Wednesday, April 24, 2013

America The Fallen: 24 Signs That Our Once Proud Cities Are Turning Into Poverty-Stricken Hellholes – The City of Detroit Was Once Had The Highest Per-Capita Income In The United States!!

by Michael
Hellholes - Photo by Lyzadanger
What is happening to you America?  Once upon a time, the United States was a place where free enterprise thrived and the greatest cities that the world had ever seen sprouted up from coast to coast.  Good jobs were plentiful and a manufacturing boom helped fuel the rise of the largest and most vibrant middle class in the history of the planet.  Cities such as Detroit, Chicago, Milwaukee, Cleveland, Philadelphia and Baltimore were all teeming with economic activity and the rest of the globe looked on our economic miracle with a mixture of wonder and envy.  But now look at us.  Our once proud cities are being transformed into poverty-stricken hellholes.  Did you know that the city of Detroit once actually had the highest per-capita income in the United States?  Looking at Detroit today, it is hard to imagine that it was once one of the most prosperous cities in the world.  In fact, as you will read about later in this article, tourists now travel to Detroit from all over the globe just to see the ruins of Detroit.  Sadly, the exact same thing that is happening to Detroit is happening to cities all over America.  Detroit is just ahead of the curve.  We are in the midst of a long-term economic collapse that is eating away at us like cancer, and things are going to get a lot worse than this.  So if you still live in a prosperous area of the country, don’t laugh at what is happening to others.  What is happening to them will be coming to your area soon enough.
The following are 24 signs that our once proud cities are turning into poverty-stricken hellholes…
#1 According to the New York Times, there are now approximately 70,000 abandoned buildings in Detroit.
#2 At this point, approximately one-third of Detroit’s 140 square miles is either vacant or derelict.
#3 Back during the housing bubble, an acre of land in downtown Phoenix, Arizona sold for about $90 a square foot.  Today, an acre in downtown Phoenix sells for about $9 a square foot.
#4 The city of Chicago is so strapped for cash that it is planning to close 54 public schools.  It is being estimated that Chicago schools will run a budget deficit of about a billion dollars in 2013.
#5 The city of Baltimore is already facing unfunded liabilities of more than 3.2 billion dollars, but the city government continues to pile up more debt as if it was going out of style.
#6 Today, the murder rate in East St. Louis is 17 times higher than the national average.
#7 According to USA Today, the “share of jobs located in or near a downtown declined in 91 of the nation’s 100 largest metropolitan areas” between 2000 and 2010.
#8 Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.
#9 There are more than 85,000 streetlights in Detroit, but thieves have stripped so much copper wiring out of the lights that more than half of them are not working.
#10 The unemployment rate in El Centro, California is 24.2 percent, and the unemployment rate in Yuma, Arizona is an astounding 25.6 percent.
#11 It has been estimated that there are more than 1,000 homeless people living in the massive network of flood tunnels under the city of Las Vegas.
#12 Violent crime in the city of Oakland increased by 23 percent during 2012.
#13 If you can believe it, more than 11,000 homes, cars and businesses were burglarized in Oakland during 2012.  That breaks down to approximately 33 burglaries a day.
#14 As I have written about previously, there are only about 200 police officers assigned to Chicago’s Gang Enforcement Unit to handle the estimated 100,000 gang members living in the city.
#15 The number of murders in Chicago last year was roughly equivalent to the number of murders in the entire country of Japan during 2012.
#16 The murder rate in Flint, Michigan is higher than the murder rate in Baghdad.
#17 If New Orleans was considered to be a separate nation, it would have the 2nd highest murder rate on the entire planet.
#18 According to the Justice Department’s National Drug Intelligence Center,  Mexican drug cartels were actively operating in 50 different U.S. cities in 2006.  By 2010, that number had skyrocketed to 1,286.
#19 Back in 2007, the number of New York City residents on food stamps was about 1 million.  It is now being projected that the number of New York City residents on food stamps will pass the 2 million markthis summer.
#20 The number of homeless people sleeping in the homeless shelters of New York City has increased by a whopping 19 percent over the past year.
#21 As I noted yesterday, approximately one out of every three children in the United States currently lives in a home without a father.
#22 In Miami, 45 percent of the children are living in poverty.
#23 In Cleveland, more than 50 percent of the children are living in poverty.
#24 According to a recently released report, 60 percent of all children in the city of Detroit are living in poverty.
As I mentioned at the top of this article, the decline of the city of Detroit has become so famous that it has actually become a tourist attraction.  The following is a short excerpt from an article in the New York Times
But in Detroit, the tours go on, in an unofficial capacity. One afternoon at the ruins of the 3.5-million-square-foot Packard Plant, I ran into a family from Paris. The daughter said she read about the building in Lonely Planet; her father had a camcorder hanging around his neck. Another time, while conducting my own tour for a guest, a group of German college students drove up. When queried as to the appeal of Detroit, one of them gleefully exclaimed, “I came to see the end of the world!”
For much more on the shocking decline of one of America’s greatest cities, please see my previous article entitled “Bankrupt, Decaying And Nearly Dead: 24 Facts About The City Of Detroit That Will Shock You“.
So are there any areas of the country that are still thriving?
Well, yes, there are a few.  In particular, those areas that are sitting on top of energy resources tend to be doing quite well for now.
One example is Texas.  In recent years people have been absolutelyflocking to the state.  There are lots of energy jobs, the cost of living is low and there is no state income tax.
But overall, things are really tough out there.  Over the past decade America has lost millions of good jobs to offshoring, advancements in technology and a declining economy.
Last year, the United States had a trade deficit with the rest of the world of more than half a trillion dollars.  Overall, the U.S. has run a trade deficit with the rest of the world of more than 8 trillion dollars since 1975.
All of that money could have gone to U.S. businesses and U.S. workers.  In turn, taxes would have been paid on all of that income which could have helped keep our cities great.
But instead, our politicians have stood idly by as we have lost tens of thousands of businesses and millions of jobs.  If you can believe it, more than 56,000 manufacturing facilities have closed down permanently in the United States since 2001.
We have allowed our economic infrastructure to be absolutely gutted, and so we should not be surprised that our once proud cities are turning into poverty-stricken hellholes.
And this is just the beginning.  The next wave of the economic collapse is rapidly approaching, and when it strikes unemployment in this country will eventually rise to a level that is more than double what it is now.
When that happens, I wouldn’t want to be anywhere near our rotting, decaying cities.
Railroad In Milwaukee

Ron Paul on Bitcoin: If I can’t put it in my pocket, I have reservations

Former Congressman Ron Paul (R-TX) told Bloomberg TV’s Erik Schatzker and Sara Eisen today that he is ”concerned about the erraticness of the dollar. The dollar is up, the dollar is down. We print a lot of dollars. The dollar gets devalued. That is really the concern. If people think the gold price up and down is a reflection of something wrong with gold, no, I say it is something wrong with the dollar.”

