Wednesday, August 14, 2013

This Is The Biggest Cluster Of Hindenburg Omens Since The Last Stock Market Crash

Are we heading for a major stock market decline?  Warnings about a crash of the financial markets are quite common these days, and usually they don’t materialize.  But this time may be different.  A number of top analysts are pointing out the fact that the biggest cluster of “Hindenburg Omens” has appeared since the last stock market crash.  And those that have studied this insist that the more “Hindenburg Omens” there are in a cluster, the stronger the signal is.  Meanwhile, another very disturbing sign is the fact that the yield on 10 year U.S. Treasuries is starting to soar again.  On Tuesday it shot up from 2.62% to 2.727%.  As I have written about previously, the yield on 10 year U.S. Treasuries is the most important number in the U.S. economy right now.  If that number continues to rise, it is going to be very, very bad news for the financial system.
But before I discuss rising interest rates any further, I want to talk about this unusual cluster of Hindenburg Omens that we have just witnessed.  In a previous article, I shared a list of the criteria that are commonly used to determine whether a Hindenburg Omen has appeared or not…
1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3. That the NYSE 10 Week moving average is rising.
4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market)is negative on that same day.
5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).
When the Hindenburg Omen makes an appearance, it is supposedly a signal that the U.S. stock market will likely experience a significant decline within the next 40 days.
But of course this has not always happened when a Hindenburg Omen has appeared.  However, what we are seeing right now is a highly concentrated cluster of Hindenburg Omens.  According to SentimenTrader’s Jason Goepfert, the last time such a cluster appeared was before the last stock market crash…
Sometimes a topic in the market takes hold and it’s hard to shake it off. One of those is the technical “market crash” signal called the Hindenburg Omen.
It has its boosters and its detractors, and we’re not going to get caught up in debating its merits. We’ve discussed it for 12 years, always with the same arguments.
On June 10th, we outlined the market’s historical performance after suffering at least 5 signals from the Hindenburg Omen within a two-week period. Stocks were consistently weak afterward, and proved to be so again, at least for a while.
With the latest market rally, the Omens are flaring up again.There have been 5 Omens triggered out of the past 8 trading sessions (your data may vary—we’re using the same sources we’ve always used for historical data). That’s actually the closest-grouped cluster since early November 2007.
It’s extremely rare to see as many Omens occurring together as we’ve seen over the past 50 days. The last time was prior to the bear market in 2007.
The time before that was prior to the bear market in 2000.
Will the pattern hold up this time?
We’ll see.
But without a doubt we have been witnessing some very unusual activity in the markets over the past couple of weeks.  In fact, according to Tyler Durden of Zero Hedge, we have now seen a Hindenburg Omen occur five times in the last seven trading days…
For the 5th time in the last 7 days, equity market internals have triggered an anxiety-implying Hindenburg Omen. Based on our data, this is the most concentrated cluster of new highs, new lows, advancing/declining based confusion on record. The last few occurrences have not ended well (though obviously not disastrously) but as the creator of the ‘Omen’ notes, the more occurrences that cluster, the stronger the signal.
But the Hindenburg Omen is not the only sign that a stock market crash may be coming.  Marc Faber, the publisher of the Gloom, Boom & Doom Report, says that the markets are repeating the exact same pattern that we saw just before the stock market crash of 1987…
“In 1987, we had a very powerful rally, but also earnings were no longer rising substantially, and the market became very overbought,” Faber said on Thursday’s “Futures Now.” “The final rally into Aug. 25 occurred with a diminishing number of stocks hitting 52-week highs. In other words, the new-high list was contracting, and we have several breaks in different stocks.”
Faber says that’s exactly where we find ourselves this August.
Faber is projecting a stock market decline of “20 percent, maybe more” in the month ahead.
Meanwhile, as I mentioned at the top of the article, the yield on 10 year U.S. Treasuries shot up to 2.727% today.  The Federal Reserve is starting to lose control of long-term interest rates, and the only way that Fed officials are going to be able to get control back is to substantially raise the level of quantitative easing that they are doing, but of course that would create a whole bunch of other problems.
For now, the Fed keeps dropping hints that “tapering” is coming.  But if the Fed does “taper”, there might not be any support for bond prices from the private sector.  BAML credit strategist Hans Mikkelsen recently detailed why this is the case…
Since the financial crisis, Treasuries have been supported by numerous types of investors, including mutual funds/ETFs, banks, [emerging market] central banks and the foreign official sector (in addition to the Fed of course). However, these four sources of Treasury demand are unlikely to support the market in the short term going forward.
First, with continued outflows from non-short term high grade bond funds, money managers are unlikely to provide support for Treasuries any time soon.
Second, with increasing loan demand reducing the need for banks to support profitability by buying Treasuries, as well as significant mark-to-market losses in [available-for-sale] portfolios that in the future will count against capital, banks are unlikely to add long-duration assets in a rising interest rate environment.
Third, in light of continued depreciation of [emerging market] currencies, it appears unlikely that [emerging market] countries are experiencing inflows that need to be reinvested in Treasuries.
Finally, custody holdings of Treasuries continue to decline, suggesting foreign official sales of Treasuries.
If the yield on 10 year U.S. Treasuries continues to rise sharply over the coming months, that could potentially cause the 441 trillion dollar interest rate derivatives bubble to implode.  As John Embry recently told King World News, that would be “disastrous” for the global financial system…
Interest rates have already risen dramatically, so any tapering will simply throw gasoline on that fire and torch the banking system which is up to its eyeballs in interest rate derivatives. This would be disastrous for the entire financial system.
Someone recently suggested that there was already a $4 trillion hole in the European banking system. If we look at the Japanese situation, that is totally unstable as well. So the destruction of paper money will only accelerate, and this is what you are seeing reflected today in the prices of gold and silver.
We also have this shortage of physical gold, which is reflected by the fact that the gold lease rates have been negative for 25 consecutive days. We then had the revelation that the Bank of England had dumped a staggering 1,300 tons of physical gold into the market that they were supposed to be safely storing for other countries. The Bank of England wouldn’t even comment, they just pleaded the 5th.
Hopefully these Hindenburg Omens will pass and nothing will happen.
Hopefully the yield on 10 year U.S. Treasuries will not continue to rise.
But you know what they say – hope for the best but prepare for the worst.
I hope that you are getting prepared for the worst while you still can.
Republished from: The Economic Collapse

