Anwar broke treaty with Najib by protesting polls results, reveals WSJ

BY CLARA CHOOI
ASSISTANT NEWS EDITOR

KUALA LUMPUR, May 25 ― Former Indonesian vice-president Jusuf Kalla has accused Datuk Seri Anwar Ibrahim of reneging on a peace deal to respect the outcome of Election 2013 that he brokered between the opposition leader and Datuk Seri Najib Razak in April. The Wall Street Journal reported today interviews with all three parties confirming the secret peace deal, and quoted Jusuf as claiming that he had phoned Anwar a day after the May 5 polls and urged the opposition leader to respect the commitment and “look at reality”.
“We had a commitment,” Jusuf was quoted as saying. “But they said, ‘No, no, no, no.’ ‘‘
The renowned international newspaper said that Anwar admitted to making the pact but told the WSJ that his opponents had nullified the deal by the way they ran their campaign.
“How can you talk reconciliation when you demonise your opponent in this manner?” Anwar was quoted as saying.
The WSJ wrote that it was Anwar who had approached Jusuf on the agreement two months ago, seeking the latter’s help in securing his opponent’s commitment for a peaceful election outcome.
The deal — that both sides refrain from personal attacks during campaigns and to accept the outcome of the polls — was subsequently made in April.
The two rivals had apparently rejected a clause in the accord to offer the loser a role in a “reconciliation government”, the WSJ wrote.
An adviser to Najib reportedly confirmed the deal, telling the WSJ that Anwar had sought Jusuf’s assistance to secure a mutual agreement to accept the results of the polls peacefully, regardless which way it goes and even in the event of a slim majority.
“The prime minister reiterated privately to Jusuf Kalla and in public before the election that BN would respect the will of the people and accept the election results, even if the opposition wins,” the paper quoted the aide as saying.
But Anwar’s version of the events surrounding the peace deal appeared to differ.
Quoting Anwar, the WSJ wrote that it was Jusuf who reached out to offer his assistance in ensuring an orderly outcome to the polls.
“There were many friends around the region who were concerned about the transition of power and whether it would be peaceful,” Anwar reportedly said.
According to the paper, Jusuf is known for his role in brokering peace deals during his term as vice-president from 2004 to 2009, having done so in Thailand and Sri Lanka to help resolve conflicts across the Indonesian archipelago.
In the May 5 polls, Najib and the ruling Barisan Nasional (BN) was returned to power in Putrajaya after a heated contest that saw Anwar’s Pakatan Rakyat (PR) win the popular vote but lose the polls.
A dissatisfied Anwar and PR have been staging mammoth rallies across the country since the close of the election, insisting that the election had been stolen from them through fraud and widespread cheating.
During one of his rally speeches, Anwar vowed never to surrender until PR claims its rightful place at the helm of Putrajaya.
The 65-year-old Anwar also appears to have put his plans for retirement on hold, and seems determined to fight on.
PR’s point of contention was the popular vote, which saw BN scoring just under 48 per cent of the total number of votes cast and PR scoring the majority at 51 per cent.
But the uneven dispersal of votes across various constituencies, which PR has labelled gerrymandering by the BN, had cost them the election as it only snapped up 89 seats to BN’s 133 seats in the 222-seat Parliament despite winning the popular vote.
Apart from the “Black 505” rallies, which have drawn mammoth turnouts all around, PR is also filing formal petitions against the results in 27 constituencies.
But the WSJ noted that Anwar believed these challenges were unlikely to turn the polls back in favour of his PR.
It added that although Anwar had accused the Najib camp of undermining his campaign with personal attacks, Jusuf did not join the opposition leader in the criticism.
Instead, the Indonesian leader said he felt both sides had met their commitment to refrain from personal attacks during the campaign.
But Jusuf said he fears that a prolonged dispute over the polls results between Anwar and Najib’s camp would only harden existing divisions among factions in Muslim groups and the Chinese and possibly lead to violence.

Sequestration Poll Shows That Nearly 4 In 10 Americans Impacted By Cuts

Nearly 4 in 10 Americans have felt the pain of automatic spending cuts, according to a poll released Friday by ABC News and The Washington Post.
Most Americans across the political spectrum disapprove of the cuts. Fifty-nine percent of Democrats, 54 percent of Republicans and 58 percent of independents oppose sequestration.
Cuts seem to be having more of an impact than in months past. A CBS News poll in early May found that only 27 percent of Americans were impacted by the cuts. A March ABC/Post poll found that cuts had only impacted 25 percent of respondents.
The impact of the cuts colors the respondents' view of the economic recovery. For those who say that the cuts have had no impact, 66 percent say that the economic recovery has begun. For those who say that it has had a minor impact, 46 percent say the economy is recovering, while 53 percent say it isn't. Those who say it has had a major impact squarely think the economy is not recovering, by a margin of 36 to 63 percent.
Read the full poll here.

Internal Revenue Service Scandal – The Abolition of the Collectors of Internal Revenue in 1948

Today I saw and heard, on Fox News, IRS exempt organizations director, Lois Lerner, say, after taking the testamentary oath at a House of Representatives Oversight Committee hearing, that she had not done anything wrong. “I have not done anything wrong. I have not broken any laws. I have not violated any IRS rules or regulations,” and then she took the Fifth Amendment right against self-incrimination. Lerner was in danger of criminal prosecution even though she was just a high level employee doing a job invented by Congress. She is guilty of not knowing the difference between a powerless employee and an officer of the United States of America. Since 1952, the employee inmates have run the asylum at the Internal Revenue Taxpayer Service. The customers are finally realizing they don’t have to buy what the IRS is selling.

The history of federal taxation from 1789 to 1948 is told in the United States Government Printing Office publication, “The Work and Jurisdiction of the Bureau of Internal Revenue,” which is available by doing an Internet search on that title. That booklet documents the time in American history when federal taxes were collected by Collectors of Internal Revenue, who had been appointed by the President of the United States of America with the advice and consent of the Senate and who were bonded in an amount determined by the Commissioner of Internal Revenue. For an era of 163 years real federal taxes were collected by real federal Collectors of Internal Revenue although the collections were made outside the district where the taxes were owed.

The conservative targeting scandal is a direct result of the abolition of the Collectors of Internal Revenue by IRS Reorganization Plan No.1 of 1952, which took federal tax collection away from sixty-five Collectors of Internal Revenue and handed it to thousands of employees without any government power to collect federal taxes. IRS employees could and did accept payments voluntarily made into the Treasury of the United States. When payments were not volunteered, IRS employees pretended to be Collectors of Internal Revenue.

The employee run Internal Revenue Service evolved from the United States Treasury Department’s government Bureau of Internal Revenue, while Treasury pretended nothing had changed. Thus, was born the longstanding practice, embraced by both Republican and Democratic administrations not to delve into the details of the IRS’s administration and enforcement of federal tax laws.

Mitt Romney vowed to repeal Obamacare when he was elected President, so IRS employees did everything in their power to re-elect Barack Hussein Obama by making difficulties for Obama’s political opponents.

Learning difficult tax law is easier when there are big rewards. Congress wants to know what happened at the IRS. You can teach anyone the law once you learn it. Contact me at edrivera@edrivera.comfor the details.

Dr. Eduardo M. Rivera

Sweden riots: Cops seek reinforcements, US citizens warned

Fredrik Sandberg/Scanpix via Reuters

Firefighters extinguish a row of burning cars in the Stockholm suburb of Rinkeby Thursday after youths rioted for a fifth night.

