Saturday, February 19, 2011

Silver explodes/middle east problems continue/documents released my Fed showing gold involvement

Good morning Ladies and Gentlemen:

Before commencing this important commentary, I would like to introduce you 4 new members into the banking morgue.  Very shortly they will be joined by their ring leader JPMorgan and their band of merry banking friends:
Goldman Sachs, Citibank, Bank of America, Morgan Stanley and Wells Fargo:

The 4 banks that failed last night are as follows:

1. Habersham Bank of Clarkesville GA
2. Charter Oak Bank of Napa California
3. San Luis Trust Bank of San Luis Obispo CA
4. Citizens bank of Effingham , Springfield GA.

may they rest in peace.

As many of you are quite well aware of, gold and silver had a stellar day yesterday.  Gold climbed by$3.50 to $1388.20. However the star of the show was silver climbing by 73 cents to $32.30.  During the session it reached a high of $32.87 as the bankers panicked and started to cover their massive shorts.

Let us head over to the comex and see how the trading fared yesterday.

The total gold comex open interest rose by 2369 contracts to 481,548 from Thursday's level of 479,179.
The front February delivery month saw its open interest rise from 648 to 653 despite 4 deliveries on Thursday.  We got a few queue jumpers needing some gold.  The next delivery month of April saw its open interest also rise from 311,585 to 312,764.  However the volume at the gold comex was still rather subdued coming in at an estimated 104,766.  The confirmed volume on Thursday was also quite low at 103,537.
This is of concern to our commissioners as business is leaving for London.  It may indicate that investors want the physical metal and are not willing to wait for a future month to obtain their physical metal.

The total silver comex open interest rose to an unheard of 150,615.  We reached this level before but that was when we had considerable calendar spreads which had no economic benefit.  These spreaders have since departed so this volume is a true indication of demand.  The rise in open interest from Thursday was a rather large 2349 contracts.  Despite midnight oil meetings by the bankers, the onslaught in silver continued on Friday and the bankers finally succumbed by buying back some of their massive shorts.
The front options expiry month of February saw its open interest mysteriously rise from 91 to 113.  We had zero deliveries on Thursday so we had quite a few queue jumpers in need of silver.  The front month of March saw its open interest drop marginally from 55811 contracts to 53,125.  We are a week away from first day notice and it looks to me that many of our silver players are resolute and willing to stand for delivery.
This will be quite a week.
The estimated volume at the silver comex yesterday was 103,401 which is huge  with small amounts of rollovers.  The confirmed volume yesterday was also high at 103,195.  The bankers are in disarray!!

Here is a chart for Feb 18.2011 on deliveries and inventory changes at the comex:

Withdrawals from Dealers Inventory 
Withdrawals from customer Inventory 
262,603 oz
Deposits to the dealer Inventory
Deposits to the customer Inventory
84,225  oz
No of oz served  (contracts )  18
90,000 oz
No of notices to be served 113
565,000 oz
Withdrawals from Dealers Inventory 
Withdrawals from customer Inventory 
 63,991 oz
Deposits to the dealer Inventory
  5899 oz
Deposits to the customer Inventory
10,632 oz
No of oz served (contracts 58
5800 oz
No of oz to be served 595
59,500 oz 

Let us start with gold.  We witnessed a tiny 5899 oz of gold deposited to the dealer
yet no withdrawals form the dealer.  The customer was busy in gold: he received a deposit of 10,632 oz but another customer removed  63,991 oz or 2 tonnes of gold.
There were no adjustments.
The comex folk notified us that 58 notices were sent down for servicing for a total 5800 oz of gold.  The total number of notices sent down so far this month total 10,725 for a grand total of 1,072,500 oz of gold.  To obtain what is left to be serviced I take the Feb. open interest (653) and subtract from that total the Friday deliveries of 58 which gives me 595 notices left to be serviced or 59,500 oz of gold.
Thus the total number of gold oz standing in this delivery month of February is as follows:
1,072,500 oz(already served)  +  59,500 (oz to be served)  =  1,132,000 vs Thurs. total of 1,131,000 for a gain of exactly 1000 oz. 