Canadians charged in $140 million penny stock fraud

Four Canadians and five Americans have been indicted in what U.S. officials call one of the largest international penny stock frauds in history.

By: The Canadian Press
NEW YORK, N.Y.—Four Canadians and five Americans have been indicted in what U.S. officials call one of the largest international penny stock frauds in history.
The U.S. Department of Justice says six suspects were arrested today in New York, Arizona, New Jersey, Florida and California, and another was arrested in Ontario.
The fraud generated funds from investors in about 35 nations through various brokerage and bank accounts, according to a statement from the office of U.S. Attorney Loretta Lynch in Brooklyn.
Two more, including the alleged Canadian mastermind, are being sought.
The department says the arrests are the result of a multi-year investigation involving the FBI and the RCMP.
The charges against the nine defendants include 24 counts of securities fraud, wire fraud and false personation of Internal Revenue Service employees, according to the statement.
The “pump and dump” scheme involved fraudulently inflating, or “pumping up,” share prices and trading volumes of certain penny stocks, and then “dumping” billions of shares of those stocks on investors, according to the statement.
The defendants also operated a so-called advance fee scheme, using call centers from which they would induce investors to pay fees for non-existent services to sell their illiquid penny stock shares, according to the indictment.
Both schemes were allegedly orchestrated by Sandy Winick, 55, a Canadian who has lived in China, Thailand, Vietnam and the United States, according to an indictment. Winick remains at large and is presumably hiding in Thailand, according to Lynch’s office.
Others charged include Joseph Manfredonia, 45, who used phony press releases to promote the penny stocks and recruited others to manipulate their prices and trading volumes, according to the indictment, filed earlier this month..
Cort Poyner, 44, bribed brokers to purchase the penny stocks on behalf of their clients, according to the indictment. He was also intercepted on a wire communication reminding others involved in the scheme to use mobile “throwaway phones” to avoid being caught, according to the statement.
Gregory Curry, 63, and Kolt Curry, 38, Canadians who also lived at various times in Thailand, managed call centers around the world, including in Canada, Thailand and the United Kingdom, and were planning to open a call center in Brooklyn, according to the statement. They also prepared false letters, websites and email accounts to deceive potential and actual victims. Kolt Curry also made phone calls to potential clients.
“Hitting the Americans would be like taking money from a baby,” Kolt Curry said of the Brooklyn call center in an intercepted wire communication, according to the statement.
Gregory Curry, along with Winick, remains at large.
Gregory Ellis, 46, a Canadian, acted as president of several companies that issued the penny stocks and called potential customers as part of the advance fee scheme, according to the indictment. Ellis was arrested in Ontario, Canada.
Gary Kershner, 72, a U.S. citizen who lived in Arizona and Kansas, made false statements to regulators and investigators and created fraudulent documents, according to the indictment.
Songkram Roy Sahachaisere, 43, a U.S. citizen who lived in California, promoted the penny stocks through Investsource Inc, a public relations firm he owned, according to the indictment.
William Seals, 51, of California, bought and sold several of the penny stocks to manipulate their share price and market volume, according to the indictment.
Lawyers for those accused could not be reached immediately for comment.
Winick has been in trouble with regulators in the past.
In 2010, the U.S. Securities and Exchange Commission won a default judgment against him after he failed to respond to a complaint accusing him of creating dozens of shell companies under a public company he controlled, First Canadian American Holding Corp, later known as Blackout Media Corp (BKMP.PK).
The SEC accused Winick of creating 59 subsidiaries in Blackout with no legitimate business purpose except to sell unregistered shares in the companies and pocketing the proceeds.
In 2012, he was ordered to disgorge $3.2 million in ill-gotten gains and was permanently barred from the penny stock market, among other penalties, according to court documents.
Blackout is among several companies mentioned in the indictment.