By Simon Johnson and Patrick Lannin, Reuters

STOCKHOLM - Police in the Swedish capital are to seek reinforcements after youths again set cars ablaze and threw stones at police for a fifth night running, officials said on Friday.
The unrest has led the United States embassy to warn U.S. citizens this week not to go to areas hit by rioting.
"I can confirm we have sent out a Warden message," embassy spokeswoman Danielle Harms said, referring to alerts by the Department of State with safety or travel information.
Around 30 cars were set on fire in poorer neighborhoods in northwestern and southwestern parts of the capital on Thursday night and rioters caused widespread damage to property, including schools, police said.

Despite Sweden's reputation for equality, the rioting has exposed a fault-line between a well-off majority and a minority, often young people with immigrant backgrounds, who cannot find work, lack education and feel marginalized."In terms of extent, it is a little less, a little quieter," police spokesman Kjell Lindgren said of the disturbances on Thursday night. Eight people, mostly in their early 20s, had been detained during the night. He said police were planning to request reinforcements from other areas to help deal with the rioting, upcoming football matches and the wedding of Princess Madeleine, third in line to the throne, on June 8.He said the police needed to be prepared to maintain a heavy presence on the streets. "We will do that for days, weeks, as long as it is necessary," he said. The violence of recent days appears to have been sparked by the death in Husby - the centre of the rioting - of a 69-year old, shot by police earlier this month.One recent government study showed up to a third of young people aged 16 to 29 in some of the most deprived areas of Sweden's big cities neither study nor have a job.The gap between rich and poor in Sweden is growing faster than in any other major nation, according to the OECD, though absolute poverty remains uncommon.

Swedish police try to restore order in Stockholm after week of rioting

Reinforcements brought in after disturbances show Sweden is not immune to tensions festering in deprived communities

Burnt out cars in Stockholm: rioting continued in the Swedish capital on Thursday for the fifth night in a row. Photograph: Rikard Stadler/Rikard Stadler/Demotix/Corbis

Police reinforcements have poured into the capital from provincial districts as Stockholm sought to put an end to a week of rioting, the worst to hit Sweden for years.
Disturbances have spread to 23 suburbs, dozens of cars have been set alight and around 30 people have been detained in connection with the riots, which were touched off on Sunday after police shot dead a man, believed to be Portuguese, who was reportedly wielding a knife.
Although a city police spokesman claimed the situation was at last calming down, further reinforcements arrived on Friday night from Skane, several hundred miles away to the south, as well as from Vastra Gotaland.
On Thursday night, two schools, a police station and 15 cars were set alight. The previous night around 70 cars were reportedly burned.
Few citizens in the city's suburbs appeared to believe that police would be able to prevent the disturbances from continuing after the end of the school week, but there was cautious optimism in the city that the worst of the rioting was over.
"It feels like things have been calmer tonight, at least that's our impression," said police spokeswoman Towe Hägg. "There are a lot of volunteers out on night patrols and that might have helped," she added. Local community leaders were hailed as "heroes" by the prime minister, Fredrik Reinfeldt, for stepping in to help police restore order.
The riots have served as a sharp reminder that despite regular praise for its 'Nordic model' of progressive politics, relatively low unemployment and a generous social safety net, Sweden is not immune to the tension that festers in deprived communities.
The riots began on Sunday in the neighbourhood of Husby, 14km north-west of Stockholm's city centre, a week after police shot a 69-year-old man who was reportedly roaming the area with a machete. According to Stockholm police, the man retreated to an apartment that was stormed by officers who were concerned for the welfare of a female inhabitant. An attempt to disarm the man with a flash grenade was unsuccessful and he was then shot by the police. The incident resulted in groups of young local men setting fire to about 100 vehicles.
Husby was calm on Friday, with children making their way home from school only showing the most cursory interest in burnt-out wrecks under the bridge next to their school.
Although the smashed windows of shops, two schools and the local library had yet to be replaced, locals of the 12,000-strong neighbourhood, which has an 80% immigrant population, said there had been no problems since 20 members of the local Islamic centre went around Husby to talk to the youths involved in the original disturbances.
"They told them that it had to stop and that they were scaring people," said Abdul, a nurse in the local hospital after Friday prayers at the mosque.
"At the moment it's very hard to get jobs – not just here but for everyone in Sweden," said the Moroccan immigrant who had lived in Husby for 11 years. Having registered growth of 6.1% and 3.9% in 2010 and 2011 respectively, the Swedish economy slowed to just 0.8% last year, largely as a result of faltering exports to the eurozone. Residents born outside Sweden represent 15% of the country's 9.5 million population, but account for 35% of those registered as unemployed.
Many of the riots have occurred in cramped neighbourhoods with tall, run-down housing blocks, which were quickly constructed as part of Sweden's "million homes" project in the 1960s and 1970s when Stockholm was in the grip of one of its periodic housing crises. Long-since abandoned by almost all of their original inhabitants, they are often the only source of available housing for migrants and asylum-seekers from war-torn countries.
Sweden's relaxed immigration policy and generous asylum system has resulted in exceptionally high immigration levels over the last decade. In 2012, 82,000 non-Swedes migrated to the country – 44,000 of them were asylum-seekers. The country's migration board expects to receive 54,000 asylum seekers in 2013, including around 20,000 Somalis.

The Clash of Civilizations & Perpetual War

Abby Martin talks to Dr. John Trumpbour, research director at Harvard Law School’s labor and work life program, about the theory of the clash of civilizations, the idea that a culture or war is inevitable and inherent in the relationship between the East and West; Hollywood’s homogenization of US culture and Harvard’s perpetuation of the ruling class.

FED BS & the Yen-Carry-Trade Ticking Time Bomb

Wow, it took over one day before the Fed came out to do damage control on Bernanke’s Congressional double speak Wednesday that set the markets on a correction.
Fed’s Bullard Wants Faster Inflation Before Tapering QE
“Before I am in favor of tapering I would like to see some assurance that inflation is going to move back towards target,” he said.
U.S inflation fell to a two-year low of 1.1 percent earlier this month, at the sharpest pace since December 2008 due to the dip in the oil price. The fall led to speculation that the Fed would stay on its very easy monetary policy path, despite divisions among policymakers.
http://www.cnbc.com/id/100763999
It is all part of the Yen-Carry Trade wind down.
Banks are scrambling to kick the can down the road, but a some point the road comes to and end.
Japan is still in upheaval, due in large part to the impending Yen-Carry-Trade wind down.
http://www.seeitmarket.com/wp-content/uploads/2013/04/Carry-Trade-041013-1024×539.png
Now for the first time since 2004-2007, the speculative diffusion of a revived Yen carry trade is underway. Much has been made of the carry trade’s return in recent days, but flows out of the JPY began basing and then quietly mounting beginning in late-May/early-June 2012.
http://www.seeitmarket.com/reviving-the-yen-carry-trade-15001/
House of cards about to collapse?
Will it be first deflation with a quick whipsaw to hyper-inflation?
Is the coming financial collapse going to be inflationary or deflationary?  Are we headed for rampant inflation or crippling deflation?  This is a subject that is hotly debated by economists all over the country.  Some insist that the wild money printing that the Federal Reserve is doing combined with out of control government spending will eventually result in hyperinflation.  Others point to all of the deflationary factors in our economy and argue that we will experience tremendous deflation when the bubble economythat we are currently living in bursts.  So what is the truth?  Well, for the reasons listed below, we believe that we will see both.
The next major financial panic will cause a substantial deflationary wave first, and after that we will see unprecedented inflation as the central bankers and our politicians respond to the financial crisis.  This will happen so quickly that many will get “financial whiplash” as they try to figure out what to do with their money.  We are moving toward a time of extreme financial instability, and different strategies will be called for at different times.

http://www.zerohedge.com/news/2013-05-23/will-it-be-inflation-or-deflation-answer-may-surprise-you

Nikkei price over last year graph.
http://finviz.com/futures_charts.ashx?t=NKD&p=d1

First cards to collapse: Utilities and REITs.