And now for our star of the show, silver:
There were only deposits of silver by the customer as the dealer was not present in any transaction yesterday.  The customer received 84,225 oz but another customer removed 262,603 so the net loss of silver by the customer section at the comex was 178,378 oz.
There must be fires all over the place as entities need physical silver.  There were no adjustments.
The comex folk notified us that 18 delivery notices were sent down for a total of 90,000 oz of silver  The total number of notices sent down so far this month total 412 for a total of 2,060,000 oz.  To obtain what is left to go to finish off the month, I take the Feb open interest  (113) and subtract out the Friday deliveries  (18) which gives me 95 notices left to be served upon  or 475,000 oz.
Thus the total number of silver oz standing in this non delivery month is as follows:
2,060,000(already served)  + 475,000 (to be served)  =  2,535,000 vs Thursday's total of  
2,425,000 for a huge gain of 110,000 oz.  Again someone was badly in need of silver.

 The huge rise in silver price has caught the silver bankers totally offside on the silver banking.  The BIS data released in November  ( shows that the G 10 bankers have collectively sold forwards and swaps to the tune of 4 billion oz and short naked calls for another 3 billion oz.  The total, 7 billion oz represents  10 years of production.  If you just do the forwards, then it is 7 years of annual silver production.  Let us say the average cost of acquiring these derivatives and forwards equate to $15.00 for silver. Thus collectively the entire G10 bankers are feeling massive pain  (losses) to the tune of:

7 billion oz of silver( 32.30-12.00)  =  7 billion x $17.30 =  121.1 billion dollars of losses.

This is in a market of only 14 billion dollars. It begs the question to what economic need was this done.This is still off balance sheet.
If you include only the forwards or swaps (the lending of actual metal to which nothing has come back yet) then the losses are:
4 billion x 17.30 or  69 billion dollars.

Regardless how you look at it, the bankers are in serious trouble with this huge rise in silver prices. I hope you understand the severity of the situation.

Let us now travel to the COT and see what happened with our banker positions.

Posted Friday, 18 February 2011 | Share this article | Source: 
Gold COT Report - Futures
Large Speculators
Change from Prior Reporting Period

Small Speculators

Open Interest



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, February 15, 2011

In the gold COT report, those large speculators that were long gold added massively to their positions and were clearly rewarded for their efforts.
Those speculators that were short gold, saw the light and covered  1607 of their short positions.
And now for our commerical sector:
Those commercials that are long gold covered 1606 contracts as a way of supplying the gold paper.
Those commercials that have been perennially short gold increased their short positions by a massive 7109 contracts.  They are feeling a little pain tonight.  Forget the small speculators they are not in the game.

COT Gold Report - Positions as of
Tuesday, February 15, 2011

Silver COT Report - Futures
Large Speculators

Small Speculators

Open Interest



non reportable positions
Change from the previous reporting period

COT Silver Report - Positions as of
Tuesday, February 15, 2011

Ok let us see what gives here at the silver COT:
Those large speculators that have been long pounded the table by massively increasing their long positions to the tune of 5803 contracts.
Those large speculators that have been short continued to go short to the tune of 1929 contracts and were caught terribly offside.  They are feeling pain tonight.
And now for our famous commercials.
Those commercials that are long silver and close to the physical scene added 2900 contracts to the long positions, guessing correctly that silver was on the move.
Those commercials that have been short silver from day one like JPMorgan et friends continue to supply the massive paper to the tune of 6831 contracts.  It seems that JPMorgan underestimated demand for silver from all quarters as they continued to supply the paper. The small specs are just not in the silver game.

In a nutshell:  PANIC at banking circles this weekend.

Let us see how our ETF's fared.  First our non physical ETF's:
Here is the inventory at the GLD last night:

Total Gold in Trust

Tonnes: 1,223.10
Value US$:

Thursday's total:    1224.01 tonnes of gold
                  Oz=      39,353,093.41

we lost:  .91 tonnes of gold.  This no doubt put out fires over in England has the Chinese are trying to get as much gold onto their shores as possible.  They are buying GLD shares and tendering them for metal.  The Bank of England is going to have headaches when they cannot get their gold back.

