Wednesday, February 27, 2013

RED ALERT: The Gold Police Have Arrived!


This is becoming a disturbing trend.
In Houston you are now considered a criminal if you sell gold or silver.

Info Wars
Law Requires Any Consumer Selling Gold To Submit To Fingerprints And Mugshots
Last week the Houston City Council passed an ordinance requiring people who sell precious metals to be fingerprinted and photographed.  According to KTRK-TV, the ordinance is “meant to help track down criminals who try to resell stolen valuables."
"Gold-buying businesses will now be required to photograph and fingerprint sellers as well as photograph the items that are being sold to the dealer."
In other words, citizens who sell gold will be considered criminals until they demonstrate otherwise.
“It’s going to allow us the tools necessary to combat a lot of the high-end jewelry thefts that’s going on in the city, whether it’s robberies or burglaries,” Houston Police Officer Rick Barajas told the news station last Wednesday.
Audi S8s, Shelby Mustangs, BMW M5s, Dodge Chargers and Honda S2000 roadsters are stolen thousands of times a year and yet people who own them are not required by government to be fingerprinted and photographed in order to sell their cars. Ditto folks who sell expensive items at pawn shops or on eBay. Can you imagine the chaos in commerce that would occur if every item over say $1,000 required the seller to surrender fingerprints and photographs – more accurately, mugshots – which the buyer would be obliged under penalty of law to submit to the state within 48 hours?
"No precious metals thief is going to agree to a mug-shot and thumbprint," said Houston City Council Member Helena Brown in response to the law.
"That’s like declaring that the thieves are going to be turning themselves in.  It’s ludicrous.  I don’t know who told HPD that this is going to help them.  It’s not going to help anyone, but rather it will be damaging to an industry and to our self-respect and liberty."
Continue reading...

Gold Sellers in Houston Must Submit Fingerprints & Mugshots

Is this the start of a trend:

New Bill Requires Gold & Silver Registration In Illinois

Photo by William Banzai7...

Precious metals never looked so good.

The greatest Halloween costume of all time.

Druckenmiller: 'Interest On The Debt Is Going To Kill Us'

Hedge fund legend Stanley Druckenmiller on exploding debt interest.
Two short highlight clips from Druckenmiller's interview last week on CNBC
WSJ Editorial By Druckenmiller...
Here's a chart of interest paid on the U.S. national debt.
Interestingly, we have already paid $150 billion for fiscal 2013.

More Druckenmiller:

'The bond market is a funny thing...'

Meanwhile, the U.S. Debt Machine rolls on, borrowing $50,000 per second.

CHART: CBO Projection of Federal Spending

Senator Warren Rips Ben Bernanke and Other Financial Regulators Over “Too Big” Banks

Background here and here.
This entry was posted in Business / Economics, Politics / World News. Bookmark the permalink.

Gold Confiscation Begins? Report of 2 Dozen Gold Krugerrands Stolen From Safety Deposit Box by CIA

A Steve Quayle reader has reported that the 2 dozen gold Krugerrands he kept stored in his safety deposit box in a Cincinnati 5/3rd Bank have been confiscated, and that the 5/3 Bank Manager informed him that a CIA agent was the culprit who cleaned out his stash of phyzz- but that all fiat dollars were left untouched in the box.
While this in an anecdotal account, this emphasizes a point we have long made here at SD: if you don’t hold it, you don’t own it!
Full account of Fed gold confiscation is below:

Freedom Girl
From Steve Quayle:
I woke up and thought .  I think i will go to the bank today and see the gold coins my grandpa gave me about 15 yrs ago as its been about 2 yrs now since I have been to the Bank Box. So when i got there the bank mgr asks me how are you today, Mr Jones i am fine I would like to see my bank BOX please !!!!.  Senior Officer–OK- Mr Jones this way . So he takes me into the vault room and Brings me my safety deposit Box here’s your box Mr Jones, take as long as you want , Ok thank you i said . To my surprise the (2 dozens GOLD KRUGERRANDS) that I had are GONE!
WHAT!!!!!!! Mr mgr where are my coins who has been in the box– No one should have been in it- its My box .
The bank mgr said the CIA has taken them, they think you are in the MOB . What there has not been a police officer notify me or i have knot been arrested for anything! that’s B . S !
You will hear from my lawyer so that’s were i am at right now.   But here is the kicker– there was money in the box to and it was knot touched . I am still waiting for my lawyer to get back with me at this time . The bank was 5/3 of CINCINNATI OHIO, so if anyone has a bank box with this company or any bank at this time –PLEASE get your stuff out of your safety deposit boxes now before its too LATE!!!!!!!!
2 dozen gold coins at 1 troy oz are about $41,000. us dollars that’s two years of hard work for me and my family I am so mad about this ROBBERY AND INJUSTICE that has been done to me and my family at this time . THANKS –

And…’s gone!
If you don’t hold it, you don’t own it!!

Third Time’s the Charm: How Will The Fed Deal With THIS Bubble?

by Phoenix Capital Research

The Fed has a HUGE problem on its hands.
Fed officials are well aware that stocks have become totally disconnected from reality. However, they cannot simply come out and discuss ending stimulus efforts outright because it would cause a market collapse. Remember, the single most important role for the Fed post-2008 is to maintain confidence in the system. So they cannot risk any explicit statement that they will be pulling the punchbowl.
Consequently, Fed officials have begun a careful process of managing down expectations regarding future stimulus.
Federal Reserve Bank of St. Louis President James Bullard gave remarks Thursday on “U.S. Monetary Policy: Easier Than You Think It Is,” at a special banking forum sponsored by Mississippi State University’s Department of Finance and Economics.

Bullard discussed four considerations for QE3 going forward.  First, while substantial labor market improvement is a condition for ending the program, Bullard said that “the Committee could consider many different aspects of labor market performance when evaluating whether there has been ‘substantial improvement.’”  These include the unemployment rate, employment, hours worked, and Job Openings and Labor Turnover Survey (JOLTS) data.
Second, “Without an end date, the Committee may have to alter the pace of purchases as news arrives concerning U.S. macroeconomic performance,” Bullard said, noting that “substantial labor market improvement” does not arrive suddenly.  “This suggests that as labor markets improve somewhat, the pace of asset purchases could be reduced somewhat, but not ended altogether,” he explained.  “This type of policy would send important signals to the private sector concerning the Committee’s judgment on the amount of progress made to that point.”
A third consideration for the QE program is inflation and inflation expectations, Bullard said.  Current readings on inflation are rather low, which he said may give the FOMC some leeway to continue asset purchases for longer than otherwise.  Although worries about rising inflation have so far been unfounded, “the lesson from QE2 is that inflation and inflation expectations did trend higher,” he said, adding that it is too early to know if that will happen with the current QE program.
Finally, he said, “The size of the balance sheet could inhibit the Committee’s ability to exit appropriately from the current very expansive monetary policy.”  He explained that when interest rates rise, asset values will fall, which could possibly complicate monetary policy decisions.
Note that Bullard, like the December Fed FOMC, mentions “inflation expectations.” The Fed cannot ever openly admit that inflation is a problem because doing so would inevitably lead to the realization that the Fed is in fact the primary cause of inflation in the financial system.
Consequently the Fed must use coded terms such as “inflation expectations” to discuss the presence of inflation (note that “inflation expectations” moves the blame for prices to investors who expect inflation as opposed to the Fed which has created inflation).

