassing eastern Pennsylvania, southern New Jersey and Delaware and is looked at closely as one of the first indicators of the health of the U.S. manufacturing sector.

US foreclosures rose 24% year over year as the banks stepped up the pace :

00:06 US foreclosures rose 24% y/y in Q1 according to RealtyTrac
The online marketplace releases a report showing filings went up to 803K in Q1. In March, foreclosures rose 46% y/y and 17% m/m to 341K. Percentagewise by state, Nevada, Arizona, and California had the highest rates in Q1. By totals, California, Florida, and Arizona had the most.
* * * * *


Oh my Goodness: THEY JUST RELEASED THE fEDERAL DEBT: total public debt outstanding: 11,218,863,034,278.04.

yesterday, it was 11.146 trillion. a gain of 72.4 billion dollars in one day.

no wonder they raided gold today (they are 82 billion dollars away from debt ceiling)

I also want to add that dollars have been received to the government in the form of income taxes this week. The deadline to file your returns in the usa was April 15.09. I guess they are not getting the dollars they think they budgeted for.

The economy is suppose to be improving and the banks lending. This would mean that commercial paper is flowing again.

I guess we got something out of place here...commercial paper is dropping in quantity...the banks are not lending a dime:

U.S. commercial paper outstanding shrinks in week

NEW YORK, April 16 (Reuters) - The U.S. commercial paper market contracted sharply in the latest week, erasing the previous week's surge as the deep economic downturn continued to erode it, Federal Reserve data showed on Thursday.

For the week ended April 15, the size of the U.S. commercial paper market, a vital source of short-term funding for daily operations at many companies, fell by $59.6 billion to $1.474 trillion outstanding. That shrinkage more than offset the prior week's $56.9 billion expansion, which was the biggest rise since early January.

The overall U.S. commercial paper market peaked at about $2.2 trillion outstanding in August 2007, after which the global credit crisis started to slash the market's size.

Asset-backed commercial paper fell by $23.5 billion to $681.0 billion outstanding in the latest week, the lowest since December 2004, according to Reuters data.

In part, the market's contraction shows "there is a lot of pressure for companies to finance their longer-term assets with longer-term liabilities," instead of using short-term instruments such as commercial paper, said Robert C. King, an
economist at the Jerome Levy Forecasting Center in Mount Kisco, New York.

The global credit crisis battered the price of commercial paper and raised such borrowing costs sharply before the Federal Reserve stepped in to buy a big chunk of the market.

Companies and banks are still using commercial paper to fund routine short-term operations such as payroll, analysts say.

However, many companies and banks are now wary of using commercial paper to finance purchases of some longer-term assets such as securitized mortgages, King said.

That strategy backfired in the financial crisis as securities' prices fell broadly, ramping up borrowing costs in the commercial paper market, King said.

Unsecured financial issuance outstanding fell by $29.4 billion in the latest week after rising $40.9 billion the previous week.


I have written many times about the Goldman profit and the relationship with AIG. Today in a column at the NY times, Mr William Cohan wrote a scathing attack on Goldman Sachs.

Here is what he has to say:

William Cohan in a NY Times op-ed: The question many Wall Streeters are asking is just how Goldman once again snatched victory from the jaws of defeat. Many point to Goldman’s expert manipulation of the levers of power in Washington….the firm has come to be known, as a headline in this newspaper last October put it, as "Government Sachs."

How can one ignore, the conspiracy-minded say, the crucial role that Henry Paulson, who followed Mr. Rubin to the top at both Goldman and Treasury, played in the decisions to shutter Bear Stearns, to force Lehman Brothers to file for bankruptcy and to insist that Bank of America buy Merrill Lynch at an inflated price? David Viniar, Goldman’s chief financial officer, acknowledged in a conference call yesterday the important role the changed competitive landscape had on Goldman’s unexpected firstquarter profit of $1.8 billion: "Many of our traditional competitors have retreated from the marketplace, either due to financial distress, mergers or shift in strategic priorities."