Futures heading back to yesterday’s low.
Looks like it couldn’t hold the 1654 to 1666 PRZ.
Looks a lot like a bear flag.
http://futures.tradingcharts.com/intraday/ES/63
Nikkei Futures Resume Plunge
http://www.zerohedge.com/news/2013-05-24/nikkei-futures-resume-rout
Keeping an eye on Bonds vs SPX.
http://stockcharts.com/h-sc/ui?s=AGG:$SPX&p=W&yr=2&mn=0&dy=0&id=p53512735501&a=301391750
Reversal could come mid to late next week according to my VIX wave forecast.
Rogue algos are now hitting the market.
Keep a close eye on if this continues.

A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve.
The network has seized control of the media to cover up its crimes, too, she explained.
In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts.
Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption.
And she is confident of success.
http://www.thenewamerican.com/economy/economics/item/15473-world-bank-insider-blows-whistle-on-corruption-federal-reserve


DB

The Fed’s Hands Are Tied… Right as the Financial System Begins to Crack

by Phoenix Capital Research

Japan’s Nikkei, after rallying over 70% since November, just collapsed 11% in less than two days. Looking at the chart, it’s pretty clear where this thing is heading: the same as the NASDAQ in 2000.

This is the problem with economic policy that focuses on pushing stocks higher: eventually the collapsing economy comes home to roost and stocks implode. We saw this in 2000 and 2008. We’re currently seeing it in Japan. And it’s only a matter of time before it his the US.
Indeed, Bernanke’s whole life work has been based on the belief that the Fed didn’t do enough during the Great Depression. So he’s opted to expand the Fed’s balance sheet to over $3 trillion and to monetize most of the US’s debt issuance via QE to battle the Financial Crisis.
Altogether, the Fed has monetized QE equal to 15% or so of the US’s GDP. Doing this has already put stocks back in a bubble and damaged the economy to no end. Marginal debt is back at record highs, housing has not bottomed, and Bernanke is still talking about a “recovery” FIVE years after the Crash. At this point based on the business cycle alone we should be in a roaring growth spurt.

QE doesn’t work. It never has. Look at Japan.


Japan has monetized an amount equal to well over 25% of its GDP via QE. And at that point its bond market began to crash. It’s not coincidence that the Fed is beginning to talk about tapering QE now that this is happening. Even a career academic can look at what’s going on in Japan and know that more QE won’t help the US.
So the Fed is essentially handcuffed at this point. Increasing QE in any way risks a Japan-bond market style rout.
Can you imagine what would happen if the financial system faces another Crisis? The Fed has already thrown everything including the kitchen sink at the system. If the system collapses now the Fed will be powerless to stop it.
Investors, take note… the financial system is sending us major warnings… If you are not already preparing for a potential market collapse, now is the time to be doing so.


We produced 72 straight winning trades (and not a SINGLE LOSER) during the first round of the EU Crisis. We’re now preparing for more carnage in the markets… having just seen another SIX trade winning streak…
To join us…
Click Here Now!
Best Regards,
Graham Summers

Why do people feel poor even though the stock market is at a record high? The process of inflating asset bubbles and transferring wealth to targeted groups. S&P 500 up 145 percent from 2009 low.

The stock market provides a beautiful scent of success although most Americans will only catch a whiff of that aroma.  The S&P 500 is now up 145 percent from the gloomy low reached in 2009.  Even though this unrelenting trend upwards has added wealth to a few, the majority of Americans are still seeing the purchasing power of their dollars slowly erode.  The one secure location for wealth in housing is now being usurped by Wall Street as investors begin to invest heavily in the rental real estate business.  Speculation in the markets is once again booming.  Japan had a mini-crash this week but the media cycle continues to pretend that printing your way into prosperity is somehow as easy as having central bankers pushing play on the iPod and expecting the hits to come one after another.  The reason you likely do not feel the big gains of the recent run is because most of the gains have come from artificially low interest rates and companies slashing wages and squeezing profits out of current workers.

S&P 500 and Case Shiller
The vast majority of Americans have their wealth locked up in housing.  While stocks are at record levels, the housing market still has a far way to go to reach the previous peak:

This is startling divergence especially when a large portion of the recent housing gains have come from the Federal Reserve going bananas into purchasing mortgage backed securities and easy money flooding the rental housing market.  Is this sustainable?  It is hard to tell especially when we are also reaching peak food stamp usage in the country.
Our reliance on foreign debt has grown very large:

 Nearly $6 trillion of our debt is now held by foreigners.  When I look at a chart like this, I realize that our reliance on others is only going to grow more and more as we continue to spend at the current rate.  We are now seeing much of this money flooding back onto our shores in the form of exclusive product purchases and also real estate investing in more select markets.  For many people trying to live day by day, all these gains simply mean that life is getting more expensive while they see their standard of living erode.
You can see this with the pace of GDP growth and also in the growth of total public debt:

The growth of public debt is far outpacing the growth of GDP.  You can see that as the recession hit, debt spending expanded to back fill the loss in consumption from the private sector.  But now as the market is back, debt based spending is still extremely high and a large part of this is coming from unprecedented actions from central banks.
The example of the Nikkei in Japan crashing in one day is a good example of what happens when you enter into uncharted waters.  Does this look remotely healthy in our case?

It is no coincidence that the stock market has been on rocket fuel since 2009 as well.  Yet the middle class continues to erode in the United States.  The reason many people feel poorer is because they actually are.  The wealth of a very small segment of society continues to expand as they utilize all these new mechanisms of leveraging debt.  Most Americans are unable to access these cheap funds from the Fed or having the knowledge to use high-frequency trading algorithms to make quick gains in the market.
It is still the case that half of this country has no savings or is living paycheck to paycheck.  The Fed wants you to spend money you don’t have just to re-inflate the bubble.  Best way to avoid recognizing major losses is simply to ignore them and inflate the market back up.  It is easy to do when you control the digital printing press.  The Nikkei’s 7 percent one day crash should tell you that not all easy money is golden.

Collapse: Does Washington Bridge Expose the Crumbling of a Nation?

Though witnesses say "miracle" nobody was killed, does incident speak to larger problem?

- Jon Queally, staff writer

(Photo: Harley Soltes / Special to The Seattle Times)As the nation continues to follow the slash and burn economic policies of the austerity hawks in Washington, will a dramatic bridge collapse in Washington state renew talk of America's eroding infrastructure?
On Thursday night, a truck hit a support beam on Interstate-5 near Seattle and caused a complete section of the Skagit River Bridge to collapse, sending vehicles and their passengers into the frigid water below.
The local Stagit Valley Herald called the collapse a "disaster, but no tragedy" and described how a "large flatbed truck passed under the bridge, hitting several of the steel trusses on its way," ultimately coming to a stop "about 100 yards away from the structure on its south side." It was the other cars and trucks on the bridge that went with it as the main section fell into the river.
Speaking with local reporters, witness Romero Ortiz said, “I just find it shocking that a bridge like that would fall without any bomb going off or anything.”
"...repairing roads and rail, building modern airports, keeping our broadband and energy grid at world class standards, making sure the sewers don’t leak, strengthening the sinews for the extreme weather that is upon us – this isn’t an ideological question. It is just common sense." -Robert Borosage, Campaign for America's Future
Though all involved in the collapse survived, questions on Friday are centered around how a bridge—even one categorized as by the state as "functionally obsolete"—could so easily collapse and whether or not the incident in Washington tells a larger story about the conditions of US roads and bridges.
As The Seattle Times reports:

The bridge, built in 1955, was inspected twice last year and repairs were made, according to state Transportation Secretary Lynn Peterson.
The bridge is classified as a “fracture critical” bridge by the National Bridge Inventory.
That means one major structural part can ruin the entire bridge, as compared with a bridge that has redundant features that allow one member to fail without destroying the entire structure.
The bridge is used by an average of about 70,000 vehicles per day, 12 percent of which are trucks.
Those vehicles will now have to find another route.

