Saturday, August 13, 2011

Gold and Silver withstand Raid/Jefferson county rejects debt proposal/ More problems in Japan

Good morning Ladies and Gentlemen:

Before commencing with the gold/silver report, I would like to introduce to you our newest entrant to the banking morgue:  (courtesy Associated Press)

Regulators shut small Kansas bank; 64th in 2011
WASHINGTON (AP) — Regulators on Friday shut down a small bank in Kansas, lifting to 64 the number of U.S. bank failures this year.
The pace of closures has slowed, however, as the economy has slowly improved and banks work their way through the bad debt accumulated in the Great Recession. By this time last year, regulators had shuttered 110 banks.
The Federal Deposit Insurance Corp. seized First National Bank of Olathe, based in Olathe, Kan., with $538.1 million in assets and $524.3 million in deposits. Enterprise Bank & Trust, based in Clayton, Mo., agreed to assume the assets and deposits of the failed bank.
In addition, the FDIC and Enterprise Bank & Trust agreed to share losses on $419.6 million of First National Bank of Olathe's loans and other assets.
The failure of First National Bank of Olathe is expected to cost the deposit insurance fund $116.6 million.
In all of 2010 regulators seized 157 banks, the most in a year since the savings-and-loan crisis two decades ago. The FDIC has said 2010 likely marked the peak for bank failures from the Great Recession.
There were 140 bank failures in 2009, costing the insurance fund about $36 billion. The failures last year cost around $21 billion, a lower price tag because the banks involved were smaller on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.
From 2008 through 2010, bank failures cost the fund $76.8 billion. The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC's deficit narrowed in the first quarter of this year; it stood at about $1 billion as of March 31.
Depositors' money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted last July.


Gold and silver both were under the pressure yesterday as the bankers supplied massive non backed paper in their bid to lower prices.  The COT report highlighted the bankers plight as the bankers covered some of their shorts at higher and higher prices.  The price of gold finished the comex session at $1740.20 down $23.90
on the day. Silver withstood the raid quite nicely all day rising by 40 cents to $39.10.

In access trading here are the final closes for both gold and silver:

gold:  $1746.30
silver: $39.07

Let's head over to the comex and assess the damage.

The total gold comex OI fell by exactly 3000 contracts to 518,138 despite Thursday's fall in price.
The bankers had hoped that many more gold leaves would have fallen from the tree and were quite dismayed that this did not happen.  That is the reason for the additional Friday raid.  The front delivery month of August saw its OI fall from 2752 to 2232 for a loss of  520 contracts with only 62 deliveries.  Blythe was busy handy out the goodies on Friday.  The next front month of October saw its OI fall from 26,782 to 22,207 as it looks some of the bankers lightened up on their short side positions here and in the December contract.
The big December month saw its OI fall from 369,957 to 366,701.  The estimated volume Friday came in at 207,140 which is a huge day.  Wait until you see the confirmed volume on Thursday:  a mammoth 373,975 contracts as the bankers threw in everything...the kitchen sink, their mothers-in name it..the bankers were scared and tried everything to save themselves. You will see damage inflicted on the bankers in the COT report.

The total silver comex OI did not follow gold's lead.  It seems that the many margin increases has turned this market strictly to a physical one.  There is no leverage to speak of.  The total OI rose by 1800 contracts to 115,703 despite the raid.  The bankers were again quite dismayed.  Wait until you see this next data point.
The front options expiry month of August saw its Oi rise from 15 to 139 for a gain of  124 contracts. When I saw this, I knew that someone was in need of silver badly and I expected to see early Saturday morning a huge delivery notice for more silver and I was not disappointed. The Friday report saw zero deliveries on silver but early this morning we got news that 150 notices were filed for Monday with a Tuesday delivery.
The next front month is September which is 2 1/2 weeks away saw the OI remain relatively high at 42,280 only dropping by 1500 contracts.  The estimated volume on Friday was very anemic at 35,578 as the bankers were loathe to supply any more non backed paper and thus this allowed silver to rise.  The confirmed volume on Thursday was higher at 69,581.

nventory Movements and Delivery Notices for Gold:  August 13.2011:

