Saturday, March 24, 2012

Spanish 10 yr bonds rise to 5.5%/Italian bonds rise to 5.13% on the 10 yr/Greek 10 yr bonds over 20% in yield

Good morning Ladies and Gentlemen:

Before commencing my commentary, let me introduce to you our two latest entrants to our banking morgue:

1.  Premier Bank of Wilmette Illinois
2. Covenant Bank and Trust, Rock Spring GA,



Gold closed yesterday at $1662.40 a rise of $20.10 on the day.  Silver also had a good day rising by 93 cents to $32.25. Europe was in the red due to rising bond yields with respect to the Spanish bonds coupled with rising credit default spreads.  The long term Greek bonds fell in price badly as its yield now exceeds 20%.

No word yet on the English law Greek bonds that have now defaulted. I also find it very strange that we have not heard from any bank about their losses on credit default swaps save one "bad bank" in Austria which fessed up to loosing 1.6 billion USA dollars.


Let us now head over to the comex and see who things shape up over there.

The total gold comex OI fell by 3261 contracts with the mini-raid of Thursday.  The total new OI rests this weekend at 431,964 contracts as compared to Thursday's level of 435,225.  The front non delivery month of March saw its OI fall from 166 to 124 for a loss of 42 contracts.  However we had 114 delivery notices on Thursday so we actually gained another 4200 additional gold ounces standing  (42 contracts).  The next delivery month for gold is now one week away and I will be reporting open interest and suspected amounts of gold ounces standing for delivery.  This weekend, the April OI stands at 139,629 a drop of 5017 contracts from Thursday's level of 144,646.  The estimated volume today was on the light side if you include those rollovers into June.   The confirmed volume on Thursday was much higher at 205,035 but then of course we had a raid.

The total silver comex OI continues to confound our bankers.  The raid on Thursday caused no action on the part of our resolute longs who instead of pitching their contracts, they added another 1417 longs to their holdings.  The new total OI for the silver complex rests this weekend at 112,365 compared to Thursday's level of 110,948.  The front delivery month of March saw its OI fall 33 contracts from 322 to 289. However we also had a huge number of notices filed on Thursday equating to 121 contracts.  Thus we again gained more additional silver ounces standing in March. The next delivery month is May and here the OI rose by 915 contracts from 53,694 to 54,609.  This increase in OI in the next front month comes in conflict with the raid.  The longs won out as they are resolute in their conviction.  The estimated volume Friday at the silver comex was extremely anemic 38,321.  The volume on Thursday was much higher at 56,947 and as you can see the raid failed miserably.


Let us begin with March inventory movements  in Gold


 gold ounces standing in March 24:














Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
nil
Deposits to the Dealer Inventory in oz

nil
Deposits to the Customer Inventory, in oz
nil 
No of oz served (contracts) today
(87) 8,700
No of oz to be served (notices)
(37)  3700
Total monthly oz gold served (contracts) so far this month
(1311) 131,100
Total accumulative withdrawal of gold from the Dealers inventory this month
  102.2
Total accumulative withdrawal of gold from the Customer inventory this month

169,646.57

My goodness, the CME sends many delivery notices these past couple of days and yet zero activity
at the gold comex vaults.  Strange indeed!!

We had no gold deposits no gold withdrawals of any kind and no adjustments.
I guess the lack of movement of metal with these delivery notices is a mystery!
Thus the gold inventory registered remains at 2.482 million oz or 77.2 tonnes of gold.

The CME notified us that we had another huge delivery notice of 87 notices late Thursday
for delivery on Monday.  This equates to 8700 oz of gold. We only had 52 notices that needed to be served upon, so again some banker dealers needed some physical to bailout entities in England. The total number of notices filed so far this month total 1,311 notices or 131,100 oz of gold.  To obtain what is left to be served upon, I take the OI standing for March (124) and subtract out Friday deliveries (87) which leaves us with 37 notices left to be served upon.

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

131,100 oz (served)  +  3700 oz (to be served upon)  =   134,800 oz or 4.192 tonnes of gold
we gained 7200 oz of additional gold to stand.
Please note two important aspects here:

1. the number of gold ounces are increasing as the month progresses.
2. the cash settlements for the last 10 days as been minimal.

end



the silver chart for March:    March 24/2012:








Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory10,610.74(Scotia,)
Deposits to the Dealer Inventory594,166.79 (Brinks)
Deposits to the Customer Inventory 621,400.64 (Brinks,JPM)
No of oz served (contracts)1 (5,000)
No of oz to be served (notices) 288 (1,440,000)
Total monthly oz silver served (contracts)1459 (7,295,000 )
Total accumulative withdrawal of silver from the Dealers inventory this month3,231,423
Total accumulative withdrawal of silver from the Customer inventory this month 2,323,886.6
The silver vaults here quite active in total contrast to the comatose action in gold.
The dealer at Brinks received the following;

1.  594,166.79 oz of silver

The customer received the following deposits:

1. Into Brinks:  2,114.04 oz
2. Into JPM:  619,286.60 oz

total customer deposit:  621,400.64 oz.

We had one withdrawal by the customer at Scotia:

1. Out of Scotia vaults:  10,610.74.
we had no adjustments.
Thus the registered inventory rests this weekend at 36.06 million oz
The total of all silver rests at 135.85

Question:  in the past few days we have seen huge deposits of silver into the dealer
and the dealer that has received almost all of the silver is Brinks.  Why haven't we seen
 greater deliveries if the dealer has received such a huge entry of silver?


The CME reported that despite the huge dealer and customer inventories at the silver comex, we had only 1 delivery notices for 5,000 oz.  The total number of notices filed so far this month total 1459 contracts or 7,295,000 oz.  To obtain what is left to be served upon, I take the OI standing for March  (289) and subtract out Friday delivery notices (1) which leaves us with 288 notices or 1,440,000 oz left to be served upon.

Thus the total number of silver ounces standing in this delivery month is as follows:

7,295,000 oz (served)  +  1,440,000 (oz to be served upon)  =  8,735,000.

we gained 440,000 oz of additional silver standing.

Please note that:

1. Finally we are seeing the number of oz standing in silver rise as the month ends
2. Cash settlements have been tiny as we near the end of the month
3. The total silver standing is 3.7 million oz higher than the delivery month of December.

end


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.



March 24.2012:

Total Gold in Trust

Tonnes:1,282.69

Ounces:41,239,868.12

Value US$:68,600,449,472.06








March 22.2012:

TOTAL GOLD IN TRUST

Tonnes:1,282.69

Ounces:41,239,868.12

Value US$:67,425,862,970.49






March 21.2012:





TOTAL GOLD IN TRUST

Tonnes:1,290.25

Ounces:41,482,719.52

Value US$:68,394,175,072.19






We had no change in gold entering or leaving the GLD






 






end






And now for silver March 24; 2012:





Ounces of Silver in Trust312,390,225.200
Tonnes of Silver in Trust Tonnes of Silver in Trust9,716.42





March 22.2012:



Ounces of Silver in Trust312,730,146.600
Tonnes of Silver in Trust Tonnes of Silver in Trust9,726.99



March 21.2012:






Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67



we lost 340,000 oz of silver today from the SLV vaults  





   


end



And now for our premiums to NAV for the funds I follow:



1. Central Fund of Canada: traded to a positive 4.2percent to NAV in usa funds and a positive 4.4% to NAV for Cdn funds. ( March 24.2012)

2. Sprott silver fund (PSLV): Premium to NAV  rose slightly   to  5.56% to NAV  March 24.2012 :
3. Sprott gold fund (PHYS): premium to NAV rose to  2.62% positive to NAV March 24. 2012). 




end.

At 3:30 pm we obtain the COT report which tells us the relative positions of the major players in silver and gold.
Let us now see the Gold COT:


Gold COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
175,009
43,546
31,719
166,859
332,997
373,587
408,262
Change from Prior Reporting Period
-15,468
3,975
-6,738
15,424
-10,126
-6,782
-12,889
Traders
158
73
77
49
48
242
169


Small Speculators




Long
Short
Open Interest



57,452
22,777
431,039



-4,498
1,609
-11,280



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, March 20, 2012


Our large speculators:

Those large specs that have been long in gold were massacred again as they pitched 15,468 long contracts.
Those large specs that have been short in gold added a relatively high 3975 contracts to their short side.

Our commercials:

Those commercials who have been long in gold added a monstrous 15,424 contracts to their long side.
And those commercials who have been short in gold from the beginning of time, covered a large 10,126 contracts.

Our small specs;

Those small specs that have been long in gold were massacred long with their big brothers the large specs as they too pitched 4498 of their long contracts. On a percentage basis the liquidation was quite severe.

Those small specs that have been short in gold added 1609 contracts to their short side.

The small specs generally get it wrong.

Conclusion:  This is the most bullish scenario I have ever witnessed in gold.  This compares to the lowest price in gold at around 250.00 per oz in 2001.  It looks to me like gold will zoom as the commercials are beginning to go net long.

and now for our silver COT:


Silver COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
28,489
7,320
24,246
37,622
69,748
90,357
101,314
30
677
-539
2,281
-1,224
1,772
-1,086
Traders
65
31
41
36
44
119
99

Small Speculators




Long
Short
Open Interest



21,065
10,108
111,422



-2,080
778
-308



non reportable positions
Change from the previous reporting period

COT Silver Report - Positions as of
Tuesday, March 20, 2012



Our large speculators:

Those large specs that have been long in silver refused to play sucker to the whims of the criminal bankers.
They added another 30 contracts to their long side despite the fall in price.

Those large specs that have been short in silver added  677 contracts to their short side.

Our commercials;

Those commercials that have been long in silver and close to the physical scene added a rather large 2281 contracts to their long side.

Those commercials that have been short in silver from the year 4 BCE , covered only a tiny 1,224 contracts from their short side.

Our small specs;

Our small specs that have been long in silver fell victim to the bankers antics and pitched  a rather large 2,080
contracts from their long side

Our small specs that have been short in silver added another 778 contracts to their short side

Conclusion:  more bullish than last week, but we can visualize the distinction between our two metals, gold and silver with respect to the bankers. In silver our bankers have been frightened to supply the short paper for the past several weeks.

