Thursday, August 29, 2013
US bank chief admits using bailout funds to buy vacation home
Darryl Layne Woods, the chairman of Columbia, Mo.-based Mainstreet Bank,
pleaded guilty on Monday to using bailout funds from the Troubled Asset
Relief Program to purchase a luxury condominium in 2009, U.S. Attorney
Tammy Dickinson announced in a press release.
50% Of 'Retiring' Senators Now Become Lobbyists, Up From 3% A Few Decades Ago
from the the-influence-business-is-good-business dept
This is from a little while ago, but Hunter Walk alerts us to a buried gem in a NY Times' book review of This Town by Mark Leibovich
-- a book about Washington DC that sounds just horrific (not the book
itself, but the concept of wanting to know any more about DC). The
review notes that Leibovich buried an interesting statistic deep in the
book:
And, with so much money flowing into lobbying efforts, we're building a system where political entrepreneurship outweighs market entrepreneurship -- and that's exceptionally dangerous for our economy and our future. Political entrepreneurs -- those who manipulate the system for their own benefit -- tend to focus on locking up value, limiting competition and providing themselves with greater control over the market. Market entrepreneurs are more focused on innovation, expanding the pie and economic growth. Tragically, political entrepreneurs, via massive lobbying efforts, like to pretend they're about market entrepreneurship, and we get a system of crony capitalism that actually does significant harm to the economy.
When nearly half of everyone in Congress who is retiring jumps into that business of helping political entrepreneurship, the system is completely broken.
in 1974, 3 percent of retiring members of Congress became lobbyists. “Now 50 percent of senators and 42 percent of congressmen do.” No one goes home anymore.We've talked plenty about the corrupting influences of the revolving door between industries and the government. Not all lobbyists or lobbying is bad, per se, but it's a symptom of the times we live in and the business of influence. It highlights the kind of "soft corruption" that Larry Lessig has been talking about for years, where it's not out-and-out bribery, but merely the promise of a cushy job down the road that can have tremendous impact on the way the government functions.
And, with so much money flowing into lobbying efforts, we're building a system where political entrepreneurship outweighs market entrepreneurship -- and that's exceptionally dangerous for our economy and our future. Political entrepreneurs -- those who manipulate the system for their own benefit -- tend to focus on locking up value, limiting competition and providing themselves with greater control over the market. Market entrepreneurs are more focused on innovation, expanding the pie and economic growth. Tragically, political entrepreneurs, via massive lobbying efforts, like to pretend they're about market entrepreneurship, and we get a system of crony capitalism that actually does significant harm to the economy.
When nearly half of everyone in Congress who is retiring jumps into that business of helping political entrepreneurship, the system is completely broken.
Dow Jones Industrial Average: Next Major Global Economic Dislocation May Be Weeks Away
Chris Martenson: For years we’ve preached the From the Outside In
principle of markets: When trouble starts, it nearly always does so out
in the weaker periphery before creeping towards the core.
We saw this in the run-up to the housing bubble collapse, as sub-prime mortgages gave way before prime loans, and in Europe, as smaller economies like Greece, Ireland, and Cyprus have fallen first and hardest (so far). We see this today in accelerating food stamp use among poorer U.S. households. In each case, the weaker economic parties give way first before being followed, over time, by the stronger ones.
Using this framework, we can often get several weeks to several months of advance notice before trouble erupts in the next ring closer to the center.
Which makes today notable, as we’re receiving a number of new warning signs. The periphery is giving way.
Ever since the current economic “recovery” began, we’ve been warning of the high risk of a renewed financial crisis. That risk is now uncomfortably high. This is because nothing that led to the first round of troubles was actually addressed at the root level. Instead, prior troubles were simply papered over with central-bank liquidity, leaving structural weakness intact – for instance, our ‘too big to fail’ banks are just as big, and our sovereign debt levels are even worse than they were pre-2008.
The next crisis will be larger and more damaging than the last one, principally because nothing got fixed, political capital was spent, and trust has been eroded, leaving everyone depleted and ready to bolt for the financial exits.
