Looting the Pension Funds

All across America, Wall Street is grabbing money meant for public workers

Illustration by Victor Juhasz

By Matt Taibbi

In the final months of 2011, almost two years before the city of Detroit would shock America by declaring bankruptcy in the face of what it claimed were insurmountable pension costs, the state of Rhode Island took bold action to avert what it called its own looming pension crisis. Led by its newly elected treasurer, Gina Raimondo – an ostentatiously ambitious 42-year-old Rhodes scholar and former venture capitalist – the state declared war on public pensions, ramming through an ingenious new law slashing benefits of state employees with a speed and ferocity seldom before seen by any local government.
Detroit's Debt Crisis: Everything Must Go
Called the Rhode Island Retirement Security Act of 2011, her plan would later be hailed as the most comprehensive pension reform ever implemented. The rap was so convincing at first that the overwhelmed local burghers of her little petri-dish state didn't even know how to react. "She's Yale, Harvard, Oxford – she worked on Wall Street," says Paul Doughty, the current president of the Providence firefighters union. "Nobody wanted to be the first to raise his hand and admit he didn't know what the fuck she was talking about."
Soon she was being talked about as a probable candidate for Rhode Island's 2014 gubernatorial race. By 2013, Raimondo had raised more than $2 million, a staggering sum for a still-undeclared candidate in a thimble-size state. Donors from Wall Street firms like Goldman Sachs, Bain Capital and JPMorgan Chase showered her with money, with more than $247,000 coming from New York contributors alone. A shadowy organization called EngageRI, a public-advocacy group of the 501(c)4 type whose donors were shielded from public scrutiny by the infamous Citizens United decision, spent $740,000 promoting Raimondo's ideas. Within Rhode Island, there began to be whispers that Raimondo had her sights on the presidency. Even former Obama right hand and Chicago mayor Rahm Emanuel pointed to Rhode Island as an example to be followed in curing pension woes.
What few people knew at the time was that Raimondo's "tool kit" wasn't just meant for local consumption. The dynamic young Rhodes scholar was allowing her state to be used as a test case for the rest of the country, at the behest of powerful out-of-state financiers with dreams of pushing pension reform down the throats of taxpayers and public workers from coast to coast. One of her key supporters was billionaire former Enron executive John Arnold – a dickishly ubiquitous young right-wing kingmaker with clear designs on becoming the next generation's Koch brothers, and who for years had been funding a nationwide campaign to slash benefits for public workers.
Nor did anyone know that part of Raimondo's strategy for saving money involved handing more than $1 billion – 14 percent of the state fund – to hedge funds, including a trio of well-known New York-based funds: Dan Loeb's Third Point Capital was given $66 million, Ken Garschina's Mason Capital got $64 million and $70 million went to Paul Singer's Elliott Management. The funds now stood collectively to be paid tens of millions in fees every single year by the already overburdened taxpayers of her ostensibly flat-broke state. Felicitously, Loeb, Garschina and Singer serve on the board of the Manhattan Institute, a prominent conservative think tank with a history of supporting benefit-slashing reforms. The institute named Raimondo its 2011 "Urban Innovator" of the year.
The state's workers, in other words, were being forced to subsidize their own political disenfranchisement, coughing up at least $200 million to members of a group that had supported anti-labor laws. Later, when Edward Siedle, a former SEC lawyer, asked Raimondo in a column for Forbes.com how much the state was paying in fees to these hedge funds, she first claimed she didn't know. Raimondo later told the Providence Journal she was contractually obliged to defer to hedge funds on the release of "proprietary" information, which immediately prompted a letter in protest from a series of freaked-out interest groups. Under pressure, the state later released some fee information, but the information was originally kept hidden, even from the workers themselves. "When I asked, I was basically hammered," says Marcia Reback, a former sixth-grade schoolteacher and retired Providence Teachers Union president who serves as the lone union rep on Rhode Island's nine-member State Investment Commission. "I couldn't get any information about the actual costs."
This is the third act in an improbable triple-fucking of ordinary people that Wall Street is seeking to pull off as a shocker epilogue to the crisis era. Five years ago this fall, an epidemic of fraud and thievery in the financial-services industry triggered the collapse of our economy. The resultant loss of tax revenue plunged states everywhere into spiraling fiscal crises, and local governments suffered huge losses in their retirement portfolios – remember, these public pension funds were some of the most frequently targeted suckers upon whom Wall Street dumped its fraud-riddled mortgage-backed securities in the pre-crash years.
Today, the same Wall Street crowd that caused the crash is not merely rolling in money again but aggressively counterattacking on the public-relations front. The battle increasingly centers around public funds like state and municipal pensions. This war isn't just about money. Crucially, in ways invisible to most Americans, it's also about blame. In state after state, politicians are following the Rhode Island playbook, using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budget-devouring boogeymen responsible for the mounting fiscal problems of America's states and cities.
Secrets and Lies of the Bailout
Not only did these middle-class workers already lose huge chunks of retirement money to huckster financiers in the crash, and not only are they now being asked to take the long-term hit for those years of greed and speculative excess, but in many cases they're also being forced to sit by and watch helplessly as Gordon Gekko wanna-be's like Loeb or scorched-earth takeover artists like Bain Capital are put in charge of their retirement savings.