On Bitcoin, Paul said, “To tell you the truth, it’s little bit too complicated. If I can’t put it in my pocket, I have some reservations about that.”
Paul on whether he’s concerned about the drop in gold:

“I am concerned about the erraticness of the dollar. The dollar is up, the dollar is down. We print a lot of dollars. The dollar gets devalued. That is really the concern. If people think the gold price up and down is a reflection of something wrong with gold, no, I say it is something wrong with the dollar. People have been expressing concerns over the past couple of months about gold, but compared to what? Compared to where gold went from when the Fed took over where it was $20 per ounce compared to what has happened in the past?…I remember in the 1970′s when they finally allow people to own gold and it went from $35 to $200 rather rapidly, and then it lost 50%. Then it went up to $800. To compare a couple of months or a couple of weeks and forget about a bull market in gold price in relationship to the dollar for 12 years. I would say the comparison is not an authentic comparison. What you have to look at is the inflation. Inflation is an increased supply of money. Since 2008 they have quadrupled the supply of Federal Reserve credit and are buying $85 billion per month of treasury bills. At the same time last week they bought $60 billion. That is the inflation. That is the distortion of the market and that’s why we’re not getting economic growth.”

On whether we’re seeing the opposite of inflation right now:

“It depends on how you define it. Inflation is when you increase the supply of money. Bond prices go up. Stocks are going up. Housing prices are starting to go back up again. Education costs are going up, but the gross distortion is the effect that the inflation of the money does on the price of money and interest rates and how it causes economic problems and why you don’t get economic growth. You have to look at the malinvestment and destruction that occurs when you mess around with the price of money. It’s not just the CPI because the CPI is not reliable. The government fudges that as well. They change the way they measure it. Free-market economists say it is going up about 8%. A lot of deception going on out there. I was just talking to someone on getting social security, they’re not happy with the purchasing power of the dollar and you can’t tell me there is no inflation.”

On what the real value of gold is:

“No one knows it other than what is happening at that moment. The Supply and demand of gold is very important. That is why it is money, because gold is used elsewhere and it is commodity. The supply and money of paper is the culprit. That is the one that is causing all the trouble. People ignore the supply and demand of paper. Yes, paper goes up and goes down, but look at the long term purchasing power of the dollar. It has been devastating. At the rate they are printing the money, you will see a continual devastation of the value of the dollar. You will not see economic growth until you liquidate the debt and liquidate the malinvestment out there. Sure, you will see housing go up again, but you will see more bubble formation because prices go up does not mean there is economic growth. We are a long way from the correction, mainly because they ignore the definition of inflation and ignore the need to liquidate debt and the need to liquidate and get rid of all the malinvestment. One good comparison is look at the price of stocks and gold. Although in the past couple of weeks it has changed a bit. The price of the stock market has crashed, because you used to be able to buy the Dow with 44 ounces of gold. Now it is under 10 ounces of gold. It will probably go a lot lower.”

“I think the way gold is acting it acts like a market does. You get ahead of itself, there has to be a correction. The amazing thing is not the correction, the amazing thing is the biggest bull market of the century when one commodity went up for 12 years straight. You cannot ignore that. To say, well there has to be an adjustment because prices are subjectively decided by many factors so you cannot predict exactly where the money will go. Unfortunately right now the money that the Fed creates goes into reserves, further distorting the markets and pumping up prices of bonds, further building a bubble that will burst because our economic growth is not there and we are in every bit as much trouble of Europe and Greece. Someday there will be a lack of confidence in our dollar and you will see the correction in the paper a lot more severe than you see the correction in the dollar-gold ratio.”

On Bitcoin:

“To tell you the truth, it’s little bit too complicated. If I can’t put it in my pocket, I have some reservations about that. But it has been designed in the free market. If it is a means of exchange, it would not ever be illegal. You shouldn’t regulate it in the free market, but I do not think it fits the definition of money, which has been around for 6000 years. People want to see something they can know what it is, they can define it, touch it and put in their pocket. If you do not have a computer and someone running the computer and calculations, you don’t have it. I am not a big supporter of that, but I am not opposed to it. I admit, I do not fully understand what is going on with it.”

On whether the Boston marathon tragedy is an opportunity to fix immigration:

“There is always an opportunity because there is a need for it, but I do not think they will solve any problems at all because they are too big and complicated and very much involved with economics. I don’t think you can deal with immigration unless you deal with the welfare state. It is an incentive for people not to work. It is an incentive for others to come and get free services. Also, I think it is more important that we look at our work permit, letting people come in and work, and put aside the idea of how we will give automatic citizenship. That becomes a political football because everyone is lining up. Who is going to get the vote? One side says that we are going to get all the votes — we want them all to be legalized. I think you have to deal with the economic policy and really open up the opportunities for people to come back and forth and to work, but not to insist everyone will become a citizen because I do not think that will work under these circumstances.”

On how Republicans will win the next election if there is no solidarity:

“I think the solidarity is the same problem in Republican and Democratic parties. It’s ongoing. There’s always factions. Of course, I want to unify everyone in the belief and the cause of liberty. Sound money, balanced budget, the constitution. So yes, there’s a good way to unify them, but unity for the sake of unity makes no sense whatever. The old guard are losing their way. The party is getting smaller. It is splintered. They will have to face up to the fact that if they talk about limited government and personal liberties, they have to believe in it and do something about it because the young people will not be fooled. If this continues, the party will become smaller.”

On whether Rand Paul will run for president in 2016:

“You’ll have to ask him. I have no idea what he wants to do.”

Gerald Celente - Trends In The News - "A State Of Siege!" - (4/22/13)

Rich get richer in recovery, but net worth of lower 93% declines

WASHINGTON -- The richest 7% of American families saw their average wealth soar 28% from 2009 to 2011, while the remaining 93% of households lost 4% of their net worth over that same period, according to a new report.
The analysis of Census Bureau data by the Pew Research Center draws on the most recent statistics on wealth. The findings throw into stark relief the dramatically uneven nature of the recovery.
The economy officially emerged from recession in 2009, and since then affluent families have benefited handsomely from recovering stock prices and surging gains in bonds. Six out of 10 households with a net worth -- assets minus debts -- of $500,000 or more directly owned stocks and mutual funds in 2011, compared with just 13% for everybody else.
The report found that the average wealth of the upper 7% of households jumped to $3.17 million in 2011 from $2.48 million two years earlier. The mean wealth for the remaining 93% dipped to $133,817 from $139,896 as their fortunes were tied up in their homes. From 2009 to  2011, property values sank 5%, based on the Case-Shiller index.
The housing market has since bottomed and is growing again, but not nearly as fast as stocks and other financial assets. And that means the country’s wealth gap is likely to have widened further in the last 16 months.
“This recovery is sort of unique in that the housing market, rather than leading, has lagged,” said Richard Fry, a co-author of the Pew report, in explaining part of the wide variance between the upper 7% and the lower 93%. The 7% share was drawn because of certain limitations in the tabulated data from the Census Bureau’s Survey of Income and Program Participation.
This Census data set is not used as much by scholars as the Federal Reserve’s Survey of Consumer Finances, which compiles comprehensive statistics on the financial health of American families every three years. But the latest data are for 2010, and comparing those figures with 2007 make it difficult to assess the magnitude of the wealth gains made in the recovery, given that the downturn ended in the middle of that 2007-2010 period.   
Edward Wolff, an economist at New York University who has written extensively on wealth distribution, said the new Pew report is helpful in understanding how “very sensitive wealth is to the housing market.” Close to two-thirds of American households own their homes. But of more concern than un-recovered home values, Wolff said, is the declining and stagnant incomes of Americans.
Economists attributed the varying recovery in wealth partly to Fed policies that supported gains in stock and bond markets.
“The Fed has kept things pretty good for the wealthy,” Wolff said.
Fed officials, from time to time addressing issues of growing inequality, have stated that their stimulus policies are aimed at promoting economic and job growth that would benefit families with lower income and wealth as well.
But Sarah Raskin, a Fed governor, said in a speech last week that given the long-running trends of income and wealth inequality, "it is unlikely that cyclical improvements in the labor markets will do much to reverse these trends."
She added: "It strikes me that macroeconomists are far from a comprehensive understanding of how wealth and income inequality may affect business cycle dynamics."

