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Thursday, May 7, 2008

Now they say it.  These guys aren't dumb, they're just a bunch of wolves in sheeps clothing.  Spin and pretending they're shocked is what they do best. 

IMF worries that commodities may not be a bubble

IMF Warns on Global Inflation

By Krishna Guha, Javier Blas,
Chris Giles, and Ralph Atkins
Financial Times, London
Thursday, May 8, 2008

http://www.ft.com/cms/s/0/f30215fc-1d3d-11dd-82ae-000077b07658.html

Global inflation has re-emerged as a major threat to the world economy, the International Monetary Fund said on Thursday in a stark warning that marked an abrupt change of tone from its emphasis on the risks to growth.

John Lipsky, IMF deputy managing director, said "inflation concerns have resurfaced after years of quiescence" due to soaring energy and food prices. Mr Lipsky said global growth was slowing but headline inflation was "accelerating."

The IMF warning came as crude oil prices hit a record of almost $124 a barrel, up 99 per cent in the past 12 months, and customers scrambled to take out insurance against prices rising above $200 a barrel.

In an indication the commodities boom may not be the bubble imagined, Mr Lipsky said the forces pushing prices up "appear to be fundamental in nature" -- and these were being amplified by lower US interest rates and the dollar's decline.

He was "optimistic" that there would not be a repeat of the early 1970s, when increasing energy prices ushered in a period of rising inflation expectations and accelerating inflation, but he said this risk "cannot be discarded out of hand."

Mr Lipsky said policymakers must respond aggressively to any sign of rising inflation expectations "lest the impressive gains in global stability attained in recent years be sacrificed."

The IMF's inflation warning was reinforced by European central bankers, as the European Central Bank and Bank of England left interest rates unchanged despite increasing signs of economic weakness.

The eurozone was "experiencing a rather protracted period of high annual rates of inflation," Jean-Claude Trichet, ECB president said. It was "imperative" that the households and companies did not think inflation rates were normal and raise prices and wages accordingly.

The Bank of England rejected calls from representatives of the increasingly sickly housing market for lower interest rates, maintaining its rate at 5 per cent. The monetary policy committee felt the increasing tension between rising inflation and lower growth did not allow it to cut rates twice in successive months.

The majority on the MPC are cautious cutting interest rates aggressively as inflation is moving increasingly above the bank's 2 per cent target would send the wrong signal about its determination not to allow higher inflation to become ingrained again in British society.

The switch in emphasis from the IMF from growth to inflation follows the latest surge in the price of oil.

Mr Lipsky suggested part of this could be due to monetary policy and exchange rates. He said IMF research suggests low interest rates effect commodity prices "above and beyond the traditional effect of increased demand" while the decline in the dollar since 2002 was responsible for about $25 of the increase in the oil price.

The IMF warned food prices would stay high for the foreseeable future.

Tuesday, May 6, 2008

Financial Cyclones

I'm sure many of you have read the news about the cyclone that hit Myanmar and killed thousands and how their government failed to warn their own people. 

While reading that I am reminded of the financial cyclone that is slowly killing millions financially.  Goldman Sachs recently voiced their belief that oil will hit between $150 and $200 per barrel in the near future.  Inflation here in the States is nearing all time highs.  Gas prices, food prices, everything you need prices are rising like a rocket and the entire time, all you hear on the news is jibberish.  I guess the government likes it that way because if you knew how bad things really are, consumer spending would come to a screeching halt and I'm sure those responsible for the mess also fear the idea of jail time.

Little articles like the one about the pawnbroker I read of in 'The S&A Digest' from www.stansberryresearch.com. 

"The downturn in the economy means huge profits for pawnshops. And it's not just gas-station attendants and waitresses fueling the growth. A Philadelphia pawnshop reported making more loans to upper-middle class citizens and businesses. One local, high-end jewelry shop pawned $150,000 of inventory just to make payroll.

Friday, April 25, 2008

Here's a closer look at the latest U.S. Dollar "rally".

It's got a long long ways to climb before you could call THAT a rally.

Monday, April 28, 2008

Will the Fed cut rates again?  If they do cut rates it weakens the dollar and raises inflation but helps the credit problems. 