And reporting by Bloomberg added:A portion of the Interstate 5 bridge is submerged after it collapsed into the Skagit River in Mount Vernon on May 23, 2013. Images on local television station websites showed at least two vehicles in the river, including one with a man sitting atop his vehicle’s roof. There were no reports on the number of people involved or any deaths or injuries. (Photographer: Frank Varga/Skagit Valley Herald/ AP Photo)

The bridge’s collapse put a new focus on the nation’s failing infrastructure, an issue that President Barack Obama has highlighted in his second-term agenda. It came almost six years after a highway span fell in Minnesota at rush hour, killing 13 people and injuring 145. Last week, Obama ordered a 50 percent cut in the time it takes executive-branch agencies to start major road and bridge projects.
The president cited “an aging infrastructure badly in need of repair” during his February State of the Union speech and called for $50 billion in new spending on repairs. He described a “Fix It First” program to deal with the most urgent needs.
“We have some work to do on our bridges,” Washington Governor Jay Inslee told reporters at the wrecked span, amid floodlights that lit up twisted, half-submerged pieces. “We have maintenance needs that are significant across our state.”

In 2007, the I-35W Saint Anthony Falls Bridge in Minneapolis collapsed, killing thirteen people and injuring nearly 150. Following that incident and the public outcry it generated, promises were made to improve infrastructure spending nationwide.
Yet, in the aftermath of the 2008 financial collapse caused by Wall Street and despite economists' repeated calls for government stimulus spending that would both improve public services and create much needed jobs, little has been in done in Washington as purveyors of austerity—who argue (without evidence) for the wisdom of cuts to government spending—continue to dominate the debate and obstruct progress.
Ironically, just hours before the I-5 bridge collapse in Washington on Thursday, Robert Borosage, director of the Campaign for American's Future, tackled this exact subject by writing:

There is an idiocy about our current national politics that is simply stupefying. We are sitting idly, watching, and suffering, as our nation disintegrates into a run-down backwater. Our airports are a global disgrace. Our railroads, broadband, energy grid are all outmoded by international standards. A bridge falls every other day. Our sewage systems are overwhelmed by normal use, and collapse in the extreme weather that has become the national norm. Sinkholes now are becoming a life-threatening peril.
At the same time, over 20 million people are in need of full-time work. The construction industry has still not recovered from the housing collapse. The federal government can borrow money at interest rates near zero. Yet instead of grabbing this opportunity to rebuild the country, Washington is focused on cutting budgets, an austerity that clearly costs jobs and impedes the recovery.

And concluded:

...repairing roads and rail, building modern airports, keeping our broadband and energy grid at world class standards, making sure the sewers don’t leak, strengthening the sinews for the extreme weather that is upon us – this isn’t an ideological question. It is just common sense.
That this isn’t getting done now reveals exactly how extreme, how corrupt, and how destructive our current politics are.

DIA Collection Could Be Sold To Pay Off Detroit’s Massive Debt

DETROIT (WWJ/AP) - When Detroit Emergency Manager Kevyn Orr says everything’s on the table to dig the city out of debt, he’s not kidding.
Orr is looking at whether the collection at the Detroit Institute of Arts should be sold as city assets that could possibly cover Detroit’s long-term debt, which is estimated at about $15 billion.
Orr spokesman Bill Nowling told the Detroit Free Press the museum may face exposure to creditors if Detroit seeks bankruptcy protection.
“We have no interest in selling art, I want to make that pretty clear. But it is an asset of the city to a certain degree,” Nowling said. “As much as it would pain us to do it, and it does, I’m a great lover of art and so is Kevyn, we’ve got a responsibility to rationalize all the assets of the city and find out what the worth is and what the city holds.”
Amid the possibility, the museum said it has hired New York bankruptcy attorney Richard Levin to suggest ways to protect the collection from possible losses. Levin has been involved in bankruptcy case involving General Motors and other high-profile cases.
The DIA issued the following statement on the issue:

“The DIA strongly believes that the museum and the City hold the museum’s art collection in trust for the public. The DIA manages and cares for that collection according to exacting standards required by the public trust, our profession and the Operating Agreement with the City. According to those standards, the City cannot sell art to generate funds for any purpose other than to enhance the collection. We remain confident that the City and the emergency financial manager will continue to support the museum in its compliance with those standards, and together we will continue to preserve and protect the cultural heritage of Detroit.”

The city owns the Detroit Institute of Arts’ building and collection, while daily operations are overseen by a nonprofit. The scope of Orr’s power as an emergency manager to sell the collection or any other major assets, such as the city’s water department, likely would be tested in court.
It’s a move that’s certainly not sitting well with philanthropist and DIA patron Alfred Taubman, who said “it would be a crime” to sell any of the museum’s treasures to satisfy city creditors.
“I’m sure Mr. Orr, once he thinks about it, will certainly not choose that as one of the assets,” Taubman told the Free Press. “It’s not just an asset of Detroit. It’s an asset of the country.”
Much like people disagree on what is considered art, WWJ listeners are divided on this DIA issue. Here are just some of the comments we received:

– “I don’t think they should do that because it’s not the DIA’s fault that the city messed up the budget.”
– “Absolutely it’s OK. The city is in crisis and they have to restructure. Sell the art, repeal the tax.”
– “The city of Detroit holds an obligation to all citizens of Michigan and they’ve got to do what they’ve got to do.”
– “Are you kidding? The one place where we can go to get some kind of sophistication in the city and they want to sell it off? Ridiculous.”
– “The art should be sold, along with all the parks and any waterfront property.”
– “I guess we have a Marie Antoinette economy going in Detroit. Let them eat cake if they ain’t got no bread.”
– “The museum hasn’t caused this crisis. Would Rome sell the Colosseum if in fact they had a financial issue?”
– “Drastic situations call for drastic measures.”
– “Taking away some of that art would hurt the city and the people that come out to see things.”
Republican Gov. Rick Snyder in March appointed Orr as emergency manager, giving Orr the final say on Detroit’s fiscal matters. The city’s budget deficit could reach $380 million by July 1, it could run out of cash before the end of the year, and bankruptcy hasn’t been ruled out.
Under a Chapter 9 bankruptcy filing, neither a judge nor creditors can force the city to liquidate its assets, but bankruptcy experts tell the Free Press that a judge and creditors could push for a sale. Some creditors have already asked Orr whether the DIA collection is “on the table,” Nowling said.
Founded in 1885, the DIA covers 658,000 square feet that includes more than 100 galleries and 60,000 works of art. According to its website, the museum is among the top six in the United States. Its collection includes works by Vincent van Gogh, Henri Matisse, Pieter Bruegel the Elder and scores of others. It displays American, European, modern and contemporary art, as well as significant African, Asian, Native American, Oceanic, Islamic and ancient collections.
The museum doesn’t estimate how much its collection might be worth, and any sale price for specific items would depend on market conditions.
TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

Federal Audit Finds Baltimore City Schools Misused Federal Stimulus, Title I Funds

BALTIMORE (WJZ) — A federal audit finds stimulus dollars intended for Baltimore City Schools is spent on things far from the classroom.
Christie Ileto explains where your tax dollars went.
The audit shows federal stimulus, Title I dollars, went to dinner cruises, makeovers and meals and now, state lawmakers and parents want answers from the school district.
The report shows stimulus dollars intended to improve education at Baltimore City Schools didn’t go directly to the classroom.
“Anytime there’s an audit of Title I dollars, you’re going to see errors at the school level because schools spend money for what they need, and then sometimes they worry about if it fits the parameter of the grant later,” said Baltimore City Schools CEO Andres Alonso.