With the periphery failing, we likely have only weeks – perhaps a month or two – until the next big dislocation hits.
Déjà Vu (All Over Again)
We’ve been here before. We’ve seen trouble start on the outside and progress inwards, and not all that long ago.
In 1999 and 2007, we saw the financial markets blithely trundle along higher, even as clear signs of trouble at the margins were abundant.
One of the common myths about the stock market, often repeated in the press, is that it peers into the future. The market is the ‘great discounting machine.’
But the stock market powered higher into the new millennium, despite being the most overvalued it had ever been in history, before diving violently in 2001. So much for peering into the future.
And again, the Dow Jones Industrial Average (INDEXDJX:.DJI) went to new heights in 2007,
Pages: Next
We saw this in the run-up to the housing bubble collapse, as sub-prime mortgages gave way before prime loans, and in Europe, as smaller economies like Greece, Ireland, and Cyprus have fallen first and hardest (so far). We see this today in accelerating food stamp use among poorer U.S. households. In each case, the weaker economic parties give way first before being followed, over time, by the stronger ones.
Using this framework, we can often get several weeks to several months of advance notice before trouble erupts in the next ring closer to the center.
Which makes today notable, as we’re receiving a number of new warning signs. The periphery is giving way.
Ever since the current economic “recovery” began, we’ve been warning of the high risk of a renewed financial crisis. That risk is now uncomfortably high. This is because nothing that led to the first round of troubles was actually addressed at the root level. Instead, prior troubles were simply papered over with central-bank liquidity, leaving structural weakness intact – for instance, our ‘too big to fail’ banks are just as big, and our sovereign debt levels are even worse than they were pre-2008.
The next crisis will be larger and more damaging than the last one, principally because nothing got fixed, political capital was spent, and trust has been eroded, leaving everyone depleted and ready to bolt for the financial exits.
With the periphery failing, we likely have only weeks – perhaps a month or two – until the next big dislocation hits.
Déjà Vu (All Over Again)
We’ve been here before. We’ve seen trouble start on the outside and progress inwards, and not all that long ago.
In 1999 and 2007, we saw the financial markets blithely trundle along higher, even as clear signs of trouble at the margins were abundant.
One of the common myths about the stock market, often repeated in the press, is that it peers into the future. The market is the ‘great discounting machine.’
But the stock market powered higher into the new millennium, despite being the most overvalued it had ever been in history, before diving violently in 2001. So much for peering into the future.
And again, the Dow Jones Industrial Average (INDEXDJX:.DJI) went to new heights in 2007,
Pages: Next
Syrian TurmOil: War panic sends black gold prices to 2-year high
Washington and London’s push for military intervention has taken its toll on the financial world. The threats have spurred oil and gold prices – while investors have rushed to pull their money from stock markets. RT’s Katie Pilbeam looks at how the rhetoric has affected the world economy. READ MORE: http://on.rt.com/9df190
Gerald Celente w/ Jeff Rense ~ The Only Thing Keeping Global Economy’s Alive Is Gov’t Money Printing
John Stossel ~ Myths, Lies, & Complete Stupidity: #1
California Governor Proposes Massive Prison Expansion To Avoid Freeing Inmates
California Gov. Jerry Brown (D) on Tuesday announced a $315
million plan to expand the state prison system’s capacity by thousands
of beds, allowing the state to comply with a federal court order to
sharply reduce the population of its overcrowded facilities by the end
of the year.
Under the governor’s plan, the state would move some 12,000 inmates from overcrowded state prisons into private prisons and county jails. During a press conference in Sacramento on Tuesday, Brown portrayed the plan as necessary to ensure “public safety,” noting that it would allow California to meet the court requirements without releasing prisoners.
But critics say the cost of Brown's expansion is likely to sap much-needed funds from schools and social service agencies. They insist the state could release thousands of low-level prisoners without endangering the public.
“The governor’s proposal is a plan with no promise and no hope,” state Sen. Darrell Steinberg (D), the Senate president pro tem, said in a statement. “As the population of California grows, it's only a short matter of time until new prison cells overflow and the court demands mass releases again."