US Mint Halts Sales, Depletes Inventory Of One-Tenth Ounce Gold Coins

We have been reporting extensively on the terminal disconnect between the paper gold market, which tumbled ten days ago for a variety of reasons, and the physical gold market which one can safely say, has seen a record surge in demand by those who wish to take advantage of the tumbling prices, depleting inventories of gold and silver in virtually all jurisdictions, and leading to the a record purchase of gold in the US mint a week ago as also reported here.
Today, we learn that, as expected, none other than the US Mint has officially run out of small denomination gold coins, in this case One-Tenth ounce American Eagle gold bullion coins. We are confident this incontrovertible proof of soaring retail demand for physical will somehow result in JPM or another bullion bank dumping a few extra thousands ounces of paper/electronic gold or silver to further disconnect the paper price from what is actually going on with physical demand. As for the US Mint, first it's fractions of an ounce: look forward to the mint running out of all bullion denominations in the coming days and week, first in gold, then in silver as well.
From Reuters:
The U.S. Mint said it has suspended sales of its one-tenth ounce American Eagle gold bullion coins as surging demand after bullion's plunge to two-year lows depleted the government's inventory.

This marks the first time it has stopped selling gold product since November 2009, dealers said. A spokesman for the Mint did not return calls seeking confirmation of that milestone.

The U.S. Mint, one of the world's leading gold and silver coin producers, halts coin sales from time to time as it runs out of coin blanks to meet increases in demand.

So far in April, the U.S. Mint has sold 175,000 ounces of American Eagle gold coins, putting it on track to challenge a high of 231,500 ounces set in December 2009.
* * *
While the one-ounce American Eagle gold coins remain the most popular size, year-to-date demand for the one-tenth ounce coins has been up over 118 percent compared to the same period in 2012, the Mint said.
We, for one, can only hope that the idiotic smashdown of spot paper gold continue and the price is sent to $0 or negative, while the last remaining physical ounce in inventory disappears at any price.
At that point the exchanges will have quite a few anxious people to answer to, the second someone demands even one bar in delivery.
Also, learn the words: "forced cash settlement."

Dire state of Britain's job market unveiled as 4,300 people apply for just 150 vacancies at new Tesco store

  • Almost 30 people applied for each job at store near Gosport, Hampshire
  • Local Nichola Stanley: 'Everywhere you look people are dying to get a job'
  • Latest figures show UK unemployment rate rose to 7.9 per cent

A new Tesco store has been swamped with 4,300 applications for just 150 jobs in the latest example of Britain's desperate job market.
There were almost 30 applicants for each job at the supermarket in Rowner, near Gosport, in Hampshire, which is due to open in May.
Due to the overwhelming response, Tesco asked 826 to attend an interview after applicants filled in answer a series of questions online.
Desperate: More than 4,300 job hunters applied for just 150 positions at a new Tesco store in Hampshire
Desperate: More than 4,300 job hunters applied for just 150 positions at a new Tesco store in Hampshire
That list included 55 long-term unemployed who were guaranteed an interview through the JobCentre.
A shortlist were then invited to do a work trial in nearby stores before the final team was chosen.
Nichola Stanley, 40, from Rowner, was one of many local people to miss out on a job after her online application was rejected.
She said: 'We definitely need jobs in Gosport, because the community is dropping like flies.
'Everywhere you look people are dying to get a job.'
The most recent figures for the UK showed unemployment rose by 70,000 to 2.56 million between December and February, according to Office for National Statistics.
It pushed the unemployment rate to 7.9 per cent, further illustrating the fragile nature of the UK economy.
The number of people in employment also fell, while earnings growth slowed considerably, according to ONS data.
The new store is part of the Rowner Renewal project, which was launched in 2007 to transform the run-down estate.
It is less than 10 miles from Whiteley, Hampshire, where 4,000 job-seekers were pictured queuing for a jobs fair last month.
Dressed in smart suits and ties, some turned up more than two hours early in freezing weather before the doors to the recruitment fair for a new shopping centre opened.
Queues of job-seekers turned up to a recruitment fair for the opening of a new shopping centre in nearby Whiteley last month
Queues of job-seekers turned up to a recruitment fair for the opening of a new shopping centre in nearby Whiteley last month
The South East has the second lowest unemployment rate in the UK at 6.6 per cent, compared to the national average of 7.8 per cent.
But the recent clamour for jobs shows no region is immune from Britain's economic woes.
Store manager of the new Tesco store Nigel Perman admitted he was surprised at the huge number of people applying for a job.
He said: 'We had 4,300 people apply online, which is an astronomical amount of people. I was really surprised.
'It also shows the need for jobs out there. It was great phoning these people and telling them they've got a job.
'They were so ecstatic and grateful.'
The unemployment rate in the UK reached 7.9 per cent, according to the latest figures from the ONS
The unemployment rate in the UK reached 7.9 per cent, according to the latest figures from the ONS

REPORT: AP TWITTER ACCOUNT HACKED… Says Obama injured in White House explosion… DOW Tanks on Fake Tweet

AP Twitter account hacked; report of White House explosions false
LONDON — Hackers today compromised the main Twitter account of The Associated Press and sent out an erroneous tweet about an attack at the White House.
The tweet, which said that there had been two explosions at the White House and President Barack Obama was injured, came after hackers made repeated attempts to steal the passwords of AP journalists.
Early Tuesday afternoon, the verified Twitter account of the Associated Press was hacked. The breaking news tweet (captured below) claimed President Obama had been injured due to “two explosions” in the White House.
The tweet went out to  the AP’s 1.9 million followers.
The AP account was quickly suspended and through the use of their verified corporate communications Twitter account, the AP stated that the tweet was “bogus.”

260,000 S&P 500 e-mini contracts traded in the three minutes following the fake AP Tweet. That is ~$20.4 Billion notional value ‘changed hands’. For those with trailing stops, our condolences…
the day – to get a sense of the scale of volume…

Physical Gold vs. Paper Gold: The Ultimate Disconnect

Bud Conrad, Chief Economist
Casey Research

How can we explain gold dropping into the $1,300 level in less than a week? Here are some of the factors:

  • George Soros cut his fund holdings in the biggest gold ETF by 55% in the fourth quarter of 2012.
  • He was not alone: the gold holdings of GLD have contracted all year, down about 12.2% at present.
  • On April 9, the FOMC minutes were leaked a day early and revealed that some members were discussing slowing the Fed $85 billion per month buying of Treasuries and MBS. If the money stimulus might not last as long as thought before, the "printing" may not cause as much dollar debasement.
  • On April 10, Goldman Sachs warned that gold could go lower and lowered its target price. It even recommended getting out of gold.
  • COT Reports showed a decrease in the bullishness of large speculators this year (much more on this technical point below).
  • The lackluster price movement since September 2011 fatigued some speculators and trend followers.
  • Cyprus was rumored to need to sell some 400 million euros' worth of its gold to cover its bank bailouts. While small at only about 350,000 ounces, there was a fear that other weak European countries with too much debt and sizable gold holdings could be forced into the same action. Cyprus officials have denied the sale, so the question is still in debate, even though the market has already moved. Doug Casey believes that if weak European countries were forced to sell, the gold would mostly be absorbed by China and other sovereign Asian buyers, rather than flood the physical markets.
My opinion, looking at the list of items above, is that they are not big enough by themselves to have created such a large disruption in the gold market.

