Saturday, August 24, 2013

Who is the real thief?

During a robbery in Guangzhou, China, the bank robber shouted to everyone in the bank: "Don't move. The money belongs to the State. Your life belongs to you."

Everyone in the bank laid down quietly. This is called "Mind Changing Concept” Changing the conventional way of thinking.

When a lady lay on the table provocatively, the robber shouted at her: "Please be civilized! This is a robbery and not a rape!"

This is called "Being Professional” Focus only on what you are trained to do!

When the bank robbers returned home, the younger robber (MBA-trained) told the older robber (who has only completed Year 6 in primary school): "Big brother, let's count how much we got."

The older robber rebutted and said: "You are very stupid. There is so much money it will take us a long time to count. Tonight, the TV news will tell us how much we robbed from the bank!"

This is called "Experience.” Nowadays, experience is more important than paper qualifications!

After the robbers had left, the bank manager told the bank supervisor to call the police quickly. But the supervisor said to him: "Wait! Let us take out $10 million from the bank for ourselves and add it to the $70 million that we have previously embezzled from the bank”.

This is called "Swim with the tide.” Converting an unfavorable situation to your advantage!

The supervisor says: "It will be good if there is a robbery every month."

This is called "Killing Boredom.” Personal Happiness is more important than your job.

The next day, the TV news reported that $100 million was taken from the bank. The robbers counted and counted and counted, but they could only count $20 million. The robbers were very angry and complained: "We risked our lives and only took $20 million. The bank manager took $80 million with a snap of his fingers. It looks like it is better to be educated than to be a thief!"

This is called "Knowledge is worth as much as gold!"

The bank manager was smiling and happy because his losses in the share market are now covered by this robbery.

This is called "Seizing the opportunity.” Daring to take risks!

So who are the real robbers here?

Third bailout for debt-laden Greece 'inevitable', Eurogroup chief concedes as crisis rears its head again

The highest ranked official in the eurozone last night said it was ‘inevitable’ that Greece will need a third bailout to save it from collapse.
Jeroen Dijsselbloem, president of the powerful Eurogroup of finance ministers, became the latest senior figure to concede that the debt-riddled country will need further aid next year.
Greece has already received £205billion of emergency funds in two separate rescue packages but it is feared it will not be enough to plug the hole in the nation’s finances. ‘The problems in Greece won’t be solved in 2014 so something more will have to happen,’ said Dijsselbloem, who is also Dutch finance minister.
Flying the flag for a bailout: Debt-laden Greece has already received £205billion in emergency funding
Flying the flag for a bailout: Debt-laden Greece has already received £205billion in emergency funding
It overshadowed a surprisingly upbeat survey showing private sector activity in the eurozone picked up this month despite a deepening slump in France.
Dijsselbloem’s comments followed a week of startling admissions over the true state of the Greek economy more than three years after its first £90billion bailout.
Wolfgang Schaeuble, Germany’s finance minister, set the balling rolling by declaring that Greece will need yet more emergency aid to keep it afloat.
Former Greek finance minister George Papaconstantinou also said ‘there could be a need for another bailout’ while Olli Rehn, European Commissioner for Economic and Monetary Affairs, refused to rule out a third rescue deal. Talk of a new deal for Greece sent shockwaves through Europe and made a mockery of claims by senior officials in the eurozone that the single currency crisis is finally over.
Jose Manual Barroso, the head of the European Commission, provoked scorn early this year by claiming the euro was out of the danger zone. And Francois Hollande, France’s Socialist president, this summer declared: ‘The crisis in the eurozone is over.’
Renewed concerns over the future of the single currency this week were enough to prompt Jens Weidmann, head of the German Bundesbank, to warn a break-up of the eurozone would have ‘grave consequences’.
Greece remains trapped in its sixth year of recession and unemployment has soared to record levels. Hopes that the eurozone is stabilising were bolstered, however, by figures showing business output rose at its fastest rate since June 2011 this month.
Markit said its index of activity in the private sector, where 50 is the cut off between growth and decline, rose from 50.5 in July to 51.7 in August.
Germany clocked up a score of 53.4, its best for seven months, but the French reading slumped to 47.9 in a further blow to Hollande. ‘It is too soon to sound the all-clear for the euro crisis,’ said Erik Britton, director at Fathom Consulting.