In summary, the COT report for gold and silver is very bullish as we head into next week.

end


Before leaving the physical scene, I thought you might like this article on the explosion of demand for gold from China:


(courtesy James Turk)


Chinese gold imports will keep increasing

2012-MAR-18

Hong Kong Since China began to embrace economic progress in the 1990s and let the compelling forces of capitalism take hold to raise living standards in that country, its impact on world markets has been profound. Chinese capital has become a major influence in the global economy, and demand from China has had a huge impact on commodity prices. But an exception to the Chinese influence has been gold.
China has had little impact on world gold markets. The reason being that Chinese domestic gold production, which over the past several years has grown to make China the largest gold miner in the world, was sufficient to satisfy domestic demand. Consequently, in contrast to other markets in which China has become an important source of demand, it has had little impact on the demand for gold.
Just over a year ago, however, the balance between Chinese gold production and demand began to change. Chinese mining companies were unable to produce enough metal to satisfy the growing domestic demand, with the result that China began importing gold.
The trend for importing gold began modestly, and received little attention. But last year this growing trend started to get noticed. The Financial Times in September 2011, for example, reported: “Data from the Hong Kong government showed that China imported a record 56.9 tonnes [of gold] in September, a six-fold increase from 2010. Monthly gold imports for most of 2010 and this year run at about 10 tonnes, but buying jumped in July, August and September. In the three-month period, China imported from Hong Kong about 140 tonnes, more than the roughly 120 tonnes for the whole 2010.”
More recently, Reuters reported: “China imported nearly a fifth more gold from Hong Kong in November [2011] than the previous month, continuing a trend of sharply rising purchases that has seen bullion flows to the mainland more than treble in the first 11 months of the year. A record 102.525 tonnes of gold entered the mainland from Hong Kong in November, the Hong Kong Census and Statistics Department said.”
These are huge numbers. Last year India imported approximately 900 tonnes of the roughly 2,800 tonnes of gold mined last year. But China is rapidly closing the gap, and is likely to overtake India in the next few years. The impact on the global gold market from such an event, if it were to occur, would be profound and obviously very bullish. But even if China does not become the world’s largest gold importer, the inability of Chinese producers to mine enough metal to meet domestic demand will alone be very bullish for the gold price.
Given the above it is clear to see that China has become an important influence in the gold market and consequently, on the gold price. It is therefore another reason to remain bullish on the prospects for the metal of kings.
Author: 

end

Here is India's citizens reaction to a rise in duty on gold and silver:

(Wall Street Journal)



Indian Gold: It's Worth and Its WaitBuyers Sit on Their Hands as Sellers of the Yellow Metal Close Shop in Protest of New Levies ByBIMAN MUKHERJI in New Delhi, DEBIPRASAD NAYAK in Mumbai and TATYANA SHUMSKY in New York MUMBAI—The world's biggest gold market is on strike.
In India, gold sellers closed up shop last Saturday to protest the government's decision to boost levies on sales of the precious metal. India accounts for more than a quarter of global consumer gold demand. The sudden halt in trading is sending gold prices lower.
Gold futures have declined 1% since last Friday, when India's finance ministry issued an order to double the import duty on gold to 4% and instituted a 0.3% tax on most gold-jewelry sales.
Associated Press IN THE MARKETS: A jeweler in Kolkata, India, is closed last Saturday. Gold sellers are on strike, protesting levies on the yellow metal.
In India, gold has deep cultural significance: Parents buy it for daughters' weddings, and the metal is given as a gift on some religious holidays. It also is a common vehicle for investment. Buying by Indian consumers is so substantial that any sustained reduction in demand would remove a key pillar of support to gold prices, analysts say.
"The permanently bullish gold crowd has banked on salvation to come from India, and what do we do when [it's] not very active?" said Jon Nadler, senior analyst with Kitco Metals Inc. North America.
Gold futures on Thursday fell $7.70 a troy ounce, or 0.5%, to $1,642.30. That brings the losses this month to 4%, although gold still is up for the year.
Trade groups estimate about 300,000 proprietors, who employ millions of artisans and clerks, are affected by the tax changes. In a note to clients Tuesday, Standard Bank said "physical buying out of Asia has evaporated" as a result of the shop closures. The protest was initially planned as a three-day action, but industry leaders extended it to Saturday. On Thursday in Mumbai, a few shops reopened temporarily.
"If the government doesn't listen to our demands, we may continue," said S.K. Jain, president of New Delhi-based Chandni Chowk Jewellers' Association.
The government is seeking to raise revenue to plug a budget shortfall. It also wants to encourage Indians to diversify into other investments, like stocks. In a speech Monday, Indian Finance Secretary R.S. Gujral said domestic savings needs to be directed to more productive assets.
Additionally, policy makers increasingly are targeting gold demand—and imports—as an easy way to attack the growing current-account deficit, which is weighing on the rupee. The current-account deficit, a measure of a nation's indebtedness to foreign creditors, has been rising as India's gold imports outpace its earnings on exports, raising questions about India's ability to manage its debts.
There are early indications the tactic is working.
"We had ordered jewelry before the tax hike. But today, when we came to the shop, the jeweler quoted us a higher price," said Shilpa Seth, a 36-year-old housewife, in Mumbai's Zaveri Bazaar gold hub. "So we want to postpone our purchase for the time being."
Prithviraj Kothari, president of the Bombay Bullion Association, said the levies could cause India's annual gold demand to fall more than 30%, to 600 tons, and local gold prices could rise. "Imports have almost stopped," Mr. Kothari said.
Others say claims of a steep plunge in imports amounts to little more than fear-mongering. The strike comes at, seasonally, a slow time for imports, as retailers and wholesalers buckle down to reconcile their books for the fiscal year, which ends March 31.
The fundamental reason to buy gold in India—"culture and weddings"—hasn't changed, said Ajay Mitra, managing director of the World Gold Council for India and the Middle East. He added that, "in the longer term, [the tax] increase will not substantially affect demand." Some analysts say, if gold prices decline enough, it could offset the taxes, and Indian buyers will re-enter the market.
Enlarge Image
CloseAgence France-Presse/Getty Images An Indian jewellery shop owner measures the weight of a piece of gold jewellery for a customer.
Moreover, savvy gold traders are likely to circumvent the new rules by taking advantage of a loophole that taxes imports from Thailand at a lower rate.
While the order to raise taxes already has been issued, it is possible the Indian government, which has flip-flopped in the past on economic issues, such as cotton exports, could revise the rules so they are more favorable to gold sellers.
"While the initial announcement has raised concerns over a drop in demand for gold, we would await the release of the final details before drawing any overly bearish conclusions," wrote Standard Bank analyst Marc Ground.
Some jewelers are worried the introduction of the new tax on the gold sold in small shops would add uncertainty over how to comply with the tax code. Until last week, the tax was only applicable on gold jewelry sold by big companies, such as Gitanjali Gems Ltd. 532715.BY +1.07%or Titan Industries Ltd. 500114.BY -0.56%
"All these taxes could lead to big chaos," said Dinesh Jain, director of the All-India Gems & Jewellry Trade Federation.
-END-




In the wee hours of Friday morning, Europe sold off due to the rise in Spanish bonds to 5.5%, Italian bonds to 5.13%, together with increase costs to insure sovereign bonds. The fact that China is slowing down is certainly putting a damper on things. There is now talk of a 3rd LTRO!!  This precipitated a rush to sell European equities:

(courtesy zero hedge)



Selloff Resumes As "Risk Off" Sentiment Refuses To Leave
Tyler Durden's picture





Yesterday we discussed extensively how the narrative of US decoupling, which has so far trumped everything else, is finally fading, is coming to an abrupt end, and with no other "plotline" to take its place, as China, Europe and corporate profits are all in the dumps, the only option is for more easy money to come soon. However, with crude sticky this will be a problem in an election year. Today, this sentiment has become even more acute as new Greek 2023 bonds have for the first time trade over 20%, with weakness spreading to all the other PIIGS, and talk of yet another LTRO already picking up pace. The question of what if any assets European banks is luckily ignored for now. So as futures turned red once more, here is Bank of America summarizing the bearish market sentiment this morning.
Market action
The vast majority of the global equity markets are selling off. In Asia, the Japanese Nikkei, the Hang Seng and the Chinese Shanghai Composite all dropped 1.1%. The sell-off was sparked by a surprise drop in profit at the Agricultural Bank of China - the country's third biggest bank. Not all Asian equity markets finished in the red, the Korean Kospi managed to finish flat, while the Indian Sensex was lifted 1.0%.
For the fifth day in a row, European equities are selling off. In the aggregate, European shares are off 0.3%. If that holds, European markets will post their largest weekly drop so far this year. Blue chip stocks are hit even harder than the broader market, down 0.7%. At home, futures are pointing to a roughly flat opening ahead of this morning's new home sales report.
In bondland, Treasuries continue to rally across the curve, as investors begin to think the recent sell-off was overdone. The sell-off was originally sparked by investors lowering their odds of QE3 later this year and moving forward their expectations of the first Fed hike from late 2014 to late 2013. In our view, the sell-off was overdone and our rates strategy team suggests a trade idea to capitalize on the recent sell-off in Treasuries.
In Europe, peripheral sovereign debts are selling off. Spain's 10-year note is up another 5bp, to yield 5.50%, while Italy's 10-year note is up 6bp, to 5.13%. Meanwhile, the UK gilt and German bund are benefiting from the risk-off trade; both notes are rallying 3bp, to 2.29% and 1.88%, respectively.
In the currency markets, the dollar is selling off, with the DXY index down 0.4%. Not surprisingly the weaker dollar is boosting commodity prices. WTI crude oil is up 41 cents, to $105.76 a barrel, and gold is trading $4.33 an ounce higher, at $1,650.23.
Overseas data wrap-up
Europe is not out of the woods yet. Overnight, our European economists published a piece on the challenges that lie ahead for Spain. In particular, Spain needs to (1) find a new growth model, where construction and real estate play a lesser role and resources move to the tradable sectors, (2) reduce leverage across sectors, including, but not restricted to, real estate-related activities, and (3) bring down the c.25% unemployment rate. The rebalancing exercise will be particularly challenging, as the economy faces contraction this year and subdued growth next year, due to the combination of a large fiscal adjustment and a credit squeeze. A positive force would be recovering exports, but these largely depend on euro-area growth.
With that in mind, our European team revised down its GDP forecast for the country. It expects GDP growth to contract by c.1.5% in 2012 and to be flat next year. Given the relatively benign profile for growth, where the European team forecasts Spain returning to positive growth in 2014, it does not project the deficit-to-GDP ratio to fall below 3% before 2014, while the debt-to-GDP ratio peaks at just below 80% of GDP before receding from 2014 onwards. To read the full report: European Macro Viewpoint, 23 March 2012
Today's events
The only thing on the economic calendar today is the release of the February new home sales report at 10:00 am. We expect new home sales to decline 3.0% in February, to 310,000. Mortgage purchase applications fell 7.3% in the month, which suggests a decline in contract signings.

end

Peter Tchir of TFMarket Advisors does a superb piece on the Spanish 10 yr bond.
He questions who on earth will buy this stuff?
It will not be the banks as they are generally buying up to the 5 yr end.
Not hedge funds nor will the ECB.  Thus there really is no natural buyer of the Spanish 10 yr bond.