Now for our SLV inventory for Friday night:

Ounces of Silver in Trust338,195,424.400
Tonnes of Silver in Trust Tonnes of Silver in Trust10,519.05
On Thursday, we had the following:

Ounces of Silver  334,728,758.700

tonnes of silver: 10,411.23

I guess the demand for silver was too great for our custodians has they increased the number of oz in "inventory" by 3,466,666 oz.  This is becoming such a farce!

And now for our physical ETF's/

The Sprott physical silver fund showed a positive to NAV of 12.89%  (PSLV and PHS.U)
The sprott physical gold fund showed a positive to NAV of 4.38%  (PHYS) and PHY.U)
The central fund of canada showed a positive to NAV of : 9.2%  (CEF.a)

Finally, as promised we got some documents on the Fed involvement in gold swaps and gold trading.
There is now no question that the Fed is involved in massive gold manipulation.

Here is one piece released yesterday and it is from 1997:

G-10 minutes from 1997 show central bankers conspiring about gold

3:43p MT Friday, February 18, 2011
Dear Friend of GATA and Gold (and Silver):
Western government and central bank officials discussed coordinating their gold market policies at a private meeting of the G-10 Gold and Foreign Exchange Committee in April 1997, according to minutes of the meeting released to GATA today by the Federal Reserve Board upon the order of a federal court. The minutes also quote a U.S. delegate as warning that a rising gold price would increase the U.S. government's debt burden.
The document was only one of many whose release was sought by GATA in its freedom-of-information lawsuit against the Fed in U.S. District Court for the District of Columbia. The judge, Ellen Segal Huvelle, ruled two weeks ago that other documents containing the Fed's gold-related secrets were exempt from disclosure under the law.
The G-10 committee minutes were compiled by New York Fed official Dino Kos and were transmitted to the Fed's Board of Governors by Edwin M. Truman, then director of the Fed's International Finance Division and a participant in the meeting.
They quote a British delegate as saying that while the gold price seemed "sluggish," the gold market itself was actually showing "resilience" and "physical demand is high." The British delegate described the gold market as "traditionally secretive."
The minutes show committee members acknowledging the heavy involvement of central banks in gold leasing, with the British delegate estimating that a year's worth of gold production already had been sold forward. That was 14 years ago and of course much central bank gold leasing followed until the last year or so.
According to the minutes, the U.S. delegate cited above, identified only as "Fisher" -- apparently Peter R. Fisher, head of open market operations and foreign exchange trading for the Federal Reserve Bank of New York -- also warned that central bank gold sales and leasing might be construed as positive for gold. The minutes say: "First, he noted that some market cynics viewed central bank activity as a contrary indicator and therefore one had to be conscious of possible feedback effects. Second, he noted that the price of gold, unlike other commodities, had historically not trended toward the cost of production. This seemed to suggest an ongoing supply/demand imbalance. Third, he had the sense that the gold leasing market was an important component in this puzzle, though he did not understand enough about that market, particularly the credit risk aspects of gold lending."
A Canadian delegate, the minutes say, wondered whether data about the gold market could be trusted -- a point much pressed by GATA and others lately.
U.S. delegate Fisher, the minutes say, "explained that U.S. gold belongs to the Treasury. However, the Treasury had issued gold certificates to the Reserve Banks, and so gold (by these means) also appears on the Federal Reserve balance sheet. If there were to be a revaluation of gold, the certificates would also be revalued upwards; however [to prevent the Fed's balance sheet from expanding] this would lead to sales of government securities. So the net benefit to Treasury would need to be carefully calculated, since sales of government securities would expand the public portfolio of government securities and hence also expand the Treasury's debt-servicing burden."
This seems to be as candid an acknowledgement as any of the U.S. government's profound interest in suppressing the price of gold.
Two years after the G-10's Gold and Foreign Exchange Committee discussed coordinating Western central bank policies toward gold, most of those central banks announced just such a formal mechanism of cooperation, the Washington Agreement on Gold:
The minutes of the April 1997 meeting of the G-10 Gold and Foreign Exchange Committee, which the Fed sought to conceal, along with the secrecy on which the Fed successfully has insisted for its other gold records, are powerful confirmations of Western central bank interest in controlling the gold market surreptitiously. The minutes have been posted at GATA's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