The fact that this phrase (inflation expectations) pops up in both Bullard’s speech and the Fed’s FOMC minutes indicates that the Fed is well aware that it is causing inflation to spiral out of control. This is a big reason why the Fed is beginning to manage down expectations of future stimulus.
Indeed, Bullard is not the only Fed official to be talking down QE.
Federal Reserve Bank of Cleveland President Sandra Pianalto said the gains from the Fed’s $85 billion in monthly bond purchase may fade.
Over time, the benefits of our asset purchases may be diminishing,” Pianalto said today in a speech at Florida Gulf Coast University in Fort Myers, Florida.
“Given how low interest rates currently are, it is possible that future asset purchases will not ease financial conditions by as much as they have in the past,” she said. “It is also possible that easier financial conditions, to the extent they do occur, may not provide the same boost to the economy as they have in the past.”
Fed officials are debating how long they should continue their bond buying, designed to foster economic growth and reduce 7.9 percent unemployment. The Federal Open Market Committee last month kept the monthly purchase pace unchanged at $40 billion in mortgage-backed securities and $45 billion in Treasury purchases.
The central bank has said the purchases will continue until the labor market improves “substantially.”
Source: Bloomberg
Inflation is on the rise in the financial system in a big way thanks to the Fed and other Central Banks’ money printing. However, the Fed has now realized that things are beginning to spiral out of control. As a result it is managing down expectations for further stimulus. This will not contain inflation in any real way. However, it will have a major impact on asset prices, particularly stocks which are now in a bubble, closing in on all-time highs despite earnings falling, the global economy rolling over, a banking crisis in Europe, a sovereign debt crisis in Europe, China slowing its liquidity injections and more. This will end very badly. The Fed has set the stage for another Crash. And this time around its hands will be tied as it has used up all of its tools just creating this bubble.
THIS is the reason the Fed is beginning to shift its tone. It realizes it has blown another bubble and that we’re likely headed for another Crash. And this time around the Fed will be totally out of ammo to stop it. Unlike 2008 which was just a warm-up, this will be the REAL CRISIS featuring full-scale systemic failure.
So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from the economy taking a massive downturn, potentially taking down the financial system with them. Think I’m joking? The Fed is pumping hundreds of BILLIONS of dollars into financial system right now trying to stop this from happening.
To take out an annual subscription to Private Wealth Advisory now and start taking steps to insure your loved ones and personal finances move through the coming storm safely…
Best Regards,
Graham Summers
- See more at:

IMF: ‘World Economy Could End as We Know It …’

The Daily Bell
Christine Lagarde: “2013 Will Be Make or Break” Christine Lagarde, managing director of the International Monetary Fund, cautioned at the World Economic Forum in Davosthat Europe must continue to guard against a relapse in 2013. Speaking at an event honoring women leaders hosted by Credit Suisse in partnership with Newsweek and The Daily Beast, Lagarde was joined by Egyptian human rights activist Dalia Ziada, who discussed the challenges women face in the Middle East. “2013 will be a make or break year,” Lagarde said. “2012 was tough. A lot happened in Europe, a lot happened in the U.S. and there is clearly a lot happening in Asia.” – The Financialist
Dominant Social Theme: If we don’t make it in 2013, the world as we know it will disappear.
Free-Market Analysis: While this speech was made a while ago at Davos, we think it is worth noting as Ms. Christine Lagarde is enunciating a significant dominant social theme – that the West is surely destined to perish if savvy officials don’t make the proper decisions.
The West is in terrible trouble anyway, economically, most from the decisions of this self-appointed elite that has used central banking as a weapon of creative destruction. Having obtained the awesome power of money printing, elites printed too much of it, probably on purpose, and thus crashed economies first in the US and then in Europe.
Now, Ms. Lagarde indicates (and surely she will repeat this meme) that the same mechanism and leadership that brought us to our current situation are to be entrusted with critical decisions in 2013. Here’s more from the article:
Policymakers have to stay focused on the medium-term plan to reduce debt. The same goes for Japan,” Lagarde said. In Europe, although 2012 saw many policy actions such as the institution of the European Stability Mechanism, more work remains. “We need to make sure we guard against relapse – which will happen if we don’t keep at it. More importantly, it’s not time to relax.” “
Ingredients for a Stable Economy Trust and con?dence are crucial to avoiding a relapse and seeing the course for global economic stability, Lagarde explained. “Trust is a crucial factor for the economy. It has been eroded, and in order to rebuild it you need to face reality constantly. You need to tell people the truth – that’s what they want.”
If Ms. Lagarde wanted to tell the truth, she would explain to people how the fiat-money business cycle works. Monopoly central banks overprint money and cause first a boom and then a bust. By increasing or decreasing money printing, a handful of people can shake the economic world.
There is no direct evidence, of course, of their strategic decisions but we have noted in the past that the economic environments the most adversely affected in the past years have been Western ones. The so-called BRICs, including Brazil, India and China have boomed.
If one subscribes to the idea that the powers-that-be have in mind both a world currency and world government, then such economic adjustments make sense. Down goes the West, up go other large economies. Gradually, perhaps on purpose, the dollar’s dominance is eroded. Additional currencies become strengthened.
This all seems coincidental of course, merely the outgrowth of economic affairs. But for believers in directed history, none of it may be a coincidence. The idea may be to make a global economy easier to integrate.
If this is the case, Ms. Lagarde is not telling the truth on several levels. First, the West’s “crisis” may be in a sense manufactured, the result of a global central banking economy that need to be adjusted and reduced. Second, the decisions made in the current environment are not necessarily significant.
Obviously, she is framing the argument as if there are only two choices. Either abandon economic “discipline” and suffer the consequences or continue with quasi-austerity measures – high taxes, monopoly privatization and lower federal benefits – and reap the rewards.
There are plenty of other ways to fix Western economies, including repudiating bank debt as those in Iceland did, introducing gold-backed currencies and generally diminishing the power of monopoly central banking. If Ms. Lagarde wanted to be honest, she’d discuss these options as well.
Conclusion: Instead, she is framing the discussion in a certain way. This was a more fruitful strategy in the 20th century than the 21st.