Withdrawals from Dealers Inventory in oz
Withdrawals fromCustomer Inventory in oz
30,839 (Scotia,Manfra)
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
197,716 (Brinks,Scotia)
No of oz served (contracts)  today
700 oz  (7)
No of oz to be served  (notices)
 222,500 (2225 )
Total monthly oz gold served (contracts) so far this month
 586,100 (5861)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month
336,149 oz

We had quite a bit of activity yesterday. Still no activity with respect to the dealer.
On the deposit side of things we had two deposits into the customer:

1. Into Manfra:  32 oz
2. Into Scotia:  197,684 oz.

total deposit:  197,716. oz

On the withdrawal side:

1.   772 oz left Manfra
2.   30,067 oz left Scotia

total withdrawal:

30,839 oz.
There was a tiny adjustment of 597 oz of gold leased from the customer to the dealer.

The comex folk on Friday notified us that only 7 notices were filed for delivery for 700 oz.  The total number of notices for the month is now 5861 for 586,100 oz.  To obtain what is left to be served, I take the OI standing (2232) and subtract out the Friday deliveries  (7) which leaves me with 2225 notices or 222,500 oz left to be served upon.

Thus the total number of gold oz standing in this delivery month is as follows:

586,100 oz (served..corrected from Thursday)  +  222500 (oz to be served)  =  808,600 oz or 25.15 tonnes.  You can see the damage that Blythe is having on the delivery process.

For a heads up for Monday's commentary, the delivery notices filed for gold came in at a big fat zero.  The comex is having great difficulty in finding any gold for settlements.
They must resort to cash settlements only.

And now for silver 

First the chart:

Withdrawals from Dealers Inventory nil
Withdrawals fromCustomer Inventory 26,921 ( Delaware)
Deposits to theDealer Inventory nil
Deposits to the Customer Inventory 883,284  (Delaware,HSBC,Scotia)
No of oz served (contracts) nil  (0)
No of oz to be served  (notices) 695,000 (139)
Total monthly oz silver served (contracts) 1,725,000  (345)
Total accumulative withdrawal of silver from the Dealers inventory this month 152,218
Total accumulative withdrawal of silver from the Customer inventory this month 3,229,786
Again another hectic day inside the silver vaults but no activity with respect to the dealer.

The customer had 3 huge deposits:

1.  177,288 oz (Delaware)
2.   384,317 oz (HSBC)
3.    321,679 oz (Scotia)

total deposit:   883,284 oz

There was one withdrawal by the customer:

26,921 from Delaware.

We had a big adjustment of 633,413 oz of silver adjusted out of the customer and into the dealer in a lease arrangement.
The registered silver inventory raises to 27.808 million oz
The total silver inventory  is also raised to 105.699 million oz.

The comex folk notified us that zero notices were filed for delivery so the notices remain at 345 or 1,725,000 oz.  To obtain what is left to be served, I take the OI standing (139)
and subtract out Friday deliveries (zero) which leaves me with 139 notices or 695,000 oz left to be served upon.

Thus the total number of silver oz standing in this non delivery month is as follows;

1,725,000 (oz served)  +  695,000 9oz to be served)  =  2,420,000 oz.

No wonder we are seeing huge activity in the silver inventory movements.
And for a heads up for Monday, the delivery notices filed late last night came in at 150 contracts.  This was the reason for the huge gain in OI for the front August month.  Somebody needed silver badly.


Let us now proceed to our ETF's SLV and GLD and then our physical gold and silver funds:

Sprott and Central Fund of Canada.

 The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
Thus a default at either of the LBMA, or Comex will trigger a catastrophic event.

First GLD inventory changes:  August 13.2011.

Total Gold in Trust

Tonnes: 1,260.17
Value US$:

Total Gold in Trust:  August 11;2011

Tonnes: 1,272.89
Value US$:

Total Gold in Trust  August 10.2011:

Tonnes: 1,296.52
Value US$:

 This is getting more corrupt by the day.  We lost another 12.72 tonnes of gold
yesterday.  By guess is that this is real gold leaving the LBMA as sovereign nations are seeking the last bastion of physical gold on the planet.  As I have mentioned many times, the game ends when London runs out of gold/silver.