Even Deep Discounts At These Stores Couldn’t Lure Customers In Last Month

By  for Profit Confidential:

The retail sector of the economy acts as a gauge of consumer spending. When the retail sector shows weakness, it means consumer spending isn’t as strong. If that becomes the case, economists assume the U.S. economy will perform poorly since consumer spending makes up about two-thirds of U.S. gross domestic product (GDP).
As it stands, the retail sector is showing weakness and providing troubling news on consumer spending. According to Thomson Reuters, sales at retail stores open for at least a year increased a dismal 3.9% in July, below the analyst expectation of a rise of 4.4%. (Source: Reuters, August 8, 2013.)
A well-known name in the retail sector, Gap Inc. (NYSE/GAP), registered an increase of one percent in July same-store sales from July 2012. Analysts were expecting an increase of 1.7%.
Costco Wholesale Corp. (NASDAQ/COST) said its July same-store sales increased four percent from July 2012; analysts were expecting a rise of 5.1%. The company also stated that consumers are shying away from buying big-ticket items such as electronics.

In July, American Eagle Outfitters (NYSE/AEO) reported a decline of seven percent in its quarterly same-store sales, again compared to July 2012.
What’s even more troubling…to get those sales in July going, the retail sector had to offer deep discounts to customers.
July usually kicks of the back- to-school shopping season and gives us an idea of howconsumer spending going into the fall season looks. After the holiday shopping season, the back-to-school season is the second busiest for the retail sector.
As it stands, the National Retail Federation (NRF) is already expecting lower spending in the retail sector on back-to-school goods this year. This trade association expects families with school-age children to spend $634.78 this back-to-school shopping season compared to $688.62 last year—a decline of almost eight percent. (Source: National Retail Federation, July 18, 2013.)
My question; how long can the optimism in retail stocks last while demand in the retail sector from consumers is falling? Sooner rather than later, the irrationality between the prices of retail stocks and what their growth prospects are will meet an unpleasant reality. By Michael Lombardi, for Profit Confidential
Homebuilder stocks are heading into dangerous territory; investors need to take note, even if they don’t own these stocks. The move to the downside for this barometer of activity in the U.S. housing market is significant. Read…. What the 25% Collapse in Homebuilder Stock Prices Tells Us

Commodity Trader Tells Bloomberg TV Of ‘Huge Run’ On Physical Gold

Bloomberg News television today lets Mihir Dange, co-founder of commodity trading firm Grafite Capital, remark that his company bought physical gold eight weeks ago but still hasn’t gotten delivery yet. Dange says “there’s a huge run on physical now.” Dange’s comment begins at the 1:30 mark in the video here:

David Morgan – Gold & Silver Psychological Warfare Consolidation While India & China Buy!

David Morgan – Gold & Silver Psychological Warfare Consolidation While India & China Buy!

DC's Revolving Door is Fascism, Pure and Simple

Eric Blair
Activist Post

The revolving door of useful idiots swapping positions from the U.S. government to private industry is pandemic. It permeates every single industry; but especially banking, energy, war, food, medicine, prisons, and now surveillance.  It's fascism, pure and simple, and it's time we start admitting it.

"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power." - Benito Mussolini.

We're already well aware of the revolving door at the Pentagon to keep the war machine going:

The latest example of the fascist revolving door involves privatized spying.  Former NSA Chief and instigator of warrantless spying programs, Michael Hayden, publicly speaks out in favor of expanded spy powers, refers to privacy activists as Al Qaeda terrorists, and collects a paycheck from the Chertoff Group.

Glenn Greenwald writes:
Hayden is a partner in the Chertoff Group, a private entity that makes more and more money by increasing the fear levels of the US public and engineering massive government security contracts for their clients. Founded by former Homeland Security secretary Michael Chertoff, it's filled with former national security state officials who exploit their connections in and knowledge of Washington to secure hugely profitable government contracts for their clients.
Greenwald points out that CBS conveniently forgot to mention that Hayden was the person most responsible for implementing spying on Americans and that he now benefits financially from expanding that policy.

I know, what we need is to empower a new well-funded government agency to provide oversight of these private contractors. That'll stop fascism, right?

Most still view democracy, or majority rule over others, as somehow opposite of fascism. Yet both are simply means to the same end -- control. Democracy sounds nice in theory, but in practice we have very little say in public discourse, laws, or regulations; and when we get to vote, it's up between two carefully chosen useful idiots.

"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin.

There are many goodhearted political activists trying to rid the campaign system of corporate money without fully recognizing how the revolving door works in a fascist state. Yes, campaign contributions play a part in that, but the perpetual promise of an elite job is the real carrot.

When did we elect Michael Hayden to represent us? Did any of you vote to give up your privacy and offer to pay for surveillance?

Activists naively think they can poke around the edges and fix this system; a system that institutionalizes -- no, subsidizes -- fascism. Our "democracy" doesn't allow us to fix it. Fascism is embedded in our system.