• 
  
• 1
• 
  
• 2
• 
  
• 3
• 
  
• 4
• 
  
• 5
• Next ››

Audit: Army paid $16M to deserters, AWOL soldiers

(AP) — Even as the Army faces shrinking budgets, an audit shows it paid out $16 million in paychecks over a 2 ½-year period to soldiers designated as AWOL or as deserters, the second time since 2006 the military has been dinged for the error.
A memo issued by Human Resources Command at Fort Knox, Ky., found that the Army lacked sufficient controls to enforce policies and procedures for reporting deserters and absentee soldiers to cut off their pay and benefits immediately. The oversight was blamed primarily on a failure by commanders to fill out paperwork in a timely manner.
The payments from 2010 to 2012 represent only a fraction of the Army's nearly $44 billion projected payroll for 2013
http://news.yahoo.com/audit-army-paid-16m-deserters-awol-soldiers-150621055.html
Check out the member blogs, videos, and discussions http://12160.info/

Governments stealing from bank accounts

 Don't Buy Silver Or Gold

Until You Read This Free Report And Learn The Secrets Of The Pros

 

WASHINGTON – The questionable practice of “bail-ins” begun by Cyprus a year ago to keep banks solvent is beginning to spread to other nations, and holders of large deposits are starting to see their balances plunge literally overnight.

A “bail-in,” as opposed to a bailout that countries especially in Europe have been seeking from the International Monetary Fund and the European Union, is a recognition that such outside monetary injections won’t be forthcoming.

Consequently, banks have been seeking money from another source – their large depositors. The funds are simply taken and applied to a bank’s recapitalization in lieu of government bailouts.

The practice essentially is a transfer from a personal savings account to the bank’s operating account, without the customers’ permission or even any notice.

The example set in Cyprus when the island nation confronted its financial crisis now is spreading to such other countries as Italy, Poland, New Zealand and now Canada.

Get “I Want Your Money” and find out what may be coming to your neighborhood.

Financial experts agree that the practice soon could spread to the United States.

The “bail-in” a year ago in Cyprus developed after the island nation was refused further outside financing from the IMF and the European Central Bank of the EU, of which the Mediterranean island is a member.

Cyprus never was looked upon as a place to spend money. Instead, it was seen more as a place to safely hide large deposits of cash for private individuals and companies not only in Europe and Russia but for major shareholders and top executives from all over the world.

Hiding huge sums of cash was made easy in Cyprus with such mechanisms as outright bank deposits, shell companies and holding companies, with massive transfers taking place between them.

“Cyprus was a leader – in some circles and for some applications, the leader – in quiet storage, management and structuring of exceptionally large sums for private individuals and corporations all over the world,” financial expert Franklin Raff wrote in a March 2013 WND article.

“Cypriots were fast learners in the fields of global asset protection and ‘tax optimization,’” Raff said. “Cyprus’ 2004 entrance into the E.U. gave financial operations a deeper veneer of legitimacy and security.

“All of this meant almost a decade of rapidly expanding business,” he said. “This was surely from Europeans and Russians wary of unpredictable tax laws and indiscriminate, extralegal confiscations, but also from entities in North America and elsewhere.”

Because a long line of EU banks had been bailed out at major public expense during the 2008-2009 financial crisis, the EU decided to turn down two of Cyprus’ major banks, Laiki and the Bank of Cyprus, for similar help.

In an effort to save the Cypriot economy from collapse, the government passed a law that took some 4.3 billion euros in deposits belonging to some 14,000 depositors just in the Laiki bank alone, leaving each depositor with no more than 100,000 euros, the limit on deposit insurance under EU regulations.

Ultimately, Laiki bank folded, with depositors’ diminished assets transferred to the Bank of Cyprus.

In an effort to recapitalize the Bank of Cyprus, Cypriot officials imposed a 47.5 percent loss on deposits exceeding the 100,000 euro limit, exchanging the seized deposits for shares in the bank.