(courtesy Peter Tchir)



Spanish Bond Yields - Who's A "Natural" Buyer Of The 10 Year

Tyler Durden's picture




From Peter Tchir of TF Market Advisors
Spanish Bond Yields - Who's A "Natural" Buyer Of The 10 Year
Spanish 10 year bonds are above 5.5% now.  They once again failed to hold early gains, and the losses seem to be accelerating. 
Once again, the back end of the curve is “flattening” with the 5 year 9 bps higher, while the 10 year is only 4 higher.
The 2 year has barely budged, which is largely because a lot of that paper is tucked away in non mark to market books of banks and doesn’t reflect any actual market price.  With so much manipulation of the market, you have to pay close attention to the signals that are least affected – like the 10 year bond, and even the 5s/10s spread even though the 5 year is far more anchored by artificially low 2 year yields.
It also seems that the number of runs that I’m seeing on Spanish bonds, and the big CDS indices has decreased a bit over the past couple of days – potentially a sign that dealers are caught on the wrong side of the market and the only flows they are seeing at these price levels, would take them even deeper into the hole.  That usually precedes a gap in spreads.  (or it could just be a bunch of traders taking long lunches on a Friday).
Who is the “natural” buyer of Spanish 10 year bonds?
Banks:  Banks always tended to buy 5 year and in.  10 year bond never fit banks as well as shorter dated bonds, so they were never the core buyer of this part of the curve.  This desire to be in shorter maturities has been accentuated by the LTRO.  LTRO encourages banks to buy 3 year and in paper for 2 reasons – i) no funding mismatch at maturity of LTRO, and ii) since LTRO is collateralized, far less risk of having to post variation margin on short duration bonds (at least until the whole curve inverts).  So banks across the board have many incentives to participate in the short end which was their natural tendency to begin with.  So banks as a whole do not like the long end, and foreign banks will dislike it even more.  It is very hard for a non-Spanish bank to justify long term positions in Spain.  There is $100 billion of debt in the Spanish system where banks issued bonds to themselves, got it guaranteed by Spain, and are using those bonds to get central bank money.  As a non-Spanish bank, you have to look at that cozy relationship and be nervous.  If, and when, the Spanish financials deteriorate, it is hard to expect fair treatment as a foreign bank when it is so clear that Spanish banks and the government have become very interconnected. 
So the reality is, the only banks that might buy long dated Spanish bonds are Spanish banks, and they are already pretty full of Spanish debt and even they much prefer to buy the short end.  In theory, that special little subset of Spanish banks, the Caja’s, might do as they are told, but since they are already on life support, that is hardly a deep pocket investor.
Insurance Companies:  Insurance companies have typically been the core buyers of longer dated sovereign debt.  It fits their asset/liability management programs well.  For Spanish longer dated bonds to find real support, they will need insurance companies to buy.  But will they?  First, the economic situation in Spain is bad.   The unemployment numbers are staggering, and the 50% youth unemployment rate is worse than in Greece.  The budget deficit is nowhere close to 3% and unlikely to get there in a declining European economy.  So the fundamentals don’t support investment, but that is only part of the problem.  Officials can talk about the low debt to GDP in Spain, but professional investors have to look at all the contingent and hidden debt.  Spain has implicitly and explicitly guaranteed the municipal debt.  The Spanish government is in up to its eyeballs in helping the Caja’s.  They have participated in the LTRO ponzi bond scheme even more than Italy has on a relative basis.  These contingent liabilities will make insurance companies more reluctant, but that would still be part of the “fundamental” analysis.
The intangibles are also lined up against investing in Spain here.  The insurance companies just had PSI shoved down their throats on Greece.  They were forced to participate.  They saw new laws enacted that were retroactive.  In a case where the fundamentals leave Spanish bonds as a dubious investment, the intangibles make it very scary.  Who wants to buy a bond today on the “hopes” that Spain won’t change laws, won’t demand debt forgiveness, won’t favor their own banks and insurance companies?  The reality is that only Spanish insurance companies are going to be keen to buy Spanish 10 year bonds since they are living in the fundamentals, and can’t really explain to their own politicians that they don’t want to invest, because they don’t trust the government.  They are already long these bonds, and it is unclear how much new money they are getting to allow them to invest more.
At some point insurance companies will buy longer dated Spanish bonds, but the fundamentals aren’t encouraging, and all the tricks and games and ploys that the Troika used to force losses on some Greek bondholders are too fresh in the minds of these investors to be buying hand over fist, at least not at these yields/prices.
Hedge Funds:  Hedge funds are part of the problem, not the solution.  Many funds are caught long this paper.  Unlike banks, who stuck to the short end during the rally, hedge funds piled into the 5 year and out part of the curve.  Some were covering shorts that were being driven in their mush on a daily basis.  Others only fully bought into the rally this year.  They finally decided that LTRO must be great, because it seemed like it was working.  They bought into the theory that Europe was somehow okay, and that even if things weren’t fixed, the next problem was far down the road.  I believe these late converts are the ones behind much of the recent selling.  They saw that yields had stopped moving tighter, saw day after day of small weakness, and then finally started seeing some real moves with some significant P&L impact.  Most will be getting out of their long positions here.  Any fund that bought Spanish 10 year bonds after January 12th is underwater now.  Depending on when you bought them in December you may now have losses too.  That is ignoring the fact that whatever P&L you showed on your February statement, is getting hit hard with the 10 year now down 4.5% since you closed the books.  I am not sure we have seen a renewed attempt to get short Spain by hedge funds.  I believe the bulk of the flows so far have been from hedge funds cutting Spanish risk, and not yet from those trying to get short, though that is some of the flows.
So hedge funds are likely still cutting longs, and will be growing shorts, not helping the move, but if they feel that the EU will step up and attempt to drive bonds higher, they will reverse direction. So for now, hedge funds aren’t the buyer, but they will be the easiest to convince to get “long for a trade” if not as a longer term investment.
Basis Trades:  Some people who are short Spain via CDS may buy Spanish bonds.  That is often a source of liquidity at times of stress.  I think it will have less of an impact than usual.  Spanish bonds still trade at high prices, even the 10 year, is above 102, so without the potential windfall profit from a “jump to default” scenario, they will be less likely to tie up capital on the basis (lower dollar price bonds give more positive convexity to the basis buyers).  There are also some concerns about how lucky the CDS settlement on Greece was.  The fact that the settlement for “old” CDS was on “new” bonds is scaring the more thoughtful basis traders.  The “new” bonds could have come at a much higher price, and with the settlement structure, could easily have caused large losses for the “basis” players in spite of getting the Credit Event.
The basis traders (and those funds already short via CDS) will be potential buyers of bonds, but they will tend to focus on new issues, and the basis trade isn’t particularly compelling in Spain – yet.   Though it is a lot more interesting than a couple of weeks ago when bonds were trading very well relative to the less manipulated CDS market.
ECB SMP:  Will the ECB step in with their secondary market programme?  This is the fear of the shorts.  The only “natural” buyer, if you can call a central bank a “natural” buyer, is the ECB.  The ECB cannot like this move and cannot be happy that talk is turning negative again (though they should never have been so giddy about the price move in the first place).  So the ECB must be considering stepping in and buying bonds.  There are some problems with that.  The SMP program is still near its limit.  Since the ECB didn’t participate in Greece’s restructuring, they still hold all those bonds on their books – except for the €4.5 billion they just received for their March 20th bonds.  So it is a bit unclear how much more they can or will add (why they didn’t reduce the positions during this rally is a mystery to me – since they could have freed up capacity and booked a profit).  Looking at the ECB’s Greek positions, it is clear that they too were more comfortable at the front end, and although they participated in longer bonds, they did put the bulk of their money to work at the short end of the curve.  They will get over it, but it does seem that supporting the 10 year is less of a comfortable position for them (maybe Ben calls them and play the Twist for them to encourage them). 
Finally, the countries that back the ECB and the countries being “supported” by the ECB may be less enthusiastic about intervention in the past.  The SMP is not merely a programme that buys bonds in the secondary market.  It buys bonds, and magically converts them to “money good” senior bonds for the ECB.  The fact that the ECB owned so many Greek bonds and without some legal chicanery would have had large losses, must scare the countries that back the ECB.  No one expected the ECB to own bonds that could lose money.  Will Germany and even France support taking more risk with the ECB balance sheet?  If the ECB does buy, will regular investors get comfortable, or will the shorts over time become more aggressive, knowing that every euro the ECB buys, means more subordination for the remaining bonds and a much lower recovery in the event of default?
I think the ECB will attempt to calm the markets, but the amount of money spent will be underwhelming at these levels, and the market reaction will be even more muted than prior ECB interventions.
There are relatively few natural buyers of Spanish long dated bonds here.  Fast money is likely caught long, and it will take a potentially reluctant ECB and some already overly exposed Spanish institutions to step up and stop the slide.  It may happen, but many of the policies that “bailed out” Greece created very bad precedents for bondholders, and some of those are coming home to roost, as is the understanding that LTRO ensures that banks can access liquidity, but does nothing to fix any problem at the sovereign level.




end


Zero hedge has been pounding the table on this for the past few weeks.  The stigma on the banks that participates in the LTRO is certainly causing problems with their bonds as yields rise over 100 basis points over banks that do not participate:

(courtesy zero hedge)

LTRO Stigma Reaches All-Time High

Tyler Durden's picture





Six weeks ago when we first brought the idea of a 'stigma' for accepting LTRO loans, the difference between credit spreads of unencumbered banks and encumbered banks was a mere 50bps. Today it has soared higher to post-LTRO record wides at 100bps as LTRO-facing increasingly-encumbered and increasingly-subordinated senior unsecured credit spreads blow out to near mid-February wides. It was mid-February when we called out Draghi for lying about the 'stigma' - perhaps now the market is realizing he was not telling the truth, the whole truth, and nothing but the truth as all the benefits of the LTRO (fixing short-term liquidity issues for the critical banking system) start to unwind. Whether it is margin calls from the ECB on falling asset prices or rising cost of funds from a market-wide recognition of the massive subordination that just occurred (and will only get worse), we suspect the primary issuance market for EU banks (especially those who took the loans) will be closed (or hugely expensive) for a long time to come.