Now let us see inventory movements in the SLV:  August 13:2011

Ounces of Silver in Trust312,051,730.900
Tonnes of Silver in Trust Tonnes of Silver in Trust9,705.89

August 11.2011:

Ounces of Silver in Trust314,195,076.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,772.56

august 10.2011:

Ounces of Silver in Trust314,195,076.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,772.56

Friday we lost a huge 2.144 million oz of silver.  My guess again is that this silver is leaving London onto foreign shores.  

1. Central Fund of Canada: it is trading at a positive .2 percent to NAV in usa funds and positive 0.2% in NAV for Cdn funds.  ( aug 13.2011).  
2. Sprott silver fund  (PSLV):  Premium to NAV decreased a bit  to a  positive 19.09.% to  NAV August 13.2011
3. Sprott gold fund (PHYS): premium to NAV increased a bit  to a  2.87% to NAV  August 13.2011).

Note:  central fund of Canada is probably a good buy as it has zero premium.

Note:  Sprott silver still commands a huge premium in silver.
Note:  the Sprott gold is now turning to a fair sized premium to NAV

the world is seeking the physical stuff.


At 3:30 pm, the comex released the COT report and it was a dandy.

First the gold COT: (remember this is from Tuesday to Tuesday (aug2-aug9)

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, August 09, 2011

wow! did you see this?

Those large speculators that have been long in gold decided on mass to pitch huge quantities of their positions to the tune of 32,586.

Those large speculators that have been short added a huge 11,016 contracts to their shorts.

and now for our commercials:

Those commercials who are long gold and close to the physical scene added 8,458 contracts to their longs.

And our bankers who are always short:  they covered a massive  29,970 contracts into a rising price of gold.  The bankers got slaughtered!!

The small specs who are long jumped on the bandwagon again as they raised their longs by 
6237 contracts.
The small specs who are short added 1,063 contracts to their shorts.

Conclusion:  the gold COT has started to resolve itself as the bankers were frightened by the huge rise in gold and they were forced to liquidate some of their shorts at higher and higher prices.  This is getting closer and closer to a systemic banking failure.

And now for the silver COT:

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, August 09, 2011

The large speculators like gold pitched 6,164 of their long contracts.
Those large speculators that are short gold added a tiny 299 contracts to their short positions.

And now for our commercials:

Those commercials that are long silver and are close to the physical scene added
a huge 5,953 to their long side.

And for our famous commercial shorts like JPMorgue and company:
they covered a smallish:  3294 contracts.

The small specs are not in the game as they were blown out with the huge margin lifts.

Conclusion:  more bullish on silver as the bankers are covering.  However gold is more bullish as the bankers seem to be running for the hills.  The lack of delivery notices is also very telling as is the huge drop in gold inventory over in London.  Expect gold to rise big time this coming week.

Let us see some of the big stories which will shape gold and silver's rise.

This is a big story late last night as Jefferson county rejected a bankruptcy settlement proposal:

Alabama county rejects settling $3.1 billion in debt

Read more:

(special thanks Associated Press)