But he was largely mum on American International Group, which, Goldman’s critics insist, is the canvas upon which the bank and its alumni have painted their great masterpiece of self-interest. A few days after Mr. Paulson refused to save Lehman Brothers last September — at a cost of a mere $45 billion or so — he came to A.I.G.’s rescue, to the tune of $170 billion and rising. Then he decided to install

Edward Liddy — a former Goldman Sachs board member — as A.I.G.’s chief executive.

Goldman has since received some $13 billion in cash, collateral and other payouts from A.I.G. — that is, from taxpayers…

December 2008 was not included in Goldman’s rosy first-quarter 2009 numbers. In that month, Goldman lost a little more than $1 billion, after a $1 billion writedown related to "non-investment-grade credit origination activities" and a further $625 million related to commercial real estate loans and securities. All told, in the last seven months, Goldman has lost $1.5 billion. But that number didn’t come up on Monday. How convenient…


Here is the latest figures from the comex inventory. Gold has finally left the vaults with a huge 145000 oz departing.

Silver on the other hand saw only eligible silver leave: 300,000 oz

Here are the latest inventory figures:

4,970 ozs withdrawn from the dealer’s inventory.
300,894 ozs withdrawn from the customer inventory
Total dealer inventory 62.96 Mozs
Total customer inventory 52.4 Mozs
Combined Total 115.36 MOZ


144,953 ozs (net) withdrawn from the dealers (registered) category
1,108 ozs withdrawn from the customer (eligible) category
Total dealer inventory 2.53 Mozs
Total customer inventory 5.9 Mozs
Combined Total 8.44 MOZ

No sooner had I commented yesterday…. “for gold the warehouse stocks are also comatose and have been for months. Almost no gold moves in or out in volume. There have been 8.5Mozs of inventory for yonks yet GLD is supposedly taking delivery from somewhere on a daily basis quantities of gold that get close to being all the gold mined in the world on any given day!” …then today by coincidence there was some gold being moved! Maybe it will get moved back in tomorrow just to humor me!

Meanwhile 429 delivery notices in the April Gold Contract were issued today which brings the total for the month to 11,638 which is 1.164 Mozs (50% of what is available for delivery) yet there is no sizeable deliveries moving from the warehouse unless today’s movement is repeated everyday for the next 10 days.

In silver the cumulative delivery notices stand at 348 contracts or 1.74Mozs, which it not very much compared to inventories yet it is silver that is being taken off the exchange in large volumes. Something doesn’t smell right.

Rob Kirby wrote that the Fed has purchased 1.5 billion dollars of bonds in the TIPS variety. These are inflation linked bonds. I guess the Fed is worried about future inflation flare ups.

Subject: Permanent OMO: Fed purchases $1.503 billion in TIPSFed purchases $1.503 billion in TIPS


China is massively purchasing copper and all base metals and storing them on their shores. Ambrose Evans wrote an article on this subject and I urge you all to read it:

Ambrose’s articles are always ahead of the pack, and extremely thought provoking, even if he may sometimes have a hidden agenda of his own or of his editors, that he may be pursuing ?

It is difficult to find other plausible reasons for the huge surge in the copper price off its recent lows ?

Maybe the Chinese will move through all the metals after they have cornered the world copper stocks. A trillion $ or two can buy a lot of metals at their current capped pices.

« The beauty of recycling China's surplus into metals instead of US bonds is that it kills so many birds with one stone: it stops the yuan rising, without provoking complaints of currency manipulation by Washington; metals are easily stored in warehouses, unlike oil; the holdings are likely to rise in value over time since the earth's crust is gradually depleting its accessible ores. Above all, such a policy safeguards China's industrial revolution, while the West may one day face a supply crisis.

Beijing may yet buy gold as well, although it has not done so yet. The gold share of reserves has fallen to 1pc, far below the historic norm in Asia. But if a metal-based currency ever emerges to end the reign of fiat paper, it is just as likely to be a "Copper Standard" as a "Gold Standard". «


to see the whole article: click on the blue.

I would also like to point out that China has produced 280 tonnes of gold this year and they have sold zero oz to the world. They store every oz produced.

They are also purchasing gold on the open market but they do not disclose the quantity purchased. It is rumoured that they add to reserves approx 400 tonnes per year, namely 280 tonnes from mining and 120 tonnes from purchases.

The usa produces 240 tonnes of gold and sells the entire 240 tonnes plus all the gold in its vault.