Charts: Bloomberg



end



Greek 10 yr bonds now trade over 20% in yield sliding 14% in two days:

(courtesy zero hedge)

Eurosis Is Back As "New" Greek Bonds Break 20%, Slide 14% In 2 Days

Tyler Durden's picture




Well that didn't take long. New Greek bonds (GGB2) have dropped dramatically in the last 2 days. The 2023 bond has fallen from over EUR29.5 on Wednesday to under EUR25.5 this morning, prices have dropped an incredible 14% and down a painful 17.5% from its opening break highs of just 2 weeks ago. Yields have broken back above 20% for the first time for this new 10Y as it appears reality is sinking in that Greek Bailout III will come sooner rather than later. Eurosis is back.
Price has tumbled significantly...


and implicitly yield has exploded - now over 20%...


Charts: Bloomberg






end


Here is this Financial times release on the continuing of strikes in Portugal:



(courtesy Financial times)


Union split dampens strike impact: The FT noted that Portugal's second general strike in four months on Thursday brought public transport in Lisbon to a standstill and also impacted ports,shipyards, schools, hospitals, courts and other public services. However, the paper also pointed out that participation in the 24-hour stoppage was lower than expected due the lack of support from UGT, the country's second largest and most moderate union. Recall that the UGT has backed the fiscal and structural reforms that are part of the country's €78B bailout program.
Town halls may have to default due to €9B debt load: Bloomberg cited comments from Fernando Ruas, president of the nation’s association of municipalities, who said that Portugal's town halls face default amid €9B in debt unless the government provides support soon. Ruas attributed the problems to a meaningful decline in money transfers from the government in Lisbon. He noted that about €1.5B of the total debt is in bills to suppliers overdue by more than 90 days, while the remainder is mostly made up of debt banks. 

end

* * * * *






Here is a great article illustrating that austerity will not work.  What is needed is deregulation to stimulate growth. Countries must  remove many of the obstacles to operate businesses.  He calls these impediments
"weeds in the economic garden":

(courtesy Bloomberg/John Cochrane)



Austerity or Stimulus? What We Need Is Growth


Austerity isn’t working in Europe.
Greece is collapsing, Italy and Spain’s output is declining, and even Germany and the U.K. are slowing down. In addition to their direct economic costs, these “austerity” measures aren’t even swiftly closing budget gaps. As incomes decline, tax revenue drops, and it becomes harder to cut spending. A downward spiral looms.
These events have important lessons for the U.S. Our government cannot forever borrow and spend 10 percent of gross domestic product each year, with an impending entitlements fiasco, to boot. Sooner or later, we will have to fix our finances, too. Europe’s experience is a warning that austerity - - a program of sharp budget cuts and (even) higher tax rates, but largely putting off “structural reforms” for a sunnier day - - is a dangerous path.
Why is austerity causing such economic difficulty? What else should we do?
Lack of “stimulus” is the problem, say the Keynesians, epitomized by the New York Times and its columnist Paul Krugman, who has been crusading on this point. They claim that falling output in Europe is a direct consequence of declining government spending. Yes, 50 percent of GDP spent by the government is simply not enough to keep their economies going. They -- and the U.S. -- just need to spend more. A lot more.

Germany’s Limits

Where will the money come from? Greece, Spain and Italy simply cannot borrow any more. So, say the Keynesians, Germany should pay. But even Germany has limits. The U.S. can still borrow at remarkably low rates. But remember that Greece was able to borrow at low rates right up to the moment that it couldn’t borrow at all. There is nobody to bail out the U.S. when our time comes. What should we do then?
The traditional Keynesian answer was: Move on to monetary stimulus. Deliberately inflate and devalue. Break up the euro so the southern European countries can inflate and devalue even more.
Lately, Keynesians have been pushing an even more audacious idea: Deficits pay for themselves. In a March 17 column, Krugman wrote: “there’s a plausible case that spending more now actually improves the long-run fiscal picture.”
U.S. federal revenue is less than 20 percent of GDP. For deficit spending to pay for itself, then, $1 of spending must create more than $5 of output. Economists have been arguing about whether this “multiplier” is more or less than one; five is beyond any reported estimate. Keynesians made fun of “supply siders” in the 1980s, who made similar claims for tax cuts. At least those cuts had incentives on their side, which stimulus doesn’t.
Is there another explanation, and a more plausible way forward?
The stimulus explanation is curious for what it omits. Think of Greece.
Is it irrelevant that Greece is 100th on the World Bank’s “ease of doing business” list, behind Yemen; 135th on “starting a business” and 155th on “protecting investors?” Is it irrelevant that professions from truck driving to pharmacies are still rigorously protected, that businesses can’t fire people, that (according to a Greek colleague) you can’t even get a driver’s license without paying a bribe? Does it not matter at all that, as the International Monetary Fund delicately put it in its latest report on Greece, the “structural reform program” aimed at “deeply ingrained structural rigidities in labor, product, and service markets” got nowhere?

Greek Taxes

Doesn’t it matter that Greece has a high combination of individual, corporate, wealth and social taxes? True, Greeks famously don’t pay taxes, but businesses that must operate illegally to avoid taxes are much less efficient.
Money is fleeing Greece, Italy and Spain. Does talk of exiting the euro, followed quickly by devaluation, inflation (the IMF predicts 35 percent in Greece, should it leave) and capital controls, have nothing to do with lack of investment?
Keynesians urge devaluation to gain competitiveness. Greek wages have in fact declined about 10 percent to 12 percent, according to the IMF. Yet investment and production aren’t turning around. Greek “demand” needn’t matter -- the whole point of the euro area is that Greece can sell to Germany, so long as Greece stays in the euro area. But it isn’t happening. Is that a mystery? Would lower wages compel you to invest money in Greece; surmount a thicket of regulation; and expose yourself to the threats of wealth, property and business taxation, currency expropriation and capital controls, or even nationalization?
In sum, isn’t it plausible that a good part of Europe’s austerity doldrums are linked to “supply,” not “demand;” “microeconomics,” not “macroeconomics;” weeds in the economic garden, not a want of fertilizer? Isn’t it plausible that factors beyond simple declines in government spending matter in a debt crisis?
That insight suggests a different strategy: Let’s call it “Growth Now.” Forget about “stimulating.” Spend only on what is really needed. We could easily stop subsidies for agriculture, electric cars or building roads and bridges to nowhere right now, without fearing a recession.
Rather than raise taxes further on the “rich,” driving them underground, abroad, or away from business formation, fix the tax code, as every commission has recommended. Lower marginal rates but eliminate the maze of deductions. In Europe, eliminate the fears of wealth confiscation, euro breakup and currency devaluation that are driving savings and investment out of the south. Most of all, remove the profusion of regulation and (increasingly) direct government management of the economy.

Italy’s Deregulation

Europe is beginning to figure this out. Italy’s prime minister, Mario Monti, is addressing his country’s debt crisis by proposing far-reaching deregulation, now. While his proposals aren’t complete or close to radical enough, and they are combined with some unfortunate business-stifling tax increases, it’s remarkable that anyone in Europe is beginning to talk about this.
“Structural reform” is vital to restore growth now, not a vague idea for many years in the future when the stimulus has worked its magic. It’s also a lot harder politically than the breezy language suggests. “Reform” isn’t just “policy” handed down by technocrats like rules on the provenance of prosciutto; it involves taking away subsidies and interventions that entrenched interests have grown to love, and have supported politicians to protect. They will fight it tooth and nail.
That is even more reason to address this now, while there is a crisis. The will to do so may evaporate if better times return, and the ability to do so might disappear if the economies plunge.
(John H. Cochrane, a professor of finance at the University of Chicago Booth School of Business and an adjunct scholar of the Cato Institute, is a contributor to Business Class. The opinions expressed are his own.)
Read more opinion online from Bloomberg View.
To contact the writer of this article: John H. Cochrane at john.cochrane@chicagobooth.edu.








And now on the USA side of things I highlighted to you on Thursday, the exchange between Timothy Geithner and Congressman Gowdy.  The Congressman asked if there would be only one more increase, what will that number be.   Here is Dave from Denver discussing this:

(Dave from Denver..the Golden Truth)



Thursday, March 22, 2012

How Much Treasury Debt?

If this doesn't scare the shit out of you - and scare you out of paper dollars and into real assets like gold and silver - then you are either brain dead or you just don't care anymore.

Tim Geithner (along with Bernanke) was testifying before the House Committee on Government Oversight and Reform yesterday. Congressman Trey Gowdy (R-SC) - in a display of forcing Geithner to answer a question directly that Ron Paul should take notes on - asked Geithner if he had only ONE more debt increase request that could possibly be made, how big would it be.

After trying to shuffle - very awkwardly, I might add - around answering the question, Geithner responded with, "It would be a lot - it would make you uncomfortable." Here's the exchange, which I found spine-chilling:

Geithner: "That I’d have to get to you in writing, I can’t do it in my head though." (note: in the background someone says "he can't put that in writing.")
Gowdy: "How about a round number?"
Geithner: "No idea….
Gowdy: "$20 trillion?"
Geithner: "I just can’t do it in my head."
Gowdy: "$50 trillion?"
Geithner: "I don’t know..."
Gowdy: "A lot? Can we agree it would be a lot?"
Geithner: 
"It would be a lot. It would make you uncomfortable."