DiNapoli: Average Wall Street bonus nearly $122K

Profits and bonuses are up at Wall Street firms, according to an analysis released Tuesday by Comptroller Tom DiNapoli, but there are fewer high-paying securities jobs in New York than there were before the 2008 financial collapse, and no prospect for major hiring on the horizon.
“I think it is a mixed bag. The good news is, certainly compared to last year, we’re seeing a return to profitability,” DiNapoli, a Democrat, said a press conference in New York City. But: “Part of what the firms have been doing is reducing head count. … So even when you see the bonus numbers and the total bonus pool up 8% and the average bonus up 9%, part of that is because there are fewer people.”
DiNapoli’s analysis deals with the broker-dealer firms on the New York Stock Exchange — some 200 companies — so it’s not a holistic picture of what is now a more diversified financial sector. Still, his office estimated those firms would book $23.9 billion in profits for 2012 — that’s triple the amount for 2011 — and the cash bonus pool this year would be $20 billion. That’s up slightly from 2011, but less than the $30-plus billion that was paid to traders in 2006 and 2007.
The average bonus this season is $121,890, also up slightly from 2011 but lower than historic highs. DiNapoli said firms pushed their payments into 2012 as opposed to the early days of 2013 in likely response to higher federal tax rates that took effect with the new year. On Monday, DiNapoli reported this had caused a spike in state revenue collections; because New York State operates on an April 1 to March 31 fiscal year, the shift should not affect the state budget, DiNapoli said.
DiNapoli’s report also included salary data from 2011, the most recent year available. Employees of broker dealer firms earned an average salary and bonus of $362,950 — a higher figure than before the financial crisis. That’s more than five times the average salary in New York City. DiNapoli also said that while Wall Street firms constitute 5.3 percent of private sector jobs in New York City, they account for 23.2 percent of private sector wages.
The number of people employed by the broker dealer firms was roughly 170,000 at the end of last year, DiNapoli said, roughly the same as it was at the end of 2011. But that’s lower than pre-crash headcount of 189,000 in November, 2007: DiNapoli said firms shed roughly 28,000 during the financial crisis, but have added only 8,500 back. The all-time high for Wall Street employment was 200,300 in December, 2000.
“It’s great work if you can get it,” DiNapoli said.
The below chart shows the average bonus and total bonus pool stretching to 1985:

Billionaires for Austerity: With Cuts Looming, Wall Street Roots of "Fix the Debt" Campaign Exposed

With $85 billion across-the-board spending cuts, known as "the sequestration," set to take effect this Friday, a new investigation reveals how billionaire investors, such as Peter Peterson, have helped reshape the national debate on the economy, the debt and social spending. Between 2007 and 2011, Peterson personally contributed nearly $500 million to his Peter G. Peterson Foundation to push Congress to cut Social Security, Medicare and Medicaid — while providing tax breaks for corporations and the wealthy. Peterson’s main platform has been the Campaign to Fix the Debt. While the campaign is portrayed as a citizen-led effort, critics say the campaign is a front for business groups. The campaign has direct ties to GE, JPMorgan Chase, Morgan Stanley and Goldman Sachs. Peterson is the former chair and CEO of Lehman Brothers and co-founder of the private equity firm, The Blackstone Group. For more, we speak to John Nichols of The Nation and Lisa Graves of the Center for Media and Democracy. [includes rush transcript]
John Nichols, political writer for The Nation. His latest article is "The Austerity Agenda: An Electoral Loser."
Lisa Graves, executive director of the Center for Media and Democracy and an editor of Pete Peterson Pyramid, a new website that connects the dots between billionaire Pete Peterson and the Campaign to Fix the Debt.

Italian election cliffhanger raises concerns over eurozone

Italian former Prime Minister Silvio Berlusconi leaves the voting booth before casting his ballot at a polling station.(AFP Photo / Olivier Morin)
Italian former Prime Minister Silvio Berlusconi leaves the voting booth before casting his ballot at a polling station.(AFP Photo / Olivier Morin)
Experts fear a split parliament in the eurozone's third-largest economy is likely to paralyze any new government and potentially reignite the eurozone debt crisis.
Pier Luigi Bersani’s center-left coalition is poised to gain a majority of seats in the Italian Parliament's lower house, but the upper house will be deadlocked, the Interior Ministry said on Tuesday after 99.9% of the votes had been counted.
"The situation looks ungovernable, and that's the worst outcome you can imagine," said Guido Rosa, president of the Italian Foreign Bank Association, Wall Street Journal reports.
The political gridlock sent markets into a downward frenzy on Monday, as many experts fear that paralysis in Italy will hinder economic recovery; the market recorded its biggest drop in more than three months.
Asian stocks were among the hardest hit: Japan’s Sony Corp slipped 3.5%, the Nikkei fell 2.2% and Global Logistics Properties fell 6.9% in Singapore. Asian markets have relied heavily on the European recovery, as much of their revenue is based in the eurozone.
"It revives memories of risks in the eurozone," said Yuji Saito from Credit Agricole in Tokyo told Reuters. "I doubt that the situation will turn into a disaster, but we need to carefully monitor developments.”
Wall Street hit a four-month record low, the S&P dipped below 1,500 and the Dow slumped more than 200 points. US banks also reacted to the risk of political uncertainty in Italy: Morgan Stanley fell 6.6%, Citigroup declined 3.8%, Bank of America dropped 3.6% and JP Morgan slid 2.5%.
The euro dropped below 1.31 to the dollar, a six-week low for the currency.
The situation is likely to come down over the course of the next couple of weeks and there is no reason to panic, Nick Parsons, Head of Research in UK & Europe at the National Australia Bank in London told RT Business.
“We don’t believe there is any existential threat to the European single currency area. Yes, there are going to be a few wobbles, yes, there is a little bit of uncertainty, but Italy is by no means the worst economy in euroland and its certainly not about to leave the euro whatever the various claims of different political spokespeople.”
Investors, analysts, hedge funds and foreign markets are all closely watching Italy’s next political move. If the eurozone’s third-largest economy goes rogue and refuses to cooperate with the recovery plan, it could upend global markets.
Both Berlusconi and Grillo ran anti-euro platforms, railing against ‘Brussels bureaucrats’ and ‘dictates from Berlin.’ Grillo has even suggested Italy ditch the euro currency. Bersani vowed to work with the eurozone to reconcile Rome’s €2-trillion debt.
I think the worst is yet to come for Italy,” said Gianfranco Fini, a former foreign minister, and political opponent of Monti.