If they don't cut or if they were to raise the rate (which I doubt will happen), it would help the dollar a little but the credit troubles would get worse. 

They're damned if they do and damned if they don't.  All I know is I wouldn't have my savings in the form of dollars.

Sometimes I wonder though...If rumors about a possible "Amero" currency were true, what better way to get people to accept it than to drive the economy into a huge hole, drive the dollar down to virtually nothing and let the people suffer a while.  Then when everything looks hopeless, here comes your hero, with that bright idea that will save us all....the Amero.

Thursday, April 24, 2008

I love the way the Fed, our politicians, bankers and the media spins reality into fairy tales.  Some of you may have seen the headline stating: Fed to sell $75B in Treasurys.  They're referring to it as an "auction".  The Fed isn't auctioning anythging and they only thing they're selling is BS to the public.  They use the word auction in place of loaning money to banks in return for their worthless derivatives.  Why would they do this?  To save those banks for failing.  Why save them?  Because the economy is on the brink of disaster and they're trying to make the crash as painless as possible and they're responsible for it in the first place.  Besides, the Fed creates money out of thin air and they'll keep doing it as much as they have to.  Who pays?  YOU and ME!

I say "They" meaing the Fed, the politicians, the media and the bankers.  Those four groups all lumped into one greasy, greedy, selfish ball of liars.  They need to save their own asses and they spin it into claiming they're "easing credit woes" because they care about you so very much.

I doubt they think we're stupid enough to believe that but they'll lie and keep lying until we do. 

Now I'm wondering what kind of fairy tale they'll spin about this headline: Wal-Mart's Sam's Club chain limits rice purchase.

While you read this I'll be at the store hoarding rice hahaha.

Monday, April 21, 2008

Below is an article from http://gata.org/ . Enjoy!

Edwin Vieira Jr.: Silver and gold guarantee freedom

Address by Edwin Vieira Jr.
Gold Anti-Trust Action Committee Inc. conference
GATA Goes to Washington -- Anybody Seen Our Gold?
Hyatt Regency Crystal City Hotel, Arlington, Virginia
Friday, April 18, 2008

Silver and gold are not merely valuable commodities, investments, and media of exchange. More importantly, they are key "checks and balances" in America's legal and political institutions.

The fight against the use of silver and gold as money that has been waged by bankers and rogue politicians since the 1870s as to silver and the 1930s as to gold --and will intensify as fiat currencies collapse throughout the world -- is ultimately directed against America's national independence, her constitutional government, and every common American's individual liberty and prosperity.

The Constitution of the United States adopted a monetary system consisting of silver and gold coin, in which the standard is the "dollar," containing 371 1/4 grains (troy) of fine silver, with the values of gold coins to be measured in "dollars" according to the free market's rate of exchange between silver and gold. Neither the general government nor any state is authorized to emit paper currency.

These restrictions prevent rogue public officials from turning public debts into currency, as a means for redistributing wealth from society to political elitists and their clients in special-interest groups.

Furthermore, although the Constitution does not mention banks, either public or private, its only correct construction requires separation of bank and state -- extirpation of all inherently fraudulent fractional-reserve banking schemes -- and rigorous regulation of all other fractional-reserve arrangements that might operate fraudulently. (See Edwin Vieira Jr., "Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution," second revised edition, 2002.)

But since the early 1800s rogue politicians and bankers have steadily subverted the Constitution by forging an increasingly tight relationship between bank and state. Through the grant of one abusive special privilege after another, politicians have immunized fractional-reserve banking against the just economic and legal consequences of its own inevitable failures, so that public officials and bankers could turn both public and private debts into currency -- thus separating the supply and the purchasing power of currency from the economic discipline of the free market, and rendering those matters largely political in nature.

Under the Federal Reserve System, Americans no longer enjoy "money" in the economic sense but are subjected to what must be denoted as "political currency," with emphasis on the adjective. Political currency is emitted on the basis of political debts --that is, either 1) public debts or 2) private debts for the payment of which the creditors expect public bailouts if their debtors default.