California's prison system is one of the largest and most crowded in the country. The governor’s plan, which still needs legislative approval, would create enough space to comply with a 2009 order by a panel of federal judges, who ruled that overcrowding was jeopardizing the health and safety of inmates. The order, which the U.S. Supreme Court this month refused to review, gives the state until Dec. 31 to reduce the population of its facilities by about 10,000 inmates.
In an unconventional move, private prisons targeted for the expansion would be staffed with state employees, an arrangement that would allow the governor and his allies in the legislature to avoid a politically risky confrontation with the state’s powerful prison guard union. MORE Video, California Prison System, California Prison Expansion, California Prison Guard Union Private Prisons, California Prison Overcrowding Private Prisons, California Prison Reform, California Private Prisons Overcrowding, Jerry Brown Prison Expansion, Jerry Brown Prison Guard Union, Jerry Brown Private Prisons, Politics News
Under the governor’s plan, the state would move some 12,000 inmates from overcrowded state prisons into private prisons and county jails. During a press conference in Sacramento on Tuesday, Brown portrayed the plan as necessary to ensure “public safety,” noting that it would allow California to meet the court requirements without releasing prisoners.
But critics say the cost of Brown's expansion is likely to sap much-needed funds from schools and social service agencies. They insist the state could release thousands of low-level prisoners without endangering the public.
“The governor’s proposal is a plan with no promise and no hope,” state Sen. Darrell Steinberg (D), the Senate president pro tem, said in a statement. “As the population of California grows, it's only a short matter of time until new prison cells overflow and the court demands mass releases again."
California's prison system is one of the largest and most crowded in the country. The governor’s plan, which still needs legislative approval, would create enough space to comply with a 2009 order by a panel of federal judges, who ruled that overcrowding was jeopardizing the health and safety of inmates. The order, which the U.S. Supreme Court this month refused to review, gives the state until Dec. 31 to reduce the population of its facilities by about 10,000 inmates.
In an unconventional move, private prisons targeted for the expansion would be staffed with state employees, an arrangement that would allow the governor and his allies in the legislature to avoid a politically risky confrontation with the state’s powerful prison guard union. MORE Video, California Prison System, California Prison Expansion, California Prison Guard Union Private Prisons, California Prison Overcrowding Private Prisons, California Prison Reform, California Private Prisons Overcrowding, Jerry Brown Prison Expansion, Jerry Brown Prison Guard Union, Jerry Brown Private Prisons, Politics News
Federal Reserve Internal Survey: ‘Will Beatings Continue Until Morale Improves?’
The Federal Reserve has to be one of the single most opaque
institutions not only in our nation but in the world. I often
think of the Fed as having a door in which those inside can see out,
but those outside can never see in.
In light of this premise, I am exceptionally surprised to read of a recent survey of Federal Reserve employees that is highlighted by The Huffington Post.
Can the blankets covering up our pols, bankers and regulators be pulled back so that the incest can be exorcised and our nation might recover? Don’t hold your breath.
Navigate accordingly.
I thank the regular reader who brought this story to my attention.
Larry Doyle
Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.
For those reading this via a syndicated outlet or receiving it via e-mail or another delivery, please visit the blog and comment on this piece of ‘sense on cents’.
Please subscribe to all my work via e-mail, an RSS feed, on Twitter, or Facebook.
I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.
This entry was posted on Wednesday, August 28th, 2013 at 10:16 AM and is filed under Federal Reserve, General. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
In light of this premise, I am exceptionally surprised to read of a recent survey of Federal Reserve employees that is highlighted by The Huffington Post.
Regulators overseeing the nation’s largest financial institutions are distrustful of their bosses, afraid to speak out, and feeling isolated, according to a confidential survey this year of Federal Reserve employees.
The findings from the April survey of roughly 400 employees, presented to Fed staff during multiple meetings in June and July and obtained by The Huffington Post, show a workforce that is demoralized, and an institution where teamwork is nonexistent, innovation and creativity are discouraged and employees feel underutilized.Obtained by The Huffington Post? That is far different than “provided” to The Huffington Post. Do you get the sense that perhaps a disgruntled employee leaked this survey?