Deutsche Bank Is Caught In A Spiral Of Lies

Deutsche Bank, long coddled by the German government, is mired in a swamp of costly “matters,” such as the Libor rate-rigging scandal or the carbon-trading tax-fraud scandal that broke with a televised raid by 500 police officers on its headquarters.
It’s writing down assets and setting up reserves to settle these allegations. Co-CEO Jürgen Fitschen insinuated more gloom was to come. The bank, he said, would “be confronted with more developments in these and other matters” [The Putrid Smell Suddenly Emanating From European Banks].
And now, one of these other matters seeped to the surface: the bank had known for years about the impact of commodities speculation on food prices and the havoc it wreaked on people in poor countries. And it had lied to the German Parliament about it.
On June 27, 2012, David Folkerts-Landau, head of Deutsche Bank’s DB Research, educated a parliamentary commission about the dire consequences of food price inflation—and what didn’t cause it.
“In developing countries where often up to 90% of the income must be spent on food,” he said, “price increases of wheat, corn, and soybeans in the years 2007-2008 and 2010-2011 had devastating consequences.” Volatility made it worse. “Even spikes of only a few months are a serious threat to food security.”
While the volume of options and derivatives in agricultural markets had been ballooning in recent years, “primarily in search of higher yields,” he said, there was “hardly any sound empirical evidence” for the assertion that any of it “led to price increases or higher volatility.”
He cited the big players. The US Commodity and Futures Trading Commission (CFTC) had received “no reliable economic analysis” that showed that excessive speculation influenced the markets. US Department of Agriculture came to the same conclusion in 2009. And the Bank for International Settlements (BIS) pointed out as early as 2007 that there was “no convincing causal relationship” between speculation and price increases. That the BIS would say that makes sense: it groups together 58 central banks, including the most prodigious money printers. On its board: Fed Chairman Ben Bernanke, NY Fed President William Dudley, ECB President Mario Draghi, etc. etc.
Thus inspired, Folkerts-Landau concluded that “commodity prices are primarily determined by fundamental demand and supply factors,” not speculation.
Alas, foodwatch, an independent non-profit, has obtained four studies by DB Research and two studies by German insurance and finance conglomerate Allianz that showed that both companies had known for years that commodity speculation—one of their major business activities—drove up food prices.
In September, 2009, a DB Research study pointed out: “Speculation has also contributed to price increases.”
A year later, DB Research found that speculation could be “distorting the normal functioning of the market,” which “can have grave consequences for farmers and consumers and is in principle unacceptable.” It argued that it was important for the proper “functioning of the food chain” that commodity derivatives serve their original purpose of price discovery and hedging against volatility. And it suggested that more regulation of derivatives would “be helpful in avoiding excesses.”
In January, 2011, DB Research—shocked that high food prices had at least in part triggered social unrest in a number of countries in Latin America, Asia, and Africa—admitted that “in some instances speculation might have added to the price movement.”
Two months later, DB Research acknowledged that in developing countries where “consumers spend over 50% of their income on food,” price increases can be devastating and “hollow out the right to food.” While there was no consensus on the role of derivatives, the study nevertheless fingered speculation: “When speculation drives prices to a level that is no longer consistent with fundamental data, this can have serious consequences for farmers and consumers.”
Hence another scandal: large banks have known for years that commodities speculation and related products that they sold to their clients caused immense damage to people in developing countries and hurt people even in rich countries. foodwatch points out that even short price spikes can cause permanent damage to already mal-nourished children—and can lead to death. Yet banks “deceive the public, even lie to Parliament, to continue without scruples to profit at the expense of those who are starving.”
But the banks are just a link in the chain. Central banks have cranked up their printing presses and flooded the world with speculative capital, causing asset bubbles left and right. Their stated policy goal is to cause inflation, but when food-price spikes wreak havoc around the world, it’s of course someone else’s fault.
Deutsche Bank is flailing to get this under control. There have already been noisy demands that it remove those financial products from the markets that bet on price changes of agricultural commodities. But the bank is the bedrock of the German economy, and Germany must soldier on. All hopes rest on it: its vibrant economy teeming with globalized, ultra-competitive, export-focused companies is supposed to drag France and other Eurozone countries out of their economic morass. But then, there’s an ugly reality. Read....  What If Germany Gets Bogged Down Too? Or Has It Already?

New York City homelessness continues to set new records

In the latest of what might be termed his “Marie Antoinette” moments, New York’s billionaire mayor Michael Bloomberg declared last week that “nobody’s sleeping on the streets” of the city.
Of course, everyone who has eyes to see, who has traveled on the city’s subways at night or even during the day, or who has walked through various areas of the city, knows that this is not the case.
In fact, even as Bloomberg vented his contempt for the poor, the city’s own figures show that there were 3,200 people sleeping on the streets in January of 2012, during the coldest month of the winter a year ago. The actual number was undoubtedly much larger and has grown since then.
The mayor’s dismissive comment came in response to a question about the city shelter system turning families away despite frigid winter temperatures. The Daily News reported on 23-year-old Junior Clarke and his family, including his wife and 4-year-old daughter. They were told on one cold night in January that there were no beds for them under a changed city policy in which all families applying for shelter for the first time are given a bed, but returning families are sometimes turned away with the claim that they have other options.
According to a report on, a spokeswoman for the Bloomberg administration’s Department of Homeless Services said, “For reapplications, we take into account weather conditions, and we work to ensure that applicants who have alternate living situations do not take up beds that are needed by those who truly have no recourse.”
The Clarke family had last been in a shelter in 2008, when they were thrown out of Mr. Clarke’s mother-in-law’s home. Clarke lost his job as an emergency medical technician last December, and they were evicted from a rented room after falling behind on the rent. They refused to leave the shelter when told to last month, and called the Legal Aid Society, which intervened and was able to convince the shelter employees to take them in for the night.
As of June 2012, the city’s municipal shelter system reported a total count of 48,700, including 20,400 children. For the last three years, according to the Coalition for the Homeless, 110,000 different men, women and children have used the shelters. Hundreds of thousands of New Yorkers, perhaps 5 percent of the city’s population or even more, have passed through this system at one point or another since the financial collapse.
Bloomberg, now in the last year of three four-year terms, often boasts of his administration’s plan to build or preserve 165,000 affordable housing units by 2014. 124,000 of these allegedly affordable units were developed between fiscal year 2004 and 2011. Despite the mayor’s claims, however, homelessness sets new records every month. The number sleeping in municipal shelters each night is 57 percent higher than in January 2002, when Bloomberg first took office.
A report issued earlier this month by the Association for Neighborhood and Housing Development (ANHD), a research and advocacy group, explained that even though the city touted these units as affordable housing, they were far from affordable for most of the workers and working poor in the very neighborhoods where they had been built or renovated. (Report available at
The report gives the example of the Highbridge neighborhood in the west Bronx, one of literally dozens of similar working class neighborhoods in all of the five boroughs of the city, and especially in the “outer boroughs,” beyond Manhattan and its high-priced real estate. Even though the median income in Highbridge is $26,140—barely above the ludicrous federal poverty threshold of $23,550 for a family of four—a typical building in the area advertised for tenants earning between $29,931 and $53,800 for a studio apartment, and between $37,680 and $61,400 for a one-bedroom apartment. In other words, families earning below the lower limits would not be allowed to rent. The Highbridge example applies to at least half of the city’s community districts.
An examination of the report and a comparison to the official claims about affordable housing shows that the claims are mostly fraudulent. The city provides subsidies based on federal income guidelines for prospective occupants, but these guidelines are based on a formula to determine the “Area Median Income” that includes income levels in wealthier suburban counties outside the city proper. The guidelines also base themselves on data that shows rents are higher in the New York area than elsewhere. This has absolutely nothing to do with the millions of New Yorkers in low-wage or minimum-wage jobs who have no way to pay the rents that are demanded in the “affordable” housing that Bloomberg trumpets as his great legacy.
Of course there are somewhat better-off sections of the population who can pay those rents. The pent-up demand for housing is so high that thousands of others fill these new or preserved apartments, but for the most part the poorest one-third or two-fifths of the population is given no option except to place their names on waiting lists for city housing projects that are back-logged at least 10 to 20 years, or remain in substandard or overpriced housing, or doubled up with families.
Even the so-called affordable units that have been completed in recent years, where rents do not reach the stratospheric levels dictated by the market, are expected to became “unaffordable” in the future because the government subsidies that have been provided mandate income restrictions that will eventually expire, after which rents will be allowed to rise to the market rate. The report projects the loss of at least 11,000 of these “affordable” units annually after 2017.
Meanwhile, in the “other” New York, the New York of the 1 percent and even of the one-hundredth of one percent, palatial apartments have been built and remain unoccupied for all but a few days or a few weeks annually, as fabulously wealthy buyers put some of their money into expensive real estate. The New York Times reported two weeks ago on the well-known phenomenon of multimillion-dollar pieds-a-terre, condominiums that are bought as second, third, fourth or fifth residences by multimillionaires and billionaires.
The super-luxury building on 57th Street across from Carnegie Hall, for instance, where a crane accident during Hurricane Sandy closed the street to traffic for a week, has two apartments in contract for $90 million and has attracted billionaire buyers from Britain, Canada, China and Nigeria. When this building opens, most of its apartments will not be occupied for most of the time. That is already the case at the Plaza Hotel at the southeast corner of Central Park, which converted many of its suites into condos several years ago, and at the twin towers of the Time Warner Center, at the southwest corner of the park.
While the billionaire mayor throws families out of the city’s miserly shelter system, he welcomes his fellow billionaires to join in an orgy of conspicuous consumption unseen since the days preceding the French Revolution. The spiraling Manhattan real estate boom continues, the expression of intensifying social inequality and an irrational economic system.