BIRMINGHAM, Ala. | Leaders of Alabama’s most populous county voted unanimously Friday to reject a settlement with Wall Street creditors to pay off more than $3.1 billion in debt.
The move bought more time to avoid what would be the largest municipal bankruptcy ever filed.
The Jefferson County Commission has been trying to avoid filing bankruptcy over more than $3.1 billion in sewer system debt for three years.
The total value of the bankruptcy would exceed $4.1 billion once the county’s debts for schools and other projects are included, officials said.
Commissioners sharply criticized the settlement proposal by Wall Street, which would have resulted in rate increases of almost 25 percent within 18 months and additional, single-digit rate hikes for as long as 40 years. Creditors would have forgiven more than $1 billion in debt, and the county would have refinanced $2.3 billion, which would be used to pay off old debts, create a $233 million reserve and cover more than $23 million in issuance costs.
The settlement also would have resulted in dismissal of litigation including the county’s lawsuit against JPMorgan Chase & Co. over deals that helped lead to the debt. Commissioners said that all those cases should go forward and that criminal investigations into the debacle should continue.
Jefferson County has about 658,000 residents and is home to Alabama’s largest city, Birmingham, and its medical and financial centers. A bankruptcy filing by the county would far exceed the current record for a municipal bankruptcy, set 17 years ago by Orange County, Calif. A court-appointed official last month recommended a 25 percent rate hike for sewer customers, whose average residential bill would increase by more than $9 a month to $46.88, calling it a necessary step toward financial viability, but it’s unclear what might happen to rates, county services and its workforce should leaders opt for bankruptcy.
Jefferson County financial woes result from a mix of outdated sewer pipes, the economy, court rulings and public corruption.
A federal court forced Jefferson County to begin a huge upgrade of its outdated and overwhelmed sewer system to meet federal clean-water standards in the ’90s, and officials used bonds to finance the improvements. Outside advisers suggested a series of complex deals with variable-rate interest that were later shown to be laced with bribes and influence-peddling.
Loan payments rose quickly because of increasing interest rates as global credit markets struggled, and the county could no longer afford its payments.
Meanwhile, a string of elected officials, public employees and business people were convicted of rigging the transactions that helped put the county in so much trouble.
Posted on Fri, Aug. 12, 2011 11:13 PM


Here is a shortened John Williams version of events of yesterday and Thursday as he states that the dollar is in trouble and also the huge miss on the trade figures mean a downward revision in the GDP.  Always remember that a trade deficit subtracts from growth numbers.

(courtesy Jim Sinclair)

John Williams of brings us the latest.
- Financial Circumstances Remain Unstable and Threatening
- U.S. Dollar Is in Serious Trouble
- Retail Sales Gain Was Statistically Meaningless and Largely Reflected Inflation
- Trade Data Suggest Downside Pressure on Upcoming GDP Revision


As I mentioned to you on Thursday, 4 countries announced a ban on short selling on financials.
The situation is quite dire if you have to orchestrate this:  (courtesy Jim Sinclair Charlton and Kellar
Short-selling banned in 4 European countriesBy ANGELA CHARLTON, GREG KELLER
updated 8/11/2011 6:40:18 PM ET
PARIS — France, Italy, Spain and Belgium are banning short-selling on select stocks amid efforts to calm market turmoil that has sent bank shares gyrating wildly and aggravated worries about Europe’s huge debts.
The European Union’s markets supervisor, the ESMA, announced the move late Thursday night after boosting surveillance of stormy markets earlier in the day. The move capped two days of whipsaw trading that saw French banks’ market value fall and rise by billions of euros.
In a short sale, a trader hopes to make a profit by betting on the decline in the price of a share. The practice has been blamed for contributing to market volatility.
The ESMA said in a statement that the four countries “have today announced or will shortly announce new bans on short-selling or on short positions” as of Friday.
The French market regulator, the AMF, announced late Thursday that it is banning for 15 days net short-selling on 11 stocks, including those of banks Societe Generale, BNP Paribas and Credit Agricole and leading insurers.
Belgium’s market authority said it would ban short-selling on financial shares such as leading banks and insurers as of Friday. Belgium had already banned naked short selling, basically a bet on a decline in the price of a share without borrowing the share, since August 2008.


This next commentary is a must read as it explains what a default by either Italy or Spain will mean to our economy:

(courtesy Jim Sinclair and CNBC)
Depression Decade in Europe If Italy Defaults: AnalystPublished: Friday, 12 Aug 2011 | 5:07 AM ET
By: Catherine Boyle
As the European markets were braced for another turbulent day, one analyst at Citi warned that a decade of economic slowdown could follow if Italy and Spain default on their debt repayments.
“If you let Italy and Spain default, you will have 10 years of depression in Europe,” Matt King, global head of credit strategy at Citi, told CNBC Friday.
The euro zone once again seems endangered by market turbulence this week after France, the region’s second-largest economy, became the latest country to face speculation about its credit rating and mass sell-offs in its major banking stocks.
Disappointing economic data released on Friday showing that French economic growth was zero in the second quarter of 2011 increased the pressure on President Nicolas Sarkozy.
This followed a 0.9 percent increase in growth in the first quarter. Declining household consumption was cited as the main factor in the lack of growth.
“Rumours are still swirling around France,” John Wraith, fixed income strategist, BofA Merrill Lynch Global Research, told CNBC Friday.
“All of the countries in the euro zone are getting dragged into this vortex as the situation gets worse in the periphery.”
This week, French banking stocks have suffered huge declines as panic about their exposure to peripheral euro zone economies spreads.
The mass sell-off has led to a ban on short-selling in France, Italy, Spain and Belgium for at least 15 days, starting Friday.
French banks have $450 billion of exposure to Italy, according to King, who doesn’t think Italy will end up defaulting.