China is the world's largest refiner of silver. It is in their interest to acquire massive amts of silver as they know that supplies are dwindling.

Speak to you on Saturday


Wednesday, April 15, 2009

April 15.09 commentary.

Good evening Ladies and Gentlemen:
Gold closed up by 80 cents to 891.00.  Silver rose by 2 cents to 12.80.
The gold comex OI rose by 692 contracts to 336000..still very low by comparative figures.  The silver Oi surprisingly went up another 1000 contracts to 95000 as silver continues in backwardation at the comex.
I would like to comment on comex gold deliveries. Today 1883 contracts were bought for April and they will surely stand for delivery.   Remember also that 350,000 oz of gold stood in March..It now looks like the total that will stand will be around 1.65 million oz.  (1.3 for April plus .35 for March).What is very strange is that zero oz has moved either way in or out.  Here is one report:
Yesterday the Open Interest in the April COMEX gold contract was 362, it is now 2245 contracts. The addition of 1883 contracts so late in the current contract month can only mean the buyer intends to stand for delivery. There are already 11,208 cumulative delivery notices issued this month but almost no deliveries have been made…I know that from observing that there has been almost no physical metal leaving the COMEX warehouse on the gold side. If these new contracts stand for delivery the total to be delivered will be 1.3 Mozs; the dealer inventory stands at 2.68 Mozs. In other words deliveries could reduce available dealer inventory by 50% in a single month. There is always a possibility that these delivery notices get re-tendered (settled in cash) but so far that hasn’t happened. There is certainly the potential for a short squeeze brewing in gold which coupled with the continuing drawdown in physical silver inventories I have been reporting looks like things will get exciting very soon.
And this from Adrian.  He is coming to my way of thinking.  That is the figures from the comex are bogus.
Here is his comments:
COMEX Warehouse Stocks April 15, 2009


ZERO ozs withdrawn from the dealer’s inventory. 
993 ozs withdrawn from the customer inventory
Total dealer inventory 62.96 Mozs,br> Total customer inventory 52.71 Mozs
Combined Total 115.67 MOZ


10000 ozs deposited in the dealers (registered) category 
96 ozs withdrawn from the customer (eligible) category
Total dealer inventory 2.69 Mozs
Total customer inventory 5.9 Mozs
Combined Total 8.59 MOZ

Silver was trading in backwardation today. It closed with the April contract having only one half of a penny of contango over MAY. The contango between April and June is 2 pennies. The contango across all contracts has reduced to very low levels. This implies significant shortage of physical silver yet only one bar was taken out of the COMEX today…hmmm! In gold the warehouse stocks are also comatose and have been for months. Almost no gold moves in or out in volume. There have been 8.5Mozs of inventory for yonks yet GLD is supposedly taking delivery from somewhere on a daily basis quantities of gold that get close to being all the gold mined in the world on any given day! Gold also traded in backwardation today yet the dealers received 10,000 ozs and customers withdrew a piddlin’ 96 ozs…one gold bar!

I am now starting to suspect the reporting from the COMEX warehouses. It starts to smell of being Enronized. Things just don’t jive. This makes me think that the massive squeeze in gold and silver will come out of nowhere because the warehouse numbers are false. How can gold trade in backwardation and the warehouse stocks not have changed for months?

OK. Lets get to some economic news of the day.
US prices fell  last month:

U.S. consumer prices fall 0.1 pct in March 

WASHINGTON, April 15 (Reuters) - U.S. consumer prices fell unexpectedly in March and recorded their first annual drop since 1955, government data showed on Wednesday, as slumping demand pushed down energy and food costs. 

The Labor Department said its closely watched Consumer Price Index fell 0.1 percent, after increasing 0.4 percent in February. Analysts polled by Reuters had forecast headline CPI rising 0.1 percent. 

Core prices, which exclude food and energy items, rose 0.2 percent after rising by the same margin in February. That compared to analysts' prediction for a 0.1 percent increase. Core prices have risen by 0.2 percent for three months in a row. March core prices were lifted by increased costs for tobacco and vehicles. 

On a year-over-year basis, consumer prices fell 0.4 percent in March, the first 12-month decline since August 1955, following a 0.2 percent increase the previous month. Core prices rose 1.8 percent year over year. 