Depositors in Cyprus lost an estimated total of 10.6 billion euros.

In viewing the recapitalization experience in Cyprus, financial experts say “bail-ins” are increasingly becoming accepted practice around the world due to the lack of any outside bailouts.

In jeopardy will be all private bank accounts and private pension funds.

Financial sources say that the government of Poland just “raided” private pension funds in an effort to reduce the size of the government debt.

According to a Reuters report, the Polish government will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, much of which is foreign-owned.

“The Polish government is doing the best that it can to make this sound like some sort of complicated legal maneuver, but the truth is that what they have done is stolen private assets without giving any compensation in return,” said financial expert Michael Snyder writing for the Financial Collapse blog.

Now, finance ministers in the EU are undertaking a similar approach.

They have approved a plan to force bondholders and shareholders to finance future bank failures before going to taxpayers for bailouts.

This will apply to bondholders and shareholders with deposits over 100,000 euros. Those with less than 100,000 euros of insured deposits will be protected.

“What this means is that if you have over 100,000 euros in a bank account in Europe, you could lose every single bit of the unprotected amount if your bank collapses,” Snyder said.

Italy also is organizing a form of its own “bail-in” for the country’s oldest bank as it has halted any further interest payments and doesn’t intend to make up for the missed payments if and when they resume.

While deposits will remain untouched for now, financial experts believe it will only be a matter of time before its depositors experience a Cypriot-type “bail-in.”

In Canada, the government has actually written a “bail-in” provision into its new government budget proposal in its “Economic Action Plan 2013.”

“This new budget actually proposes to implement a ‘bail-in’ regime for systemically important banks’ in Canada,” Snyder said.

Snyder believes that governments throughout the world will be eyeing depositors’ money as part of the solution to halt future failures of major banks.

“As a result, there is no longer any truly ‘safe’ place to put your money,” Snyder said.

“One of the best ways to protect yourself is to spread your money around,” he said. “In other words, don’t put all of your eggs in one basket. If you have your money in a bunch of different places, it is going to be much harder for the government to grab it all.

“But if you don’t listen to the warnings and you continue to keep all of your wealth in one giant pile somewhere, don’t be surprised when you get wiped out in a single moment someday,” he added.

That certainly was the experience of the Andrew Georgiou family in Cyprus earlier this year. Literally overnight, his life’s savings of 750,000 euros, except for 100,000 euros which were covered by deposit insurance, were wiped out. Georgiou subsequently had a heart attack, though he survived.

He, like hundreds of other depositors in Cyprus, has gone to court against the central bank and the Cypriot government, but the outcome is far from certain.

 

Until You Read This Free Report And Learn The Secrets Of The Pros

A “bail-in,” as opposed to a bailout that countries especially in Europe have been seeking from the International Monetary Fund and the European Union, is a recognition that such outside monetary injections won’t be forthcoming.

Read more at http://www.wnd.com/2013/09/governments-coming-to-steal-savings-accounts/#ZPeBHMwsLeZ6Zwhz.99

Feds Botch New $100 Bills (Again), Taxpayers Left With the Tab

Due to a printing error committed by its Washington, D.C., facility, the Federal Reserve’s rollout of the new $100 bill has hit yet another serious snag, David Wolman writes for The New Yorker, citing a document from the Bureau of Engraving and Printing.

The Federal Reserve has for the past few years been meaning to introduce a sleeker, sharper and more technologically advanced $100 bill. In fact, the new bill was supposed to be released in 2011. However, the scheduled release was pushed back because of a printing error that left blank spots on the bill.

And now there’s another problem involving a thing called “mashing,” according to bureau spokeswoman Darlene Anderson.

The new $100 bill. (Image source: U.S. Treasury)

Wolman explains: “When too much ink is applied to the paper, the lines of the artwork aren’t as crisp as they should be, like when a kid tries to carefully color inside the lines—using watercolors and a fat paintbrush.”

“Mashing,” according to Anderson, is “infrequent.”

Still, the latest printing error has left stacks of the redesigned bills “clearly unacceptable” – and they are mixed with passable ones, said bureau director Larry Felix in a July memo, adding that the Fed will return more than 30 million hundred-dollar notes and demand its money back.

This means that another 30 billion dollars’ worth of paper “sits in limbo awaiting examination,” writes Wolman.

Due to the lack of quality control, Fed officials announced they will not accept any $100 notes from the Washington, D.C., facility until further notice. This means it falls on the printing facility in Fort Worth, Texas, to help the Fed meet its Oct. 8 deadline for putting the new bills into circulation and delivering its cash orders.