ObamaCare and the '29ers'

Here's a trend you'll be reading more about: part-time "job sharing," not only within firms but across different businesses.
It's already happening across the country at fast-food restaurants, as employers try to avoid being punished by the Affordable Care Act. In some cases we've heard about, a local McDonalds has hired employees to operate the cash register or flip burgers for 20 hours a week and then the workers head to the nearby Burger King BKW +1.80% or Wendy's to log another 20 hours. Other employees take the opposite shifts.
Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more "full-time equivalent workers" to offer health plans to employees who work more than 30 hours a week. (The law says "equivalent" because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don't offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well.
These employment cliffs are especially perverse economic incentives. Thousands of employers will face a $40,000 penalty if they dare expand and hire a 50th worker. The law is effectively a $2,000 tax on each additional hire after that, so to move to 60 workers costs $60,000.
A 2011 Hudson Institute study estimates that this insurance mandate will cost the franchise industry $6.4 billion and put 3.2 million jobs "at risk." The insurance mandate is so onerous for small firms that Stephen Caldeira, president of the International Franchise Association, predicts that "Many stores will have to cut worker hours out of necessity. It could be the difference between staying in business or going out of business." The franchise association says the average fast-food restaurant has profits of only about $50,000 to $100,000 and a margin of about 3.5%.
Because other federal employment regulations also kick in when a firm crosses the 50 worker threshold, employers are starting to cap payrolls at 49 full-time workers. These firms have come to be known as "49ers." Businesses that hire young and lower-skilled workers are also starting to put a ceiling on the work week of below 30 hours. These firms are the new "29ers." Part-time workers don't have to be offered insurance under ObamaCare.
The mandate to offer health insurance doesn't take effect until 2014, but the "measurement period" used by the feds to determine a firm's average number of full-time employees started last month. So the cutbacks and employment dodges are underway.
The savings from restricting hours worked can be enormous. If a company with 50 employees hires a new worker for $12 an hour for 29 hours a week, there is no health insurance requirement. But suppose that worker moves to 30 hours a week. This triggers the $2,000 federal penalty. So to get 50 more hours of work a year from that employee, the extra cost to the employer rises to about $52 an hour—the $12 salary and the ObamaCare tax of what works out to be $40 an hour.
Moving to 33 hours a week costs the employer about $10 an hour more in ObamaCare tax. Look for fewer 30-35 hour-a-week jobs. The law that was sold as a way to help business and workers is thus yanking a few more rungs from the ladder of economic upward mobility.
Many franchisees of Burger King, McDonalds, Red Lobster, KFC, Dunkin' Donuts and Taco Bell have started to cut back on full-time employment, though many are terrified to talk on the record. Activist groups have organized boycotts against Darden Restaurants, DRI +1.19% which owns Olive Garden and Red Lobster, for daring to publicly criticize ObamaCare. It's safer to quietly dodge the new costs and avoid becoming a political target.
But the damage won't be limited to franchisees or restaurants. A 2012 survey of employers by the Mercer consulting firm found that 67% of retail and wholesale firms that don't offer insurance coverage today "are more inclined to change their workforce strategy so that fewer employees meet that [30 hour a week] threshold." This week Nigel Travis, the CEO of Dunkin' Donuts, asked Congress to change the health law's definition of full-time to 40 hours a week from 30 hours so worker hours won't have to be cut.
The timing of all this couldn't be worse. Involuntary part-time U.S. employment is already near a record high. The latest Department of Labor employment survey counts roughly eight million Americans who want a full-time job but are stuck in a part-time holding pattern. That number is down only 520,000 since January 2010 and it is 309,000 higher than last March. (See the nearby chart.) And now comes ObamaCare to increase the incentive for employers to hire only part-time workers.
Democrats who thought they were doing workers a favor by mandating health coverage can't seem to understand that it doesn't help workers to give them health care if they can't get a full-time job that pays the rest of their bills.
A version of this article appeared February 23, 2013, on page A12 in the U.S. edition of The Wall Street Journal, with the headline: ObamaCare and the '29ers'.

Plight of savers could get even worse as Bank of England considers NEGATIVE interest rates

  • Deputy governor Paul Tucker says Bank has discussed radical move
  • High street lenders would have to pay the central bank to hold their money
  • Move could wipe out savings rates and inflation would ravage deposits

Negative interest rates should be considered as an option to encourage banks to lend to small and medium-sized firms, the Bank of England’s deputy governor for financial stability said today.
Paul Tucker said the dramatic move had been discussed at this month’s rate-setting meeting as an option to help fuel economic growth.
Such a move would spell catastrophe for cash-strapped savers, who have already been crippled by rock bottom rates since the Bank of England dramatically cut the base rate to its record low of 0.5 per cent in March 2009.
The Bank of England has kept the base rate at the historic low of 0.5 per cent since March 2009, which is now nearly four years
Paul Tucker
The Bank of England has kept the base rate at the historic low of 0.5 per cent since March 2009, which is now nearly four years. Right: Bank of England deputy governor Paul Tucker
Cutting it further to below zero would effectively mean depositors, such as high street lenders, would have to pay the central bank to hold their money.
The hope would be that banks would therefore choose to lend out more of their funds to small businesses rather than stockpiling it at their expense. 

But the base rate is also used by high street banks to set their own interest rates for customers.
There are currently just three savings accounts offering interest rates that beat the current 2.7 per cent rate of inflation: one offers 2.8 per cent, one is disappearing from the market within days and the third is available to a very restricted geography.
New ideas: The Bank of England has considered a negative base rate to encourage lending
New ideas: The Bank of England has considered a negative base rate to encourage lending


Negative interest rates would mean that the Bank of England would start to charge high street banks for looking after their money.
It is considering charging interest on the funds that commercial banks hold on deposit at the central bank in order to encourage these high street lenders to do other things with the money.
The move would be intended to encourage more lending to businesses and households, rather than letting it sit in bank vaults.
If the interest rate was -1 per cent, they would have to pay the BoE a 1 per cent rate each year to hold money with it.

It is hoped that small businesses and house-buyers that have complained that banks are not lending would benefit from the cash injection and it would be easier to get a loan.
But savers could be hit as it is yet more pressure on rates and banks may pass on that pain to customers and slash interest rates.
A negative base rate would likely see savings rates plunge even further, resulting in prudent savers’ nest eggs being eaten away at an even faster rate.
Speaking to MPs on the Treasury Committee, Mr Tucker said: 'This would be an extraordinary thing to do and it needs to be thought through carefully.
'I hope we will think about whether there are constraints to setting negative interest rates.’
He also suggested more bond-buying through the quantitative easing scheme was on the cards and added that the pound may need to weaken more - a comment that pushed sterling to near 2.5-year lows against the dollar.
Banks cut interest rates to make saving less attractive and borrowing more attractive, which in turn stimulates spending to boost economic growth.
However, with the base rate already at 0.5 per cent the Bank is running out of conventional tricks to encourage growth and is looking at other alternatives. 
When it cut the base rate to 2009 the Bank judged it could not be reduced below that level.
Instead it has resorted to quantitative easing – which has a similar effect to cutting the base rate of encouraging spending - and has also looked at other policy measures including buying other assets.
It is hoped Mark Carney, who is taking over as Bank Governor in July, will also bring much-needed new ideas to boost the economy.
It would not be the first time a central bank had resorted to a negative base rate. In 2009 the Swedish central bank, the Riksbank, set a rate of -0.25 per cent on its deposit rate.
In December the Swiss bank Credit Suisse implemented negative rates on bank deposits to curb demand for the Swiss franc. 