The Paper Gold Market

The paper gold market is best embodied in the futures exchanges. The prices we see quoted all day long moving up and down are taken from the latest trades of futures contracts. The CME (the old Chicago Mercantile Exchange) has a large flow of orders and provides the public with an indication of the price of gold.

The futures markets are special because very little physical commodity is exchanged; most of the trading is between buyers taking long positions against sellers taking short positions, with most contracts liquidated before final settlement and delivery. These contracts require very small amounts of margin – as little as 5% of the value of the commodity – to gain potentially large swings in the outcome of profit or loss. Thus, futures markets appear to be a speculator's paradise. But the statistics show just the opposite: 90% of traders lose their shirts. The other 10% take all the profits from the losers. More on this below.

On April 13, there were big sell orders of 400 tonnes that moved the futures market lower. Once the futures market makes a big move like that, stops can be triggered, causing it to move even more on its own. It can become a panic, where markets react more to fear than fundamentals.

Having traded in futures for over two decades, I want to provide some detail on how these leveraged markets operate. It's important to understand that the structure of the futures market allows brokers to sell positions if fluctuations cause customers to exceed their margin limits and they don't immediately deposit more money to restore their margins. When a position goes against a trader, brokers can demand that funds be deposited within 24 hours (or even sooner at the broker's discretion). If the funds don't appear, the broker can sell the position and liquidate the speculator's account. This structure can force prices to fall more than would be indicated by supply and demand fundamentals.

When I first signed up to trade futures, I was appalled at the powers the broker wrote into the contract, which included them having the power to immediately liquidate my positions at their discretion. I was also surprised at how little screening they did to ensure that I was good for whatever positions I put in place, considering the high levels of leverage they allowed me. Let me tell you that I had many cases where I was told to put up more margin or lose my positions. Those times resulted in me selling at the worst level because the market had gone against me.

The point of this is that once a market moves dramatically, there are usually stops taken out, positions liquidated, margin calls issued, and little guys like me get taken to the cleaners. Debates rage about the structure of the futures market, but my personal opinion is that a big hammer to the market by a well-heeled big player can force liquidations, increase losses, and push the momentum of the market much lower than the initial impetus would have. Thus, after a huge impact like we saw on April 13, the market will continue with enough momentum that a well-timed exit of a huge set of short positions can provide profits to the well-heeled market mover.

Moving from theory to practice, one of the most important things to keep your eye on is the Commitment of Traders (COT) report, which is issued every Friday. It details the long and the short positions of three categories of traders. The first category is called "commercials." They are dealers in the physical precious metals – for example, gold miners. The second category is called "non-commercials." They include hedge funds and large commercial banks like JP Morgan.

Non-commercials are sometimes called "large speculators." The rest are the small traders, called "non-reporting" since they are not required to identify themselves. The ones to watch are the large speculators (non-commercials), as they tend to move with the direction of the market. Individual entities could be long or short, but in combination the net position of the group is a key indicator.

The following chart shows the price of gold as a blue line at the top, and the next panel down shows the net position of these large speculators as a black line. You can see that over the long term, they move together. When the net speculative position is above zero, this group is betting on rising gold prices. Of course, the reverse is true when it's below zero. In this 20-year view, the large speculators were holding net negative positions during the lowest point of the gold price, around the year 2000. As the price of gold rose, their positions went net long, and they profited.

An interesting thing about the chart above is that the increasing amount of net longs reversed itself before gold peaked in 2011, suggesting that these large speculators became slightly less bullish all the way back in 2010. The balance remains net long, but it remains to be seen how long that lasts.

What is not so obvious is that these large speculators are so big that they can affect the market as well as profit from it; when they initiate massive positions in a bull market, they drive the price of the futures contracts even higher. Similarly, when they remove their positions or actually go short, they can push the market lower.

So what happened a week ago was that a massive order to sell 400 tons of gold all at once hit the market. Within minutes the price plummeted, and over a two-day period resulted in the largest drop of the price for futures delivery of gold in 33 years: down $200 per ounce.

We don't have the name of the entity that did this. However, the way the gold was sold all at once suggests that the goal was not to get the best price. An investor with a position of this size should have been smart enough to use sensible trading tactics, issuing much smaller sell orders over a period of time. This would avoid swamping the market; and some of the orders would be filled at higher prices and thus generate more profit. Placing a sell order big enough to affect the overall market price suggests that someone with powerful backing wanted to drive the price of gold down.

Such an entity could have been a large speculator who already had a sizable short position and could gain by unloading some of its short position once the market momentum had driven the price even yet lower. Or it could be a central bank – one that might be happy to have the gold price move lower, as it would provide cover for its printing of more new money. Of course, it could be some entity that owned long contracts and wanted to get out of the position all at once. We don't know, but this kind of activity, resulting in the biggest drop in 30 years, raises more than just suspicion when we consider how important the price of gold is to many markets around the globe.

Can markets really be influenced by big players? Well, was the LIBOR rate accurately reported by huge banks? Have players ever tried to corner markets? The answer to all the above, unfortunately, is yes.

There's an even bigger problem with the legal structure of the futures market: even the segregated funds on deposit can be pilfered by the broker for the brokerage's other obligations. That is what happened to MF Global customers under Mr. Corzine. (I had an account with a predecessor company called Man Financial – the "MF" in the name. I also had an account with Refco, which is now defunct. Fortunately, the daggers did not hit my account, since I was not a holder when the catastrophes occurred.) My take: the futures market is dangerous, and not a place for beginners.

One last note: after the Bankruptcy Act of 2005, the regulations support the brokers, not the investors, when there are questions of legality about losses in individual investment accounts. Casey Research will be producing a report with much more detail on this subject in the near future.

So, what now? We aren't going to see a secret memo – no smoking gun to confirm that what happened on April 13 was an attempt to affect the market. Still, the evidence is suspicious. When big entities can gain from putting on big positions, the incentives are big enough for them to try – LIBOR, Plunge Protection Team, Whale Trade, etc., all support this view.

The Physical Gold Market

Previously, there was little difference between the physical and paper markets for gold. Yes, there were premiums and delivery charges, but everybody regarded the futures market as the base quote. I believe this is changing; people don't trust the paper market as they used to.

Instead of capitulating to fear of greater losses, the demand for physical gold has hit new records. The US Mint sold a record 63,500 ounces – a whopping 2 tonnes – of gold on April 17 alone, bringing the total sales for the month to 147,000 ounces; that's more than the previous two months combined.
Indian markets, which are more oriented to physical metal, now have a premium of US$150 over the futures price in Chicago. Demand at coin dealers has increased as the price has dropped. And premiums are much bigger than they were as recently as a week ago.