And the Fed doesn’t really have a choice.

“There are dire consequences involved here because BEP sells Federal Reserve notes to the Board to finance our entire operation,” Felix’s memo reads. “If the BEP does not meet the order, the BEP does not get paid.”

Though it’s difficult to put a dollar amount on the cost of the printing error (the Fed has little interest in figuring this out), it will most likely be taken out on U.S. taxpayers.

“Taxpayers will have to pay to inspect, correct, produce, transport, and secure all the additional money that will replace the botched notes. Disposing of the bad bills? That’s on taxpayers, too, as are the additional hours spent making up for the mistake by employees of the bureau,” Wolman writes.

And let’s not forget the psychological toll the printing SNAFUs could take. Faith in U.S. currency is everything. If people lose faith in the ability of the Fed to produce trustworthy and reliable bills, those bill may lose their value.

“The situation is akin to a magician getting caught unloading a crate of bunnies from the back of his truck,” Wolman explains.

“It threatens to injure the aura—the almightiness—of the dollar that enables most people to go about their business without ever stopping to examine the bills in their hand or to contemplate what gives them value.”

–

Federal Contractors Employ More Low-Wage Workers Than Walmart and McDonald’s Combined, While Paying Top Execs. $24 Billion

Crowd: We can’t survive on eight twenty-five!
Jessica Desvarieux, Capitol Hill Correspondent: Eight twenty-five is currently the minimum wage for federally contracted employees in D.C. Workers like 54-year-old Melissa Roseboro are making around that, and she says it’s simply not enough to live on.
Melissa works part-time as a cook for McDonald’s at the Smithsonian’s National Air and Space Museum in Washington. And the conditions have gotten so bad that she says she can’t even pay her bills.
Melissa Roseboro, Low-Wage Worker: You know, a lot of people out here, we are struggling day to day [incompr.] homeless. I even have to go try to [incompr.] just to make ends meet.
Desvarieux: Workers are calling for help from President Obama, demanding the president sign an executive order mandating government contractors to pay a higher wage, similar to how President Johnson signed an executive order in 1965 mandating government contractors not discriminate against prospective employees based on race.

Fast forward almost 50 years and the fight for fair pay continues.
Crowd: We can’t survive on eight twenty-five!
Desvarieux: Many are barely surviving, and taxpayers are the ones subsidizing this low-wage economy, according to a study by public policy organization Demos. Data shows that hundreds of billions of public funds go to private companies that pay low wages. There are more than half a million low-wage private sector jobs funded by federal contracts. Demos found that government contracts support almost two million low-wage jobs. That’s more than McDonald’s and Walmart combined.
But not all federal contract employees fit into this category. Executive pay can be as high as $760,000 a year. And a new report from Demos shows that nearly $24 billion a year goes to paying salaries of federal contractor executives.
Now a group of senators and congressmen have called on President Obama to step in and sign an executive order to raise the minimum wage to a living wage. Of those calling for higher pay was independent senator Bernie Sanders from Vermont.
Bernie Sanders, U.S. Senator (I-Vt): Most of the new jobs being created in this country today are part-time jobs. They are low-wage jobs. And we have got to get a handle not only on unemployment, not only on income and wealth inequality; we have got to get a handle on raising wages throughout this country so that workers do not depend upon starvation wages.
The Real News also spoke with Democratic Congressman Keith Ellison and asked why there hasn’t be more progress on the bill for a higher minimum wage or the executive order, considering the proposal was sent in July.
Keith Ellison, U.S. Representative (D-Mn): But we haven’t seen the president put pen to paper and sign the executive order, even working on the people who work for federal contractors. And we believe it’s time to do that. We’ve got 49 members of the House who agree that the president needs to sign an executive order. And we believe that he should do it and he should do it now.
Now, somebody asked: well, why hasn’t he done it? You know, I specifically asked him that question directly. He told me it was under advisement. I hope that he’s working on it. And, of course, the naysayers might say, well, it has budgetary implications; with the sequester maybe it might be tough. And there might be reasons, but I’m telling you that this is a fight worth having.
Desvarieux: President Obama has said in the past that no American should work full-time and live in poverty. And today protestors are making sure that he’s keeping his word. Several of them were invited into the White House to speak to officials about their day-to-day struggles.
Roseboro: When you go to tell your story, then, you know, they are really amazed. But I do know this much, that they know that it’s a lot of us out here. You know. And I don’t know why I actually say they are amazed, because we’re–it’s a lot of us out here. You know, it’s not our first time doing this, even though we’re doing this the first time at the White House.
Desvarieux: Melissa and several other low-wage workers fighting with the group Good Jobs Nation wrapped up their meeting with officials from the White House. While there, they presented letters and a petition with 250,000 signatures calling for a higher pay.
Melissa says she remains hopeful that the change that she voted for by electing President Obama will one day come.
For The Real News Network, Jessica Desvarieux, Washington.
Copyright: Truth Out