Unfortunately, the Federal Reserve System is inherently unstable, and must lurch from one self-generated crisis to another, each increasing in severity, until its house of financial cards self-destructs.

Having separated society's medium of exchange from the production of real goods and services in the free market -- and instead linked the currency to creating, packaging, marketing, servicing, and eventually salvaging political debts -- the Federal Reserve system encourages, facilitates, and rewards irresponsibility on the part of both lenders and borrowers, in the private as well as the public sector.

For those who benefit from the system to continue to loot society, the supply of political currency must expand. For that supply to expand, political debts must increase.

True enough, political debts can increase, even geometrically, because political currency can be created (as the saying goes) "out of nothing" to float them. But real wealth cannot be generated simply by the emission of paper promises. Neither can new paper promises pay off old ones.

So, avarice being unlimited, insatiable, and imprudent, the whole operation must cumulate and culminate in an unsustainable bubble of debts that either implodes in a depression or explodes in hyperinflation.

Although the Federal Reserve System is fatally flawed, the wealth and power of elitists in high finance, big business, and the political class depend on maintaining it -- or replacing it in a timely fashion with something of equal serviceability for their ends.

As it cannot long be maintained, it must and will soon be replaced. With what remains a matter for speculation. Not open to the slightest doubt, however, is that, as crises have rocked the system, the establishment has always moved farther away from the Constitution -- deeper into the sump of lawlessness -- to shore up the banking cartel, and always at the expense of common Americans.

In the 1930s, in response to the collapse of the fractional-reserve racket, rather than reforming the operations of the banks, the Roosevelt administration and a pliant Congress seized the American people's gold and outlawed almost all public and private contracts promising to pay in gold. In the 1950s and through the 1960s, until the Nixon administration terminated redemption of Federal Reserve notes in gold in 1971, the inflationary policies of the Federal Reserve System drained off more than half of America's national stock of gold to foreign banks and the profiteers operating through them. And during the last few decades, surreptitious manipulation of the precious-metals markets has kept the price of gold (measured in Federal Reserve notes) suspiciously low, even as this country's financial structures have become increasingly shaky.

The price of gold has been manipulated for two reasons, one being the suppression of evidence, the other the throttling of monetary evolution.

First, an ever-increasing price of gold reflects the breakdown of the Federal Reserve System -- just as an ever-increasing temperature reveals that the human body is sick, and when it reaches a critical point that death is imminent.

Second, those who fatten off of political currency need to prevent ordinary people from realizing that only a return to silver and gold as common media of exchange can stabilize America's economy, and especially from actually employing silver and gold in preference to Federal Reserve notes in their day-to-day transactions. However, as the Federal Reserve System experiences ever-more-frequent, ever-more-serious, and ever-less-tractable problems, downward manipulations of the prices of gold and silver will become impossible. And that the system is beyond repair will become apparent to all.

At that point, the question will arise -- and behind the scenes doubtlessly already has arisen among bankers and politicians -- as to how and with what to replace the banking cartel.

When a political currency has failed, the traditional trick of the bankers and politicians has been to introduce a new, supposedly more stable currency -- often within a new, supposedly more stable banking apparatus. This was the sleight of hand that moved America from the independent state banks in operation prior to the Civil War, through the partially cartelized national banks created in the 1860s, to the fully cartelized Federal Reserve System established in 1913.

Throughout this devolution, the progression of illegality became increasingly stark.

The state banks violated Article I, Section 10, Clause 1, of the Constitution. But at least they operated only regionally. The national banks violated Article I, Section 8, Clause 2, and operated throughout the country. But at least their emission of paper currency was limited by the amount of public debt a generally thrifty Congress was willing to incur.

The Federal Reserve System, though, is a corporative-state (or fascist) structure that purports to delegate Congress' supposed monetary powers to private interests; and the system's bubble of both public and private debts will expand to the limit of the avarice of the cartel's operators, their clients, and their political henchmen.