As promised, I sent the following down to the CFTC.  It is self explanatory:

Dear Chairman Gensler and Fellow Commissioners:

There have been several developments at the comex that deserve some attention.  At the hearing, the major stumbling point against adopting position limits was the fear
that business would migrate to other bourses, namely the LBMA.  I guess that you are seeing a noticeable drop in the trading volume at the gold comex.  It appears to me that many speculators
are sensing the exchange as being rigged, so  they are moving their business elsewhere. A fear of loss of business was certainly expressed by the commissioners at the March 25 hearing  equally, with the lone exception being Mr Chilton. The delay in the
implementation of position limits may have been the last straw as investors need integrity of markets and we are certainly not seeing much of that lately.

I would also like to draw your attention to some anomalies on pricing of various commodities.  The huge spread between the Brent Crude Oil contract versus the West Texas Intermediate contract is of concern because usually the WTI trades at a premium
due to its lesser amounts of impurities than the European benchmark, Brent Sea Crude contract.  Since the mantra of the comex is a price discovery mechanism, something is going haywire in this market.  The spread of Brent over WTI is now over 16.00 dollars per barrel premium.

There is another spread that should be noted. In normal times, propane trades at a premium to natural gas in the 30-50% range depending on market conditions throughout the USA.   However right now the premium is close to 240%.  Due to the fact that there are many more homes heated with natural gas than propane, is this market being manipulated to lower the average homeowner's heating bill?  I guess a 240% increase in a heating bill to the average USA homeowner would be catastrophic.

We need integrity of our future markets and I strongly believe that the precious metals market, the crude oil price discrepancy, and the huge spread between the propane commodity over the natural gas commodity needs to be addressed.

Thanking you in advance

Harvey Organ BSCPhm   MBA.


I invite your comments on this.

Let us now go to the big stories of the past few days:

The first one is a tandy.  MERS has now given up and basically states that the transfers of mortgages are null and void:'

MERS Exits Stage Left, Tells Members Not To Foreclose In MERS' Name

After the MERS Valentine's Day Massacre, previously reported on Zero Hedge, where Judge Robert Grossman found that MERS has no right to transfer mortgages, the company appears to have proceeded with the logical next step: professional Hara-kiri. In an announcement sent out to all MERS Members, the company stated that according to a proposed amendment to Membership Rule 8, it will require "members not to foreclose in MERS' name." MERS is seeking comments in a 90-day period, but since this is a directive driven from external judicial decision(s), it is unlikely that MERS members' opinions will matter at all. Basically MERS may have just exited the US mortgage scene, stage left, for good.
Highlights from the release:
MERS is providing the following guidance to all Members to strengthen business practices, and minimize reputation, legal and compliance risk to MERS and its Members. In recent months legal challenges have arisen regarding alleged inadequacies and improprieties in the foreclosure process including allegations of insufficient or incorrect supporting documentation and challenges to the legal capacity of parties’ right to foreclose. MERS is committed to re-evaluate and strengthen its systems and procedures to protect against these types of legal challenges. Consistent with this approach we have enhanced the Corporate Resolution Management System (CRMS) and instituted related policies and procedures designed to strengthen MERS’ business practices and limit compliance risks. To comply with this guidance, MERS Members should implement the following practices, effective immediately.

MERS is planning to shortly announce a proposed amendment to Membership Rule 8. The proposed amendment will require Members to not foreclose in MERS’ name. Consistent with the Membership Rules there will be a 90-day comment period on the proposed Rule. During this period we request that Members do not commence foreclosures in MERS’ name. If a Member determines that it will commence a foreclosure in MERS’ name during this 90-day period, two weeks advance notice must be given to MERS to permit verification of the appointment and current status of the Certifying Officer proposed to participate in the foreclosure. No foreclosure may be processed in MERS’ name without first obtaining this verification. We encourage Members to bring foreclosures only in the name of the holder of the note, in the name of the trustee or the servicer of record acting on behalf of the trustee

As to whether this will actually impact a housing business whose every component is in regulatory and legal flux and limbo, and more specifically, the share prices of WFC and BAC, please direct your queries to Liberty 44, c/o Central Market Planning Bureau.