"When the people find that they can vote themselves money, that will herald the end of the republic." -- Benjamin Franklin.

Significantly, when lawmakers and regulators have the power to grant corporate favors, there is no way to stop the the flow of corporate bribes.  It's nature.  Put simply, he who wants a favor will always pay those with the power to grant them that favor.  It makes no difference if it's called a democracy, monarchy, republic, or whatever -- if the government is the sole provider of market favors, the result will be fascism.

We've reached a point where giving more money and more power to the government means giving more power to the multinational corporations. Yet, the very same activists who hate corporatism in turn hate the idea of weakening the government. They believe one counterbalances the other.

Although the NSA and spying are in the spotlight, who do you think benefits from budget increases for the supposed watchdogs FDA, EPA, or SEC? Can you honestly say it's for our benefit after understanding the revolving door?

That is why the only genuine solution is to remove the power that government has to regulate our personal lives and business altogether. If you're against corporatism, you must also oppose big government because they are one and the same.

Obamacare Limit on Consumer Costs To Be Delayed a Year

The implementation of Obamacare is suffering another setback,  after it was discovered that a rule establishing a maximum limit in the out-of-pocket expenses people may have to spend on their own health care will be delayed until 2015.

The health care law stipulates that individuals will not have to spend more than $6,350 per year on their own, including deductibles and co-payments, while families would not spend more than $12,700.

But a little noticed rule in the legislation grants a one-year grace period to some insurers, allowing them to set higher limits or no limits at all on some costs in 2014, The New York Times reports.

Editor's Note: Should ObamaCare Be Repealed? Vote in Urgent National Poll

The clause was established on the premise that insurers and employers may need more time to streamline the way they administer coverage and upgrade their computer systems to centrally keep track of individual out-of-pocket expenditures.

"We knew this was an important issue. We had to balance the interests of consumers with the concerns of health plan sponsors and carriers, which told us that their computer systems were not set up to aggregate all of a person's out-of-pocket costs. They asked for more time to comply," an unnamed senior administration official told the Times.

The delay is bad news particularly for people with chronic illnesses, including cancer and disabilities, many whom have tens of thousands of dollars a year in out-of-pocket expenses for treatment and medications.

The news represents the second significant delay in the roll-out of the president's signature health care plan. In July, the administration announced it will not require employers to provide health insurance for their workers until 2015, prompting a wave a criticism about the viability of the law and the renewal of calls to repeal the program.

© 2013 Newsmax. All rights reserved.

California Won't Accept Its Own IOUs

 SAN FRANCISCO (CN) - Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors' federal class action claims the state is trying to balance its budget on their backs.
     Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California "paid" her with an IOU that two banks refused to accept - yet she had to pay California sales tax on the so-called "sale" of the uniforms.
     The class consists mostly of small business owners, many of whom rely on income from government contracts to keep afloat. They say California has used them as "suckers" as it looks for a way to bankroll its operations while avoiding its own financial obligations.
     "Instead of seeking funds through proper channels, the State has created a nightmare," the class says. "Many of these businesses will not survive if they are required to wait until October 2009 to have these forced IOUs redeemed by the State."
     The class claims the state is violating the Fifth and Fourteenth Amendments. It demands that California be ordered to honor its own IOUs, plus interest. They are represented by William Audet.  

Peter Schiff: Next Fed Chair Will Lead Us to 'Economic Ruin'

U.S. Agrees Not to Prosecute 'London Whale'

The J.P. Morgan Chase & Co. trader known as the "London whale" has reached an agreement with federal authorities to avoid criminal prosecution over a $6 billion trading loss, but two former colleagues are expected to be charged as soon as Wednesday, according to people close to the case.
Prosecutors are expected to charge Javier Martin-Artajo, a Spaniard who led the team that made the disastrous trades, and Julien Grout, a Frenchman responsible for recording and distributing daily values on the group's positions. They don't, however, plan to bring charges against Bruno Iksil, who made the wagers that earned him .

Unemployment Down, FED Ready To Taper, Economic Collapse Avoided? Everything Is Being Prepped To Pull The Big One Over On The American People Come This Fall!

Unemployment is down, there is talk of the FED tapering, the terror threat is still going on but in the shadow of the middle east. All economic indicators are pointing to the economy getting ready to make a full recovery. The President is out on the campaign trail selling Obamacare, selling the housing market, pretending to nothing about the NSA spying on people. In the meantime more rights, liberties are being taken away. Everything is being prepped to pull the big one over on the American people come this fall

Bill Fleckenstein: Too-easy money makes market too risky; The liquidity-fueled rally of the past 9 months is easy to like. But recent history tells us higher prices based on easy money carry extreme dangers, so a violent drop could lie ahead.
There is not much one can say to make sense out of the maniacal rise we have seen in the stock market since last fall, other than to note that the third and fourth rounds of bond buying by our Federal Reserve (aka QE3 and QE4) have boosted stock prices 20 to 25%.