Nonetheless, as unconstitutional and economically unsound as they were and are, all these schemes operated and even now operate under color of the national sovereignty and laws of the United States, subject in principle to overarching control by the American people. Indeed, Section 30 of the Federal Reserve Act still explicitly reserves to Congress the right to repeal, alter, or amend the system at will. But with the Federal Reserve System the bankers and politicians have gone about as far as they can go within the economic and political institutions of the United States. And they have separated paper currency from the discipline of free markets about as far as possible, while still pretending to maintain some semblance of a connection to free markets.

So as the Federal Reserve System shakes itself to pieces, the likelihood is that first, a new currency will arise outside of the United States in some regional supra-national entity such as the proposed North American Union; and, second, the value of this new currency will not be controlled by free financial markets but, instead, propping up the currency's value will be the excuse for extensive governmental intervention in and manipulation of the markets.

This plan is so alien to the experiences and desires of most Americans that its implementation will probably require a controlled meltdown of the Federal Reserve System to bludgeon them into accepting the North American Union as the only way to obtain a new, supposedly stable currency and to return to something approaching economic normalcy. Yet even a controlled meltdown, along with the accompanying absorption of the United States into a new Northern Hemispheric political order, will unavoidably generate extensive economic, social, and political unrest that will threaten the financial establishment's power.

Even dumbed-down Americans will not long suffer conditions of depression akin to those of the 1930s, let alone South American levels of inflation as well. Desperate people will ask questions and assign blame. Perhaps not just a few will abandon debt currency altogether and substitute silver and gold as their media of exchange. They and others will conclude that the Federal Reserve System is unconstitutional -- and therefore that its operations are arguably a complex of criminal offenses. (See 18 U.S.C. §§ 241 and 242.)

Many will realize that the establishment's scheme for replacing Federal Reserve Notes with a supra-national currency is a political crime on a more stupendous scale yet, because it depends upon destroying both the Constitution and the Declaration of Independence. Then an aroused people will take political action against the institutions and individuals responsible for foisting the funny-money scheme on their country.

On the other side, the establishment will not be idle. It will do anything and everything possible to maintain its position. Obviously the Constitution and the Declaration of Independence will be expendable, because the establishment has been trying to whittle away the former on a piece-by-piece basis over the years, and intends to do away with the latter at one fell swoop in the near future. So this country, as an independent nation, will be expendable too. And if this country, why not the freedom and prosperity of common Americans as well?

Will ordinary Americans -- at least 80 to 90 million of whom are armed -- meekly put up with a program aimed at their own country's assisted suicide? Why should they, when they have nothing to lose economically or politically? If they refuse to knuckle under, the establishment's only recourse will be to attempt to lock down the whole country under a para-militarized police state, perhaps with the assistance of "peacekeepers" from Canada and Mexico (for the employment of whom negotiations are apparently already in progress).

That is why careful observers conclude that the paranoia being generated by politicians and the big media over "homeland security" -- and the frenetic para-militarization of law-enforcement agencies at the national, state, and even local levels in the name of "homeland security" -- are not caused by or aimed at foreign "terrorists" at all, but instead target ordinary Americans in their own home towns.

The establishment is preparing to force justifiably angry Americans into line when its financial house of cards comes tumbling down, either in a controlled demolition or otherwise.

Americans will not be the only victims of such repression. The establishment must prevent other peoples, in other parts of the world, from jumping off the financial treadmill of political currency. That will require the use not only of economic and political pressure, but also -- indeed, especially -- of military coercion. For the provision of which the establishment will attempt to force common Americans to pay, and to send their sons and even their daughters off to fight, die, and be maimed and sickened in foreign lands.

Little good, then, will it do for an ounce of gold to soar to $2,000, $3,000, or higher -- and for silver to increase in value proportionately too -- if the ultimate consequences are a police state in America, then a supra-national regime replacing the United States, accompanied by endless military conflicts throughout the world.

In the grand scheme of things, gold and silver are far less important as economic investments or hedges against hyperinflation or depression than as guarantors of individual freedom -- and then to the fullest extent only when they are actually used as media of exchange throughout society. Silver and gold as currencies supply the foundation necessary for economic democracy and limited government; whereas fiat currencies inevitably function as the tools of fascism, socialism, and every other form of financial imperialism.