Energy prices dropped 3.0 percent after rising 3.3 percent the previous month. The food index eased 0.1 percent for a second straight month in March.


The empire Manufacturing report came out today and it was bad but not as bad as last month:
08:30 Apr Empire Manufacturing (14.65) vs. consensus (35)
Mar reading was (38.23). 
* * * * *
Any reading below zero is contraction in the NY manufacturing area.
Mortgage applications continued to spiral downward contracting a full 11.3 per cent last month.  Here is the report:
07:01 MBA mortgage purchase applications index (11.3%) in 10-Apr week; total market index (11.0%) 
Compares to 11.1% and 4.7%, respectively, in prior week. The refi index was (10.9%) vs. 3.2% in the prior week. The 30-year fixed rate (3bp) to 4.70%; 15-yr. fixed rate (3bp) to 4.46%. 
However, the big news of the day had to be the release of the TIC report.  This shows cash inflows or cash outflows.  Since the usa had a deficit it needed an inflow of at least 40 billlion dollars to cover its trade deficit and another 15 billion dollars to cover its service sector deficit.  Instead it got another 97 billion dollar outflow.  This is usa dollar negative.
Here is the report:

09:04 Feb total net TIC flows ($97.0B)
Net long-term TIC flows $22.0B vs. consensus $14.0B. Jan total net TIC flows revised to ($146.8B) from ($148.9B); Jan net long-term TIC flows revised to ($36.8B) from ($43.0B). 
* * * * *

U.S. net capital outflows at $97 billion in Feb 

NEW YORK, April 15 (Reuters) - Net capital outflows from the United States totaled $97 billion in February compared with a revised outflow of $146.8 billion the previous month, the Treasury Department said on Wednesday. 

The department originally reported outflows of $148.9 billion in January. 

Excluding swaps, net long-term capital flows showed an inflow of $22 billion in February, compared with revised outflows of $36.8 billion the previous month. January's figure was initially reported by the Treasury as an outflow of $43.0 billion.


Total usa production fell a full 1.5% last month for the nation.  This is not very good for the stock market as the usa is not producing goods for anyone:

U.S. industrial production falls 1.5 pct in March 

WASHINGTON, April 15 (Reuters) - U.S. industrial production fell an unexpectedly sharp 1.5 percent in March, Federal Reserve data showed on Wednesday, capping a brutal quarter as businesses pared orders and cut inventory in a deepening recession. 

For the first quarter as a whole, output dropped at an annual rate of 20 percent, the largest quarterly decrease of the current recession, which began in December 2007. That is likely to reinforce expectations that the overall economy contracted sharply in the first quarter. 

The drop in March marked the sixth consecutive monthly decline, and matched the revised 1.5 percent fall in February, originally reported as a 1.4 percent fall. Economists polled by Reuters had expected a 1 percent drop for March. 

At 97.4 percent of its 2002 average, output in March fell to its lowest since December 1998. The capacity utilization rate dropped to 69.3 percent, the lowest since the data series began in 1967.


US home builder confidence rose a bit last month and fueling reason for the stock market to rally 100 points today:

U.S. home builder sentiment rises in April 

WASHINGTON, April 15 (Reuters) - U.S. homebuilder sentiment rose in April to its highest level since last October, the National Association of Home Builders said on Wednesday. 

The NAHB/Wells Fargo Housing Market index rose to 14 from 9 in March, emerging from single-digit territory for the first time in six months, the group said in a statement. April's increase was the largest one-month gain since May 2003.


The next bombshell to hit the usa will be the collapse of the credit card securitzation.  The total loans securitized is around 1 trillion but 10 trillion of CDO's are leveraged on it.  This will collapse the banks.
I urge you all to read the following passage as this gentleman has got it right as  Capital One in its filings has noted a huge jump in annualized defaults  (9.33 per cent). Here is the passage:

Round Two in big bank Toxic Asset collapse coming

Capital One, in a regulatory filing, reported that their credit card defaults jumped up to an annualized rate of 9.33% in March. And, after a pause in foreclosure filings (most of the pause was a result of banks deferring foreclosures during the holidays and a moratorium in California), foreclosure notices in March spiked, which I suggested a few weeks ago would happen. Here are the links:

Also, despite lower mortgage rates (artificially lower per Fed intervention), mortgage applications tanked 11% last week, led by a collapse in purchase applications. Please note that this number was reported on an unadjusted basis due to Easter/Passover (which shouldn't have affected the numbers anyway), so this reported number actually is a true snapshot of the mortgage application market.