Beneath the surface, however, stocks are a house of cards. Simply because prices are rising as a consequence of the massive liquidity injected by the Fed (and the Bank of Japan) – combined with “professionals” running other people’s money who are terrified of not keeping up with the averages – does not mean that participating in the stock market at the moment is something that anyone who is sane ought to do.–too-easy-money-makes-market-too-risky
Peter Schiff On The Half Full Economy
The marginal economic strength that was described in the most recent GDP release from Washington has caused many to double down on their belief that the Federal Reserve will begin tapering Quantitative Easing sometime later this year. While I believe that is a fantasy given our economy’s extreme dependence on QE, market observers should have learned long ago that the Bureau of Economic Analysis (BEA) initial GDP estimates can’t be trusted. A perusal of their subsequent GDP revisions in the last five years reveals a clear trend: They are almost twice as likely to revise initial estimates down rather than up, and the downward adjustments have been much larger on average.
As a result of this phenomenon, an overall optimism has pervaded the economic discussion that has consistently been unfulfilled by actual performance. The government is continuously over promising and under delivering. Unfortunately, no one seems to care.
Detroit Bankruptcy Provokes Calls For Nationwide Assault On Pensions

The most aggressive statements were made by billionaire New York City mayor Michael Bloomberg, who said in a speech Tuesday that Detroit is “the road to ruin for any American city. I believe that the Detroit experience holds lessons for every American city—and that we have an obligation to protect our future by examining those lessons.”
Bloomberg then laid the blame for the Detroit bankruptcy at the feet of workers and retirees:
“One of the major reasons that Detroit could not stop its downward spiral was that its labor costs—especially its retiree costs for pensions and health care—crowded out its ability to invest in the things that make a city an attractive place to live and visit.”

Bloomberg’s speech culminated in a blunt threat to workers and retirees in America’s most populated city. “We are only a short distance from relapsing into decline if we allow health care and pension benefits to crowd out the investments that make New York City a place where people want to live, work, study, and visit,” he said.

Why Are So Many People Choosing To Leave The United States Permanently?
-The U.S. economy has been steadily declining for many years and that decline now seems to be accelerating.
-We are being taxed into oblivion.
-The quality of the jobs in our economy is rapidly declining.
-The middle class is continually shrinking.
-Poverty is exploding.
-Escalating social decay in our major cities.
-Our culture is rapidly going down the toilet.
-Our health care system has become a complete mess and a giant money making scam.  Obamacare is only going to make things even worse.
-Our politicians are tremendously corrupt, but the same clowns just keep getting sent back to D.C. over and over again.
-Our nation seems to be on a relentless march toward collectivism.
-America is rapidly turning into a “Big Brother” police state that is run by control freaks that seem obsessed with watching, tracking, monitoring and controlling virtually everything that we do.

O’Reilly: Food stamps are ‘encouraging parasites’ to ‘take as much as they want’

Fox News host Bill O'Reilly

Fox News host Bill O’Reilly on Monday declared that President Barack Obama had encouraged “parasites” to take advantage of the food stamp program and other “entitlements.”
For the past week, the Fox News Channel has promoted its special, “The Great Food Stamp Binge,” which highlights surfer Jason Greenslate as he takes advantage of the Supplemental Nutrition Assistance Program (SNAP).
Although the 99 percent of SNAP recipients do not defraud the program, O’Reilly only focused on Greenslate during his Monday broadcast.
“The food stamp scandal, right now, 15 percent of the entire American population receiving food subsidies,” the Fox News host announced. “And some of those people are conning the system.”
O’Reilly said that the president was to blame for changing the work rules for food stamps and allowing “anybody to get them if they know how to game the system.”
“I take one look at this guy and he’s making money off the books,” he explained. “Now I’m not going to make any accusation on national television about how he’s making money, but this guy’s not just surviving on food stamps. Alright? He’s making money. The rat life entails a lot of different things.”
“But this guy is a parasite. And my contention is that the Obama administration is encouraging parasites to come out and, you know, take as much as they can with no remorse. And this is how a country declines. This is how we become a weak nation.”
Watch this video from Fox News’ The O’Reilly Factor, broadcast Aug. 12, 2013.

Fresh sign that Fed is falling out of love with QE

itself is dicey, as it really depends on the central bank promising not to raise short-term interest rates, the study found.
The economic letter, written by Vasco Curdia and Andrea Ferrero, senior economists at the San Francisco regional bank, focused on the Fed’s second round of asset purchases: $600 billion of long-term Treasurys purchased between November 2010 and June 2011. The economists said the purchases added about 0.13 percentage point to real GDP growth.
And without the guidance from the Fed that  rates would be held close to zero, QE2 would only have added 0.04 percentage point to growth, the economists found.
There was no discussion of the cost of QE2 in the paper.
The Fed is currently buying $85 billion a month in Treasurys and mortgage related assets. It has signaled it wants to pull back the stimulus. Charles Evans, the president of the Chicago Fed, estimated that the central bank will buy $1.2 trillion of assets once the third round of the program is completed.
The study fits with the view of some monetary policy experts who argue that asset purchases are really just “earnest money,” or a signal to markets that the Fed is going to keep interest rates low for longer. In other words, while the Fed is buying assets, it won’t be raising rates.
According to this view, once the Fed starts to taper asset purchases, the market will quickly turn its attention to when the Fed will hike rates.
The study itself concludes:  ”Communication about when the Fed will begin to raise the federal funds rate from its near-zero level will be more important than signals about the precise timing of the end of QE3.”
— Greg Robb