I brought this to your attention on Thursday night and the situation in the postal scene is getting worse by the hour as they are threatening to cut 120,000 jobs.  And the economy is improving?

(courtesy associated press and jim sinclair commentary)

Postal Service proposing cutting 120,000 jobs
Also wants union contracts, employee health and pension benefits changed
updated 8/11/2011 6:35:16 PM ET
The financially strapped U.S. Postal Service is considering cutting as many as 120,000 jobs.
Facing a second year of losses totaling $8 billion or more, the agency also wants to pull its workers out of the retirement and health benefits plans covering federal workers and set up its own benefit systems.
Congressional approval would be needed for either step, and both could be expected to face severe opposition from postal unions which have contracts that ban layoffs.
The post office has cut 110,000 jobs over the last four years and is currently engaged in eliminating 7,500 administrative staff. In its 2010 annual report, the agency said it had 583,908 career employees.
The loss of mail to the Internet and the decline in advertising caused by the recession have rocked the agency.
Postal officials have said they will be unable to make a $5.5 billion payment to cover future employee health care costs due Sept. 30. It is the only federal agency required to make such a payment but, because of the complex way government finances are counted, eliminating it would make the federal budget deficit appear $5.5 billion larger.
If Congress doesn’t act and current losses continue, the post office will be unable to make that payment at the end of September because it will have reached its borrowing limit and simply won’t have the cash to do so, the agency said earlier.


The consumer confidence number plummeted from last month to levels not seen from May 1980:

(courtesy zero hedge)

Consumer Confidence Plummets To May 1980 Level

Tyler Durden's picture

UMichigan consumer confidence just printed at 54.9, on expectations of 63.0. This is the lowest since May 1980. And what's worse, inflation expectations were unchanged. Looks like those high inflation expectations are starting to get anchored. In the meantime, with the Chairsatan saying to expect at least two more years of recession, is this really a surprise to anyone?
Short Term:
Longer Term:

Confidence levels as mentioned above blew to their lowest levels in many years.  Remember that the consumer is 70% of GDP.  Here is Eric DeGroot 's insight into the low confidence number:

(courtesy Eric de Groot Insight:)


Magic 8-Ball or Probabilities?

Consumer confidence has dropped to the lowest level since May 1980.

The bold think while the skittish panic.

What are the bold doing? They are thinking about the negative correlation between consumer expectations and gold. That is, they recognize the potential for gold to pause or correct as consumer confidence approaches an extreme low. This is the obvious interpretation.

The real thinkers go well beyond the obvious. They also see a big exception to this correlation. Consumer expectation reached an all time low in 1979.07 at 44.2. This extreme reading preceded an upside explosion in gold from an average price of $295 to $675 within six months. That would be comparable to move from $1573 to $3600 by January 2012.

An all knowing crystal balls does not exist in the real world. Some claim the magic 8-ball comes close, but questions more sophisticated than "does Johnny like my new Justin Bieber t-shirt?" tend to produce vague and non-actionable responses. The real world is defined by probabilities and strategies designed to exploit them.

University of Michigan Consumer Expectations (CE) and Gold: A Correlation Study

Headline: U.S. Consumer Sentiment Falls More Than Expected to 54.9 in Michigan Index

By Jillian Berman - Aug 12, 2011 7:03 AM MT

Confidence among U.S. consumers plunged in August to the lowest level since May 1980, adding to concern that weak employment gains and volatility in the stock market will prompt households to retrench.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slumped to 54.9 from 63.7 the prior month. The gauge was projected to decline to 62, according to the median forecast in a Bloomberg News survey. 