The U.S. Department of Education is reviewing expenses from 2009 and 2010 that showed more than $4300 were used on dinner cruises, more than $2400 for PTA meals at a meeting to discuss the budget, $1300 to attend a theater performance and $500 on a mother/daughter makeover.
“We’re talking $15 million out of $112 million, and what we see are school events to engage parents, but when the auditors came to look at it they said, ‘Wait a second. This should have been paid out of general funds, rather than Title I,” said Alonso.

But that’s little comfort to parents.
“I’m appalled this sort of stuff is going down because you can’t educate the children by taking things for your own pleasures,” said George Downs.
“It’s mismanagement. It’s negligent,” said Del. Pat McDonough.
The victim, state lawmakers said, in all of this are Maryland taxpayers and Baltimore City school children.
“Funding for some of Baltimore’s neediest children was simply squandered and transparency requirements were completely disregarded. This abuse of tax dollars is one example of why many Americans mistrust government,” said Congressman Dutch Ruppersberger in a statement.
“Who’s responsible? There needs to be a serious investigation,” said McDonough.
“Of course we don’t want schools to make mistakes, but I think error is a little different than the way it’s being portrayed,” said McDonough.
But parents said mistakes shouldn’t be made when it comes to their child’s education.
The U.S. Department of Education also found similar misspending in Prince George’s County Schools.

Life terms urged in Bangladesh accident

Those responsible for the Bangladesh building collapse that killed more than 1,000 garment workers should be given life in prison, a government-appointed committee has said. The investigating committee, appointed by Bangladesh's interior minister, recommended life in prison for the owner of the five factories based in the building on the outskirts of Dhaka last month. The collapse of the Rana Plaza building, the deadliest garment-industry accident in history, highlighted the hazardous working conditions in Bangladesh's $20bn garment industry and the lack of safety for millions of workers, who can be paid less than $38 per month. The committee found that the ground on which the Rana Plaza was built was unfit for a multi-storey building and the construction itself was "extremely poor quality". "A portion of the building was constructed on land which had been a body of water before and was filled with rubbish." Khandaker Mainuddin Ahmed, the committee head, told the Association Press news agency on Thursday. Ahmed said Sohel Rana, owner of Rana Plaza was "the main culprit, and because of him 1,127 people have died". The report found that Rana ignored construction codes by converting the originally designed six-storey building meant for a shopping mall and commercial space into an eight-storey factory complex where over 3,000 labourers toiled. Khandaker said Rana, and the factory owners, four of whom have been arrested, forced employees to go to work on April 24 despite cracks which appeared in the building the day before. "They threatened the workers that they would be fired and that their salaries would be cut if they refused to go to work." The committee also said the owners used generators in upper floors, defying building regulations. Combined with other industrial machinery the weight of the generators triggered the collapse. New safety reforms A US delegation is to arrive on Sunday led by Wendy Sherman, the State Department's under secretary for political affairs. Nobel Laureate Muhammad Yunus speaks about garment factory workers [Al Jazeera] The American contingent will meet officials from the Bangladesh government. "They'll talk about labour law reforms," Dan Mozena, US ambassador, said. "They'll talk about fire safety standards, a minimum standard for every factory and they'll talk about a minimum structural soundness standards." If the proposals are accepted, "it will become the largest 'better work' programme in history", Mozena said. The Bangladeshi government has already pledged to tighten factory safety inspections and make it easier for workers to form unions and set up a panel to raise wages for the three million garment workers. Mozena said there were still "some outstanding issues" to be addressed, without elaborating. Poor wages and repeated fatal accidents have led to a string of protests in the main garment-manufacturing hubs, halting shipments and forcing some retailers to divert orders to other countries. More than 2,500 people were rescued after the disaster and the committee has urged the government to provide them with free medical treatment.

Source: Al Jazeera and agencies

Gold ETF Sales Dwarfed By Central Bank, Jewellery, Coin and Bar Demand

Today’s AM fix was USD 1,385.25, EUR 1,068.95 and GBP 917.81 per ounce.
Yesterday’s AM fix was USD 1,386.00, EUR 1,074.92 and GBP 919.16 per ounce.
Gold climbed $24.80 or 1.78% yesterday to $1,392.00/oz and silver finished up 0.16%.
After a volatile and momentous week for global markets, gold and silver look set to finish higher in all currencies and have their best week in a month.

Cross Currency Table – (Bloomberg)
Holdings in gold exchange-traded funds fell to fresh four-year lows yesterday but demand from central banks for bullion coins and bars, plus store of wealth jewellery demand is supporting gold.
SPDR Gold Trust, the world's largest exchange-traded gold fund, said its holdings fell 0.15% to four-year lows of 1,018.57 tonnes on Thursday.
Gold held by gold-backed ETFs, which in 2012 accounted for just 6% of the world's gold demand, fell by 177 tonnes in the first quarter according to the World Gold Council data.
ETF demand is just one facet of the broad based global demand that gold enjoys today and this fact continues to be not fully appreciated by many market participants who are tending to focus on falling ETF demand and liquidation to the exclusion of all else.
In the first quarter alone, central banks acquired 109 tonnes of gold – the seventh consecutive quarter of central bank gold accumulation.
Central Banks Diversifying Into Gold Bullion “As Prices Fall”
Central banks are continuing to diversify into gold due to significant systemic and monetary risk and many will use the recent price weakness as an opportunity to diversify into gold at cheaper prices.

Gold, 5 Min, May 20-24 2013 – (Bloomberg)
The Deputy Governor of the South African central bank, South African Reserve Bank, Daniel Mminele, said yesterday that central banks are “buying bullion” “as prices fall” to reach a 10% ratio of overall foreign exchange reserves – according to Bloomberg.
The South African Reserve Bank said it’s “comfortable” with its holdings of gold and doesn’t have plans to boost gold reserves because they already make up about 10% of foreign reserves.
South Africa’s central bank holds four million ounces of gold bullion.
Referring to the very low levels of gold owned by creditor nation central banks with massive foreign exchange and in particular dollar reserves such as China, the Deputy Governor said “some of these central banks would come off very low levels and are looking at getting to levels of around 10% of holdings in gold and we’re already there.”
Gold ETF Liquidations Dwarfed By Global Central Bank, Jewellery and Coin and Bar Demand
Jewelry demand has also picked up and total jewellery demand was up 12% year-on-year in the first quarter, driven in the main by Asian markets.
Asian buyers tend to be value buyers and like buying on weakness. Their demand is not for jewelry as a fashion accessory but rather as a store of wealth to protect from bank and currency risk.
Jewellery demand in China was up 19% on the same period last year and stood at a record 185 tonnes.
Interestingly, demand for jewellery in China alone at 185 tonnes and central banks demand at 109 tonnes equals 294 tonnes of demand for physical gold bullion which is much greater than the fall in ETF demand of just 177 tonnes.
This 294 tonnes of demand does not include global jewellery demand, excluding China, coin and bar demand globally, investment demand for digital gold, allocated gold demand and storage.
With regards to global jewellery demand in the first quarter, demand in both India and the Middle East was up 15% respectively and in the US, demand showed a significant increase, 6%, for the first time since 2005.
Demand in both India and the Middle East was up 15% respectively and in the US, demand showed a significant increase, 6%, for the first time since 2005.
Demand for gold in China and India was also driven by an increase in bar and coin sales - up 22% year-on-year in China and 52% in India. In the US demand for bars and coins was up 43% compared with the same quarter in 2012. Globally, bar investment was up 8% while official coins (such as American Eagles and Canadian Maple Leafs) were up 18%.