Here is a vendor page that quotes purchase prices and calculates the premiums on an ongoing basis. It shows premiums of 50% and more in many cases. On eBay, prices for one-ounce silver coins are $33 to $35, where the futures price is quoted as $23. A look on Friday April 19 shows one vendor out of stock on most items:

Buy - Sell On Silver Bullion
2013 Sealed Mint Boxes Of 1 Oz. Silver American Eagles - Brand New Coins
500 Coin Min.
(1 Sealed Box)
Buy @
Spot + $1.80
Sold Out
2013 Sealed Mint Boxes Of 1 Oz. Silver American Eagles "San Francisco Mint" Brand New Coins
500 Coin Min.
(1 Sealed Box)
Buy @
Spot + $2.00
Sold Out
90% Silver Coin Bags (Our Choice Dimes Or Quarters) $1,000 Face Value Figured at 715 Ozs Per $1,000 Face
$1,000 Face
Value Min.
We Buy @
Spot + $1.70
Per Oz (Spot
+ $1.70 X 715)
Spot + $4.99 Per Oz
(Spot + $4.99 X 715)
90% Silver Coin Bags 50¢ Half Dollars $1,000 Face Value We Ship in 2 $500 Face Bags
$1,000 Face
Value Min.
We Buy @
Spot + $1.90
Per Oz (Spot
+ $1.90 X 715)
Sold Out
90% Silver Coin Bags Walking Liberty Half Dollars $1,000 Face Value We Ship in 2 $500 Face Bags
$1,000 Face
Value Min.
We Buy @
Spot + $2.10 Per Oz (Spot
+ $2.10 X 715)
Sold Out
Amark 1 Oz. Silver Rounds ( Made By Sunshine ) Pure .999 BU
500 Coin Min.
Buy @
Spot -15c
Sold Out

Clearly, the physical gold market today is sending different signals than the paper market.

The Case for Gold Is Still with Us

The long-term fundamental reasons to hold gold are undeniably still with us. The central banks of the world are acting in concert in "currency wars" or "the race to debase." As they print more money, the purchasing power of each unit declines. They are caught between the rock of having to keep interest rates low to support their governments' huge deficits and the hard place of the long-term effect of diluting their currency. If rates rise, even First World governments will be forced to pay higher interest fees, leading to loss of confidence in their ability to pay back their debt, which will bring on a sovereign debt crisis like what we have seen in the PIIGS or Argentina recently.

The following chart shows the rapid growth in the balance sheets as a ratio to GDP for the three largest central banks. I've extrapolated the expected growth into the future based on the rate at which they propose to buy up assets. One could argue about how long these growth rates will continue, but the incentives are all there for all central banks to bail out their governments and their commercial banks. I fully expect the printing game to continue to provide the fuel for hard-asset investments like gold and silver to increase in price in the years to come.

Buying Opportunity or Time to Flee?

So what does it all mean? The paper price of gold crashed to $1,325 in the wake of this huge trade. It is now hovering around $1,400. My first reaction is to suggest that this is only an aberration, and that the fundamentals of the depreciating value of paper currencies will eventually take the price of gold much higher, making it a buying opportunity. But what I can't predict is whether big players might again deliver short-term downturns to the market. The momentum in the futures market can make swings surprisingly larger than the fundamentals of currency valuation would suggest.

Traders will be looking for a significant turnaround to the upside in price before entering long positions. However, a long-term, fundamentals-based trader has to look at the low price as a buying opportunity. I can't prove it, but I think the fundamentals will drive the long-term market more than these short-term events. The fight between pricing from the physical market for bullion and that from the "paper market" of futures is showing signs of discrimination and disagreement, as the physical market is booming, while prices set by futures are seemingly pressured to go nowhere.
In short, I think this is a strong buying opportunity.
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‘No justice where might is right’

Head of the European Parliament Martin Schulz visiting Nicosia yesterday

CYPRUS has been an unwilling guinea-pig for a possible policy of enforcing a haircut on banks’ deposits, President Nicos Anastasiades told his European Union partners yesterday.
He was speaking at the Nicosia-based conference of EU parliament speakers in the presence of members of the European Parliament, which comprises of voted representatives from all 27 member states.
“Cyprus was treated as an experimental guinea–pig for testing the economic theory of enforcing a haircut on bank deposits and the consequent repercussions which were to follow,” Anastasiades said yesterday, on the first day of a two-day conference.
Anastasiades conceded there was “reckless management by the banks affected” and lax supervision of the banking system, but he said that Cyprus’ treatment took place “irrespective” of those facts.
He summed up the aftermath of a decision to raid deposits made during a meeting of the eurozone’s finance ministers on a Cyprus bailout as an unjust decision made by more powerful EU-partners, a dig at paymaster Germany whose policy dominated the March 16 Eurogroup decision to impose an unprecedented haircut across all deposits - even the insured ones - across all Cyprus-based banks.
As Plato said, “‘Do not expect justice where might is right,” Anastasiades said.
Although Cyprus’ parliament rejected the first bailout proposal, Cyprus was later to agree to a bailout that impacted uninsured depositors - mostly Cypriots - in the island’s major banks whose deposits are subject to significant haircuts.
But Anastasiades said that he had extensive meetings with his EU counterparts and high-level EU officials to convey “a clear message: Cyprus is not asking for a special treatment, but expects a just and fair treatment, based on the same terms and conditions applied to all other EU countries”.
The message was that Cyprus was a partner in need, requesting solidarity but that “fundamental EU principle was not respected”, Anastasiades said.
“On the contrary, decisions reached beforehand by the interested parties were coercively imposed.
“I sincerely hope that this precedent in relation to Cyprus is not going to be applied elsewhere in Europe,” Anastasiades said.
“Although, as is well known, the main raison d’être of a precedent is that it can serve the purpose of establishing norms and guidelines to be repeatedly and universally applied.”
Anastasiades’ statement is bound to resonate with some of his EU partners.
High-level stakeholders have been quick to state that the terms of Cyprus’ bailout was a one-off, but suspicion continues to grow that future bailouts may follow similar lines. Slovenia is believed to be next in line to need a bailout, and there are already other EU member-states in financial trouble, such as Italy and Spain.
Meanwhile, German Chancellor Angela Merkel said yesterday in Berlin that eurozone members must be prepared to cede control over some policy areas in order to overcome the debt crisis.
“We need to be ready to accept that Europe has the last word in certain areas. Otherwise, we won’t be able to continue to build Europe,” Merkel said at a Deutsche Bank event. Polish Prime Minister Donald Tusk who was also present at the event said that it would be “dangerous” if the impression was given that Germany was imposing its own economic model, which Merkel denied.
And the European Council’s head, Herman Van Rompuy, said in Brussels that Cyprus had demonstrated the need “to break the vicious circle between sovereigns and banks that has haunted us since the beginning of the crisis.”
“We are working on this next phase already, with Commission proposals for a single resolution mechanism. We can't afford to have a half-built system,” he said.
“Single supervision and single resolution go together, you can't have one without the other. We can build both within our current treaty. Which is good, since we do not have the luxury of time,” Rompuy said.
“The broader work towards a genuine Economic and Monetary Union must continue,” he said at the Brussels Think Tank Dialogue.
But Anastasiades yesterday called for the principle of solidarity to be safeguarded for all “irrespective of their size and economic strength”.
He said that inter-parliamentary cooperation between national legislatures and the European parliament could lessen “the EU’s democratic deficit”.
Following the decision to raid deposits in the island’s two biggest banks - resolving the one and restructuring the other in the process - the government was now “wholly devoted to alleviate, to the greatest extent possible” the impact for those affected, the economy and the banking system, Anastasiades said.
Head of the European Parliament Martin Schulz, who attended the Nicosia conference, said he would do what he could to help Cyprus and try to find a way to help small and medium-sized enterprises.
He said that he would propose a European Investment Bank programme to fund smaller businesses
“This is a difficult situation but there are solutions,” he said.
What is urgently needed is to relaunch economic activity, Shulz said.
“We can debate the restructuring of the banking system and about long term projects but in the short term people need hope and activity,” he added.
“I just walked in Makarios Avenue and the biggest problem is that people have no trust in their own future,” Schulz said, referring to the Nicosia street which was once the capital’s main shopping centre. In recent years, many of the shops have been forced to close down.