Austerity USA begins March 1st: 600,000 food stamp recipients will be cut from the program, Millions on unemployment will see their checks cut by 11%, 700,000 jobs are expected to be lost, and 70,000 children kicked out of head start

600,000 food stamp recipients will be cut from program
Massive educational cuts
Millions on unemployment will see their checks cut by 11%
12 billion in Medicare cuts
Federal funds to state governments will be cut

700,000 jobs are expected to be lost
While 70,000 children kicked out of head start

Hard Budget Realities as Agencies Prepare to Detail Reductions
WASHINGTON — In the first week of March, a laid-off person living on $300 a week in unemployment benefits is liable to find a surprise in the mailbox: notification from Uncle Sam that come April the check will be $33 lighter.
“Sequestration,” that arcane budget term consuming Washington in recent weeks, is about to move from political abstraction to objective reality for tens of millions of Americans. Barring an extremely unlikely last-minute deal, about $85 billion is set to be cut from military, domestic and certain health care programs beginning Friday.

More than 100 air traffic towers could close, some in the Heartland

The Federal Aviation Administration is considering closing more than 100 air traffic control towers at smaller airports nationwide.
Towers in the Heartland could be shut down if no deal is reached in Washington to avert federal spending cuts scheduled to take effect next month.

California Would Lose $500 Million Under Sequestration
If Congress fails to reach a budget deal this week, California will lose more than $500 million in funding for schools, the military, disability services and other federal spending, according to a report released by the White House.

More: Specifics on how California will be affected
The steep cuts, put into place in 2011 as a way to dissuade the ever-feuding Democrats and Republicans in Washington from refusing to reach a deal, are set to go into effect March 1. They have become known in politcal jargon as “sequester cuts,” or “sequestration.”

With Congress unlikely to stop deep automatic spending cuts that will strike hard at the military, the fiscal stalemate is highlighting a significant shift in the Republican Party:
Writing in the conservative Weekly Standard, William Kristol, a Republican hawk, excoriated Republicans for being “so desperate for a ‘victory’ over Obama” that they were “willing to sacrifice national defense for minor cuts in domestic spending…”
so many rank-and-file Republicans adamant that they would rather see the cuts stand than raise any taxes..
Whether or not lawmakers can agree to another sequester deal, U.S. consumers are struggling to pay bills and stay afloat. According to The Wall Street Journal, food companies are lowering future sales forecasts and marketing cheaper products to cash-strapped consumers. Burger King (BKW) has been promoting its value menu items and reduced the cost of its Whopper Jr. sandwich by 71 cents. Wal-Mart (WMT) is stocking shelves with lower-priced items to adjust to the pressures on consumer spending.


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WATCH LIVE - Bernanke's Senate Testimony On QEternity

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Classic moment.  Senator just asked Bernanke if he thinks Congress will ever produce a balanced budget in his lifetime.  Bernanke stumbled before admitting that it was unlikely.

Fed's Balance Sheet Headed To $4 Trillion...

Bernanke's Bubble Theme Song if you get bored (Nancy Sinatra):

Would you like to ride in my beautiful balloon.

Photo by William Banzai7

Paper Bonds Are AAA Rated, But Physical Gold, Silver, & Oil Are Risk Assets?

Guest Post by Bill H.
Can a barrel of oil “default”?  A bushel of wheat?  Gold or Silver?  Of course not but these are, in today’s upside down backwards world considered “risk assets”.  How whacked out have we become?  Sovereign governments that just 20 years ago would have been taken out back to the financial “disciplinary woodshed” are considered AAA rated or close to it, but physical commodities are risk assets.

2013 Silver Eagles IN STOCK As Low As $2.69 Over Spot at SDBullion!

Great Britain lost their AAA rating last week and joined the club of “non AAA” insolvents.  To be honest with you, this took me a bit by surprise.  Not because they were downgraded but because they were AAA rated in the first place!  I knew that they were AAA rated ”officially” but I guess my subconscious got the best of me because if asked I would have told you they were not.  Britain?  AAA?  There is no comedy club on the planet that could have passed this off with a straight face.
While on the subject of AAA ratings, there are a few left like Germany and The Netherlands but I ask, is there really, truly…anything paper that deserves a ”triple A” rating?  Is there anything, anywhere on “paper” that cannot default?  This goes for bonds, bank accounts and of course the currencies themselves.  Can a barrel of oil “default”?  A bushel of wheat?  Gold or Silver?  Of course not but these are, in today’s upside down backwards world considered “risk assets”.  How whacked out have we become?  Sovereign governments that just 20 years ago would have been taken out back to the financial “disciplinary woodshed” are considered AAA rated or close to it.
Forget about the “AAA” ratings being fake, what exactly can you do with your money if you are a good little sheep and stay within the “box”?  There are no bonds anywhere on the planet that compensate you for current inflation…  When you add in and consider future inflation, the current “leak” of wealth annually will become a sudden event that discounts EVERYTHING.  The “discounting” process is THE reason that governments are manipulating markets.  They have lowered interest rates beyond any reasonable level (and been there for many years) so in order to justify this, “markets” have to reflect this.
It is important to understand that not only is the “quality” false in the bond markets, so is the “math”.  When you look at inflation, bonds don’t make any sense.  Forget about the reality that inflation is running at 8-10%, use the bogus mainstream inflation rates we are spoon fed daily.  In what world does it make sense to lend your money for year at 1/4% when “official” inflation is running at 2%?  How does it make any sense to lend your money for 10 years at 2%?  Are bond investors in the business of locking in guaranteed losses year after year?  Is this how the credit markets worked all these years?  Is this normal?  Or is it the “new normal”?
Maybe it is but you must understand that the math doesn’t work and will do nothing other than destroy capital…at a faster and faster pace as the credit markets get larger and the deadbeats borrow more and more.  It doesn’t matter that the “sheep” are not the buyers anymore (they are through bond funds), capital is getting destroyed.  It doesn’t matter who the “lender” is, the Fed, ECB, BOE or BOJ, it will still be destroyed.  Mathematically and logically it makes no sense, morally and ethically it makes no sense.  The ONLY area that it makes any sense at all is politically.  Negative interest rates can only make sense in order to prolong the “wrong” and to cover your tracks.  “Tracks” being past ill advised policy, theft and fraud.
As far as Britain is concerned, they were not AAA in the first place no matter how warped your thought process is..  They are (as is the rest of the world) embarking on further QE.  They will issue more debt to lower rates further, this will increase inflation and water down the existing stock of paper.  In what world would any sane investor choose this path?  As far as I see it, the investment “options” available to those with any sanity left has been narrowed down to a mere handful and no matter what you choose it weighs more than paper with lots and lots of “zeroes” on it.  Regards,  Bill H.