The problems continue for Japan as their nuclear disaster continues to haunt them:

(courtesy zero hedge)


George Washington's picture

There have been a cluster of earthquakes near Fukushima. Just yesterday, there was another 6.0 earthquake.
There have been a cluster of meltdowns at Fukushima. For example, Asahi reports today:

A second meltdown likely occurred in the No. 3 reactor at the Fukushima No. 1 nuclear power plant, a scenario that could hinder the current strategy to end the crisis, a scientist said.

In that meltdown, 10 days after the March 11 Great East Japan Earthquake, the fuel may have leaked to the surrounding containment vessel, according to a report by Fumiya Tanabe, a former senior researcher at what was then the government-affiliated Japan Atomic Energy Research Institute.


Under Tokyo Electric Power Co.'s road map to deal with its crippled nuclear plant, reducing temperatures at the bottom of the core pressure vessel is one objective for bringing the accident under control. But if the fuel burned through the pressure vessel surrounding the No. 3 reactor and dropped into the containment vessel, that plan would be affected.


Around 11 a.m. on March 14, the reactor building was hit by a large hydrogen explosion that was likelycaused by a core meltdown, which led to fuel falling to the bottom of the pressure vessel.


Tanabe also estimates that the second meltdown led to the release of large amounts of radioactive materials, and that much of the fuel fell through the pressure vessel to the surrounding containment vessel.


Kunihisa Soda, a former commissioner at the Nuclear Safety Commission of Japan who is a specialist on severe accidents at nuclear plants, said the possibility of a second meltdown could not be ruled out.
Nuclear expert Arnie Gundersen notes that there are currently lethal radiation levels at Fukushima, that even higher measurements are to still come, and that the nuclear core has leaked out and is on floor like a pancake working its way down.
NHK notes that scientists have found radiation levels in Japanhigher than any found in the contaminated zone in Chernobyl called Red Forest:
And nuclear regulators only thought about worst case scenarios involving a single nuclear plant. They totally ignored the fact that power loss to complexes of nuclear reactors - like the cluster of 6 reactors at Fukushima - could lead to multiple simultaneous meltdowns.
And then there's a cluster of cover ups.
As the New York Times reports:

“From the 12th to the 15th we were in a location with one of the highest levels of radiation,” said Tamotsu Baba, the mayor of Namie, which is about five miles from the nuclear plant. He and thousands from Namie now live in temporary housing in another town, Nihonmatsu. “We are extremely worried about internal exposure to radiation.”

The withholding of information, he said, was akin to “murder.”

In interviews and public statements, some current and former government officials have admitted that Japanese authorities engaged in a pattern of withholding damaging information and denying facts of the nuclear disaster — in order, some of them said, to limit the size of costly and disruptive evacuations in land-scarce Japan and to avoid public questioning of the politically powerful nuclear industry. As the nuclear plant continues to release radiation, some of which has slipped into the nation’s food supply, public anger is growing at what many here see as an official campaign to play down the scope of the accident and the potential health risks.

Seiki Soramoto, a lawmaker and former nuclear engineer to whom Prime Minister Naoto Kan turned for advice during the crisis, blamed the government for withholding forecasts from the computer system, known as the System for Prediction of Environmental Emergency Dose Information, or Speedi.

“In the end, it was the prime minister’s office that hid the Speedi data,” he said. “Because they didn’t have the knowledge to know what the data meant, and thus they did not know what to say to the public, they thought only of their own safety, and decided it was easier just not to announce it.”


Meltdowns at three of Fukushima Daiichi’s six reactors went officially unacknowledged for months. In one of the most damning admissions, nuclear regulators said in early June that inspectors had found tellurium 132, which experts call telltale evidence of reactor meltdowns, a day after the tsunami — but did not tell the public for nearly three months. For months after the disaster, the government flip-flopped on the level of radiation permissible on school grounds, causing continuing confusion and anguish about the safety of schoolchildren here in Fukushima.