Silver, 5 Min, May 20-24 2013 – (Bloomberg)
The fundamentals of the gold, and indeed of the silver, market remain as sound as ever and will reward those with an allocation to physical bullion – either in allocated accounts or in one’s possession.

World Bank Insider Blows Whistle on Corruption, Federal Reserve

A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve. The network has seized control of the media to cover up its crimes, too, she explained. In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success. 

Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.”

According to the peer-reviewed paper, which presented the first global investigation of ownership architecture in the international economy, transnational corporations form a “giant bow-tie structure.” A large portion of control, meanwhile, “flows to a small tightly-knit core of financial institutions.” The researchers described the core as an “economic ‘super-entity’” that raises important issues for policymakers and researchers. Of course, the implications are enormous for citizens as well.

Hudes, an attorney who spent some two decades working in the World Bank’s legal department, has observed the machinations of the network up close. “I realized we were now dealing with something known as state capture, which is where the institutions of government are co-opted by the group that’s corrupt,” she told The New American in a phone interview. “The pillars of the U.S. government — some of them — are dysfunctional because of state capture; this is a big story, this is a big cover up.”

At the heart of the network, Hudes said, are 147 financial institutions and central banks — especially the Federal Reserve, which was created by Congress but is owned by essentially a cartel of private banks. “This is a story about how the international financial system was secretly gamed, mostly by central banks — they’re the ones we are talking about,” she explained. “The central bankers have been gaming the system. I would say that this is a power grab.”

The Fed in particular is at the very center of the network and the coverup, Hudes continued, citing a policy and oversight body that includes top government and Fed officials. Central bankers have also been manipulating gold prices, she added, echoing widespread concerns that The New American has documented extensively. Indeed, even the inaccurate World Bank financial statements that Hudes has been trying to expose are linked to the U.S. central bank, she said. 

“The group that we’re talking about from the Zurich study — that’s the Federal Reserve; it has some other pieces to it, but that’s the Federal Reserve,” Hudes explained. “So the Federal Reserve secretly dominated the world economy using secret, interlocking corporate directorates, and terrorizing anybody who managed to figure out that they were having any kind of role, and putting people in very important positions so that they could get a free pass.”

The shadowy but immensely powerful Bank for International Settlements serves as “the club of these private central bankers,” Hudes continued. “Now, are people going to want interest on their country’s debts to continue to be paid to that group when they find out the secret tricks that that group has been doing? Don’t forget how they’ve enriched themselves extraordinarily and how they’ve taken taxpayer money for the bailout.”

As far as intervening in the gold price, Hudes said it was an effort by the powerful network and its central banks to “hold onto its paper currency” — a suspicion shared by many analysts and even senior government officials. The World Bank whistleblower also said that contrary to official claims, she did not believe there was any gold being held in Fort Knox. Even congressmen and foreign governments have tried to find out if the precious metals were still there, but they met with little success. Hudes, however, believes the scam will eventually come undone.

“This is like crooks trying to figure out where they can go hide. It’s a mafia,” she said. “These culprits that have grabbed all this economic power have succeeded in infiltrating both sides of the issue, so you will find people who are supposedly trying to fight corruption who are just there to spread disinformation and as a placeholder to trip up anybody who manages to get their act together.… Those thugs think that if they can keep the world ignorant, they can bleed it longer.”

Of course, the major corruption at the highest levels of government and business is not a new phenomenon. Georgetown University historian and Professor Carroll Quigley, who served as President Bill Clinton’s mentor, for example, wrote about the scheme in his 1966 book Tragedy And Hope: A History Of The World In Our Time. The heavyweight academic, who was allowed to review documents belonging to the top echelons of the global establishment, even explained how the corrupt system would work — remarkably similar to what Hudes describes.

"The powers of financial capitalism had a far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole,” wrote Prof. Quigley, who agreed with the goals but not the secrecy. “This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations."

But it is not going to happen, Hudes said — at least not if she has something do to with it. While the media are dominated by the “power grabber” network, Hudes has been working with foreign governments, reporters, U.S. officials, state governments, and a broad coalition of fellow whistleblowers to blow the entire scam wide open. There has been quite a bit of interest, too, particularly among foreign governments and state officials in the United States.

Citing the wisdom of America’s Founding Fathers in creating a federal system of government with multiple layers of checks and balances, Hudes said she was confident that the network would eventually be exposed and subjected to the rule of law, stopping the secret corruption. If and when that happens — even if it may be disorderly — Hudes says precious metals will once again play a role in imposing discipline on the monetary system. The rule of law would also be restored, she said, and the public will demand a proper press to stay informed.

“We’re going to have a cleaned-up financial system, that’s where it is going, but in the meantime, people who didn’t know how the system was gamed are going to find out,” she said. “We’re going to have a different kind of international financial system.... It’ll be a new kind of world where people know what’s going on — no more backroom deals; that’s not going to keep happening. We’re going to have a different kind of media if people don’t want to be dominated and controlled, which I don’t think they do.”

While Hudes sounded upbeat, she recognizes that the world is facing serious danger right now — there are even plans in place to impose martial law in the United States, she said. The next steps will be critical for humanity. As such, Hudes argues, it is crucial that the people of the world find out about the lawlessness, corruption, and thievery that are going on at the highest levels — and put a stop to it once and for all. The consequences of inaction would be disastrous.     

^{Photo of World Bank headquarters in Washington, D.C.}

Senator Ted Cruz schools Senator John McCain on Debt Limit

Senator Ted Cruz schools Senator John McCain on Debt Limit

Wells Fargo Forecloses On Homeowner For Making Early Mortgage Payments

Fire Dog Lake – by DSWright
As Occupy Our Homes demonstrates at the Department of Justice the fraudclosure crisis continues unabated.
A Florida family man who not only made his mortgage payments on time but made payments early faces foreclosure by Wells Fargo. The explanation for initiating the foreclosure proceedings by Wells Fargo is nothing short of amazing and offers a sad commentary on how little has changed despite the 2008 financial crisis and supposed reforms like Dodd-Frank.  

Etienne Syldor said he’s worked his whole life for a home in Orlando for his wife and three children.
Syldor is an immigrant from Haiti and a bus driver at Walt Disney World. At times, he said he has worked multiple jobs to make sure he never missed a mortgage payment.
Last year, Wells Fargo offered him mortgage modification, and he was told if he made four monthly payments during a trial period, the modification would be permanent.

So far so good. Family man working multiple jobs to make sure he is paying his bills – personal responsibility and all that jazz. Court records confirm that Syldor made his payments.
Then something funny happened. Despite the payments Wells Fargo began foreclosure proceedings on Syldor. Not surprisingly this made no sense to Syldor who, thankfully, hired an attorney and contacted a news station.
Wells Fargo’s statement to the news station is one for the ages.