Markets plummet after Italy rejects austerity with vote for comedian causing deadlock which threatens European economy

  • Euro tumbles over prospect of coalition haggling and new elections
  • FTSE 100 closed 1.3% down as Italian stock market fell almost 5%
  • More than a quarter of voters backed the renegade Five Star Movement
  • Pier Luigi Bersani's left-wing alliance has most seats but no majority
  • Disgraced former PM Silvio Berlusconi comes in second

Panic spread through European stock markets yesterday as political paralysis in Italy sent shares tumbling.
The FTSE 100 index fell 84.93 points to 6270.44, wiping £21.5billion off the value of Britain’s blue chip firms. The losses were worse on the Continent with the stock market down 4.9 per cent in Milan, 3.2 per cent in Madrid, 2.7 per cent in Paris and 2.3 per cent in Frankfurt. Bank shares were the biggest fallers. Barclays and RBS lost more than 4 per cent.
The cost of borrowing surged in Italy and the cost of insuring the country’s debt against default climbed to its highest this year.

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Silvio Berlusconi
Democratic party (PD) leader Pierluigi Bersani casts his vote at a polling station in Piacenza
Choice: The split between the centre right forces of Silvio Berlusconi (left) and the centre left forces of Pier Luigi Bersani (right) raised the real prospect of a fresh election
The markets plunged across the world after the Italian election resulted in deadlock thanks to one of the largest protest votes in living memory.
The result in Italy is expected to slow the country's recent economic gains, and threatens to tip the entire eurozone back into full-blown crisis mode.
In a rejection of the austerity reforms needed to ease the country’s massive debt, more than a quarter of voters backed the Five Star Movement, led by comedian Beppe Grillo.
Meanwhile, the disgraced former prime minister Silvio Berlusconi unexpectedly exploded back on the scene with 29.2 per cent of the vote.

German tabloid newspaper Bild expressed its horror at the election result and renewed instability in the financial markets with the headline, 'Are they going to destroy our euro now?'
Mr Grillo's anti-euro and anti-austerity party, which took 25.6 per cent of the votes, was the most popular single party in Italy.
The Five Star Movement drew support away from both major parties, leading to the prospect of months of deadlock as politicans attempt to form a new government.
The centre-left groups, led by Pier Luigi Bersani, had 29.5 per cent of the vote in the lower house, only just ahead of Mr Berlusconi's centre-right alliance.
Mr Grillo took to the internet to taunt the country's mainstream politicians over their disappointing performance.
'We've started a war of generations,' he said in a statement posted on his website. 'They are all losers, they've been there for 25 to 30 years and they've led this country to catastrophe.'
The charismatic anti-politician, who was once convicted of manslaughter, has vowed not to join a coalition with any other party, meaning politicians face deadlock in their attempts to form a government.
Looking positive: Five Star Movement leader and comedian Beppe Grillo and his wife Parvin Tadjik
Looking positive: Five Star Movement leader and comedian Beppe Grillo and his wife Parvin Tadjik
'The winner is: Ingovernability' was the headline in Il Messaggero, while commentator Massimo Giannini wrote in La Repubblica: 'The "non-party" has become the largest party in the country.'
Despite Mr Grillo's success, a coalition between the centre-left and centre-right could be the most likely outcome after Mr Berlusconi this morning suggested he would consider teaming up with Mr Bersani, saying that both parties 'must be prepared to make sacrifices' and rejecting the possibility of fresh elections.
The centre-left was left in a state of shock by the results after failing to achieve the resounding win it had been expecting.
Enrico Letta, a senior member of Mr Bersani's party, insisted that his grouping should be first in line to try and form a government, while the leader said: 'We will handle the responsibilities that these elections have given us in Italy’s interest.'
Turnout was unusually low at 75 per cent - historically, it has usually been above 80 per cent, though this is the first national election held during winter.
Italian Elections
Plunge: Japanese markets were the first to fall today, sparking a global sell-off of shares after the election
Plunge: Japanese markets were the first to fall today, sparking a global sell-off of shares after the election
Mr Bersani is guaranteed a majority in the lower house, the Chamber of Deputies, due to election rules giving the largest alliance more than 50 per cent of the seats.
But the situation in the Senate is much more confused - Mr Berlusconi's group is likely to be the largest with 116 seats, with Mr Bersani close behind on 113, but no party is close to a majority.
The party headed by current prime minister Mario Monti, who has emphasised the need for radical economic reforms and continued austerity, performed disappointingly, attracting just 10.6 per cent of votes.
Mr Monti took over the government in November 2011, with the support of both major parties, and pulled Italy back from the brink of an EU bailout by restoring investor confidence and lowering the interest rate on the country's bonds, which was unsustainably high.

This split raised the prospect of a fresh election – and further delay to much-needed economic reforms in the single currency’s third largest economy.
Competition: Mario Monti casting his vote- Mr Monti's party expected to gain fourth place
Competition: Mario Monti casting his vote- Mr Monti's party is expected to gain fourth place
Mr Bersani, who was widely considered the favourite, has a reformist track record and has worked closely with Mr Monti, leading to hopes that he would continue along the same path.
However, the election results mean that if he is to have any hope of power he will depend on either Mr Grillo or the mercurial Mr Berlusconi, who are likely to reject the austerity demanded by the German government and other international lenders.
If investors begin to doubt that Italy will enact reforms to keep its economy on track, the damage will quickly spread to other European countries, amidst fears that Italy is too large for an EU bailout.
Leading centrists in the country lamented the results - Gianfranco Fini, a former foreign minister who lost his parliamentary seat in the election, said: 'The worst is yet to come for Italy.'
Paul Mortimer Lee, global head of market economics at BNP Paribas, said today that the election result was likely to shave up to one per cent from Italy's growth rate this year.
‘There’s no alternative to the austerity that the EU wants,' he told BBC Radio 4's Today programme. 'But the politicians are not going to offer that up on a plate because it’s a recipe for rejection.
‘The Italian people are saying we don’t want to do the hard yards. The news will have to get worse and a lot worse before it gets better.’
Decisions: People read electoral information banners in a polling station in Rome during Italy's general elections
Decisions: People read electoral information banners in a polling station in Rome during Italy's general elections
As soon as results started to be declared last night, the euro began falling, reaching a seven-week low against the dollar by this morning.
The single currency has rallied strongly in recent weeks as fears of an imminent break-up of the eurozone eased.
But analysts said a change of government in Italy – and the possible return of Mr Berlusconi – could see the austerity measures implemented by outgoing leader Mr Monti reversed and plunge the economy deeper into crisis.
The Five Star Movement has come from nowhere in three years to secure the vote of one in four Italians.
Its 64-year-old leader, Mr Grillo, attracted hundreds of thousands of supporters as he toured town squares in a camper van. Much of his support comes from young Italians, who are frustrated by never-ending corruption scandals and mobilised by social media.
Shock: Opinion polls had underestimated the appeal of the Five Star Movement in the run-up to the election
Shock: Opinion polls had underestimated the appeal of the Five Star Movement in the run-up to the election

Fragmented: Seats in the Senate are allocated on the basis of the country's regions
Fragmented: Seats in the Senate are allocated on the basis of the country's regions
Earlier exit polls had shown the centre-left coalition ahead in both houses. But initial optimism from market investors soon evaporated once later projections pointed to a lead for Mr Berlusconi’s centre-right coalition.
The former premier, who resigned 15 months ago after bringing Italy to the brink of economic ruin, has made an astonishing comeback.
His trial, on charges of paying for sex with an underage girl, has been postponed until after the election. Mr Bersani, a former communist, would have to win both houses to form a stable government. He has said he would continue with reforms begun by technocrat Mr Monti.
The country is likely to endure political horse-trading over the next few days to try to appoint a government.
If no party can form a majority, another caretaker technocratic government may have to take power until fresh elections can be held in May.
Robert O’Daly, of the Economist Intelligence Unit, said: ‘Under a scenario where the combined parliamentary representation of Mr Bersani’s centre-left and Mr Monti’s centrists is insufficient to form a majority, a period of minority government followed by further elections would be likely.
‘Such an outcome would place strong additional upward pressure on government borrowing costs. If this were to continue for a prolonged period, it could be destabilising for other distressed peripheral euro area countries.’