Thus, the fight over gold and silver as media of exchange is about more than mere money, let alone making money. For it is a fight with only two possible outcomes: either control of their own lives by the people themselves, or control of the people and their lives by political and economic elitists. To achieve the first and avoid the second no price will prove too great to pay.

----

Edwin Vieira Jr. is a lawyer, author of "Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution," and a consultant to GATA. He lives in Virginia.

* * *

Monday, April 14, 2008

With all the spin going on about why prices are going higher, it's nice to see a decent answer.  The dollar is getting weaker and nothing is going to turn it around for a long, long while.  Naturally, when the dollar is weaker, it takes more of those dollars to purchase goods.  It's called inflation and it's here to stay for quite some time.

DJ UPDATE: OPEC Pres: Oil Prices High Because Of Weak Dollar

Apr 12, 2008 (Dow Jones Commodities News via Comtex) -- -- (Updates with Khelil's comments on dollar premium in oil prices, that consumers should lower oil prices and more)

By Natalie Obiko Pearson

Of DOW JONES NEWSWIRES

ALGIERS (Dow Jones)--OPEC has no plans to adjust its oil production before September, despite signs that record high oil prices have begun to sharply hit demand, because the U.S. dollar's slide is the primary factor driving crude prices in today's market, the group's president said Saturday.

Chakib Khelil, president of The Organization of Petroleum Exporting Countries and Algeria's oil minister, told Dow Jones Newswires in an exclusive interview that he will not be attending an oil producer-consumer meeting later this month in Rome, nixing the possibility that the 13-member producer group might call an extraordinary meeting there to consider whether they should take action amid dramatic developments in the global oil market.

Prices at historical highs of around $110 a barrel have begun to hinder consumers' appetite for oil, with the International Energy Agency - the energy watchdog of major industrialized countries - on Friday making its biggest cut to world oil demand growth in seven years in its monthly oil market report.

"The fact that demand is not going to be strong reinforces the position that we've had, which is that there's no need for (an increase): Why would you produce if there's not going to be demand? And it reinforces the decision we have made not to meet until September," Khelil said in an interview in the Algerian capital. "As a matter of fact, I won't be going to Rome even."

Khelil, noting that demand would likely pick up in the summer during peak driving season in the U.S., also ruled out cutting output for the time being.

"There is no demand for cutting oil prices. I think it's not in the cards to cut production. We'll have to look at the situation in September," when OPEC is next scheduled to hold an oil output policy meeting.

"Prices are high...because of the devaluation of the dollar. There is a direct relationship," Khelil said. A former World Bank economist, Khelil said he had looked into the issue and estimated that for every 1% decline in the value of the dollar in the past two years, there has been a $4 increase in the average oil price.

"We would be lying to ourselves if we say to the world, 'well, if we increase oil production, the price will go down,'" Khelil said, pointing to how OPEC's decision to raise output by 500,000 barrels a day last September did little to stem crude's climb.

A depreciating dollar has driven investors to commodities seeking a hedge against inflation. Consumers paying for oil in other currencies have also not felt the rise in the price in oil as sharply as Americans, which has helped to support demand.

Khelil said that if the U.S. economic outlook improves - with a subsequent strengthening of the dollar - "we would see the improvements in the oil price."

But following cautionary statements about the economic outlook from both the International Monetary Fund and the U.S. Federal Reserve this past week, Khelil said, "it doesn't look very good...We have the impression that things will get worse before they get better."

Khelil said that if the impact of the sliding dollar were factored out, the oil price would be far lower and the fundamentals of oil supply and demand would re-exert themselves.

"If we can take out that impact, if the dollar index goes back to where it was two years ago, we would see a much lower price than we do today...at $55 to $60 (a barrel), you could say that whatever we did would have an impact," he said. "Because the major parameter influencing oil prices would be supply and demand."

Khelil said the onus of dealing with the current oil market didn't only lie with producers and that governments of oil-importing countries could be doing more to help consumers, like lowering taxes on gasoline and other oil products.