Wells Fargo, bank representative Veronica Clemons sent a statement:
“For some loans, completing trial payments is a significant step toward a permanent modification; however, in this instance, the loan was part of a mortgage-backed security and in a protected pool, with specific payment guidelines. We are working with Mr. Syldor to explain the guidelines and explore options that may help.”
The bank told Eyewitness News Syldor didn’t follow the modification guidelinesbecause he paid early and sometimes his payments were sent one on top of the other

Oh the absurdist world of MBS. Because Wells Fargo sold Mr. Syldor one of these chopped up and reassembled frankenloans it didn’t matter that the bank was getting paid – usually the goal of loaning money – what mattered was that the arcane calculus of the derivative was not being complied with. And since Syldor was so happy to have a home for his family and was able to cobble together the cash from working multiple jobs he rushed to pay his mortgage to keep his home. His reward? Foreclosure proceedings that would have put him and his family on the street.
It’s 2013 and we are still dealing with this nonsense.

Gold “Trying to Build Base” as Retail Demand Counters More ETF Selling

London Gold Market Report
from Adrian Ash, BullionVault
Fri 24 May, 08:45 EST

Gold “Trying to Build Base” as Retail Demand Counters More ETF Selling

The GOLD PRICE fell $10 per ounce after reaching almost $1400 for the 5th time this week in London trade Friday morning.

Silver held tight around $22.50 per ounce, managing only one-third of gold’s 2.0% gain for the week.

After yesterday’s 7% plunge Japan’s stock market bounced, but other Asian equities fell, as did European stocks.

US and UK markets are closed Monday for national holidays.

“There is a floor emerging around $1360,” says a New York dealer’s note, adding that bearish speculators wanting to profit from a fall in the gold price “may be inclined to wait” for a rally to this week’s high of $1414 before adding to their record holdings of short futures contracts.

Unless the gold price gets above Wednesday’s high, reckons technical analysis from Swiss bank and London bullion market-maker UBS, “the risk is for rejection and to resume the broader bear trend.”

But “while the trend is still bearish,” counters Russell Browne at Scotia Mocatta, “the metal is trying to develop a base.”

Given the 20% drop from 2011′s highs, the gold price “could take multiple weeks to consolidate and determine a direction,” Scotia says, pegging resistance at last week’s high of $1450 per ounce.

“That the gold price hasn’t completely collapsed,” says a note from Macquarie bank quoted by Reuters, “is testament to strong retail demand for jewellery, coins and bars” in the face of continued selling of exchange-traded gold trust funds by institutional investors.

Thursday saw another 1.5 tonnes of gold exit the world’s largest gold ETF. The SPDR Gold Trust has now shrunk by 25% from its all-time peak of six months ago.

The UK’s largest pawnbroker H&T today warned investors that every 10% drop in British Pound gold prices will knock £2 million ($3m) off its pre-tax profits.

Major government bonds meanwhile ticked higher as stock markets slipped, nudging interest rates lower on UK, US and German bonds.

To reduce “significantly the risk of a sharp rise in [Japan's] long-term rates,” says Nomura analyst Richard Koo, the Bank of Japan should clearly state it won’t let inflation rise above 2% per year.

Japan’s central bank vowed at the start of April to double its balancesheet to nearly $3 trillion by end-2015. The Japanese stock market has gained 29%, but government bonds have fallen sharply, doubling the interest rate on new 10-year borrowing from below 0.4% to more than 0.9% today.

“Pundits in the media, and especially on television, have devoted a great deal of attention to the subject of inflation,” says Koo. “The more people hear about it the more they are inclined to believe it, even if it is not true.”

“[But] recent history teaches us that inflation has fallen too low,” writes John Hopkins professor and IMF scholar Laurence Ball.

Commenting specifically on the United States, “Raising inflation targets to 4% would have little cost,” says Ball, “and it would make it easier for central banks to end future recessions.”

“Gold’s sensitivity to inflation is better than most other asset classes,” says Kleinwort Benson’s chief investment officer, Mouhammed Choukeir.

The private bank and wealth manager is now selling gold from client portfolios, however. Because with gold price “momentum now clearly negative and key technical support broken at $1500, it looks to be an increasingly expensive form of insurance.”

Kleinwort is increasing its allocation to the US Dollar – “a safe haven currency” – because the recent surge in world stock markets have been accompanied by “signs of investor complacency.”

Adrian Ash

What If Stocks, Bonds and Housing All Go Down Together?

by Charles Hugh-Smith
About the claim that central banks will never let asset bubbles pop ever again–their track record of permanently inflating asset bubbles leaves much to be desired.
The problem with trying to solve all our structural problems by injecting “free money” liquidity into financial Elites is that all the money sloshing around seeks a high-yield home, and in doing so it inflates bubbles that inevitably pop with devastating consequences.
As noted yesterday, the Grand Narrative of the U.S. economy is a global empire that has substituted financialization for sustainable economic expansion. In shorthand, those people with access to near-zero-cost central bank-issued credit can take advantage of the many asset bubbles financialization inflates.
Those people who do not have capital or access to credit become poorer. That is the harsh reality of neofeudal, neocolonial financialization. Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012).
Injecting liquidity by creating credit and central bank cash out of thin air is not a helicopter drop of money into the economy–it is a flood of money delivered to the banks and financial elites. The elites at the top of the neofeudal financialization machine already have immense wealth, and so they have no purpose for all the credit gifted to them by the central banks except to speculate with it, chasing yields, carry trades and nascent bubbles (get in early and dump near the top).
Life is good for the kleptocratic financial Aristocracy: for debt-serfs, not so good.


No wonder the art market and super-luxury auto sales have both exploded higher. Thanks to the central banks’ liquidity largesse, the supremely wealthy literally have so much money and credit they don’t know what to do with it all.
If you want to borrow money to attend college, the government-controlled interest rate is 9%. If you want to speculate in the yen carry trade or buy 10,000 houses, the rate is near-zero or at worst, the rate of inflation (around 2% to 3%). If you want to borrow money for anything other than a socialized mortgage to buy a single-family home, tough luck, you don’t qualify. But if you want to speculate with $10 billion–here’s the cash, please please please take it off our soft central-banker hands.
If your speculations end badly, then no problem, we transfer the toxic trash heap of debt and phantom assets onto the balance sheet of the central bank or onto the public (government) ledger.
Given this reality, it was inevitable that the stock, bond and housing markets would all be inflated into bubbles by this monumental flood of free money. Please consider these three charts:



Spot The Bubble: Average New Home Price Soars By Most Ever In One Month To All Time High (Zero Hedge)
Verdict: bubble.

Verdict: bubble.

Japanese Bond Market Halted At Open As Bond Selling Purge Goes Global (Zero Hedge)
Verdict: bubble popping.
It is widely accepted as self-evident that all these bubbles will not pop because the central banks won’t let them pop. That’s nice, but if this were the case, then why did stocks crater in 2000-2001 and 2008-2009, and why did the housing bubble implode in 2008-2011? Did they change their minds for some reason?
No; they assured us right up to the moment of implosion that everything was fine, there was no bubble, etc. The only logical conclusion is that bubbles pop even though central banks resist the popping with all their might.
In the past, central banks were pleased to inflate one bubble at a time, enabling money both smart and dumb to flee one smoking ruin and get busy inflating the next bubble-ready asset class.
But now, thanks to essentially unlimited liquidity and credit, the central banks have inflated three bubbles at the same time: stocks, bonds and housing. That raises an interesting question: what if all these bubbles pop in unison? Will the central banks be able to place a bid under all three markets simultaneously? If so, where will all that freed-up cash go next?
One possibility is gold, another is commodities such as grain and oil. The latter is especially interesting, because central banks and governments hate energy speculators with special intensity because the “Brent vigilantes” have the power to boost inflation where it matters, i.e. energy.
Once energy takes off in a speculative bubble, the rising cost of energy sucker-punches the already-anemic global recovery, and the responsibility eventually lands on the laps of the central banks who created all the bubbles. Their quantitative easing policies discredited, the central banks will have to restrain their liquidity hand-outs, and that will undermine what’s left of the various speculative bubbles they’ve blown.
Those who argue bubbles won’t be allowed to pop ever again should look at history from 1999 to the present again.