The timing of many admissions ... suggested to critics that Japan’s nuclear establishment was coming clean only because it could no longer hide the scope of the accident.
The mayor of Namie also said the government's justifications for withholding information are nonsensical.
And in related news:

It's a clusterfukushima.

Summarizing The Terms Of Italian Austerity (Or Here Comes The Piazza Navona Strike Cam)

Tyler Durden's picture

Remember how two months ago Greece came up with a bulletized list of austerity measures it would immediately if not sooner engage in to demonstrate its responsible adult behavior, funded by over €200 billion in European and American taxpayers funds and two bailouts? Well, since then we have learned that Greek GDP has plunged below even the worst case scenarios, even as the country has missed all deficit cut targets. Today, it is Italy's turn, which however apparently was confused and presented the list of austerity before it got a Greek-style rescue. Which is bad. Because within a few weeks we expect the strike (and riot)-cam to be planted firmly in the Piazza Navona and across the streets ot the Trastevere in capturing the latest round of European indignation, oddly enough not caused by local filming of The Jersey Shore. And now that the strawman is out there, when Italy actually needs the money, which will be soon, and is found to be in compliance with precisely zero of its Reps and Warranties (or kinda like a Bank of America RMBS prospectus) it just may make defrauding the middle that much more difficult.
Summary of Italian Austerity
  • Cuts to the budgets of central government ministries, worth a total of 6 billion euros in 2012 and 2.5 bln in 2013.
  • Funding to town councils, regions and provinces reduced by 6 bln euros in 2012 and 3.5 bln euros in 2013.
  • Unspecified changes to the pension system to save 1 billion euros in 2012.
  • A progressive increase in the retirement age of women in the private sector to 65 from 60 to begin in 2016, instead of 2020 as previously planned.
  • The retirement funds of public sector employees will be withheld for two years after they leave their jobs.
  • A reduction the "cost of politics" resulting in a halving of elected officials and around 55,000 fewer positions in the apparatus of central and local government. However, Berlusconi did not give a timescale for these cuts.
  • Abolition of 34 of Italy's 110 provincial governments and the merging of town councils with less than 1,000 inhabitants. However, this measure will be "for the future" and not become effective during the government's current term of office, Berlusconi said.
  • A "solidarity tax" on high earners, to be levied for two years, as an additional 5 percent on income above 90,000 euros per year and 10 percent on income above 150,000 euros.
  • Increase in taxation of income from financial investments to 20 percent from 12.5 percent, excluding income from government bonds.
  • Purchases worth more than 2,500 euros will no longer be allowed to be made in cash, as a means of curbing tax evasion. There will also be tougher penalties, such as suspension from professional bodies, for failure to issue receipts and invoices.
  • All non-religious public holidays, such as the June 2 anniversary of the founding of the Italian Republic, will be celebrated on a Sunday in a bid to increase the number of working days in a year.
  • A liberalisation of national labour contracts giving greater scope to strike accords at the company or local level.

Reuters' take on these latest promises scribbled on a non-binding piece of paper:
Italy's cabinet adopted sweeping austerity measures on Friday to cut the fiscal deficit by 45.5 billion euros and balance the budget in 2013, a year ahead of its previous schedule.

The measures, which were passed by emergency decree, must now be approved by parliament within 60 days. They come less than a month after parliament approved a previous austerity package, aimed at eliminating the deficit in 2014.

Rome promised to re-write and frontload its plans in response to a letter from the European Central Bank, which agreed to buy Italian bonds to arrest a huge market sell-off in exchange for faster fiscal consolidation and economic reform.

Austerity measures will now total 20 billion euros in 2012 and 25.5 billion in 2013, Prime Minister Silvio Berlusconi said at a news conference after the cabinet meeting.

Economy Minister Giulio Tremonti said the budget deficit will fall to 1.4 percent of gross domestic product in 2012 from 3.8 percent this year, and be eliminated in 2013.