VIDEO  Comedian who got 25 per cent of vote calls politicians 'schemers'

Australian Gov’t Moves to Seize Cash From All Inactive Accounts

The Australian government has moved to plug a $15 billion budget deficit by seizing all funds in private accounts that have been inactive for 3 years or more.
Perhaps the Australian politicians missed the memo that it is much easier to steal from citizens when they don’t even realize the theft is occurring (see quantitative easing and inflation). 
HOUSEHOLDS face losing up to $109 million from their family savings as the Federal government moves to seize cash from inactive bank accounts.


After legislation was rushed through parliament, the government will from May 31 be able to transfer all money from accounts that have not been used for three years into their own revenues.
This will mean that accounts with anything from $1 upwards that have not had any deposit or withdrawals in the past three years will be transferred to the Australian Securities and Investment Commission.
The law is forecast to raise $109 million this year as inactive accounts for three years or more are raided by Treasury.
Read more:
And to add  a little levity to the situation, Clark and Dawe’s analysis of the Australian economy and currency wars:

Italy Votes for Chaos and the Euro Crisis Is Back

Italy’s parliamentary election could not have gone worse for the country or the euro area.
It is now possible that in the coming months the currency zone’s third-largest economy will need a bailout from international creditors, at a time when Italy will have no government in place to ask for, or negotiate, a rescue. In case you had any doubts, the euro-area crisis is back.

As has so often been the case in Italy, the political gridlock has come in the Senate. Neither Pier Luigi Bersani’s center-left coalition, nor the center-right led by Silvio Berlusconi managed to win a majority, in a political system where a government needs the support of both houses in order to get anything done.
Even more worrisome, Beppe Grillo’s Five Star Movement, which has called for a referendum on whether Italy should keep the euro, has emerged as a major political force with a quarter of the vote.
Most observers had expected a partnership between Bersani’s Democratic Party -- which scraped a win in the lower house -- and Prime Minister Mario Monti’s centrists to get a majority in the Senate. But Monti scored just 10.6 percent of the vote, while Berlusconi and Grillo did better than expected in regions that are key to winning the Senate.

Long Road

Italy now has a long road to travel before it can put together a government able to pursue the painful changes to the economy that the markets and the European Central Bank demand. Financial markets hadn’t priced in such an inconclusive result, and the selloff of Italian assets that it triggered this week will probably continue, pushing up the country’s borrowing costs.
The bottom line is that Italy will almost certainly have to hold a second election; the only real question is when. In the meantime, there are four central scenarios for attempts to form a government.
The first would be for Bersani and Monti to create a minority coalition in the Senate, with Berlusconi offering his support in exchange for certain measures to be passed. This kind of horse trading would be unstable, and we could expect Berlusconi to withdraw his backing at the first hint that he wasn’t getting his way. “Il Cavaliere” (the Knight), as Berlusconi is known, has a long track record -- it was he who forced early elections.
A second possibility is that the center-left and center- right could form a grand coalition. The difficulty here is that Berlusconi’s and Bersani’s partner on the left, Left Ecology Freedom party leader Nichi Vendola, has already ruled this out. The third option is a coalition between Berlusconi and Grillo in the Senate, the least likely outcome of all, given Grillo’s disdain for his fellow comedian.
The final possibility is for Grillo to join forces with Bersani and Monti. The Five Star Movement leader has insisted throughout the election campaign that he would not partner with other parties, and may stick to this line to maintain his anti- establishment credentials. Even if Grillo changes his mind, it seems unlikely that he will sit quietly on the sidelines while Bersani and Monti pursue a policy of structural reform and austerity. So this arrangement would also be unstable.

Quick Collapse

What all of these potential governments have in common is that it would be politically impossible for them to implement the kinds of changes to Italy’s spending, labor and product markets that the bond markets, the ECB and potential creditors, such as Germany and the International Monetary Fund, would want to see. We could expect any of these arrangements to collapse quickly.
Nevertheless, a parliament will have to be formed, because in Italy, the president of the republic holds the power to call a vote, and President Giorgio Napolitano is near the end of his term. So before new elections can be held, parliament must choose a new president to call them.
The new parliament will probably also want to pass an electoral law, which should be reasonably easy to do, if the center-left, the centrists and Grillo can form a temporary coalition. All three groups are in favor of reducing the number of provinces and members of parliament, as a way of lowering the cost of politics. Any other political permutation would see protracted wrangling over an electoral law.
Electing a president, passing an electoral law, holding a new election and forming a new government will take time. In the interim, investors will be concerned that Italy may be unable to repay its loans. Italy has the world’s third-largest debt pile, at $2.16 trillion and 126 percent of gross domestic product, with 273 billion euros ($356 billion) due for repayment this year. Voters not only failed to bring to power a government that can implement the reforms necessary to stabilize Italy’s mountain of debt, but roughly half of them cast a ballot for anti-austerity parties (Berlusconi’s center-right coalition and Grillo’s Five Star Movement). Italy clearly suffers from an advanced case of austerity fatigue.
Worst of all, the country could be shut out of debt markets at a time when it cannot make use of the support mechanisms that exist for such an occasion. If investors decide that buying Italian debt is not worth the risk and Italy loses market access, the government could normally request support from the European Stability Mechanism -- the European Union’s bailout fund --and the ECB’s Outright Monetary Transactions bond-buying program.

No Access

In order to use these mechanisms, the Italian government would have to agree to a series of structural reforms and fiscal targets that are stricter than those the country has been pursuing. If the government in place cannot make progress on the latter, it can’t credibly sign up to the former. No conditionality means no access to Europe’s bailout fund and no ECB bond purchases. Without access to the markets or to these support mechanisms, Italy could face a default.
The euro area has shown itself adept at crafting last- minute solutions when pushed to the brink, so that could happen again. But, by nature, this will be an extremely unsettling time for a currency area whose collective economy is already under severe strain.
These are significant risks before a second ballot takes place. There is also a chance that a second election might deliver a majority to Berlusconi or -- even worse -- to Grillo. It is too early to guess what the results of a second election might be, or who would even run in them. What is clear is that Italy and the euro area are in for some rough months ahead.
(Megan Greene is a Bloomberg View columnist and chief economist at Maverick Intelligence. She is also a senior fellow at the Atlantic Council in Washington. The opinions expressed are her own.)