Let that sink in for a moment. Please note that Geithner did not try to dispute the $20/$50 trillion number that Congressman Gowdy threw out. Here's the 3 minute video of the exchange, which I sourced from Ed Steer's Gold and Silver Daily:

Let me be very clear about one thing. This is not a joke and this not some sort of absurd exaggeration. This is where we are right now with the finances of our country. The fact that the Government-reported economic numbers are fraudulent is finally getting acknowledgement in the mainstream media is one thing. But you can't find any mention of the real spending and real debt numbers. You have to dig for the Truth on that and it requires understanding - in general - how Government accounting works and where the numbers are buried.

The REAL direct Treasury/Taxpayer guaranteed debt number right now is at LEAST $25 trillion. This includes the $16.2 Trillion current limit PLUS the $7 Trillion in FNM/FRE Goverment guaranteed debt PLUS the Treasury bonds sitting in the Social Security Trust ($2.5 trillion last time looked). I have not included a lot of other small off-balance-sheet guarantees like GMAC (now called Ally) debt, Fed assets which are direct off-balance-sheet liabilities of the Treasury/Taxpayer and some other stuff. I would bet real money that the REAL number is closer to $30 Trillion.

This does not include the GAAP accounting for the all of the future entitlement and welfare obligations. The net present value of this - i.e. if the Government had to account for its numbers like a corporation does - is more like $100 Trillion. That is not my estimate. That is a number that comes from David Walker, the former chief of the Congressional Budget Office. On a yearly GAAP accounting basis, the Government spending deficit is more like $5 trillion (see John Williams' Shadowstats.com). The $100 trillion is how a corporation would have to account on its balance sheet for its future obligations given what is known about future spending escalations and future estimated funding of that spending. That would be the number on the balance sheet reported in a corporation's 10Q/10K.

This is reality people. What is so completely horrifying about Geithner's statements - and complete kudos to Congressman Gowdy for pressing Geithner the way he did - is that Geithner, who is not known to be politically adept, was so flustered by the thought of getting caught in a lie that he really had no way to cover-up the truth. The truth is not in what he said, the truth is in his lack of ability to refute the $20/$50 trillion number thrown at him by Gowdy. The best he could come up with is that the number is so big "it would make you uncomfortable." We know $16 trillion plus whatever is requested this fall is not big enough to make Congress or Obama "uncomfortable."

This country is broke, it's insolvent and it's collapsing. This is why the elitists - i.e. those who are in a position to steal everything not nailed down - are openly grabbing what they can. THAT is what the MF Global felony was all about. Obama knows a collapse is near. This is why the war rhetoric is escalating, this is why Obama signed legislation authorizing the Government to seize all national resources for the purposes of military defense in the event of an "emergency."

Do not be scared off by the current correction going on in the precious metals. By the time most of the people in this country understand why gold and silver are superior currencies to paper fiat dollars, the exchange price of dollars to bullion will make that exchange nearly impossible in any meaningful way for most. The current correction is somewhat mild compared to the correction experienced in 2008. At some point, probably sooner than most are willing to believe, the price of gold and silver will shoot up very quickly. By then it will be too late for most people watching to afford the true flight safety of owning gold and silver rather than paper assets and money sitting in potentially Government controlled accounts.

***





Yesterday was the release of new home sales. It fell 1.6% last month and the new figures seem to indicate that the USA will have new home sales equivalent to 313,000 on a yearly basis.  Prior to 2008 new home sales were certainly north of 1.0 million units. On a monthly basis this would mean around 25,000 home sales or roughly 500 homes per individual state in the union. With so many foreclosures still in full swing, no wonder the housing crisis is still the number one crippling factor stopping the USA recovery:


(courtesy Dow Jones)





DJ US New-Home Sales Fall 1.6% In Feb
Fri Mar 23 10:00:09 2012 EDT
WASHINGTON (Dow Jones)--Sales of new homes in the U.S. fell for the second consecutive month in February, an indication that the housing market remains shaky in the aftermath of a severe bust.New-home sales decreased by 1.6% to a seasonally adjusted annual rate of 313,000 from January, the Commerce Department said Friday. It was the second-straight monthly decline and the lowest reading since October 2011.
The results were worse than expected. Economists surveyed by Dow Jones Newswires had forecast sales last month would climb by 1.2% to an annual rate of 325,000.
In addition, January's sales were revised downward to 318,000 from an initially reported 321,000. That was a decline of 5.4% from December.
However, new-home sales were up 11.4% compared with February 2011. And prices have stabilized: The median price of a new home was $233,700 last month, up 6.2% from February 2011.
The report on new-home sales came after reports earlier in the week had appeared to show that the housing market is stabilizing after a devastating crash in prices that started in summer 2006. But the market for new homes, in particular, remains week due to competition from foreclosures and other deeply discounted properties.
Sales of previously owned homes in the U.S. dipped slightly last month, but still recorded the strongest February in five years. U.S. home building, meanwhile, fell in February, but permits for new construction reached their highest levels in nearly 3 1/2 years.
The National Association of Home Builders on Monday reported its housing-market confidence index held steady at 28 in March after five straight months of gains. At the height of the building bubble, readings were in the high 60s and low 70s, well above the 50 reading considered positive.
The housing market, which pulled the economy into the worst downturn since the Great Depression, remains shaky but has stopped being a drag on the overall economy.
Even though new home sales remain weak, investment in residential real-estate, including home building and renovation, has contributed to U.S. economic output for the past three quarters.
The number of new homes listed for sale at the end of February, meanwhile, was 150,000, equal to January and the lowest on records dating to 1963. The supply would take 5.8 months to deplete at the current sales pace and is at a healthy level. The supply of unsold homes in January was 5.7 months. There were only 54,000 new homes completed in February, the lowest recorded level.
The report showed February's new-home sales were mixed across the country, when compared with a month earlier. They fell 7.2% in the South, 2.4% in the Midwest but rose 14.3% in the Northeast and 8.0% in the West.









end


John Williams on the housing stats:


im Sinclair’s Commentary
Here is the latest from John Williams’ www.ShadowStats.com
- Activity in Housing and Construction Remains Stagnant Near Historic Lows
"No. 425: February Housing Starts, New and Existing Home Sales"
http://www.shadowstats.com
clip_image002




Please pay attention to the following as the threat of the elimination of SWIFT payments into Iran for oil will certainly cause pain for the USA dollar:

(courtesy Jim Sinclair)


“Swift” Kick To The US Dollar

My Dear Extended Family,
Today two events took place, one which has the capacity to make the recent low price of gold in the $1630s the low of this reaction (disappointing housing statistics), and another to fuel the gold price into its true 2012 range of $1700 – $2111 by this summer (utilization of selective lock out of the Swift system to India and others).
For fuel into the true 2012 range of $1700 to $2111:
"If a country doesn’t prove it’s making the necessary reductions by the end of June, any institution in that nation that settles petroleum trades through Iran’s central bank will be cut off from the U.S. banking system."
This is terribly ill advised and poorly timed. It smells like a threat of selective lockout via the Swift system.
At a time when the US dollar is sundering as the major international settlement mechanism this is the last thing that dollar managers should consider. Whoever came up with this idea has no appreciation of two points – the weakness of the Western financial system and whatever weapon of war will be used in kind.
The major financial weakness in the US is the level of the US dollar due to sundering use in international contract settlement, the clear and present trend of substituting both the Yuan and Euro as international settlement currencies, and the lack of true economic buyers in the US long bond market.
History will record this decision at this time as a major factor in the final move to financial unwind in the West.
The letdown of the housing report today does not support the majority view that the US is gaining take off speed economically. It is not. It will not and QE will go to infinity, about that there is no question.
Regards,
Jim


(courtesy Bloomberg)



U.S. Wants Iran Oil Buyers to Pledge Cuts or Risk Sanctions





The Obama administration wants ChinaIndia and 10 other nations to present plans detailing how they will curtail Iranian oil imports, saying past cuts aren’t enough to win them an exclusion from new U.S. sanctions.
Secretary of State Hillary Clinton this week granted Japan and European Union countries six-month, renewable exemptions from the measures that take effect June 28, crediting them with “significantly reducing” imports from the Persian Gulf nation.
While China and India, the two biggest buyers of Iran’s crude, have made cuts in recent months and years, they were not granted exemptions. The distinction is that the EU and Japan offered assurances they will go beyond past reductions and continue to curb purchases from the world’s fourth biggest producer, U.S. officials say.
“What we are looking for is for countries to come to us and tell us if they believe that they should be in that category that deserves an exemption, what are the kinds of significant reductions that they are willing to pursue,” said Carlos Pascual, the State Department’s special envoy and coordinator for international energy affairs.
Japan, the No. 3 importer of Iranian oil, detailed to the U.S. its plans to boost purchases from alternative suppliers, the U.S. officials said. China, India, South Korea, Turkey and eight other buyers of Iranian crude haven’t yet made similar pledges, and past cuts alone can’t be taken as evidence of future intent, said four U.S. officials who spoke on condition of anonymity because diplomatic discussions are private.

’Significant Reduction’

The new sanctions law, enacted Dec. 31, doesn’t define what constitutes the “significant reduction” needed to qualify for an exemption from penalties. U.S. officials say they haven’t quantified it because there’s no rule of thumb or percentage of cuts that applies to all cases. Each country has different energy needs, and all will be reviewed on a case-by-case basis, the officials said.
If a country doesn’t prove it’s making the necessary reductions by the end of June, any institution in that nation that settles petroleum trades through Iran’s central bank will be cut off from the U.S. banking system.
The first round of exemptions, issued to EU nations and Japan and valid until Sept. 16, were meant to set an example to others, said Victoria Nuland, a spokeswoman for the State Department. The EU banned new oil contracts with Iran on Jan. 23 and embargoed all Iranian oil effective July 1.