The shaky morale is a legacy of Alan Greenspan’s 19-year term as Fed chairman. From 1987 to 2006, the Greenspan Fed pushed for a hands-off approach by regulators, who then found themselves blamed for the financial crisis that led to the most punishing economic downturn since the Great Depression.Sounds like Alan was little more than a benevolent despot with an outsized ego. No doubt he was also deeply in bed with the industry. And Larry Summers — also a charter member of the Outsized Ego Club — is going to change this culture? Really? NOT.
“Supervisors during the Greenspan years were beaten down pretty regularly,” Phil Angelides, former chairman of the congressionally appointed Financial Crisis Inquiry Commission, told HuffPost. “It doesn’t surprise me that you would still have some dysfunction, a lack of morale and something less than a highly energized and well-coordinated arm of the Federal Reserve, where for so long the regulators and bank supervisors were held back by the leadership of the Fed.”This comment by Angelides answers the question posed most recently by regular reader Fred as to whether the Fed is the great facilitator of the Wall Street-Washington Incest. Indeed it is.
Can the blankets covering up our pols, bankers and regulators be pulled back so that the incest can be exorcised and our nation might recover? Don’t hold your breath.
About a third of workers surveyed in the policy unit agreed that it was “safe to speak up and constructively challenge things around here,” documents show.
“That tells me you don’t have the culture of debate and engagement that you need so that questions are asked,” said Angelides.What do I take from this survey and especially this last component in which only a third of the workers feel it is safe to speak up? Power and money once entrenched are not easily dislodged and the truth takes a back seat to the corruptible status quo.
Navigate accordingly.
I thank the regular reader who brought this story to my attention.
Larry Doyle
Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.
For those reading this via a syndicated outlet or receiving it via e-mail or another delivery, please visit the blog and comment on this piece of ‘sense on cents’.
Please subscribe to all my work via e-mail, an RSS feed, on Twitter, or Facebook.
I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.
This entry was posted on Wednesday, August 28th, 2013 at 10:16 AM and is filed under Federal Reserve, General. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
Telemarketing Calls Increase Despite Do-Not-Call List
PITTSBURGH (KDKA) — Those annoying telemarketing calls are increasing.
That’s what the Federal Trade Commission says, reporting consumer complaints have jumped 63 percent since 2011.
“Especially automated messages just annoy me. I’d rather talk to a person,” noted one person.
New technology has allowed unscrupulous marketers to circumvent federal and state Do-Not-Call lists.
“What it does is lowers the cost of making those telemarketing calls which means more telemarketing calls get made,” Carnegie Mellon University professor Michael Smith told KDKA money editor Jon Delano.
Smith says technology also lets telemarketers make the calls from other countries.
“Using the internet to make these calls makes it easier to off-shore the telemarketing operations which is outside the jurisdiction of the FCC and other legal entities in the United States,” added Smith.
The government reports 145,000 complaints were filed by Pennsylvanians last year alone.
And some admit that they have not yet put all their phones — including mobile phones — on the Do-Not-Call lists.
Even if you are on the list, it won’t block all calls, says Duquesne University professor Audrey Guskey.
“If it’s a charitable organization, they are allowed to call you. If you’ve done business with that organization, they’re allowed to call you. If you’ve approved of that company calling you, maybe on purpose or maybe not knowing that you have given them permission to call you, they are allowed to call you,” noted Guskey.
And, of course, politicians made sure all political calls were allowed, too.
People have developed their own defense to these calls.
One is Caller ID.
“I see Portland, Oregon. I don’t know anyone there, so I don’t answer,” said one person.
Here’s the easiest.
“I just hang up,” another said. “I don’t even take the time to listen to them.”
If you haven’t registered all your telephones on the Federal Do-Not-Call Lists, here’s the link: https://donotcall.gov/
And here’s the link to the Pennsylvania Do-Not-Call List: https://dnc.attorneygeneral.gov/
That’s what the Federal Trade Commission says, reporting consumer complaints have jumped 63 percent since 2011.