Taiwan stages live-fire drill in contested Spratlys

Source: Times of Oman
Taipei: Taiwan’s coastguards said Monday that Taipei had staged a live-fire drill within a hotly-contested island chain in the South China Sea, in a move that risks stoking regional tensions.
More than 2,000 rounds of ammunition were fired by garrison forces on Taiwan-administered Taiping, the largest of the Spratly Islands, Wang Chin-wang, chief of the Coast Guard Administration, told parliament.
It was Taipei’s first live-fire drill in the Spratlys — claimed in whole or part by Taiwan, China, Vietnam, Malaysia, the Philippines and Brunei — since long-range mortars and artillery were shifted to Taiping Island in August last year.
The exercise took place in the middle of the April, Wang said.
Taiwanese legislator Lin Yu-fang, who sits on the bench of parliament’s defence and diplomacy committee, asked Wang to disregard possible reaction from other claimants.
“Taiping Island is part of our territory. You just did what you should do. You’ve done a good job,” Lin said.
Wang said the live rounds included 40 millimetre artillery shells and 120 millimetre mortars, which were transported to the island last year causing Vietnam to express its anger over the new, longer-range weapons.
All claimants to the Spratlys, apart from Brunei, have troops based on the archipelago of more than 100 islets, reefs and atolls, which cover a vast area but have a total land mass of less than five square kilometres (two square miles).
The potentially resource-rich sea, home to important trade routes, is a potential military flashpoint and there have been a string of diplomatic rows between countries with overlapping territorial claims in recent years.
The Philippines and Vietnam have complained that China is becoming increasingly aggressive in its actions in the area — such as harassing fishermen — and also through bullying diplomatic tactics.

Russia’s New Pivot: US foreign economic strategy to create new global order

Source: RBTH
A member of the Russian Academy of Sciences on why Washington’s establishment of two giant economic coalitions is pushing Moscow to develop a new strategy.
Every American president since Harry Truman has announced a doctrine reflecting the priorities of each White House occupant. In his State of the Union address to Congress in February 2013, Barack Obama set out his priorities. Globally, Obama intends to put the United States at the head of two giant economic blocks – the Transatlantic and Trans-Pacific Partnerships. This should ensure Washington’s leadership in a polycentric system of international relations.
Simultaneously, Obama – who is trying to put an end to a “decade of wars” unleashed by his predecessor George Bush Jr. – faces the task of beating an orderly retreat from the international arena without letting it turn into a panicked flight. This scheme has become a key component of the “Obama doctrine”. It is based on the concept of a “smart force”, which emphasizes non-military means for securing U.S. influence in a multi-polar world.
China’s “steamroller”
The U.S. share of global GDP has shrunk from 23 to 18 percent over the past decade, while the share of mainland China has risen from 10 to 15 percent. Unless the Chinese economic development model hits an impasse, China will catch up with the U.S. in terms of GDP as soon as this decade, and will become twice as big on an exchange-rate basis by the middle of this century.
The U.S. president’s National Security Advisor Tom Donilon has admitted that the White House had decided that a Trans-Pacific Partnership (TPP) could help the U.S. to remedy the situation. It’s on this basis that Washington is planning to set up a free trade zone in the Asia-Pacific region.
If the TTP becomes a reality, the U.S. will account for three-fourths of the partnership’s combined GDP. This will ensure American dominance within the new economic alliance.
At the same time, the TTP is an alternative to the ASEAN+3 arrangement promoted by Beijing (a regional economic coalition of China, Japan, and South Korea plus the ASEAN members). After the accession of India, Australia, and New Zealand, the group has been expanded to ASEAN+6.
China, accounting for half of the combined $17 billion GDP of the alliance’s 16 members and with a population of more than three billion, should play the dominating role in it.
It was this situation that led Obama to declaring the TTP a top priority for his administration. Washington cannot allow Asia to integrate economically under Beijing’s tutelage. The two different projects in this huge region are incompatible.
Beijing’s reaction to Washington’s plan has been extremely negative.
“The United States has been strengthening its old military alliances, undermining the fundamentals of peace in South East Asia, fanning territorial disputes between China and its neighbors, establishing a united front against China, forcing the creation of a TTP, and derailing the independent regional process of cooperation and integration,” The People’s Daily said.
An acute geoeconomic and geopolitical rivalry between the U.S. and China is thus emerging in the Asia-Pacific region, and it’s apparently bound to last for years if not decades.
Regional vectors and a global scenario
The new U.S. strategy, however, is not limited to the Asia-Pacific region but is of a global nature. The establishment of theTransatlantic Partnership (TAP) together with the TTP is a priority for Obama’s second administration.
As the globalization process has slowed in recent years because of an inability to overcome disagreements between developed and developing countries, Obama’s administration has focused on establishing interrelated regional economic blocks that comprise most developed democracies in North America, Europe, and the Asia-Pacific region. The White House expects to achieve the establishment of the TAP and the TTP before Obama’s second term expires.
Obama is thus planning to place the United States at the helm of two “rings”, two giant regional economic coalitions, the Transatlantic and Trans-Pacific Partnerships, which account today for 20 percent of the world’s population, 65 percent of global GDP, and almost 70 percent of global exports.
China looks rather modest compared to this: 19 percent of the population, 15.8 percent of GDP, 7.5 percent of capitalization, and 10 percent of exports. Even with account taken of China’s growth down the road, Beijing would still trail far behind the two U.S.-led regional coalitions. This should secure a solid leadership position for Washington in the polycentric system of international relations.
Military aspects
Washington has expressed concerns over the consequences of China’s armed forces modernization. An annual Worldwide Threat Assessment of the U.S. Intelligence Community released on March 12 said that China had a “limited, albeit growing, capacity for power projection” not only in the Pacific but also in the Indian Ocean.
According to RAND Corporation estimates, over the next 20 years China’s gross domestic product and defense budget could exceed those of the United States. China could therefore become “a more capable opponent.”
The Pentagon has already announced a shift in the U.S. military focus to the Asia-Pacific region. Washington has openly called for turning the TAP into an “economic NATO”.
The defense budget of the TAP (i.e. of the U.S. and the European NATO members) will account for around 60 percent of global military spending. With account taken of the U.S. allies in the Asia-Pacific region, this share would exceed 65 percent.
Moreover, the share of both U.S.-led coalitions of weapons production spending will amount to at least 80 percent, and of defense-related R&D to more than 90 percent. Neither China nor even the BRICS can compare to the TAP and the TTP on those measures.
The world in the middle of this century
The long-term US strategy, however, could fail unless the Obama administration manages to overcome the existing disagreements with its allies and partners. The differences between the economic interests of Washington and its allies can be bridged, but doing so will require mutual concessions, something neither the U.S. nor the other TTP and TAP participants seem to be ready for at the moment.
Washington hasn’t yet invited Moscow to take part in these giant coalitions. China isn’t exactly welcoming Moscow to the ASEAN+6 comprehensive regional economic partnership either. This makes one think about Russia’s place in a new configuration of international relations.
Russia’s “critical mass” is small – approximately 2 percent of the global population and 3 percent of the GDP. While this share would grow in the event of successful Eurasian integration, it would still lag far behind the global giants.
Geopolitical and geoeconomic loneliness within a new system of international relations is fraught with big risks. Although just like the United States, Russia has access to both the Atlantic and the Pacific Oceans, Moscow takes no part in the integration processes in the West or the East.
It is necessary to look for a way out of this situation. Thanks to its geographical position, Russia could become a continental link between the Pacific and Euro-Atlantic integration efforts.
Sergey Rogov is Director of the Institute for US and Canadian Studies and a member of the Russian Academy of Sciences