Japan’s Cuts

Publicly available data shows Japan made “seasonally adjusted” cuts of between 15 percent and 22 percent in the second half of last year compared with the same period in 2010, depending on the data source, Pascual testified before Congress March 20.
Japan bought 53 million barrels (8.4 million kiloliters) of oil from Iran from July through December 2011, compared with 64 million barrels (10.2 million kiloliters) in the same period of 2010, according to Japanese government statistics. That’s a 17.6 percent reduction. Japan’s finance minister, Jun Azumi, said his government welcomed the U.S. exemption and intends to “keep reducing oil imports at a certain pace.”
The American sanctions are among dozens of measures taken by the U.S. and the EU since November to ratchet up economic pressure on Iran’s leaders in an effort to persuade them to abandon any illicit part of their nuclear program. The U.S., Europe and Israel have accused Iran of seeking the capability to build a nuclear weapon. Iran says its program is solely for civilian energy and medical research.

Under Pressure

The Obama administration is under pressure to turn the screws on Iran even tighter as Israel warns that it’s prepared to take military action to prevent Iran from developing nuclear weapons.
The administration should accelerate the sanctions on Iran that are due to take effect in June, Representative Mike Rogers, a Michigan Republican who is chairman of the House Intelligence Committee, said today on Bloomberg Television.
In addition, Rogers said, because neither Iran nor Israel believes the U.S. is seriously considering military action, the administration should signal that it’s willing to use force, for example by holding military exercises in the region and pre- positioning equipment that would be needed to strike Iran’s suspect nuclear facilities.
“This is as serious a problem as I’ve ever seen,” Rogers said.
Oil prices in New York have risen 7.2 percent this year, while Brent crude in London has climbed 15.6 percent, partly due to concerns over supply disruptions from escalating tension between Iran and the U.S. and its allies.

Nuclear Program

U.S. officials say they are in talks with the 12 importers that haven’t received exemptions, and are hopeful they’ll reach an understanding with each of them. South Korea, the No. 4 buyer of Iranian crude, has requested an exemption, and U.S. diplomats say they’re optimistic that officials in Seoul will pledge future cutbacks before the June 28 deadline.
South Korea is seeking exclusion from the sanctions, a government official from the Asian nation said March 21. Talks may be held before May, according to the official, who is involved in the discussions and spoke on condition of anonymity because the information is confidential.
South Africa has “downscaled” Iran imports, partly in response to requests from the U.S., and also to diversify supplies, Clayson Monyela, a spokesman for the Department of International Relations and Cooperation, said yesterday.

China, India

While China and India, the world’s fastest-growing major economies, supported four rounds of United Nations sanctions on Iran over its nuclear program, neither has endorsed the unilateral sanctions imposed by the U.S.
Indian Oil Minister Jaipal Reddy and Foreign Secretary Ranjan Mathai have said the South Asian nation will continue to buy from Iran. Still, India’s oil imports from Iran will be less than 125 million barrels (17 million tons) in the year ending March 31, Mathai said. That would be at least 8 percent lower than imports for the 12 months ended March 2011 and 20 percent below 2010 levels, according to government data.
India has been “following a general policy of diversifying our oil imports,” Mathai said. Iran is currently India’s second-biggest crude supplier. India needs to take care of local consumer interests, and isn’t planning to cut Iranian crude imports, oil minister Reddy said today.
While India hasn’t asked its refiners to stop purchasing Iranian crude, the government has told processors in the South Asian nation to seek alternative supplies and gradually reduce dependence on the Persian Gulf state because of increasing pressure from the U.S., said three Indian officials with direct knowledge of the situation.

Mangalore Refinery

India reduced purchases from Iran every year since the 12 months ended March 2009, according to government figures presented to parliament this week. Imports are poised to fall further as its biggest buyer of Iranian oil, state-owned Mangalore Refinery & Petrochemicals Ltd. (MRPL), plans to cut its term contract by about 15 percent compared with the previous 12 months, two people with direct knowledge of the matter said.
China, the biggest buyer of Iranian crude, cut imports by 45 percent in February compared with the previous month to the lowest level since May 2010, after a disagreement over payment terms between Iran and China International United Petroleum & Chemical Co., the nation’s biggest oil trader. China reduced Iran imports by 14.3 percent in January and 4.5 percent in December, customs data show.

Barter Deals

“China has been importing Iranian crude through normal channels based on our own needs for economic development,” Hong Lei, a foreign ministry spokesman, said at a media briefing yesterday, when asked if the Asian country was considering import cuts from Iran. “China has always been against unilateral sanctions, based on domestic laws, imposed by any one country on another. We especially do not accept unilateral sanctions that are forcibly imposed on a third-party country.”
Sanctions have made it increasingly difficult to insure, ship and pay for Iranian oil. India has used a Turkish bank to route payments to Iran, dealt in currencies such as the rupee and yen, and asked Iran to secure its own ship insurance.
Efforts to arrange barter deals to pay for Iranian oil may be perceived by some in Washington as a means to skirt sanctions, one U.S. envoy said. India and Iran are considering bartering commodities and other products for crude through a rupee account with state-run UCO Bank (UCO), said two people with knowledge of the matter.
“Despite whatever the Indians say about decreasing Iranian oil imports, there are other ways they can continue to get it, through Iraq and Afghanistan, for example,” Barbara Slavin, a senior fellow on Iran at the Atlantic Council, a research institute in Washington, said in an interview. “India has such energy needs, they can’t comply with these sanctions.”
To contact the reporters on this story: Indira A.R. Lakshmanan in Washington atilakshmanan@bloomberg.net; Pratish Narayanan in Mumbai at pnarayanan9@bloomberg.net
To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

end

On the MFGlobal front it seems that Corzine lied as a memo is found that he ordered customer
money to JPMorgan:
(courtesy GATA and Bloomberg)

Corzine ordered MF Global customer money moved to Morgan, memo says

 Section: 
By Phil Mattingly and Silla Brush
Bloomberg News
Friday, March 23, 2012
WASHINGTON -- Jon S. Corzine, MF Global Holding Ltd.'s chief executive officer, gave "direct instructions" to transfer $200 million from a customer fund account to meet an overdraft in a brokerage account with JPMorgan Chase & Co., according to a memo written by congressional investigators.
Edith O'Brien, a treasurer for the firm, said in an e-mail quoted in the memo that the transfer was "Per JC's direct instructions," according to a copy of the memo obtained by Bloomberg News. The e-mail, dated Oct. 28, was sent three days before the company collapsed, the memo says. The memo does not indicate whether that phrase was the full text of the e-mail or an excerpt.
O'Brien's internal e-mail was sent as the New York-based broker found intraday credit lines limited by JPMorgan, the firm's clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm's collapse. O'Brien is scheduled to testify at the hearing after being subpoenaed this w"Over the course of that week, MF Global's financial position deteriorated, but the firm represented to its regulators and self-regulatory organizations that its customers' segregated funds were safe," said the memo, written by Financial Services Committee staff and sent to lawmakers.
Steven Goldberg, a spokesman for Corzine, said in a statement that Corzine "never gave any instruction to misuse customer funds and never intended anyone at MF Global to misuse customer funds."
Vinay Mahajan, global treasurer of MF Global Holdings, wrote an e-mail on Oct. 28 that said JPMorgan was "holding up vital business in the U.S. as a result" of the overdrawn account, which had to be "fully funded ASAP," according to the memo.
Barry Zubrow, JPMorgan's chief risk officer, called Corzine to seek assurances that the funds belonged to MF Global and not customers. JPMorgan drafted a letter to be signed by O'Brien to ensure that MF Global was complying with rules requiring customers' collateral to be segregated. The letter was not returned to JPMorgan, the memo said.
The money transferred came from a segregated customer account, according to congressional investigators. Segregated accounts can include customer money and excess company funds.
Corzine, 65, in testimony in front of the House panel in December, said he did not order any improper transfer of customer funds. Corzine also testified that he never intended a misuse of customer funds at MF Global and that he doesn't know where client funds went.
"I never gave any instruction to misuse customer funds, I never intended anyone at MF Global to misuse customer funds, and I don't believe that anything I said could reasonably have been interpreted as an instruction to misuse customer funds," Corzine told lawmakers in December.
In his statement, Goldberg said Corzine did not specify which funds should be used to replenish the JPMorgan account.
"He never directed Ms. O'Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose," Goldberg said. "Nor was he informed that customer funds had been used for that purpose."
The bankruptcy trustee overseeing the liquidation of the company's brokerage subsidiary has estimated a $1.6-billion shortfall between customer claims and assets available.
Lawmakers and investigators from the Commodity Futures Trading Commission, Securities and Exchange Commission, and Department of Justice have been reviewing events leading to MF Global's bankruptcy filing. Executives including Corzine, a Democrat who served in the Senate before he was elected governor of New Jersey, gave testimony on the collapse at three congressional hearings last year.
"If client funds were transferred at his direction, it raises new questions," Seth Berenzweig, managing partner at Berenzweig Leonard LLP, a law firm in McLean, Virginia, said in an interview with Bloomberg Television. "This is a new storm cloud that is now headed for Jon Corzine and it raises a lot of issues."
U.S. Rep. Randy Neugebauer, a Texas Republican and chairman of the Financial Services oversight and investigations subcommittee, is preparing a final report on his investigation into the firm's failure.
"One of the goals of our investigation is not only to find out where the money went but to identify what went wrong in order to prevent this from happening again," Neugebauer said in a statement.
O'Brien is scheduled to appear before lawmakers with Christine Serwinski and Laurie Ferber, two other MF Global executives named by Corzine as being involved in the transaction, according to the memo. Henri Steenkamp, the firm's chief financial officer, is also scheduled to testify, as is a representative from JPMorgan who has not yet been identified.
MF Global and its brokerage sought Chapter 11 bankruptcy after a $6.3 billion bet on the bonds of some of Europe's most indebted nations prompted regulator concerns and a credit rating downgrade. Corzine quit MF Global Nov. 4.
During his testimony, O'Brien was identified by Corzine as someone with knowledge of a transfer of funds from customer accounts before the firm sought bankruptcy protection Oct. 31.
Reid H. Weingarten, O'Brien's lawyer, did not immediately respond to a phone call and e-mail seeking comment.
The memo's account of the e-mail exchanges aligns with what Terrence Duffy, the executive chairman at CME Group Inc., told lawmakers during a December congressional hearing. Auditors at CME, which had authority to oversee MF Global, learned from an employee of the brokerage that Corzine knew about the loans involving a European affiliate, Duffy told committee members.eek.

end

Zero hedge on the perjury of Jon Corzine:
(courtesy zero hedge)