“Especially automated messages just annoy me. I’d rather talk to a person,” noted one person.
New technology has allowed unscrupulous marketers to circumvent federal and state Do-Not-Call lists.
“What it does is lowers the cost of making those telemarketing calls which means more telemarketing calls get made,” Carnegie Mellon University professor Michael Smith told KDKA money editor Jon Delano.
Smith says technology also lets telemarketers make the calls from other countries.
“Using the internet to make these calls makes it easier to off-shore the telemarketing operations which is outside the jurisdiction of the FCC and other legal entities in the United States,” added Smith.
The government reports 145,000 complaints were filed by Pennsylvanians last year alone.
And some admit that they have not yet put all their phones — including mobile phones — on the Do-Not-Call lists.
Even if you are on the list, it won’t block all calls, says Duquesne University professor Audrey Guskey.
“If it’s a charitable organization, they are allowed to call you. If you’ve done business with that organization, they’re allowed to call you. If you’ve approved of that company calling you, maybe on purpose or maybe not knowing that you have given them permission to call you, they are allowed to call you,” noted Guskey.
And, of course, politicians made sure all political calls were allowed, too.
People have developed their own defense to these calls.
One is Caller ID.
“I see Portland, Oregon. I don’t know anyone there, so I don’t answer,” said one person.
Here’s the easiest.
“I just hang up,” another said. “I don’t even take the time to listen to them.”
If you haven’t registered all your telephones on the Federal Do-Not-Call Lists, here’s the link: https://donotcall.gov/
And here’s the link to the Pennsylvania Do-Not-Call List: https://dnc.attorneygeneral.gov/
Taxpayer Dollars Paid A Third Of Richest Corporate CEOs: Report
More than one-third of the nation's highest-paid CEOs from the past
two decades led companies that were subsidized by American taxpayers,
according to a report released Wednesday by the Institute for Policy
Studies, a liberal think tank.
"Financial bailouts offer just one example of how a significant
number of America's CEO pay leaders owe much of their good fortune to
America's taxpayers," reads the report. "Government contracts offer
another."
IPS has been publishing annual reports on executive compensation since 1993, tracking the 25 highest-paid CEOs each year and analyzing trends in payouts. Of the 500 total company listings, 103 were banks that received government bailouts under the Troubled Asset Relief Program, while another 62 were among the nation's most prolific government contractors.
Many of the companies appeared multiple times on the annual top 25 list, with Bank of America appearing 18 times, Citigroup appearing 15 times, while Morgan Stanley and American Express each secured 12 slots. JPMorgan Chase CEO Jamie Dimon has landed on the list twice since the bank received $10 billion under TARP, and American Express CEO Kenneth Chenault has appeared three times since his company accepted $3.4 billion in bailout money. Goldman Sachs received $10 billion under TARP, and made the list seven times in the past two decades, once after receiving its bailout. Washington Mutual and Lehman Brothers, both of which failed in 2008, also appeared on the list, with Leman making eight appearances before filing for bankruptcy.
MORE
http://www.huffingtonpost.com/2013/08/28/richest-ceos-compensation-ceos_n_3825087.html
IPS has been publishing annual reports on executive compensation since 1993, tracking the 25 highest-paid CEOs each year and analyzing trends in payouts. Of the 500 total company listings, 103 were banks that received government bailouts under the Troubled Asset Relief Program, while another 62 were among the nation's most prolific government contractors.
Many of the companies appeared multiple times on the annual top 25 list, with Bank of America appearing 18 times, Citigroup appearing 15 times, while Morgan Stanley and American Express each secured 12 slots. JPMorgan Chase CEO Jamie Dimon has landed on the list twice since the bank received $10 billion under TARP, and American Express CEO Kenneth Chenault has appeared three times since his company accepted $3.4 billion in bailout money. Goldman Sachs received $10 billion under TARP, and made the list seven times in the past two decades, once after receiving its bailout. Washington Mutual and Lehman Brothers, both of which failed in 2008, also appeared on the list, with Leman making eight appearances before filing for bankruptcy.