It looks like MERS is out of business and the bankers are in the glue!!


and then this story on the mortgage mess:

Goodnight Banks: Arizona SB1259 Foreclosures; Proof of Ownership Passes Senate Foreclosure Fraud | February 16, 2011 at 1:19 PM
Well what do we have here?
A. For any beneficiary who is not the originating beneficiary on the deed of trust, the beneficiary shall record a summary document regarding the beneficiary’s legal interest in the deed of trust that contains the following information in chronological order:
The full name and address of record of every prior beneficiary on the deed of trust.
The date, recordation number or other unique designation of the instrument, and a description of the instrument that conveyed the interest of each beneficiary.

It looks like we have a bank run over in South Korea;

courtesy of Zero Hedge

Bank Run In... Korea

Tyler Durden's picture
·         Bank Run

·         F
When one thinks of South Korea one tends to think of stable government and an even more stable financial system. That may change very soon. According to JoongAng Daily, "more than a thousand customers lined up in front of the Busan II Savings Bank located in Busan yesterday as soon as the nation’s financial regulator announced a six-month business suspension of Busan Savings Bank and its affiliate Daejeon Mutual Savings Bank." And not helping the mood was a bank employee who told the crowd that "You won’t be allowed to withdraw your money if you are just standing there without a queue ticket number." Needless to say, most promptly got a number. Those that didn't tried to get their cash at an ATM. Unsuccessfully: "Those without a ticket then headed to the automated teller machines to withdraw their money, but the machines quickly ran out of cash." And while the bank run at Busan was driven by capital inadequacy (shockingly Korea still hasn't figure out that the best way to mask liabilities surpassing assets is through pervasive fraud and suspension of all common sense accounting rules: they should promptly consult with Tim Geithner and Sheila Bair on the issue), it may promptly spread to the entire banking system. "Analysts expressed concerns that public panic about savings banks could spread.  “The fears of depositors are mounting, which could lead to bank runs at a number of savings banks, and it could eventually spread to the entire savings bank industry,” said Jung Sung-tae, a researcher at LG Economic Institute." But fear not, for the Korean government is one step ahead: "A way to secure capital [for savings banks] is to establish a joint account holding fund amounting to 10 trillion won,” explained Kim Seok-dong, FSC chairman. “This problem will be closely discussed with the National Assembly.” Any day now Korea will end up with its own version of a taxpayer funded capital block hole, a/k/a in the US as the FDIC, and all problems will be promptly brushed under the rug. We can't wait until this brilliant idea comes to China (advised by Goldman Sachs no doubt). We just wonder if it will be before or after the Chinese bank run hits...
From JoongAng:
“I’ve saved 40 million won ($35,810) over my whole life. That money was going to be used for my grandson’s marriage but I cannot trust these people [bank employees] saying that I am guaranteed to get my money back,” said Cho So-young, 79.

Although operations of three of Busan Savings Bank’s four affiliates were not suspended, there are fears that they could be hit by a bank run on their deposits.

In the case of Busan II Savings Bank, its capital adequacy ratio stood at 6.0 percent as of the end of 2010, but its liabilities exceeded assets by 12.5 billion won.

Two other affiliates, Jungang Busan Savings Bank and Jeonju Savings Bank, have capital adequacy ratios of 3.6 percent and 5.6 percent, respectively. But they are unlikely to avoid a suspension of business if a bank run occurs.

The state-run Korea Finance Corporation and four commercial banks - Woori, Kookmin, Shinhan and Hana - have decided to inject 2 trillion won of emergency liquidity into the savings bank sector.

In addition, the government has decided to extend the amount of loans that can be borrowed by the Korea Federation of Savings Banks to support savings banks from the current 600 billion won to 3 trillion won.

Financial authorities are currently working to establish a joint deposit insurance account as a safety net for other financial sectors to curb the spread of possible financial risks from the savings banks. Funds for a joint deposit insurance account would be collected by financial institutions.
It is refreshing to see that both US banking insolvency, and its means of dealing with problems (insert head firmly and deeply in sand) are spreading across the world. And with that in mind, and a drink in hand, we now await for the daily trickle of press releases from the FDIC describing today's roster of Failure Friday banks, which have really failed in not realizing that the only way to avoid bankruptcy is to merge with everyone else who is just as insolvent and become a systemic risk.