White House To Announce $300M In Aid Friday To Make Detroit Safer, Erase Blight

White House To Announce $300M In Aid Friday To Make Detroit Safer, Erase Blight

By Todd Spangler
Detroit Free Press Washington Staff

WASHINGTON — Nearly $300 million in aid for Detroit — from federal and state coffers, private businesses and charitable foundations — will be announced Friday as Obama administration officials visit the city to discuss what can be done to help eradicate blight, improve transportation, encourage new business and make residents safer.

The funding will include $150 million in blight eradication and community redevelopment, including $65 million in Community Development Block Grant funding — which had already been awarded over two years but could not be accessed by the city. An additional $25 million could help hire as many as 150 firefighters in the city.
Read more: http://www.freep.com/article/20130926/NEWS01/309260199/
Check out the member blogs, videos, and discussions http://12160.info/

Peace is Not Profitable

Mr. President, Mr. Secretary General, fellow delegates, ladies and gentlemen: Each year we come together to reaffirm the founding vision of this institution. For most of recorded history, individual aspirations were subject to the whims of tyrants and empires. For recent recorded history, individual aspirations will be subject to the whims of US tyrants and Empire.
The leaders who built the United Nations were not naïve. They understood that humanity could not survive the course it was on. So, we, the exceptionally exceptional United States stepped up to resolve conflicts, our way, to enforce rules of behavior, our way, and build habits of cooperation, our way.
For decades, the UN has made a difference, albeit, in small areas—eradicating disease, educating children. Admirable. But there’s that larger loom-er—the protection of American interests.
For much of my presidency, I have worked to enrich further the already filthy wealthy. Now, five years after the global economic collapse, the uber-rich are being lifted to greater heights of prosperity. More effort must be made to assure that they, the 2%, continue to thrive.
The UN has worked to end a decade of war. All our troops have left Iraq. An international coalition soon will end its mission to dismantle al Qaeda. Remember though that there are those who wish to harm us—9/11, 9/11, 9/11. Never forget the shoe bomber, the underwear bomber, Boston, and 9/11.

As we shift our war footing, mercenaries will replace troops. And, yes, mercenaries are expensive. We pay them handsomely to be unaccountable.
Further, we are limiting the use of drones to target only those posing an imminent threat. Each week on what I call casual Tuesday, we have a killer party during which I list America’s most wanted. Moreover, we are transferring detainees to other countries whose justice systems are not unlike ours, although their cages may be a little smaller. And here’s additional good news: We hope to close Guantanamo Bay, as soon as the last detainee commits suicide. And, yes, we have begun to review the way we gather intelligence, so as to balance security and privacy. Your secrets are safe with me.
As a result of this work among our partners throughout the world, partners that defer to our exceptionalism, the planet is more stable. Still, dangers remain. With each massacre, we learn. We now know that guns should be available at the entrances to malls. Both the NRA and General Dynamics have endorsed this.
Convulsions in the Middle East and North Africa have laid bare deep divisions within societies. Peaceful movements have been answered by violence. And when there is violence the path to peace may be a military strike, sometimes so small it is recognizable only to the people it devastates. In Syria, for example, we can avert more suffering. If we fail to take action, someone may determine who’s responsible for the use of chemical weapons. Children died. Children were writhing in pain. And then they died. Let me be clear.
Children died agonizing deaths. I call a drone strike and some unfortunate child is collateralized, POOF. Only a smudge is left to tidy. But sarin gas. Oh, I am weeping now. I can barely swallow.
The ban on the use of chemical weapons in war has been agreed to by 98 percent of humanity. And what about that remainder—the other 2 percent? Well, I spoke of them earlier. They are the fittest—those whose calculations were rewarded with huge bonuses. We are grateful to them. They, Congress, and I determine who is responsible enough to use chemical weapons.
I do not believe that America or any nation should influence who will lead Syria – that is for the Syrian people to decide. Nevertheless, a leader who slaughtered his citizens and gassed children to death cannot regain the legitimacy to lead a badly fractured country. I am pleased to provide at least three or four names of capable Assad replacements so that the people of Syria have a choice.
And I am prepared to wield my power to secure American interests in the region. Even though we are reducing our dependence on imported oil, we reserve our right, deserving we are for being exceptional.
Further, we will not tolerate the development or use of weapons of mass destruction—by anyone. Except the USA. USA! USA! USA!
I want to be clear on Iran. President Rouhani’s conciliatory words must be matched by transparency. Rouhani received a mandate to pursue a moderate course. Just as I attained the highest office for promising hope and change.
Let me be clear on Israel. The United States will never compromise on our commitment to Israel’s security. The state of Israel is here to stay.
Israel. Israel. Israel. Israeli children. Israeli children have the right to live without having rockets fired at their homes. And Palestinians have a right to not be displaced, much.
America must remain engaged in everyone else’s business. The world is better for it. America is exceptional. Because we are willing to stand up for our interests through the sacrifice of blood and treasure, the blood of our young and tax dollars on behalf of those who will thrive into the 21st century. And we stand ready to commit mass atrocities to safeguard this.
We live in a world of imperfect choices. Certainly, some would prefer I choose peace. But peace is not profitable.
These are extraordinary times, with extraordinary opportunities for opportunism. That is why we look to the future, not with fear, but, instead, salivating.
Thank you, very much.
Missy Beattie has written for National Public Radio and Nashville Life Magazine. She was an instructor of memoirs writing at Johns Hopkins’ Osher Lifelong Learning Institute in Baltimore. Email: missybeat@gmail.com.
Copyright: Counterpunch