FBI suspected of cyber-attack on anonymous web-hosting and email services

FBI suspected of cyber-attack on anonymous web-hosting and email services

By Mark Blackwood
On August 5 malicious software (malware) in the form of a Java Script (JS) attack code was discovered embedded in multiple websites hosted by the anonymous hosting company Freedom Hosting (FH), the largest hosting company on the anonymous Tor network. Initial research into the malware by experts suggests that it originated from and returned private data back to the Federal Bureau of Investigation (FBI) or other US government agencies.
The malicious script was specifically designed to attack and exploit vulnerabilities within the Firefox 17 web browser, included within older versions of the Tor Browser Bundle (TBB), which allows for anonymous Internet access.

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An announcement of the attack was made by the Tor Anonymity project, which stated, “An attack that exploits Firefox vulnerability in JavaScript has been observed in the wild. Specifically, Windows users using the Tor Browser Bundle (which includes Firefox plus privacy patches) appear to have been targeted.” It advised anyone using an older version of the Tor Browser Bundle (TBB) to update to the latest August 9 release immediately.
The detection of the malicious code coincided with the arrest of Eric Eoin Marques, the alleged administrator of FH, on suspicion that the company, which hosts a vast array of servers, had been hosting sites linked to child pornography. Shortly after Marques’ arrest every website hosted by FH was taken offline simultaneously, including the anonymous email service Tor Mail.
Owing to the fact that the TBB can inhibit the collection of data on a person’s online activities and connect it to his or her name, address, age, phone number, etc., the software has become increasingly popular, as has the free anonymous means of online communication offered by Tor Mail.
This is especially the case in the wake of the US government’s persecution of whistleblower Edward Snowden. The former intelligence contractor exposed mass internet surveillance by the US government’s National Security Agency (NSA) and its allies internationally. For disclosing these activities, Snowden has been subjected to an unprecedented international manhunt, stripped off his passport, and forced to seek temporary asylum in Russia.
TBB is used to access services on the “deep net” (servers not indexed by standard search engines) such as Tor Mail, which until August 5 had the capacity to enable anyone to safely leak information relating to government corruption, oppression and human rights abuses, without fear of being detected or having their anonymity compromised.
The goal of Tor Mail was to provide for free a completely anonymous means of email communication to anyone who needed it. As such, it had earned a reputation as being the most anonymous email operation online.
The servers accessed by Tor, now portrayed as an arena inhabited solely by criminal elements, have been used widely by human rights groups, journalists, whistle-blowers, protesters and political dissidents worldwide, as well as members of the wider public who value their right to privacy.
That is why the circulation of a malicious code that has the capacity to unmask and compromise a person’s anonymity is of great concern to those who have relied on the TBB and Tor Mail as a means of anonymous communication.
Claims that the attack only affects, or should be of concern to, those engaged in criminal activities online is false.

Silver Surges 12% In 5 Trading Days - Record Silver Coin And High ETF Demand

Today’s AM fix was USD 1,334.00, EUR 1,002.41 and GBP 862.31 per ounce.
Yesterday’s AM fix was USD 1,325.75, EUR 997.40 and GBP 856.59 per ounce.
Gold climbed $23.30 or 1.77% yesterday and closed at $1,335.90/oz. Silver surged $0.88 or 4.3% and closed at $21.34.
Gold bullion is marginally lower in all currencies today after yesterday's gains as markets await U.S. economic data releases.
Indians purchased more gold in July than June in spite of the governments efforts to curb supplies and increase tariffs. Yet the Indian government, is doubling down in their desperate, some would say futile, attempts to curb the people of India’s preference to save in gold.
India raised the tax on imports for a third time this year this morning. The duties on gold and platinum imports were increased to 10 percent from 8 percent, while the levy on silver was boosted to 10% from 6%.
Physical demand in the east is still strong ahead of the festival and wedding seasons which see increased demand.

Silver in USD, Daily, 5 Years - (GoldCore)

Silver has consolidated on it’s sharp 4.3% rise yesterday and has risen another 1.2% in European trading this morning.
Silver climbed for a fifth day yesterday and has now surged 12% in 5 trading days. It has risen from a low of $19.17/oz  last Wednesday to $21.66/oz in recent trading.
Silver futures have declined 28.6% this year in New York, the biggest loss among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index but the smart money is continuing to accumulate on the dip.
Recent resistance at $20/oz and $20.50/oz has been overcome and silver is set to test resistance at $22/oz. Above $22/oz, the next level of resistance is at $24/oz and $25/oz.
An ounce of gold bought 61.5 ounces of silver in London today and the gold silver ratio has fallen from over 67 at the start of August.
Since 2003, we have said that the gold silver ratio would in time revert to its long term, historical average below 20 to 1 (see charts below). In a note today, UBS say that the gold silver ratio should drop toward 50 in the next couple of years as silver continues to outperform gold.