Here are two stories on the middle east protests which gather huge attention globally:

Here we go again: Egypt to Bahrain 
US pledges for democracy may not extend to Bahrain, even if Obama finally supported Egypt’s rebellion. 
Mark LeVine Last Modified: 18 Feb 2011 13:04 GMT
It took until Hosni Mubarak was safely in Sharm El Sheikh and newly free Egyptians were celebrating in Tahrir square, but president Obama finally came out firmly for democracy in Egypt, no qualifiers attached.
Obama’s words were eloquent indeed; for my money even more so than his 2009 speech in Cairo. As he explained, what the world had witnessed the previous 18 days was truly "history taking place. The people of Egypt have spoken. Their voices have been heard. And Egypt will never be the same… for Egyptians have made it clear that nothing less than genuine democracy will carry the day."
The president went on to detail a set of expectations: protecting the rights of Egypt’s citizens, lifting the emergency law, revising the constitution and other laws to make this change irreversible, and laying out a clear path to elections that are fair and free.
Those expectations are entirely in line with the core demands of the organisers of the protests-turned-revolution. For that, Obama deserves credit, although at least some should be held in reserve until we see how much pressure his administration is willing to put on the military to ensure that it carries out a full transition to democracy.
What’s more, in changing themselves, Mr. Obama declared that "Egyptians have inspired us". They did so in good measure, he rightly explained, through understanding their full worth, as equal members of the larger human history and community. "Most people have discovered in the last few days that they are worth something, and this cannot be taken away from them anymore. Ever."

and then this story on the massive chaos inside Bahrain:
Bahrain forces fire at protesters 
Troops open live fire around Pearl roundabout in Manama after nightfall, at least 66 wounded.
Shots were fired by soldiers around Pearl roundabout in Manama, the Bahraini capital, a day after police forcibly cleared a protest encampment from the traffic circle.
The circumstances of the shooting after nightfall on Friday were not clear. Officials at the main Salmaniya hospital said at least 66 people were injured, some with gunshot wounds to the head and chest.
Some doctors and medics on emergency medical teams were in tears as they tended to the wounded. X-rays showed bullets still lodged inside victims.
"This is a war," said Dr. Bassem Deif, an orthopedic surgeon examining people with bullet-shattered bones.
Protesters described a chaotic scene of tear gas clouds, bullets coming from many directions and people slipping in pools of blood as they sought cover.

And then this story on the advancing Iranian ships in the Suez:

Jim Sinclair’s Commentary
This is NOT the outbreak of democracy. It is the groundwork for a victory for Iran.
Iranian ships are being respected by Egypt in their passage via the Suez Canal.
Saudi prince Talal warns of uprising threat February 18, 2011 9:45AM
A SENIOR member of the Saudi royal family has warned that the oil-rich country could be harmed by the uprisings sweeping the Arab world unless it speeded up reforms.
Prince Talal bin Abdul-Aziz Al Saud told BBC Arabic that "anything could happen" if King Abdullah Bin Abdul Aziz did not proceed with a program of political transformation.
"King Abdullah … is the only person who can carry out these reforms," the prince told the broadcaster.
"On his departure, may that be in many years to come, latent trouble will surface and I have warned of this on many occasions. We need to resolve the problems in his lifetime," the prince added.
Talal added that if Saudi authorities "don’t give more concern to the demands of the people, anything could happen in this country".
Talal has long called for reform in Saudi Arabia and formed the liberal political group "Free Princes Movement" in 1958 in reaction to the hostility between former kings Saud and Faisal.
Because of his involvement with the Free Princes Movement it is unlikely that Talal, a former ambassador to France, will ever become king.