"One thing the consumers never want to talk about is the taxes. Why can't they lower the taxes?...We hate to mention that, we hate to talk about it. But when people are focusing on OPEC and how OPEC is getting $110 (a barrel), they forget that it's only 25% of the price that consumers are paying," he said.

Khelil said that for every dollar that OPEC producers get, some European governments are earning as much as $4 in tax.

"It's good to have to have higher taxes for conservation and so on, but isn't it time for consuming countries to lower the pay on consumers?" he asked.

Khelil suggested that some of those extra tax revenues could be put toward an oil "stabilization fund" that could help consumers when prices go up and "to maintain a level of stability in the market."

OPEC members, who collectively supply about 40% of the 87 million barrels of oil consumed daily, have insisted that there is no shortage of oil and other factors - including financial speculation, geopolitical tensions and the weakening dollar - are responsible for record prices.

Others counter, however, that world oil demand growth is far outpacing the growth in supplies, which has seen OPEC's spare capacity - the cushion of oil it maintains on hand in case of disruptions - has fallen to a mere 2 million barrels a day, or less than a third of what it was in 2002. They say OPEC's reticence in confronting that trend is contributing to the anxiety behind oil prices.

Pressed on whether OPEC could be making more of an effort to be seen at least trying to manage prices, Khelil indicated that a resolute policy was more helpful than any action it could take at this time.

"It helps the market knowing that OPEC is not going to meet. When OPEC meets there is all kind of speculation: are they going to cut, are they going to remain, are they going to increase," he said.

"OPEC has to be credible," he said, and as president he aimed to ensure that "OPEC does what it says it's going to do - not lie about its intentions or the reasons that are really controlling the market."

-By Natalie Obiko Pearson, Dow Jones Newswires. +44 (0)20 7842 9450; natalie.pearson@dowjones.com

(END) Dow Jones Newswires

http://www.tradingmarkets.com/.site/news/Stock%20News/1354648/

Tuesday, April 8, 2008

Now do you believe the hype you've heard that the credit crunch is near an end? 

IMF: Credit crunch losses could approach $1 trillion

Effects of current crisis likely to be broad, deep and protracted WASHINGTON (MarketWatch) -- The total potential global losses from the credit crunch could top $945 billion over the next two years, the International Monetary Fund estimated on Tuesday, suggesting more pain for the financial sector and more headaches for governments struggling to contain the crisis. Losses tied to the housing market could top $565 billion, including the complex derivative products tied to mortgages, the IMF said in a new report on global financial market stability. 'It is now clear that the current turmoil is more than simply a liquidity event...' — International Monetary Fund But the weakness from the housing sector is spilling over into broader sectors, the IMF said. More losses will appear in loans tied to credit cards, commercial real estate and corporations, the IMF said in a new report on global financial stability. Banks and investment banks have so far written down just over $200 billion from the subprime mortgage sector. "These estimates, while based on imprecise information about exposures and valuation, suggest potential added stress on bank capital and further writedowns," the IMF said. The current market turmoil uncovered "fault lines" in the financial sector in the form of weak balance sheets and a general lack of capital. "It is now clear that the current turmoil is more than simply a liquidity event, reflecting deep-seated balance sheet fragilities and weak capital bases, which means its effects are likely to be broader, deeper and more protracted," the IMF report said. Read the IMF survey Nobody is immune Few in government or business had a handle on the risks before the crisis exploded in August. "There was a collective failure to appreciate the extent of leverage taken on by a wide range of institutions," the IMF report said. The U.S. remains "the epicenter" of the crisis, but financial institutions in other countries have been impacted. Some emerging markets remain vulnerable, although so far most have been resilient, the IMF said, in a new report on global financial stability. "Nobody is immune, they will be tested," said Jaime Caruana, director of the IMF's division of monetary and capital markets. The IMF report was released ahead of the meeting of central bankers and financial ministers from around the globe in Washington this weekend as part of the IMF's spring policy meeting. The G-7 finance ministers and central bank governors will meet on Friday. Just ahead of the meeting, the IMF announced it plans to sell 12% of its total gold reserve. The plan is subject to the approval of the U.S. Congress. See full story. Greg Robb is a senior reporter for MarketWatch in Washington. More ...