Our Middle Class, Dollar & Economy Is Being Destroyed! We Have To Stop it! – Ron Paul

China SELLING U.S. BONDS – Jason Burack

A.M. Kitco Metals Roundup: Gold Pops Following Fresh "Fed Speak"

(Kitco News) - Comex gold futures prices are solidly higher in early U.S. trading Friday, and saw a pop up just before U.S. futures trading opened. More comments coming from a U.S. Federal Reserve official were deemed as near-term bullish by gold traders. Short covering, bargain-hunting and some safe-haven buying are featured in gold. Buy stop orders were also triggered in Friday morning’s price spurt. December Comex gold was last up $16.20 at $1,340.30 an ounce. Spot gold was last quoted up $17.30 at $1341.70. December Comex silver last traded up $0.294 at $22.065 an ounce.
Gold prices were trading near unchanged levels and then spurted solidly higher following wire reports that Chicago Federal Reserve president Charles Evans said the U.S. central bank may not begin to scale back its monthly bond-buying program until 2014 because the U.S. economic environment still needs to improve.  The U.S. dollar index also slumped to its session low in the wake of Evans’ remarks. However, his comments, overall, were ambiguous. Still, the gold market bulls chose to jump on those specific Evans remarks they deemed to be bullish.
In other overnight news, consumer confidence in the European Union rose to its highest level in more than two years during August. The EU’s economic sentiment indicator rose to 96.9 in September versus 95.3 in August. However, European stock markets were weaker due to concerns about the Italian government’s stability amid a fraud scandal involving former prime minister Berlusconi. Asian stock markets were firmer in uneventful action Friday, following Wall Street’s advance Thursday.
The main focus of the market place is now on the U.S. budget and debt ceiling impasses that threaten to shut down the U.S. government as soon as next Tuesday. Congress needs to pass a budget by that time and is working on bills. Presently, it’s highly uncertain if the Congress can come to agreement by October 1.  Also, in mid-October the U.S. will hit its borrowing limit. These matters are presently an underlying bearish factor for most markets and could become a major bearish factor in the next couple weeks.
Some analysts are saying gold is presently seeing selling interest limited due to some safe-haven demand ahead of the U.S. budget and spending deadlines and the uncertainty of the matter. But other analysts are saying recent selling pressure in gold is because it’s acting like a raw commodity ahead of the U.S. budget deadlines. It’s likely one of these scenarios will more clearly come to the forefront by early next week.
Reports overnight said gold imports to India are set to increase significantly as a main festival season approaches and because the Indian government is now allowing heretofore delayed gold shipments into the country. The delay was because the government was not allowing gold imports into the country because of confusing import rules that have now been cleared up.
U.S. economic data due for release Friday includes personal income and outlays, and the University of Michigan consumer sentiment survey. A couple more Federal Reserve officials are scheduled to speak Friday, and their comments will be closely watched by the market place.
The London A.M. gold fix is $1,321.50 versus the previous P.M. fixing of $1,333.00.
Technically, December gold futures bears still have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,375.40. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,291.50. First resistance is seen at the overnight high of $1,345.20 and then at $1,350.00. First support is seen at $1,330.00 and then at the overnight low of $1,320.00.  
December silver futures bears still have the overall near-term technical advantage. A four-week-old downtrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $23.445 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $21.225. First resistance is seen at this week’s high of $22.13 and then at $22.50. Next support is seen at the overnight low of $21.41 and then at this week’s low of $21.30.
Follow me on Twitter to immediately get the very latest market developments. If you are not on board, then you are not getting key analysis and perspective as fast or as often as you could! Follow me on Twitter to get my very timely intra-day and after-hours briefs on precious metals price action. The precious markets will remain very active. If you want market analysis fast, and in after-hours trading, then follow my up-to-the-second precious metals market perspective on Twitter. It's free, too. My account is @jimwyckoff. By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Gold Analysts Bullish Due To Money Creation On Scale Never Seen In History