I guess we are all lining up taking their  turn to sue the captain,  JPMorgan:  (courtesy James Sinclair commentary)

Allstate sues JPMorgan over mortgage debt losses Wed Feb 16, 2011 6:16pm EST 
By Jonathan Stempel
NEW YORK, Feb 16 (Reuters) – Allstate Corp (ALL.N) sued JPMorgan Chase & Co (JPM.N) on Wednesday to recover losses after the bank allegedly misrepresented the risks on more than $757 million of mortgage securities the insurer bought.
The lawsuit against the second-largest U.S. bank was filed just seven weeks after Allstate filed a similar lawsuit against Bank of America Corp (BAC.N), the largest bank, over losses on more than $700 million of mortgage securities.
Jennifer Zuccarelli, a JPMorgan spokeswoman, declined to comment on the lawsuit, which was filed Wednesday in the New York State Supreme Court in Manhattan.
Allstate, the largest publicly-traded U.S. home and auto insurer, is one of many to sue lenders for allegedly misleading them about mortgage securities.
The Northbrook, Illinois-based company said it suffered "significant losses" after JPMorgan and its affiliates misled it into believing it was buying "highly-rated, safe securities" backed by high-quality loans.
"In fact," Allstate said, "defendants knew the pool was a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default."

Graham Summers have come out with another dandy and here he pounds the table on the real crisis that is coming:  food shortages:

The Real Crisis That Will Soon Hit the US

Phoenix Capital Research's picture

Forget stocks, the real crisis is coming… and it’s coming fast.

Indeed, it first hit in 2008 though it was almost entirely off the radar of the American public. While all eyes were glued to the carnage in the stock market and brokerage account balances, a far more serious crisis began to unfold rocking 30 countries around the globe.

I’m talking about food shortages.

Aside from a few rice shortages that were induced by export restrictions in Asia, food received little or no coverage from the financial media in 2008. Yet, food shortages started riots in over 30 countries worldwide. In Egypt people were actually stabbing each other while standing in line for bread.

We’re now seeing the second round of this disaster occurring in Egypt and other Arab countries today. Thanks to the Fed’s funny money policies, food prices have hit records. And even the Fed’s phony measures show that vegetable prices are up 13%!

The developed world, most notably the US, has been relatively immune to these developments… so far. But for much of the developing world, in which food and basic expenses consumer 50% of incomes, any rise in food prices can have catastrophic consequences.

And that’s not to say that food shortages can’t hit the developed world either.

According to Mark McLoran of Agro-Terra, the Earth’s population is currently growing by 70-80 million people per year. Between 2000 and 2012, the earth’s population will jump from six billion to seven billion. We’re expected to add another billion people by 2024. So demanding for food is growing… and it’s growing fast.

However, supply is falling. Up until the 1960s, mankind dealt with increased food demand by increasing farmland. However, starting in the ‘60s we began trying to meet demand by increasing yield via fertilizers, irrigation, and better seed. It worked for a while (McLoran notes that between 1975 and 1986 yields for wheat and rice rose 32% and 51% respectively).

However, in the last two decades, these techniques have stopped producing increased yields due to their deleterious effects: you can’t spray fertilizer and irrigate fields ad infinitum without damaging the land, which reduces yields. McLoran points out that from 1970 to 1990, global average aggregate yield grew by 2.2% a year. It has since declined to only 1.1% a year. And it’s expected to fall even further this decade.

Thus, since the ‘60s we’ve added roughly three billion people to the planet. But we’ve actually seen a decrease in food output. Indeed, worldwide arable land per person has essentially halved from 0.42 hectares per person in 1961 to 0.23 hectares per person in 2002.

It’s also worth noting that diets have changed dramatically in the last 30 years.

For example, in 1985 the average Chinese consumer ate 44 pounds of meat per year. Today, it’s more than doubled to 110 pounds. That in of itself is impressive, but when you consider that it takes 17 pounds of grain to generate one pound of beef, you begin to see how grain demand can rise exponentially to population growth with even modest changes to diet.

Make no mistake, agriculture is at the beginning of a major multi-year bull market. We’ve got rapidly growing demand, reduced production, and decade low inventories.

This is an absolute recipe for disaster.

Good Investing!

Graham Summers

I think that I have given you enough for this weekend.
I will try and answer all of your questions this afternoon.

Have a wonderful holiday weekend

Search This Blog