MORE
http://www.huffingtonpost.com/2013/08/28/richest-ceos-compensation-ceos_n_3825087.html
Syria War And “Market Panic” To Send Gold “Much, Much Higher” – Jim Rogers
by GoldCore
Today’s AM fix was USD 1,425.50, EUR 1,066.03 and GBP 919.91 per ounce.
Yesterday’s AM fix was USD 1,411.00, EUR 1,057.80 and GBP 909.38 per ounce.
Gold rose $13.10 or 0.95% yesterday, closing at $1,415.50/oz. Silver rose another $0.16 or 0.66%, closing at $24.46. Platinum fell $20.25/oz to $1,521.75 and palladium edged down 0.1% to $743.22/oz.
Gold and silver are higher in all currencies today. The rupee sharp falls continue and it fell the most in 20 years overnight and gold reached new record highs in the rupee.
Safe haven demand has returned due to concerns that military action against Syria could lead to a war in the already very unstable Middle East which could result in much higher oil prices and impact the already fragile global economy.
Gold in USD – 5 Years (Bloomberg)
Geopolitical risk, which has been vastly underestimated for months, has returned with a vengeance. Markets have seen increased volatility and risk aversion as the US, the UK and France press ahead with plans for a 48 hour cruise missile attack on selected targets in Syria this week.
Gold and silver have risen 4% and 7.5% in the 5 trading days since the drums of war began.
Oil prices rose sharply yesterday with NYMEX crude rising 2.9% and Brent crude rising 3.3%. This was the sharpest daily rise this year and led to a six-month high of $114.35 a barrel. NYMEX crude has risen 6% since last Thursday.
Share prices tumbled globally in volatile trading on Tuesday as momentum built for military action. Stocks in Asia also saw some losses. Falls in Europe have continued again this morning.
The FTSE All-world share index dropped 1.4% to close at its lowest since early July. The S&P 500 was down 1.42% and the Nasdaq by 2%.
It is noteworthy that one of the largest moves in stock, bond, commodity and all markets today is the sharp fall in British gilts which has seen 10 year yields rise sharply from 2.59% to 2.8%, the higest level since August 2011.
Western officials said sea launched cruise missiles would be used to attack Syria. Syria vowed yesterday to use “all means available” to counter a U.S. led assault on the country.
Russia and China have repeatedly used their Security Council vetoes to block UN action against Syria.
NYMEX Crude Oil – (Bloomberg)
Yesterday, they warned strongly against a U.S. led strike on Syria in response to the alleged use of chemical weapons, arguing it would be dangerous, irresponsible and could have “catastrophic consequences”.
Mohammad-Javad Zarif, the Iranian foreign minister, urged western countries to avoid “hasty decision making” about Syria, warning military action could worsen the situation.
The greatest risk is that an already threatened and embattled Iran decides to attempt to aid one its few allies Syria by closing the Strait of Hormuz.
Much of the oil that the Western world consumes still comes from the Middle East and most of it is still shipped through the very narrow Strait of Hormuz. More than 20% of the world’s petroleum, and about 35% of the petroleum traded by sea, passes through the strait making it a highly important strategic location for international trade.
The shipping lane is only two miles wide in each direction with a two mile buffer zone in between and is therefore a potential choking point. The narrowness of the lane makes it easy for Iran to block it. Iran is on the recorded stating that if attacked, it will block the strategic shipping lane.
Cross Currency Table 1115 GMT – (Bloomberg)
Astute investor,Jim Rogers has warned overnight in an interview with Tara Joseph of Reuters that oil and gold will go “much, much higher” due to “market panic” regarding Syria and the coming “end of free money”:
Jim Rogers: Well, Tara, I own oil, I own gold, I own things like that and if there is going to be a war, and it sounds like America is desperate to have a war, they’re gonna go much, much higher. Stocks are gonna go down, some of the markets that I’m sure are already going down, commodities are gonna go up. I mean, yeah, some of the things I own all make a lot of money. It’s, I’m not particularly keen on war, I assure you, but it sounds like they want it.