by GoldCore

Today’s AM fix was USD 1,321.50, EUR 978.45 and GBP 822.03 per ounce.

Yesterday’s AM fix was USD 1,332.50, EUR 987.92 and GBP 830.22 per ounce

Gold slid $9.40 or 0.7% yesterday, closing at $1,323.70/oz. Silver fell $0.06 or 0.28%, closing at $21.70. Platinum dropped $21.70 or 1.5% to $1,404.50/oz, while palladium slipped $1.75 or 0.2% to $718.75/oz.

After initial gains, gold sold off soon after U.S. markets opened, falling from $1,336.40/oz to $1,322.53/oz in concentrated selling over a few minutes. Gold traded sideways in Asia prior to eking out marginal gains in early European trading prior to giving up those initial gains.

U.S. Total Debt Versus Gold (1970-2013)

While data has been mixed lately, some important data points have been negative including purchases of second hand homes which fell for the third straight month in August.

The misguided speculation regarding Fed tapering has begun again.  A Bloomberg survey of 41 economists last week showed 24 expect the Fed will pare ‘stimulus’ in December. None of these same economists predicted that the Fed would not taper last week and their views on tapering should be taken with a pinch of salt.

As we have long contended, QE is set to continue for the foreseeable future as a discontinuation of QE would lead to market declines or worse and a serious recession or depression.

It remains prudent to ignore the noise from the Fed and the constant speculation from many analysts and economists – most of whom have a dismal track record in predicting events before or since the global financial and economic crisis.

Gold in USD, 5 Days – (Bloomberg)

Gold analysts are bullish for a second week due to the view that ultra loose monetary policies and budget talks risk a U.S. government shutdown which will spur demand for gold bullion as a haven.

According to Bloomberg as featured in The Washington Post:Seventeen analysts surveyed by Bloomberg expect prices to rise next week, seven are bearish and three neutral. Gold, which fell into a bear market in April, rose 7.3% since the start of July, poised for the first quarterly advance in a year.

Bullion is still heading for its first annual drop in 13 years after some investors lost faith in the metal as a store of value. The Federal Reserve unexpectedly left its bond-purchase program unchanged last week, saying that restrictive fiscal policies pose risks for the economy. President Barack Obama and congressional Republicans are debating the federal budget in a confrontation that risks a government shutdown within days.

“The outlook is positive due to the twin risks of continued ultra-loose monetary policies as seen in the lack of tapering and also due to forthcoming risks regarding the U.S. debt ceiling. They may resolve the debt ceiling, but how they resolve it is most likely to kick the can down the road. People may buy gold as a safe haven.”

Gold prices languished from 1980 to 2000 and had declining correlations with debt levels because GDP growth was sufficient to mute concerns about budget and deficit issues. Debt levels in GDP terms actually fell in the 1990’s. Also the 1990’s was an era of great economic and geopolitical optimism with the end of the Cold War, a more stable world and the emergence of China, India and other  emerging markets into the global economy.

This was during the Clinton presidency and prior to the Bush and Obama presidencies which have seen the U.S. spend money like a drunken sailor. That profligacy began soon after September 11th and the U.S. military response to the terrible events of that day.

It continues today despite a very precarious fiscal position. Since September 11th the world is a far more uncertain place and geopolitically the world is now reverting to the instability of the Cold War years.

The punch and judy show that is the U.S. Congress is making creditor nations around the world very nervous and astute investors and savers are diversifying into gold to protect from the real risk of a dollar crisis and global currency crisis.

Gold In USD and All Federal Reserve Banks Total Assets – 1996 to Today (Bloomberg)

The Federal Reserve decision to refrain from a QE taper is very bullish for gold.