Travel Insurer Knows Which Question To Ask Doctor In Order To Deny Claim

When you’re buying a non-refundable plane ticket, it can be very tempting to fork over the few extra dollars to pay for travel insurance so that you’ll be able to get your money back in the case of an emergency like a medical crisis. But as easy as it is to click on that box and sign up for the plan, the insurance companies don’t always make it easy when it comes time to file a claim. Take the example in today’s L.A. Times of a California woman who had to cancel her plans to visit Washington, D.C., in December after she began experiencing shortness of breath and her doctor advised her not to fly. Luckily, she’d paid $29.33 for a travel insurance policy so she’d be able to get her $451 airfare refunded.
Not exactly.
See, this particular travel insurance policy has an exception for cancellations due to pre-existing medical conditions, and the insurer eventually determined that the passenger’s cancellation fell under this category.
Fair enough, but how did Allianz, the insurance company, reach this conclusion?
The passenger had suffered a heart attack ten years ago and had been diagnosed with high blood pressure before that. However, both conditions were being controlled with medication. Her cardiologist tells the Times that he provided Allianz with a statement explaining that her shortness of breath could be attributable to heart or kidney trouble. He also included a list of all her visits to his office for more than a year.
Allianz asked him to circle any visits during which he treated the woman for this diagnosis of possible heart or kidney trouble. As this issue was something new that he hadn’t treated her for previously, he didn’t circle any of the dates.
And so he received yet another form from Allianz, asking, “Was the patient symptomatic of or receiving treatment for the primary or underlying conditions” in the four months before booking her trip?
Unable to provide any further explanation, the doctor had no choice but to check off “yes” on this form, and that’s all that was needed for the insurer to deny the passenger’s claim.
“Obviously she’s receiving treatment for her underlying condition,” her doctor tells the Times. “She’s been receiving treatment for her underlying condition since I started seeing her in 2003.”
But he still feels that he was put into a corner, unable to provide any context or explain that just because he’d treated her for the possible root cause of her shortness of breath doesn’t mean it’s a pre-existing condition.
“It’s a new symptom,” says the doc. “It’s not an existing condition.”
A second cardiologist agrees, saying the woman’s doctor was given no choice on this second form. “Anyone simply taking medicine would be considered to be receiving treatment for an underlying condition,” he explains.
Allianz tells the times it wasn’t trying to corner the cardiologist into providing the answer it needed to deny the claim.
“We were just trying to get to the bottom of why she canceled her trip,” says a rep for the company.
The rep did state that Allianz would reach out to the doctor again, though that hadn’t happened as of yesterday.
Meanwhile, the California Dept. of Insurance tells the Times that it wants to take a look at the particulars of this case.

FDA Knew Lab Committed Research Fraud, Approved Drug They Tested Anyway

After the U.S. Food and Drug Administration learned about potentially fraudulent work done on behalf of pharmaceutical companies by a contract research firm in Texas, they didn’t pull the drugs off the market. You might think, though, that they might hold off on approving new drugs based on testing that came from that lab. You would be wrong. Before they hit the market, generic drugs must undergo testing to show that they’re bioequivalent, which is a fancy way of saying “they do the same thing as the name brand.” Last week, we shared ProPublica’s reporting on a lab that cut corners in some of the tests it was hired to perform. The drugs went on to be approved and hit pharmacies and store shelves all over the world. The FDA won’t tell the public which drugs those were, and as far as we know they remain on the market in the United States. Now there’s something worse: drugs approved based on testing that the FDA already knew could be fraudulent.
The medication in question is another generic: Tussionex, a narcotic cough suppressant and antihistimine. The FDA didn’t just shrug and wave the drug through. A consultant audited the troubled lab’s data, and the FDA okayed the audit, saying there was no evidence that the drug is unsafe. As far as the research from the troubled lab shows.
FDA Approved New Drug Despite Ongoing Investigation of Lab Misconduct [ProPublica]

Gregory Mannarino: Physical Gold & Silver Shortages Are Accelerating

Maguire – Elaborates On The LBMA Default & Ensuing Panic

from KingWorldNews:
Today whistleblower Andrew Maguire spoke with King World News, providing even more details by elaborating on the events surrounding the LBMA default. Maguire, who recently appeared in the extraordinary CBC production titled, “The Secret World of Gold,” also told KWN about the ensuing panic which has taken place in the aftermath of the LBMA default. Maguire described entities as “panicking.” Below is what Maguire had to say in part II of his remarkable and exclusive interview….

Kunming mother sues US central bank over shrinking cash

She claims Federal Reserve has allowed her deposit of US$250 to lose a third of its value
A woman in Kunming, Yunnan province, is trying to sue the United States central bank after discovering that the real value of the US$250 she put in an account in 2006 had shrunk by 30 per cent.
She claims it was a result of the Federal Reserve issuing too much money.
Her attorney, her son Li Zhen, called the lawsuit "litigation for the public good" which aimed to stop the Fed from continuing its quantitive easing policy and promote people's awareness of their rights.
He filed the lawsuit alleging "the abuse of monopoly in issuing currency" last month at the Kunming Intermediate People's Court on behalf of his mother, Liu Hua , but the court has yet to decide whether to officially place the case on file.
Since the global financial crisis, the Fed has been pumping more money into the economy via several rounds of so-called quantitative easing to try to boost consumer spending and revive economic growth.
The judges were "greatly surprised" to see the indictment, said the 36-year-old lawyer, adding he was the first mainlander to have filed a lawsuit against a foreign country's central bank.
Li, who works at the Yunnan Tongbang Law Firm, said he referred to Black's Law Dictionary, the most cited legal dictionary in the US, and concluded that the Fed is a private institution instead of a government department.
According to the dictionary, US financial institutions are required to invest in the Federal Reserve System if they want to join it, which he construed as meaning the Fed is privately owned.
"Since the Fed is a private institution which enjoys a monopoly over the issuing of currency, US dollar holders can sue it for printing too much money," he said.
Li said he requested two things from the court - that the Fed halts the abuse of its monopoly over the issuing of dollars and that it makes a "symbolic compensation" of US$1. Asked about the possibility of whether the court will accept the case, Li said it was "difficult to say".
He added: "Since the Anti-Monopoly Law was enforced in 2008, there have been not many serious lawsuits in this regard.
"It was not until early last year that a judicial interpretation for civil anti-monopoly cases was issued … besides, this case involves very professional issues and is very complex."
He said he was looking for more "victims" like his mother and expected to bring a class action in a US court.
Professor Wang Xiaoye , an expert on anti-monopoly law, said the depreciation of a currency was a business risk that holders had to bear.

BREAKING – China sends 8 ships to disputed islands, Japan threatens to use force

Coming through now. Japan saying if there’s a landing its navy will use force against China.
Japan PM vows to use force to expel any Chinese landing
TOKYO (AFP) – Japan’s prime minister on Tuesday vowed to “expel by force” any Chinese landing on islands at the centre of a territorial row, after eight government vessels from China sailed into the disputed waters.