Gold ETF Sales Dwarfed By Central Bank, Jewellery, Coin and Bar Demand

by GoldCore


Today’s AM fix was USD 1,385.25, EUR 1,068.95 and GBP 917.81 per ounce.
Yesterday’s AM fix was USD 1,386.00, EUR 1,074.92 and GBP 919.16 per ounce.
Gold climbed $24.80 or 1.78% yesterday to $1,392.00/oz and silver finished up 0.16%.
After a volatile and momentous week for global markets, gold and silver look set to finish higher in all currencies and have their best week in a month.

Cross Currency Table – (Bloomberg)
Holdings in gold exchange-traded funds fell to fresh four-year lows yesterday but demand from central banks for bullion coins and bars, plus store of wealth jewellery demand is supporting gold.
SPDR Gold Trust, the world’s largest exchange-traded gold fund, said its holdings fell 0.15% to four-year lows of 1,018.57 tonnes on Thursday.
Gold held by gold-backed ETFs, which in 2012 accounted for just 6% of the world’s gold demand, fell by 177 tonnes in the first quarter according to the World Gold Council data.
ETF demand is just one facet of the broad based global demand that gold enjoys today and this fact continues to be not fully appreciated by many market participants who are tending to focus on falling ETF demand and liquidation to the exclusion of all else.
In the first quarter alone, central banks acquired 109 tonnes of gold – the seventh consecutive quarter of central bank gold accumulation.
Central Banks Diversifying Into Gold Bullion “As Prices Fall”
Central banks are continuing to diversify into gold due to significant systemic and monetary risk and many will use the recent price weakness as an opportunity to diversify into gold at cheaper prices.

Gold, 5 Min, May 20-24 2013 – (Bloomberg)
The Deputy Governor of the South African central bank, South African Reserve Bank, Daniel Mminele, said yesterday that central banks are “buying bullion” “as prices fall” to reach a 10% ratio of overall foreign exchange reserves – according to Bloomberg.
The South African Reserve Bank said it’s “comfortable” with its holdings of gold and doesn’t have plans to boost gold reserves because they already make up about 10% of foreign reserves.
South Africa’s central bank holds four million ounces of gold bullion.
Referring to the very low levels of gold owned by creditor nation central banks with massive foreign exchange and in particular dollar reserves such as China, the Deputy Governor said “some of these central banks would come off very low levels and are looking at getting to levels of around 10% of holdings in gold and we’re already there.”
Gold ETF Liquidations Dwarfed By Global Central Bank, Jewellery and Coin and Bar Demand
Jewelry demand has also picked up and total jewellery demand was up 12% year-on-year in the first quarter, driven in the main by Asian markets.

Asian buyers tend to be value buyers and like buying on weakness. Their demand is not for jewelry as a fashion accessory but rather as a store of wealth to protect from bank and currency risk.
Jewellery demand in China was up 19% on the same period last year and stood at a record 185 tonnes.
Interestingly, demand for jewellery in China alone at 185 tonnes and central banks demand at 109 tonnes equals 294 tonnes of demand for physical gold bullion which is much greater than the fall in ETF demand of just 177 tonnes.
This 294 tonnes of demand does not include global jewellery demand, excluding China, coin and bar demand globally, investment demand for digital gold, allocated gold demand and storage.
With regards to global jewellery demand in the first quarter, demand in both India and the Middle East was up 15% respectively and in the US, demand showed a significant increase, 6%, for the first time since 2005.
Demand in both India and the Middle East was up 15% respectively and in the US, demand showed a significant increase, 6%, for the first time since 2005.
Demand for gold in China and India was also driven by an increase in bar and coin sales – up 22% year-on-year in China and 52% in India. In the US demand for bars and coins was up 43% compared with the same quarter in 2012. Globally, bar investment was up 8% while official coins (such as American Eagles and Canadian Maple Leafs) were up 18%.

Silver, 5 Min, May 20-24 2013 – (Bloomberg)
The fundamentals of the gold, and indeed of the silver, market remain as sound as ever and will reward those with an allocation to physical bullion – either in allocated accounts or in one’s possession.

Naked Citizens - 1 CCTV Camera for Every 14 People

Increasing numbers of ‘terror suspects’ are being arrested on the basis of online and CCTV surveillance data. Authorities claim they act in the public interest, but does this intense surveillance keep us safer?
“I woke up to pounding on my door”, says Andrej Holm, a sociologist from the Humboldt University. In what felt like a scene from a movie, he was taken from his Berlin home by armed men after a systematic monitoring of his academic research deemed him the probable leader of a militant group. After 30 days in solitary confinement, he was released without charges. Across Western Europe and the USA, surveillance of civilians has become a major business. With one camera for every 14 people in London and drones being used by police to track individuals, the threat of living in a Big Brother state is becoming a reality. At an annual conference of hackers, keynote speaker Jacob Appelbaum asserts, “to be free of suspicion is the most important right to be truly free”. But with most people having a limited understanding of this world of cyber surveillance and how to protect ourselves, are our basic freedoms already being lost?

Doomsday investors betting on market crash

Stocks have had a stellar year so far. In fact, the rally has gotten so heated that some investors are making bets on a big crash.
Universa Investments, which spends hundreds of millions of dollars a year buying crash protection, has attracted a record amount of money into its fund this quarter.
"People are starting to recognize that these market moves are unnatural and distorted," said Universa president and chief investment officer Mark Spitznagel, who declined to say how much is spent on crash protection, citing SEC rules.
Universa's view that a crash is coming is not widely held, making crash protection cheap, he said. Universa buys this protection in the form of options that generate huge returns when the stock market falls by more than 20%. Universa's adviser, economist and former derivative trader Nassim Taleb calls it 'black swan' hedging.
That's apropos considering Taleb coined the phrase 'black swan,' described as an unforeseen event that has an extreme impact, such as the 2008 financial crisis or Japan's 2011 nuclear disaster.
Spitznagel says he's pretty confident that the market will crash, or fall by more than 20%, in the next six months -- a year max.
Related: Is bond bubble losing air?
The sell-off in Asian stocks Thursday, he says, is a "hint at what's going to happen."
"I think there will be a lot of false starts before it does, and this may be one of them," said Spitznagel.
Universa investors, mainly banks and pension funds, use the fund as an insurance policy to protect against a stock market crash.
In 2008, when the S&P 500 dropped nearly 40%, Universa generated returns of more than 115% for investors, according to a source familiar with the fund's performance.
Universa expects returns of at least 60% when the market is down 20%.
Claude Bovet, who runs Lionscrest Capital, has been investing with Universa since it was founded six years ago. He says he has significantly increased his allocation in the past few months.
"It allows me to be bullish. You can participate in all the upside of the stock market but without being complacent," said Bovet.
Tail risk funds like Universa generally suggest that investors put 1% of what they put into stocks into these hedges. A fund that spends $100 million on equities would put about $1 million to $1.5 million into a tail-risk strategy.
When the market is up, Spitznagel and his team try to limit losses. For example, in 2009, when the market gained 30%, Universa investors saw a bleed of only 4%.
Related: Dr. Doom says buy stocks while you still can
The Federal Reserve, with its massive bond buying program, is seeing its actions become less effective, said Spitznagel. The Fed, he says, can continue to forestall a crash but only for so long.

"There are plenty of crazy things Bernanke can do," he said, referring to the Fed chairman. "But it will end badly."

For Universa, a bad market is a good one.
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