‘Tapering’ may be put off indefinitely due to the very fragile state of the massively indebted U.S. economy. This means that interest rates must be kept low for as long as possible, leading to money printing and electronic money creation on a scale never before seen in history.

This will inevitably lead to higher gold prices – the question is when rather than if.

QE1 and QE2, in addition to the start of the current QE3, sent gold to record nominal highs. Misleading guidance from the Fed and misguided speculation regarding tapering and the possible end of QE decreased interest in gold from more speculative buyers, contributing to its weakness in recent months. That will change in the coming weeks and months when there is a realisation that ultra loose monetary policies are set to continue.

Concerns about systemic risk and currency debasement is leading to  continuing robust central bank demand for gold.

The IMF data released Wednesday showed that eight central banks increased their gold reserves in August, some very significantly.

Russia, which has the world’s seventh largest reserves of gold, increased its holdings last month by the biggest amount since December. Russia increased reserves by 12.722 tonnes to 1,015.521 tonnes, according to the IMF’s website. Russia’s gold holdings crossed the 1,000 tonne mark in July.

Turkey raised its gold reserves by the most in five months in August. Turkey added 23.344 tonnes to lift its gold holdings to 487.351 tonnes. Turkey’s increases have been bigger this year as its central bank allowed commercial lenders to hold a portion of their lira reserves in gold.

Turkey has bought gold in 13 of the past 14 months and Russia has added to its reserves for 11 consecutive months.

Ukraine, Azerbaijan and Kazakhstan were the other countries that added to their gold reserves by more than 2 tonnes each last month. Canada, Mexico and Czech Republic were among those that reduced their holdings very marginally.

Other very large buyers of gold, include sovereign wealth funds, some of which are also continuing to diversify into gold. Azernews reports that:The State Oil Fund of the Republic of Azerbaijan (SOFAZ) has said that SOFAZ’s gold reserves will reach 40 tons in 2014. The total amount of gold purchased by SOFAZ will reach 30 tons until the end of 2013, and 20 tons of the volume will be delivered to the country.

“So far, 26 tons of gold have been purchased, most of which has already been delivered to the country,” Movsumov said.

He said the process of a phased purchase of gold over three years is effective, which allows to provide the average cost of purchased gold considering the volatility of prices for this precious metal.

According to the plans, SOFAZ buys gold in batches. The fund began buying gold in the first quarter of 2012. The first batch of gold in the amount of 32,150 troy ounces was delivered to the country on January 11, while the second batch was brought on February 1 and the third one on March 1.

The continuation of ultra loose monetary policies by the U.S. Federal Reserve and the other major central banks will lead to continuing diversification into gold by prudent money internationally. 

This will lead to gold reaching a real (inflation adjusted) high above $2,400/oz in the coming years.

Banking Holiday in Panama Announced!

By Randy Hilarski
This morning the National Bank of Panama announced that it was suspending all services until Tuesday the 1st of October. The National Bank of Panama says that the reason is to upgrade systems. The Banking Holiday in Panama was announced this am.
This system wide shutdown has country wide implications. The National Bank of Panama did not warn the people before making the announcement and shutting down the banks. The people do not have access to ATM’s either. We received word of this from family members first. This weekend is payday for people across Panama.
I am active among the Gold and Silver investing community. We have been discussing at great length about the possibility of bank holidays in countries on the Dollar standard. Could Panama just be the first domino to fall in the banking system? Could this be more than just a system upgrade? Why not tell the people ahead of time to prepare for the closure of the banking system?
What are some reasons for a bank holiday? The National Bank of Panama says it is a system upgrade, I don’t believe it is that simple. Maybe a Dollar revaluation could be coming soon. Maybe it is something more serious like a banking crisis like we had in Indonesia back in 1997 or more recently in Cyprus. I am hoping for the best and preparing for the worst.
What are some things you can do to protect yourself if Panama is just the first signal of a pending banking crisis? First and foremost make sure to have some cash. Second buy the essentials for your family. Be frugal until the storm passes. I know this sounds simplistic, but those who are prepared will be fine.
I feel for the Panama families who live paycheck to paycheck. They were expecting to be paid tomorrow. This is the time that they go grocery shopping, put gas in their cars and pay the bills. This delay will have wide ranging affects on the people of Panama.
Do not be unprepared, you have it within your power to be ready for such a situation!
Latest update. 6pm CST
The Clave (Debit Card) system has been taken offline. No wire transfers between banks and internationally until the 1st of October. Panamanians will be required to go to their local bank branch to take out cash.
http://www.randyhilarski.com/