Gold Silver Ratio, Daily, 5 Year - (GoldCore)

The death of the silver bull market is greatly exaggerated as seen in the still very robust physical demand from investors and store of value buyers internationally.
This can be seen clearly in American Silver Eagle sales and in the silver ETF holdings.
Sales of silver coins by the U.S. Mint have set a record high in the first half of 2013 seeing the best start to a year ever.
Year to date Silver Eagle sales are at 30.3 million, a record pace that was supported by soaring July sales. Silver Eagle sales had a record year in 2011. That year, it took until September 21, 2011, to reach above 30 million in sales for the year.
Therefore, 2013 looks set to be a record year for Silver Eagle sales.
Silver coin sales were suspended in January for more than a week because of a lack of silver inventory. In April, purchases more than doubled from a year earlier after prices tumbled 16% in two days due to unusually aggressive selling of paper silver on the futures market.
Silver ETF holdings which have continued to increase in recent weeks and months even as the gold ETF holdings saw falls.
Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 10,396.73 metric tons as of Aug. 12 but remain near record levels.
Falling prices and concerns about being able to take delivery of coins amid continuing concerns about the U.S. economy and currency debasement have led to the record demand.
Bull markets do not end in a period of sustained physical demand nearly two years after prices have “peaked”.
This strongly suggests that silver’s bull market is far from over. Silver has gone from being massively undervalued in the early 2000’s to being fairly valued today.

Gold Silver Ratio, Quarterly, 1950-2013 - (GoldCore)

Bull markets end in speculative manias with mass participation by the public and blow off tops where prices become massively overvalued as seen in 1980.
In 1980, silver rose from $6.08/oz on January 2nd 1979, to $50/oz on January 21st 1980, or more than eight fold in less than 13 months.
This has not happened with silver yet. Most of the public does not even know the price of an ounce of silver, let alone its value and how to own it. Silver remains gold’s very poor cousin and gets little or no media attention.
The parabolic spike led to the gold silver ratio collapsing to 17 to 1 ($850 oz / $50 oz). We expect a similar outperformance and parabolic final price move in silver.
Bull markets see prices rise to above their inflation adjusted highs. Sometimes prices rise to multiples of their previous inflation adjusted high.
Silver’s inflation adjusted high was $130/oz and we continue to see that as a realistic long term price target.
Given silver’s volatility, dollar, pound or euro cost averaging into position remains prudent.
It is also important to note that when prices have had a parabolic gain - dollar, pound or euro cost averaging out of a position will be prudent as it will be nigh impossible to time the top.

Over 100 economists sign petition to raise the minimum wage

The US Has Lowest Minimum Wage and Most Young People Without Jobs Among Wealthiest Countries

Till Debt Do US Part: ‘Country’s backlog much bigger than declared’ (ft. Jim Rogers)

In the second edition of Venture Capital – Katie Pilbeam talks about the worrying new estimations on US debt figures with Jim Rogers, a legendary investor author of Street Smarts: Adventures on the Road and in the Markets. As Europe bears the burden of austerity, million-euro salaries continue to be dished out to bankers. Executive Director of DV Advisors Patrick Young tells us if such pay is justified. Can the price of fertiliser affect football? We look at whether that’s the case with the Russian football club Anzhi. Plus corporate news and market action in Russian stocks.

Iceland top of the pile in global employment

Iceland, which normally performs well in socioeconomic tables, has the world’s lowest rate of unemployment, according to new figures from prominent research firm Gallup.
The organisation’s Payroll to Population (P2P) measure estimates the percentage of a country’s adult population above the age of 14 – not only people currently in the workforce – that is employment on a full time basis for 30 hours or more per week.
Gallup’s P2P does not take into account self-employed people, part-time workers, and those who are unemployed or not payroll-employed. In addition, it does not adjust its P2P metric seasonally.
Iceland sits on top of the pile with 60 per cent of its population aged 15 or above working 30 hours or more per week on its P2P metric. Other northern European countries have also performed well on the list, with Sweden, Finland and Norway all at the upper reaches of the table.
Oil-rich countries such as Kuwait and the UAE are also near the top, while some of the world’s most developed countries including Canada, the US, Singapore and New Zealand are all in the top 20.
The list also gives an indication of joblessness by country, with some of the world’s poorest nations at the bottom of the table. Chad, Burkina Faso, Mali, with just five per cent meeting the 30-plus hours criteria, take up the bottom three spots, while Nepal is the lowest ranked Asian nation with eight percent.