Is There Enough Money on Earth to Save the Banks?: Jonathan Weil

Forget free-market fundamentals. What matters most to the capital markets now is whether the governments of the U.S. and westernEurope have the will and the wherewithal to save the global financial system from disaster yet again.
A healthy climate for the efficient allocation of capital, this is not.
By pledging to keep its benchmark interest rate near zero through at least mid-2013, the Federal Reserve succeeded (for a couple of hours) in propping up U.S. stock markets after two days of gut-wrenching declines, especially in financial stocks. The news came a day after theEuropean Central Bank embraced the role of savior by buying sovereign debt of Italy and Spain, sending yields on those countries’ bonds plunging and offering respite to financial institutions that hold them.
The notion that the world’s governments won’t permit an economic meltdown seemed to be operative, less than two weeks after the U.S. Congress threatened to torch the nation’s full faith and credit. Then yesterday the equities markets fell out of bed again. The open question is how long investor confidence in the policy makers’ powers can last.
This has added relevance in light of one of the developments that sent Bank of America Corp. (BAC)’s stock down 20 percent Aug. 8 -- the news that American International Group Inc. (AIG)had accused the company of securities fraud in a lawsuit seeking more than $10 billion. Naturally the question arises: Didn’t AIG consult with anyone at the Treasury Department, which owns 76.7 percent of AIG, about whether to fire this market- sinking torpedo at a too-big-to-fail bank so soon after Standard & Poor’s downgraded the U.S. credit rating?

Bailouts at War

It would seem not. A Treasury spokesman, Mark Paustenbach, said: “As per our stated principles, Treasury does not interfere with the day-to-day management of the company.” Just when you think the government might have matters under control, we find out it can’t even keep a bailed-out company it controls from trying to blow up Bank of America, which itself needed federal bailout money to stay afloat.
One thing that’s certain is that investors aren’t feeling very good about large financial institutions’ balance sheets. As of yesterday, there were 186 U.S.-based financial-services companies trading for less than 60 percent of their book value, or common shareholder equity, including Bank of America, Citigroup Inc. (C)Morgan Stanley (MS), AIG and SunTrust Banks Inc. (STI)Together they had a stock-market value of $300.5 billion, compared with $686.4 billion of book value, according to data compiled by Bloomberg.

Broken Cycle

When I ran the same stock screen for a June 2008 column, a few months before the financial crisis reached full flower, it turned up 168 companies with a combined $120.3 billion market value and a book value of $270.3 billion. The way the credit crunch was playing out then, market declines were begetting writedowns, leading to more market declines and then more writedowns. A year later the cycle broke, thanks to unprecedented government intervention. The largest U.S. banks were reporting quarterly profits again.
Like a Slinky walking down a flight of stairs, though, all it may take is the slightest push for inertial energy to set the writedown cycle in motion again. For instance: Bank of America, at 33 percent of book value, finished yesterday with a $68.6 billion market capitalization. That’s less than the $71.1 billion of goodwill on its June 30 balance sheet. (Goodwill, which isn’t a saleable asset, is the ledger entry a company records when it pays a premium price to buy another).

You Gotta Believe

So, Bank of America would have us believe the goodwill by itself was more valuable than what the market says the entire company is now worth. Investors don’t buy that. They see a company that needs to raise fresh capital, judging by the discount to book value, in spite of the company’s claims it doesn’t need to. The more the stock price falls, the more shares Bank of America would need to issue to appease the markets, leading to fears of even more share dilution.
The same story is playing out in Europe, driven by the sovereign-debt crisis. The 32 companies in the Euro Stoxx Banks Index yesterday had a stock-market value of 313.2 billion euros ($444 billion) and a combined book value of 620.5 billion euros. France’s Credit Agricole SA (ACA), the index’s third-largest bank by assets, trades for just 34 percent of book.
Two years ago the central planners convinced investors that the biggest surviving financial institutions would be able to earn their way back to health, in part through low interest rates and taxpayer support. The pressing question soon may be whether there is enough money on the planet to save the system as we know it, and if so, how much longer it will be before a crisis comes along that finally swamps the ability of governments to contain it.
One-hit wonders such as Fed-induced stock-market rallies can induce euphoria momentarily. They don’t fix the big problem.
(Jonathan Weil is a Bloomberg View columnist. The opinions expressed are his own.)
To contact the writer of this article: Jonathan Weil in New York at
To contact the editor responsible for this article: James Greiff at

Search This Blog