Tara Joseph: Is your main concern about supply chain disruptions for oil? Is that where we’ll see the biggest moves?
Jim Rogers: Well, that’s where we’ll see huge moves but the problem with war, Tara, is — and I’m not the first to know this – no matter how well the plans are made, strange things happen in war and who knows what unintended consequences will come. But I do know that throughout history whenever you had war, things like food prices have gone up a lot, energy prices have gone up a lot, copper price, lead prices: you know, all of these things go up a lot whenever there’s been a war in the past.
TJ: Meanwhile, moving farther to the Far East, we’re seeing of a mini crisis around Asia. The Fed stimulus unwinding really affecting confidence in India and Indonesia in particular. Do you think this is a short-term blip or do you think these countries face very rough waters ahead?
Jim Rogers: Of course they face rough waters ahead, Tara. You know, India and Indonesia – Turkey too, which is part of Asia – all of them have huge balance of trade deficits, which they’ve been able to finance with all this artificial free money that’s been floating around. Now, the artificial sea of liquidity is going to end some day and when it ends, all the people depending on this free money and this sea of liquidity are gonna suffer. Whether its this week or this year or next year, they’re all going to suffer.
TJ: We’re already, though, Jim seeing sort of the unwinding of what happens when there’s fears of that stimulus coming out. What’s next for these countries? Where does it go from here?
Jim Rogers: Tara, we, we haven’t seen much of anything yet. I mean, normally, in bear markets things go down 40% to 80% and people give up. They throw the shares out the window and they say, “I never want to invest again as long as I live.” Sure, we’ve seen some declines. Have we seen panic, have we seen terror? Absolutely not. Not in any markets yet.
TJ: Are you expecting panic? We’ve seen mini crises do you see more panic?
Jim Rogers: Yes, of course. When, when, when this artificial sea of liquidity ends we’re gonna see panic in a lot of markets, including in the US, including in West developed markets.
I mean, Tara, this is the first time in recorded history that all major central banks have been flooding the market with artificial money printing at the same time. They’ve all been trying to debase their currencies at the same time.
This has never happened in recorded history. When this ends its gonna be a huge mess.
The interview can be watched here.
Today’s AM fix was USD 1,425.50, EUR 1,066.03 and GBP 919.91 per ounce.
Yesterday’s AM fix was USD 1,411.00, EUR 1,057.80 and GBP 909.38 per ounce.
Gold rose $13.10 or 0.95% yesterday, closing at $1,415.50/oz. Silver rose another $0.16 or 0.66%, closing at $24.46. Platinum fell $20.25/oz to $1,521.75 and palladium edged down 0.1% to $743.22/oz.
Gold and silver are higher in all currencies today. The rupee sharp falls continue and it fell the most in 20 years overnight and gold reached new record highs in the rupee.
Safe haven demand has returned due to concerns that military action against Syria could lead to a war in the already very unstable Middle East which could result in much higher oil prices and impact the already fragile global economy.
Gold in USD – 5 Years (Bloomberg)
Geopolitical risk, which has been vastly underestimated for months, has returned with a vengeance. Markets have seen increased volatility and risk aversion as the US, the UK and France press ahead with plans for a 48 hour cruise missile attack on selected targets in Syria this week.
Gold and silver have risen 4% and 7.5% in the 5 trading days since the drums of war began.
Oil prices rose sharply yesterday with NYMEX crude rising 2.9% and Brent crude rising 3.3%. This was the sharpest daily rise this year and led to a six-month high of $114.35 a barrel. NYMEX crude has risen 6% since last Thursday.
Share prices tumbled globally in volatile trading on Tuesday as momentum built for military action. Stocks in Asia also saw some losses. Falls in Europe have continued again this morning.
The FTSE All-world share index dropped 1.4% to close at its lowest since early July. The S&P 500 was down 1.42% and the Nasdaq by 2%.
It is noteworthy that one of the largest moves in stock, bond, commodity and all markets today is the sharp fall in British gilts which has seen 10 year yields rise sharply from 2.59% to 2.8%, the higest level since August 2011.