The total amount of credit card debt outstanding is $955 billion. Most of this credit card debt has been securitized and stuffed into the trillions of off-balance-sheet structures like SIV's, CBO's, VIE's, etc. These structures themselves have been leveraged and also have credit default swap and interest rate swap dervatives embedded in them. In other words, with credit card defaults soaring, these Toxic Assets are probably worth less than 10 cents on the dollar, assuming the typical 10:1 leverage on these structures.

What this implies, is that just based on credit card debt outstanding, the potential total dollar liability is close to $10 trillion dollars. And we're supposed to wonder where the $200 billion already extended to AIG has gone?

Total consumer debt, including auto loans, mobile home loans, student loans etc (not counting residential mortgage debt) is well over $2 trillion. I leave it to you to work out the math on that, given the leverage applied to this debt when it's securitized....Please prepare for Round 2 of the bank collapse by moving your bank deposits into physical gold and silver.


This is not good for the housing market..more foreclosures:
20:43 Banks stepping up foreclosures - WSJ 
The Journal reports that JPMorgan (JPM), Wells Fargo (WFC), Fannie Mae (FNM) and Freddie Mac (FRE) all say they have increased foreclosure activity in recent weeks after lifting internal moratoriums that temporarily halted foreclosures. The paper adds that the resulting increase in the supply of foreclosed homes could further weigh on the beleaguered housing market and put additional pressure on bank earnings as problem loans are written off.
Reference Link (subscription required) 
* * * * *
The Wall Street Journal has doubts about Goldman and has doubts about it repaying the 10 billion dollars of TARP money.  Nobody is lending..who is going to finance Goldman Sachs?
Here is the WSJ article:
6:55 GS WSJ discusses Goldman's desire to repay $10B in TARP funds (115.11)
In a "Heard on the Street" column, the Journal notes that Goldman wants to extricate itself from the TARP in an effort to avoid unwanted scrutiny surrounding employee compensation. The article also discusses some of the concerns surrounding a near-term repayment, including liquidity worries as neither Goldman nor anybody else in the financial sector has been able to issue debt without government guarantees. In addition, the paper also worries about the impact of bifurcation given the still fragile nature of the financial system. However, the Journal goes on to note that even if Goldman's repayment approval is delayed, the firm has already separated itself from the pack merely by demonstrating that it has the ability to raise capital to support such a move.
Reference Link (subscription required) 
* * * * *
Sales Tax revenue is falling short as the economy continues to deteriorate.  This is a sure measure of economic activity within usa boundaries;
Sales-Tax Revenue Falls at Fastest Pace in Years

State and local sales-tax revenue fell more sharply in the fourth quarter of 2008 than at any time in the past half century, and has continued to erode through the beginning of 2009, according to a report released Tuesday…,br>lMyQjAxMDI5MzE5NDcxNTQzWj.html

Bill Holter talks about the General Motors and Chrysler reorganization. 
First his comments and mine will follow:


To all; regarding the potential GM/Chrysler potential bankruptcies/merger, what are they thinking! The auto industry has too much capacity, way too much overhead and legacy costs to ever truly survive in their current form. The industry must be reorganized for what obviously is a completely new and less vibrant economic environment. You just can't fix 25+ years of bad decisions that have compounded annually with new "TARP" money. You cannot throw so called good money after bad.

The auto industry is a microcosm of the economic system in general. Think about all of the strip malls across the country, how do they stay afloat in a new world where people don't/can't borrow and spend, and actually begin to save? The humorous aspect to this is builders still building more square footage, damn the torpedoes, full steam ahead. Same story with home builders, chip makers, etc.. The point here is that the ENTIRE system needs to be restructured, it all starts with the "money", but I won't go into this again today.