China-Japan showdown
The group of 168 mostly low-ranking conservative lawmakers visited the Yasukuni Shrine in central Tokyo in what local news media described as the largest mass visit by Parliament members in recent memory. The shrine of the indigenous Shinto religion honors Japan’s war dead, including several who were executed as war criminals after World War II. This has made Yasukuni, and the political leaders who visit it, a target of criticism by China and South Korea, which suffered under Japan’s early 20th-century empire building.
Last year, a group of 81 lawmakers visited the shrine during the same season, when Yasukuni celebrates a three-day spring festival.
Japan nationalists closing in on disputed islands. China warning Japan not to come any closer.
Japan has just summoned China envoy
Japan has summoned the Chinese ambassador in protest over a flotilla of Chinese government ships that entered territorial waters near a disputed island chain.
Japan’s foreign ministry said on Tuesday it had called in the envoy after eight Chinese vessels entered waters near the Senkaku islands, which China calls Diaoyu, the most in a single day since Tokyo nationalised part of the archipelago in September.
‘Large number’ of Chinese ships around disputed islands

The Tauremini

MF Global’s Trustee Sues Firm’s 3 Top Executives

 Jon Corzine, former chairman and chief executive of MF Global. 
Alex Wong/Getty Images Jon S. Corzine, former chairman and chief executive of MF Global.
7:23 p.m. | Updated

A bankruptcy trustee has sued Jon S. Corzine and other former MF Global executives, claiming they were “grossly negligent” in the lead-up to the brokerage firm’s collapse.
The action by the trustee, Louis J. Freeh, comes just weeks after he agreed to postpone the lawsuit and enter mediation with Mr. Corzine. By filing litigation that appeared to catch the MF Global executives off-guard, Mr. Freeh may have jeopardized those talks.
“We question why the trustee chose to file this lawsuit, which is filled with seriously flawed allegations, while he is participating in court-ordered mediation of these very claims,” said a spokesman for Mr. Corzine, Steven Goldberg.
Mr. Freeh, who represents hedge funds and other creditors of MF Global, said on Tuesday that “the mediation process is ongoing,” and that it was “in the best interests of the Chapter 11 estates to file the complaint.”
The lawsuit, filed in United States Bankruptcy Court for the Southern District of New York late on Monday, echoes a report Mr. Freeh issued this month that blamed MF Global executives for engineering a “risky business strategy” and ignoring “glaring deficiencies” in internal controls. The report and the lawsuit accuse the executives of allowing more than $1 billion in customer money to disappear from the firm.
In the new complaint, Mr. Freeh took aim at Mr. Corzine, a former Democratic senator and New Jersey governor who became MF Global’s chief executive in 2010. Mr. Freeh, a former director of the F.B.I., also sued two of Mr. Corzine’s top deputies: Bradley I. Abelow, the chief operating officer, and Henri J. Steenkamp, the chief financial officer. Mr. Freeh labeled the men as “Corzine’s handpicked deputies.”
“Defendants, in their capacities as officers, breached their fiduciary duties of care, loyalty, and oversight over the company, and failed to act in good faith,” Mr. Freeh wrote.
The action against Mr. Abelow and Mr. Steenkamp is unusual in that both executives remained at MF Global for more than a year after the firm’s collapse, working under Mr. Freeh. They stayed to help sort through the bankruptcy process.
Gary P. Naftalis, a lawyer for Mr. Abelow, noted that Mr. Freeh had himself described that work as “invaluable.” Mr. Naftalis criticized Mr. Freeh for “now making allegations that lack any factual or legal basis.”
Mr. Goldberg, the spokesman for Mr. Corzine, also said the assertions in the suit were unsubstantiated. “There is no basis for the claim that Mr. Corzine breached his fiduciary duties or was negligent,” he said. “We look forward to proving the actual facts in court.”
The suit, which could help Mr. Freeh recover money for MF Global’s creditors, blamed Mr. Corzine for ramping up a risky bet on European debt. While the bonds were not by themselves to blame for the collapse of MF Global, the wager unnerved its investors and ratings agencies, further undermining the firm.
“Corzine engaged in risky trading strategies that strained the company’s liquidity and could not be properly monitored by the company’s inadequate controls and procedures,” Mr. Freeh said.
Mr. Goldberg in turn called the complaint “a clear case of Monday morning quarterbacking.” Mr. Corzine, he said, inherited a firm in 2010 that had lost money in each of the previous three years.
It is unclear whether the lawsuit will alter the mediation talks. While Mr. Freeh said the discussions were continuing, the lawsuit could derail or delay the mediation process.
The litigation might also complicate an effort to return money to customers. Mr. Freeh pursued his own case against Mr. Corzine, rather than join an earlier lawsuit filed by a second MF Global trustee, James W. Giddens, and some of the firm’s customers. Mr. Giddens, who has the task of recovering money for the customers, has already returned about 89 percent of the shortfall to MF Global’s clients in the United States. Some people close to the case say Mr. Giddens has identified a path to potentially making customers whole.
The lawsuit, coming on the heels of a bankruptcy judge approving Mr. Freeh’s plan to liquidate MF Global, could empower him to recover additional money for creditors. But the case might not sit well with customers.
In a statement, Mr. Giddens said he had joined the customers’ class-action lawsuit “because it was the most efficient way to get money to customers and creditors.”
Federal authorities, including the Commodity Futures Trading Commission, also continue to investigate the misuse of customer money. Mr. Corzine has not been accused of any wrongdoing by the agency, and internal e-mails suggest he was not aware that at least some of the customer money was improperly sent to the firm’s banks.
“Anyone who violates the law, and particularly anyone at MF Global who used a billion bucks of customer cash that should have been protected, should be punished appropriately,” said Bart Chilton, a member of the trading commission.

This post has been revised to reflect the following correction:
Correction: April 23, 2013
An earlier version of this article misstated when Lehman Brothers collapsed. It was 2008, not 2012.

BRICS:The Coming Challenge to U.S. Economic Dominance

Source: TFT
Late last month, leaders from Brazil, Russia, India, China and South Africa – the so-called BRICS – announced they were forming their own development bank to assist other emerging economies. The yet-to-be-named bank is expected to compete with the World Bank and the International Monetary fund, two institutions with power structures based firmly in the United States and Europe.
The announcement also serves as yet another sign that the world economy is quickly evolving to a place where United States global economic dominance is being challenged by regional interests.  Since the end of World War II, the United States was the driver of global monetary policy. When the Federal Reserve acted, the world listened and reacted.
Now, according to officials from the BRICS nations, emerging countries are trying to insulate themselves from the market shocks caused by the United States and Europe. They no longer trust the West to do the right thing. They’re forming their own “union” to create stability that the World Bank, the International Monetary Fund and the Fed have been unable to provide.
BRICS Not Alone
In the wake of the global financial crisis, other countries are seeking alliances that will make them less reliant on the West. During the financial crisis, Japan, China and South Korea created a $120 billion emergency loan fund to shore up Asian nations’ finances. The Association of Southeast Asian nations, comprised of 10 countries from that part of the world, is also experiencing a period of robust growth.
New partnerships are also emerging closer to home. Álvaro Uribe, former president of Colombia, recently told The Fiscal Times that his country is considering entering into a formal economic alliance with Mexico, Peru and Chile, creating a bloc with a GDP of $2.2 trillion. These countries have already agreed to eliminate trade tariffs on 90 percent of the goods exchanged between them.
But the biggest challenge to U.S. dominance remains in Asia. The Pentagon is shifting its strategy to confront potential rivals in that part of the world. And U.S. companies are gaining ground in huge consumer markets in China, Indonesia and Malaysia.

Read more at TFT