Number Of People On Food Stamps Up 70% Since 2008 – America’s News HQ

California Surfer Buying Sushi & Lobster With Food Stamp!
Number Of People On Food Stamps Up 70% Since 2008 – America’s News HQ

Macro Analytics – China Slowdown Crippling Asia – with Bert Dohmen

Macro Analytics – China Slowdown Crippling Asia – with Bert Dohmen

Global Economic Crisis Update: Greek Youth Unemployment, Japan GDP, German Election, U.S Economy, Debt Ceiling, Tapering…

Greek youth unemployment hits record 65%
Overall rate at 27% but two thirds of youths can’t find a job, stats show
Bundesbank: Greece Will Need Extra Aid By Early 2014

Japan Miss On GDP, Carry Trade Totally Reversed, Nikkei Futures Down 200
The Japanese are sliding quickly towards the cliff…
There goes the tax hike (and any expectation of fiscal balance). Japanese GDP grew at a miserly 0.6% QoQ, missing expectations of +0.9% (the biggest miss in a year) and slowing from an already revised lower 0.9% growth in Q1. So much for Abenomics breathing life back into a balance-sheet-recessed nation. Typically this kind of miss would be met with cheers as bad is good but in the case of Japan where they are so far down the rabbit hole, there is no moar left. The already collapsing JPY-carry trade is unwinding in a hurry as JPY surges to a 95 handle on the news; the USD is dropping, Nikkei futures are down 200 points, S&P futures are down a few handles, and gold is holding notable gains…
German election uncertainty … Bunds selling, dragging USTs with them down!!!
Gregor Peter ‏@L0gg0l 1h
German election uncertainty … Bunds selling, dragging USTs with them down
REMINDER: The US Is Weeks Away From A Confluence Of Risky Economic Events That’s Unlike Anything We Can Recall
A couple weeks ago we wrote about the fact that the US is coming up to an unusual of significant econo-political events unlike anything we can recall.Starting sometime in September, we can expect to see the following:
  • A fight over the government’s budget, leading to a possible government shutdown.
  • A fight over the debt ceiling.
  • The beginning of Fed tapering (the reduction of large-scale asset purchases, known as Quantitative Easing)
  • A nomination for a Fed Chair to replace Ben Bernanke.
Read more:

Equity Futures Slide More On Resignation Taper Is Just Around The Corner
Despite an overnight surge in the Chinese markets, with the Shanghai Composite closing up 2.4% following reports that China will not only continue with its “liquidity tightening” operation by, paradoxically, cutting RRR for smaller banks, but launch a stimulus for several Chinese provinces and city governments “on the quiet” in the form of jumbo-sized bank loans, and GDP news in Japan that were so bad they were almost good (although not bad enough to close the Nikkei in the green) US futures continue to take on water following the second worst week of 2013 as the market now appears resigned to a Taper announcement in just over 5 weeks (as we have claimed since May). News in Europe continues to be bipolar, with the big picture confirming that only dark skies lie ahead following yesterday’s news that a new Greek bailout is just around the corner, or rather just after the Merkel reelection (even though Kotthaus perpetuated the lies and said a second cut in Greek debt is not on the agenda – although maybe he is not lying: maybe only Greek deposits will be cut this time), offset by on the margin improvements in the economic headlines, even as credit creation remains not only non-existent but as the FT reports (one year after Zero Hedge), some €3.2 trillion in financial deleveraging is still on deck meaning an unprecedented contraction in all credit-driven aggregates (one of which of course is GDP).
Taper debate and “next chairman” speculation will continue to be the primary driver of the market but in the meantime, here is the market recap via RanSquawk:
  • Germany’s Bundesbank expects Greece will need a new aid package at the beginning of 2014 at the latest according to a central bank internal document. However, German ministry said that it is not aware of Bundesbank paper on Greece.
  • Analysts at Goldman Sachs have revised up Euro-area Q2 GDP forecast to 0.2%. Also revised German Q2 GDP estimate to 0.8% Q/Q vs. Prev. 0.3% and French GDP estimate to 0.1% vs. Prev. -0.2%.
  • According to South China Morning Post, key Chinese cities and provinces are set to receive stimulus.
Don’t be fooled by DC’s quiet this week: Plenty is happening

James G. Rickards – What will happen to the Reserve Currency?

Guests: James G. Rickards, G. Edward Griffin – August 10, 2013

James G. Rickards – What will happen to the Reserve Currency?
G. Edward Griffin – Creation of the Federal Reserve and Cancer.
Produced by


zerohedge ‏@zerohedge 30 s
Obviously American Airlines didn’t spend enough to lobby the Obama administration
zerohedge ‏@zerohedge 2 min
zerohedge ‏@zerohedge 2 min

The Government Is Suing To Block The Merger of American And US Airways
The Justice Department is suing to block the merger of American Airlines and United Airlines, it said in a statement today.

The combination of the two carriers, announced in February, would create the world’s biggest airline, and bring American Airlines out of bankruptcy.
In its statement, the DOJ said the merger would “substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service.
Airline Stocks Monkeyhammered On News DOJ Seeks To Block American-US Airways Merger
The Justice department is said to plan to block the AMR-US airline merger:
Both stocks are down notably on the news – AMR -22%, LCC -11%; and the rest of the airlines sector is weakening. Perhaps the lowly lobbyists of the Airline industry should have ‘donated’ just a little more money…?