What has happened is that hope (the refuge of fools) is continually springing eternal that we can turn the clock back 2 years and go forward like nothing has happened. This is the desire, it cannot happen. The entire system must be reorganized (read, BANKRUPTCY). Someone has to lose, everyone cannot be made whole at the expense of taxpayers. There is no chance that demand for anything from soup to nuts will revert back to where we were a few years back. The U.S. is a mature economy, it is not an emerging market where people are "newly" affluent and want toasters, radios, new cars, houses etc.. The economy needs to be restructured for "replacement", not for huge new demand. Housing, autos, commercial and industrial real estate are all in over supply, production must be cut back and so must overhead costs.

What I am trying to convey here is that the system is in reverse and must be restructured accordingly across the board. This is the concept that the government is trying at all costs to avoid, it cannot and will not. The Fed is living the nightmare scenario that has been talked about for so many years, namely credit contraction. A fiat system with a fractional reserve banking system must ALWAYS have growth and inflation to survive. We have the opposite, deflation of assets and negative growth. We have had many recessions in the past without credit contraction, we had the Great Depression in the 30's but money was still backed by Gold and thus real, we have never had a credit contraction from the current whacked out debt ratios AND with a currency that is not real. Bankruptcy on a global scale (it may be called "the Great Restructuring") is the only "door without a brick wall behind it" as I see it. Regards, Bill H.

It is amazing that the government are dictating terms to these two firms yet the government is pretty lousy when it comes to running a business..e.g amtrak, the post office etc.
On top of this, what are they going to do with all of those 1-2 trillion dollars of credit default swaps?  What are they going to do with all of the firms that supply goods to these manufacturers?
This is far from over!!.
From Europe:
Axel Weber is sounding alarm bells if the ECB central bank rate falls below 1%:
05:18 ECB's Weber sees risk key rate below 1% would paralyze money market
The European Central Bank has a "bit more leeway," to lower the main refinancing rate at which it provides liquidity to banks, but the rate shouldn't necessarily fall below the critical 1% level, Axel Weber said. "I am critical of lowering the main refinancing rate below 1%," Weber said. - SA London 
* * * * *
This was tabled today in a speech explaining the dire situation for the City of Los Angeles:

Prepared text of Villaraigosa’s State of the City speech

Source: L.A. Now

Fellow Angelenos:

These are no ordinary times in the City of Los Angeles, or for that matter, any place where people depend on the global economy.

Here in L.A., the recession is taking a terrible toll.  230,000 Angelenos now standing on unemployment lines.  The jobless rate simmering at 12% and rising. The mortgage crisis has now forced 21,000 of our families to box up their belongings and vacate their homes, many experiencing for the first time in their lives the humiliating pain — the frustration — that comes in having to put your hand out and rely on the help of strangers to survive.

We have thousands of business owners struggling to make payroll.  Trade flows and ship traffic are idling at the port.  And the recession has done lasting damage to one of our most vital civic institutions: our great newspapers.

Needless to say, the recession has hit government particularly hard.

The need for our services is up.  Revenue to pay for them is down. Here in L.A., we face a $530-million  deficit this year alone.

The situation at the state level — where the system seems hardwired for failure — is even more extreme.  That’s why it is absolutely critical that we lock arms and approve the bipartisan budget stabilization package on May 19 to prevent us from destroying the very services that Californians depend on.

When challenges seem daunting, it’s always helpful to recall the old Japanese proverb: “Adversity is the foundation of virtue.”

From JIm Sinclair:
Nicholas Taleb the author of the best selling book a Black Swan..was interviewed in Europe.

I urge you all to view this tape:

Jim Sinclair’s Commentary

It is absolutely amazing that Nassim Taleb did not get the hook on financial TV this morning.

He ripped into every plan and every person of note from the Treasury, Federal Reserve and right up to the Fat Cats.

The look on the interviewer’s face was a marvel to behold. He says nothing has changed. Nothing is strengthening. The weaknesses are still there and there is no effective plan or people to change that.

I understand he is a professor of Risk Engineering so I wonder what he teaches when you listen to his views.

Professor Taleb, I am open to invitation to a lecture and promise to sit quietly and attentively. I will gladly pay for a ticket if it is public.

Please listen to this man if you have not heard him interviewed.


you can see the tape at



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