Corzine Corzined - Congressional Panel Finds Former MF Global CEO Ordered JPM Fund Transfer

Tyler Durden's picture




The only thing that could top today's epic market insanity and hilarity, would be that Corzine is himself about to be Corzined. Just released from Bloomberg:
  • MF GLOBAL'S CORZINE ORDERED FUNDS MOVED TO JPMORGAN, MEMO SAYS
  • CORZINE'S `DIRECT INSTRUCTIONS' CITED BY CONGRESSIONAL PANEL
  • MF GLOBAL TRANSFER WAS USED TO COVER OVERDRAFT, PANEL SAYS
  • MF GLOBAL FINDINGS CITED IN MEMO OBTAINED BY BLOOMBERG NEWS

The Bloomberg story on the Corzine ordered funds to be moved to JPMorgan:

(courtesy Bloomberg)

MF’s Corzine Ordered Funds Moved to JP Morgan, Memo Says

Jon S. Corzine, MF Global Holding Ltd. (MFGLQ)’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in a brokerage account with JPMorgan Chase & Co. (JPM), according to a memo written by congressional investigators.
Edith O’Brien, a treasurer for the firm, said in an e-mail quoted in the memo that the transfer was “Per JC’s direct instructions,” according to a copy of the memo obtained by Bloomberg News. The e-mail, dated Oct. 28, was sent three days before the company collapsed, the memo says. The memo does not indicate whether that phrase was the full text of the e-mail or an excerpt.
O’Brien’s internal e-mail was sent as the New York-based broker found intraday credit lines limited by JPMorgan, the firm’s clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm’s collapse. O’Brien is scheduled to testify at the hearing after being subpoenaed this week.
“Over the course of that week, MF Global (MFGLQ)’s financial position deteriorated, but the firm represented to its regulators and self-regulatory organizations that its customers’ segregated funds were safe,” said the memo, written by Financial Services Committee staff and sent to lawmakers.
Steven Goldberg, a spokesman for Corzine, said in a statement that Corzine “never gave any instruction to misuse customer funds and never intended anyone at MF Global to misuse customer funds.”

JPMorgan Overdraft

Vinay Mahajan, global treasurer of MF Global Holdings, wrote an e-mail on Oct. 28 that said JPMorgan was “holding up vital business in the U.S. as a result” of the overdrawn account, which had to be “fully funded ASAP,” according to the memo.
Barry Zubrow, JPMorgan’s chief risk officer, called Corzine to seek assurances that the funds belonged to MF Global and not customers. JPMorgan drafted a letter to be signed by O’Brien to ensure that MF Global was complying with rules requiring customers’ collateral to be segregated. The letter was not returned to JPMorgan, the memo said.
The money transferred came from a segregated customer account, according to congressional investigators. Segregated accounts can include customer money and excess company funds.

Corzine Testimony

Corzine, 65, in testimony in front of the House panel in December, said he did not order any improper transfer of customer funds. Corzine also testified that he never intended a misuse of customer funds at MF Global, and that he doesn’t know where client funds went.
“I never gave any instruction to misuse customer funds, I never intended anyone at MF Global to misuse customer funds and I don’t believe that anything I said could reasonably have been interpreted as an instruction to misuse customer funds,” Corzine told lawmakers in December.
In his statement, Goldberg said Corzine did not specify which funds should be used to replenish the JPMorgan account.
“He never directed Ms. O’Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose,” Goldberg said. “Nor was he informed that customer funds had been used for that purpose.”

$1.6-Billion Shortfall

The bankruptcy trustee overseeing the liquidation of the company’s brokerage subsidiary has estimated a $1.6-billion shortfall between customer claims and assets available.
Lawmakers and investigators from the Commodity Futures Trading Commission, Securities and Exchange Commission and Department of Justice have been reviewing events leading up to MF Global’s bankruptcy filing. Executives including Corzine, a Democrat who served in the Senate before he was elected governor of New Jersey, gave testimony on the collapse at three congressional hearings last year.
“If client funds were transferred at his direction, it raises new questions,” Seth Berenzweig, managing partner at Berenzweig Leonard LLP, a law firm in McLean, Virginia, said in an interview with Bloomberg Television. “This is a new storm cloud that is now headed for Jon Corzine and it raises a lot of issues.”
Representative Randy Neugebauer, a Texas Republican and chairman of the Financial Services oversight and investigations subcommittee, is preparing a final report on his investigation into the firm’s failure.

‘What Went Wrong’

“One of the goals of our investigation is not only to find out where the money went but to identify what went wrong in order to prevent this from happening again,” Neugebauer said in a statement.
O’Brien is scheduled to appear before lawmakers with Christine Serwinski and Laurie Ferber, two other MF Global executives named by Corzine as being involved in the transaction, according to the memo. Henri Steenkamp , the firm’s chief financial officer, is also scheduled to testify, as is a representative from JPMorgan who has not yet been identified.
MF Global and its brokerage sought Chapter 11 bankruptcy after a $6.3 billion bet on the bonds of some of Europe’s most indebted nations prompted regulator concerns and a credit rating downgrade. Corzine quit MF Global Nov. 4.
During his testimony, O’Brien was identified by Corzine as someone with knowledge of a transfer of funds from customer accounts before the firm sought bankruptcy protection Oct. 31.
Reid H. Weingarten, O’Brien’s lawyer, did not immediately respond to a phone call and e-mail seeking comment.
The memo’s account of the e-mail exchanges aligns with what Terrence Duffy, the executive chairman at CME Group Inc. (CME), told lawmakers during a December congressional hearing. Auditors at CME, which had authority to oversee MF Global, learned from an employee of the brokerage that Corzine knew about the loans involving a European affiliate, Duffy told committee members.
To contact the reporters on this story: Phil Mattingly in Washington atpmattingly@bloomberg.net; Silla Brush in Washington at sbrush@bloomberg.net
To contact the editor responsible for this story: Maura Reynolds atmreynolds34@bloomberg.net

end

And now this lawsuit on the MFGlobal situation which is self explanatory:

FOR IMMEDIATE RELEASE:
MF Global "Corporate Personhood" Case: Motion for Appeal Filed
NEW YORK – A motion for leave to appeal a Federal Court order in the current MF Global "Corporate Personhood" case was filed on Tuesday by former MF Global customer, Adam Furgatch of Hawaii. Mr. Furgatch’s originally filed motion, which raised the issue of "corporate personhood" in the ongoing MF Global bankruptcy case, was denied by Judge Martin Glenn after being heard in Federal Bankruptcy Court on March 6th.
Mr. Furgatch, through his attorney, indicated that an appeal is warranted because there are similarities between his motion and the high-profile Kiobel v. Shell Oil corporate personhood case, the Nigerian human rights violations case currently being considered by the Supreme Court. The Kiobel case seeks to hold corporations responsible for their actions in the same manner that a human person would be held responsible for his or her own criminal actions.
A prominent legal expert on the corporate personhood issue, Carl Mayer of New York, in response to a request for comment on MF Global and the Furgatch Motion, wrote that "the Shell Oil case is similar to the Furgatch case in that Shell Oil turns on the question of whether corporations can be considered 'persons' under the Alien Tort Claim Act, while the Furgatch case turns on the question of whether corporations can be considered 'persons' under the Bankruptcy Code. The fact that the Supreme Court heard the Shell Oil case and then asked for further argument on the issue, shows how important and relevant the issue of corporate personhood is."
The Furgatch Motion asserts that because the U.S. Supreme Court has ruled that corporations are to be treated as "persons", then the "parent" corporate person, MF Global Holdings, by definition, must have a "child" corporate person, MF Global, Inc., the subsidiary brokerage whose 35,000 customers are still missing at least $1.6 billion in what was universally believed to be secured, segregated funds. The motion then cites specific statutes in the Bankruptcy Code that mandate that a child’s support claims shall have super-priority status over all other unsecured creditors, including financial institutions such as JP Morgan Chase Bank.
"In essence, in human terms, the MF Global parent recklessly gambled away the family’s money and then looted the brokerage child’s trust fund and piggy bank to support a destructive gambling habit," said Mr. Furgatch in a recent interview. "The child is still missing 20% of its corporate body and is effectively maimed -- by its own parent, no less -- and needs to be made whole again. The remedy is simple and readily available with the restitution of funds, and now the parent should not be allowed to avoid its parental responsibilities in bankruptcy. A human being would never get away with such irresponsible behavior."

Mr. Furgatch added, "This issue of corporate personhood and how it affects human beings is fundamental and critical for everyone to understand. And the issue is not going away," he emphasized. "We will make sure that these important questions get answered to the satisfaction of the large and growing number of Americans who are genuinely concerned about unchecked corporate power."

The Court order denying the Furgatch Motion stated that applicable Bankruptcy Code statutes and legal precedents consider that some parts of the Code are expressly reserved for corporations and some parts for individual human persons. Thus, the Court said, the motion’s attempts to treat corporations the same as individuals are unfounded.
Mr. Furgatch responded, "No matter how the Court may have ruled so far, the Fourteenth Amendment constitutional issue cannot be ignored. If the MF Global corporations are defined as ‘persons’ in the Bankruptcy Code, then the Fourteenth Amendment guarantees equal legal protection and no discrimination among all types of ‘persons,’ be they a black, white, female, male, or corporate person, as defined. The bankruptcy laws must apply equally to corporate persons and individual persons, or perhaps the existing laws are unconstitutional and corporations are not really persons after all. Imagine that."

The Furgatch Motion also points out that in the wake of Supreme Court decisions such as Citizens United, which effectively grant human rights and privileges to corporations, the concept of "personhood" has become significantly blurred and all Federal statutes written prior to 2010 may be subject to new interpretations of corporate rights and responsibilities.
Paraphrasing a popular criticism of corporate personhood, Mr. Furgatch stated, "We’ll believe that corporations are persons when they are made to pay child support or are prosecuted for child neglect."