Western officials said sea launched cruise missiles would be used to attack Syria. Syria vowed yesterday to use “all means available” to counter a U.S. led assault on the country.
Russia and China have repeatedly used their Security Council vetoes to block UN action against Syria.
NYMEX Crude Oil – (Bloomberg)
Yesterday, they warned strongly against a U.S. led strike on Syria in response to the alleged use of chemical weapons, arguing it would be dangerous, irresponsible and could have “catastrophic consequences”.
Mohammad-Javad Zarif, the Iranian foreign minister, urged western countries to avoid “hasty decision making” about Syria, warning military action could worsen the situation.
The greatest risk is that an already threatened and embattled Iran decides to attempt to aid one its few allies Syria by closing the Strait of Hormuz.
Much of the oil that the Western world consumes still comes from the Middle East and most of it is still shipped through the very narrow Strait of Hormuz. More than 20% of the world’s petroleum, and about 35% of the petroleum traded by sea, passes through the strait making it a highly important strategic location for international trade.
The shipping lane is only two miles wide in each direction with a two mile buffer zone in between and is therefore a potential choking point. The narrowness of the lane makes it easy for Iran to block it. Iran is on the recorded stating that if attacked, it will block the strategic shipping lane.
Cross Currency Table 1115 GMT – (Bloomberg)
Astute investor,Jim Rogers has warned overnight in an interview with Tara Joseph of Reuters that oil and gold will go “much, much higher” due to “market panic” regarding Syria and the coming “end of free money”:
Jim Rogers: Well, Tara, I own oil, I own gold, I own things like that and if there is going to be a war, and it sounds like America is desperate to have a war, they’re gonna go much, much higher. Stocks are gonna go down, some of the markets that I’m sure are already going down, commodities are gonna go up. I mean, yeah, some of the things I own all make a lot of money. It’s, I’m not particularly keen on war, I assure you, but it sounds like they want it.
Tara Joseph: Is your main concern about supply chain disruptions for oil? Is that where we’ll see the biggest moves?
Jim Rogers: Well, that’s where we’ll see huge moves but the problem with war, Tara, is — and I’m not the first to know this – no matter how well the plans are made, strange things happen in war and who knows what unintended consequences will come. But I do know that throughout history whenever you had war, things like food prices have gone up a lot, energy prices have gone up a lot, copper price, lead prices: you know, all of these things go up a lot whenever there’s been a war in the past.
TJ: Meanwhile, moving farther to the Far East, we’re seeing of a mini crisis around Asia. The Fed stimulus unwinding really affecting confidence in India and Indonesia in particular. Do you think this is a short-term blip or do you think these countries face very rough waters ahead?
Jim Rogers: Of course they face rough waters ahead, Tara. You know, India and Indonesia – Turkey too, which is part of Asia – all of them have huge balance of trade deficits, which they’ve been able to finance with all this artificial free money that’s been floating around. Now, the artificial sea of liquidity is going to end some day and when it ends, all the people depending on this free money and this sea of liquidity are gonna suffer. Whether its this week or this year or next year, they’re all going to suffer.
TJ: We’re already, though, Jim seeing sort of the unwinding of what happens when there’s fears of that stimulus coming out. What’s next for these countries? Where does it go from here?
Jim Rogers: Tara, we, we haven’t seen much of anything yet. I mean, normally, in bear markets things go down 40% to 80% and people give up. They throw the shares out the window and they say, “I never want to invest again as long as I live.” Sure, we’ve seen some declines. Have we seen panic, have we seen terror? Absolutely not. Not in any markets yet.
TJ: Are you expecting panic? We’ve seen mini crises do you see more panic?
Jim Rogers: Yes, of course. When, when, when this artificial sea of liquidity ends we’re gonna see panic in a lot of markets, including in the US, including in West developed markets.
I mean, Tara, this is the first time in recorded history that all major central banks have been flooding the market with artificial money printing at the same time. They’ve all been trying to debase their currencies at the same time.
This has never happened in recorded history. When this ends its gonna be a huge mess.
The interview can be watched here.
Subscribe to:
Posts (Atom)