Procedurally, Mr. Furgatch’s attorney also filed with the Court a notice of appeal, concurrently with the motion for leave to appeal.
Mr. Furgatch, a fresh, creative voice in financial and political commentary, has published copies of all legal filings and additional background information concerning this legal action on his website: www.AdamFurgatch.com
The Furgatch Motion was brought in the case of MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
###
Contact: Lia Martin: 310-464-6225
Lia.Martin@digitalmediaminds.com

end

Every day we see the USA taking more and more civil liberties away from its citizens. Greg Hunter describes this in his latest USAWatchdog release:

(courtesy Greg Hunter  USAWatchDog.com)

It’s All About Control

21 MARCH 2012 91 COMMENTS


By Greg Hunter’s USAWatchdog.com  (Revised)
Ever since the original Patriot Act was passed by Congress in 2001, American civil liberties have steadily shrunk and government control has steadily grown.  In a financial crisis, your bank or brokerage can severely restrict the amount of money you can withdraw from your accounts.  The government can now assassinate so-called terrorists anywhere in the world, including on U.S. soil.    Think Anwar al-Awlaki, the American-born radical Muslim cleric who was assassinated by a U.S. drone strike in September.
It can also indefinitely detain suspected terrorists without charge or due process, all thanks to the National Defense Authorization Act recently signed into law by the President.  The government can shut down a website anywhere in the world without due process, just ask Megaupload owner Kim Dotcom from New Zealand.  (Yes, that’s his real name.)
As of last Friday, President Obama has authorized the government to take just about whatever it needs in the name of national defense.   It is an Executive Order appropriately called “National Defense Resources Preparedness (NDRP).”  This allows members of Obama’s Cabinet to take resources such as livestock, water, fuel, farm equipment, vehicles, planes, boats, food and just about anything the government thinks it needs for “defense preparedness.”   I am just skimming the surface here as there are many more details in the order.  (Click here for the complete Executive Order — National Defense Resources Preparedness – NDRP.)  Many are calling this a setup for peacetime martial law.  After reading the Executive Order, I don’t see how anyone could disagree with this statement.
My question is why?  If all that happened was an extension of the Patriot Act in 2011, I might not worry that much (although, Congress basically traded liberty for so-called security.)   But when you look at several of the government’s big power grabbing moves, you can’t help but ask what are they getting ready for?  Is it a Middle East war that will probably turn into world war?  Is it another financial meltdown worse than the one in 2008?  Or, is it all of the above?
On the war question, I have written many posts that say war is a “when” not an “if” scenario.  Just last week, Israeli Prime Minister Benjamin Netanyahu said he did not need the approval of the U.S. to attack Iran.  Iran has said it has the right to strike first if it feels necessary.  Now, there are reports of Russian troops landing in Syria.  The U.N. calls this development a “bomb.”  The world hasn’t been this close to a global war since the late 1930’s.  War would plunge the world into a deep depression so fast that many could be wiped out financially literally overnight.
Another financial meltdown is not just probable but highly likely.  In my opinion, and many other experts, another financial crash is also a question of “when” and not “if.”  The Fed pumped out $16 trillion in the wake of the last meltdown, and it has frozen interest rates at near 0% through 2014.  Talk of a so-called “recovery” is preposterous with a record 46.5 million Americans on food stamps and declining home values despite near record low mortgage rates.  Sure, the stock market has doubled since 2009, but it was cut in half after the 2008 meltdown.  How is anyone making money?  Charles Biderman of the Wall Street research firm “Trim Tabs” recently said,  the increase in stocks came mainly from trillions of dollars of new money printed by the Fed.  (Click here to hear Mr. Biderman.)  Shouldn’t this have fixed the economy?  Shouldn’t the banks be able to go back to “mark to market” accounting and not value real estate and mortgage-backed securities at whatever the bankers think they will fetch in the distant future?  No way is that going to happen because nothing is fixed from the last meltdown.  The failing economy was just papered over with trillions of freshly printed dollars.
Economist Dr. Marc Faber of Gloomdoomandboom.com agrees the economy has been propped up by money printing, but that will not stop a financial crash forever.  In a recent interview, he said, “. . . I think eventually the financial system will be an MF Global where you don’t get your money back from the banks and the investment banks and from the mutual funds and so forth and so on. And, so I think everybody has to think to himself, how do I protect myself against such a black swan event.”  (Click here for the complete interview from ChrisMartenson.com)  Dr. Faber is recommending physical gold and silver as portfolio insurance.  (FYI, Faber also recommended buying stocks in 2009, at the very bottom of the last financial meltdown.)
The stock market is not the only part of the economy facing a crash.  Star banking analyst Meredith Whitney says there is a “tidal wave” of municipal bond defaults coming.  Moneynews.com reported last week, “In late 2010, Whitney told 60 Minutes that municipal defaults could run up into the hundreds of billions of dollars although that hasn’t happened. Maybe not officially, but insolvency is a deepening problem, and defaults are still on the way. . . . So there’s been every effort on the part of the states to prevent this tidal wave of defaults, which is going to happen sooner or later. It’s happening at an accelerating pace. . . .You’re either willing to see it or you’ll shut your eyes, and if people want to tell me, ‘Oh, I was wrong,’ because this hasn’t played out, stay tuned.”  (Click here for more on the story.) 
I’m betting Ms. Whitney is right, and I think the government is betting the same way.  Maybe our leaders feel they have to make all of these liberty killing moves to maintain the union in a financial catastrophe?  Maybe the government sees an ominous world war on the horizon?  Whatever it sees, it is definitely not good times ahead, and it can’t be that far away.  The moves the government has made are not for liberty and freedom–it’s all about control. 

end

And this is the US citizens response to the above:

(courtesy zero hedge)

Fourth Largest Gun Maker In US Is Out Of Guns

Tyler Durden's picture




In a somewhat sad and shocking slap of reality to the face of our 'recovery' and 'freedom-based-debt-holdings', today's press-release-of-the-day (since we still haven't heard from BATS) goes to Sturm, Ruger (the 4th largest gun-maker in the US) who after receiving orders for over one million units in Q1 has temporarily suspended the acceptance of new orders.

Forget PCLN, CRM, NFLX, here's where the real action is!
RGR is up a whopping 571% from Nov 07 while the S&P 500 is down 3%...

March 21, 2012


The following letter was sent to me from a reader Gary McMillan, a fellow Canadian, yet
quite despondent over the criminal actions he has been witnessing over these several years with regards to the manipulation of silver and gold in the USA.
Silver and gold has been money for centuries and will not change. 
I asked Gary if I could share his letter to me and he consented:

(courtesy Gary McMillan)


Dear Gentleman;

The most difficult and despondent day i experienced as a noble metal investor, was yesterday. Within a whisker of tears from brokeness, i then thought of a Scripture passage (subject heading.) i got through the night, but got up this morning still heart crushed. As most of you know, i have been decrying the manipulation of this market place for as long as you have known me. This is a sector i have been following since 1971, the year Christ shed His light on my be-darkened soul, and i became a surrendered Christian, (41 yrs..) i have studied all aspects of the industry; knowing personally many of the accomplished successful miners and company founders. We have recognized Au & Ag as money; as historically it always was, and forever will be. And that is the problem. Caesar also knows it, and will do and has done any and everything to plunder the tax paying citizenry and precious metal investor. Au/Ag with it's built-in intrinsic value against bad monetary policy; and holding to account the thieving banking system, and their homicidal illegal activity, to curtail it's true price.

Certainly, gold has advanced (to a point) but according to my value recognition, it is undervalued by two and a half times it's current spot price. Gold mining companies, (AEM as an e.g.) is undervalued six times it's current cm-stock price. i know how bullion price curtailment is done, many of you also know from previous data. It is rank price rigging and open fraud, perpetrated by the many agencies of Caesar, and there is diddly you or i can do about it.

Then there is silver. Compared to the above paragraph, the gold market is saintly, and run by Seraphim and Cherubim. Silver on the other hand, and at this point in the game, should be now classified as a rare earth mineral. And is controlled by the senior Imps of Satan. Does that sound a trite strong? Not to me, We have been scammed and cheated by powerful Caesar sanctioned forces!

As stated a few years back. Silver is the everyday currency and legal tender of exchange, not gold. Silver is listed as the accepted payment for goods and services. Silver is the declared medium of settlement in the US Constitution. It has always been the common man's medium of exchange throughout the known world. With recorded and physical proof and other evidences from ancient Egyptian, Greek, Roman, and Biblical script. As a storehouse of value, gold occupies the seat of prestige and pinnacle of wealth. However, Silver is not far behind because of it's industrial and multiple underlying importance. In my opinion, because of the rarity and importance of silver, i am looking for it to saw off gold one to one. Gold can be mined over five miles beneath the earths crust. Not silver, it can only be mined as far as the earths crust, no further.  

Please see equation below; information we had vaguely heard some months ago, depicting the amount of silver required to produce one cruise missile. i mean, why should the US govt., pay the correct ratio of silver to gold, which is: 1 oz of gold, should equate 16 oz of silver. In other words, if the price of silver were free from the shackles currently impeding it's true value, the price today would be approx.. $263. per oz.. (gold at $1645. the oz..)  
Each cruise missile contains 16 kilograms of silver, which is 35.27 oz. x 16, equalling 564 oz. of silver in ea. missile.
Currently, they pay approx.. $31.50 per oz. of silver, costing them $17,780. in silver per missile, to kill women, trucks and the occasional Telaban operative. And in the future, perhaps Indian curry factories. 

If they had to pay the correct adjusted market price for honest value, the price per missile would be: $263. x 564 oz's. = $148,545. per missile; and that's just the silver component. The avionic's, ordinance, guidance, GM and bankster bonuses would take the final price higher than the missile. The difference being: (representing the rigged price subtracted from the honest price,) which is: $130,000.00 fiat dollars per missile difference.      

1 Kilogram = 35.2739619 Oz. x 16 = 564.38 oz. Ag.

Much of the linked stories below, are from Chris Powell, the Secretary Treasurer of the Gold Anti Trust Action Committee, and much appreciated. i gladly support this powerful and courageous organization, which has been screaming from the house tops for close to fourteen years.

In closing: "Payday Someday."   i'm not referring to honest valuations, i'm referring to righteous judgement by the righteous judge. Many small innocent little people have been trampled and stolen from by monetary predator evil doers. They have stolen from our children and our grand children. They are laughing today, but "HE" will laugh these common thieves in derision. And someday, they will understand my sorrow. 
  
gary  (d)       
         






YouTube - Videos from this email



It is time to say goodbye until Monday night.
I wish you all a grand weekend
all the best
Harvey



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