Columbia, SC, to exile its homeless

The city plans to forcibly segregate them in the same year it celebrates the 50th anniversary of the Civil Rights Movement.

Downtown Columbia, SC (Via Wikipedia)

What's the quickest, easiest -- if least effective -- way to deal with your downtown's unsightly problem of homelessness? Making it somebody else's problem.

Because the city government in Columbia, S.C., apparently cribs its planning for homeless outreach from old episodes of "South Park," it has decided to get its big push broom out of the garage and just sweep the homeless out of the city center.

The Columbia City Council unanimously approved the plan, creating special police patrols that would enforce "quality of life" laws involving loitering, public urination and other crimes not necessarily restricted to the homeless population. Those officers would then offer the homeless a choice: Go to jail for their homelessness or be shuffled to a 240-bed, 24-hour shelter on the outskirts of town, which they wouldn't be allowed to easily leave.

That second option isn't jail, mind you, because the homeless are being confined with the help of a local charitable organization. It's charitable incarceration, you see. The homeless can leave, but they need to set up an appointment and be shuttled by a van.

And just in case any of the offending homeless get any ideas about doing something crazy like, oh, walking into town, officials plan to post an officer -- we can only assume it won't be Brian Dennehy -- on the road leading to downtown just to make sure they don't walk back and go all John Rambo on the place.

But, hey, it's cool: That 240-bed shelter should totally hold the 1,518 homeless people currently living in the Columbia area. Besides, the city is partnering with a charity. Surely they'll be able to make this exile of the homeless work, right?

Michael Stoops, director of community organizing at the National Coalition for the Homeless, told ThinkProgress, the plan is the "most comprehensive anti-homeless measure" he had ever seen proposed "in any city in the last 30 years." He added: "Using one massive shelter on the outskirts to house all a city's homeless is something that has never worked anywhere in the country."

But there has to be a first time for everything. Maybe this policy doesn't do anything to make the homeless less homeless. Maybe it doesn't peek into bigger issues like South Carolina's 8.1% unemployment rate or Columbia's 7.9% rate -- each higher than the national average. Maybe it doesn't factor in a state foreclosure rate that ranks among the nation's Top 10 and far outstrips the national average.

But a city marking the 50th Anniversary of the Civil Rights Movement can't get into trouble for segregating a whole portion of the population from the rest of the city just because it doesn't like the way it looks, can it? Well, there is that whole "equal treatment under the law" business that applies whether someone is shaking a change cup outside of a Starbucks or not.

"The underlying design is that they want the homeless not to be visible in downtown Columbia," Susan Dunn, South Carolina ACLU's legal director said. "You can shuttle them somewhere or you can go to jail. That's, in fact, an abuse of power."

Good luck with that, Columbia.


Gold ends with nearly 2% gain, at 11-week high

By Myra P. Saefong and Barbara Kollmeyer, MarketWatch
1 2
Against this backdrop, the U.S. dollar weakened DXY -0.14% , adding another supportive pillar for dollar-denominated gold prices.
Gold’s rise came in tandem with a swing higher in U.S. Treasury bonds. The benchmark 10-year U.S. Treasury bond 10_YEAR +0.11% rose, with the yield falling to trade about 2.827% compared with 2.888% late Thursday.

Supply and demand

Egypt’s Mubarak released

Egypt’s ousted leader Hosni Mubarak has been released from prison, and private TV stations have shown footage of his arrival at a military hospital in a Cairo suburb where he will be held under house arrest. Photo: AP.
Physical demand for gold also remained a key factor in the market, with inventories on the Comex continuing to decline, said Mark O’Byrne, executive director at GoldCore in Dublin.
Comex gold inventories totaled 7 million ounces as of Aug. 21.
That equals about $9.79 billion, O’Byrne said. “The total dollar value of the remaining COMEX inventories is a very small amount vis—à—vis assets of many hedge funds, pensions funds and family offices looking to have an allocation to physical gold.”
Skoyles said both silver and gold “remain in high demand across Asia, with several questions being asked about inventory levels and markets under stress.”
In other metals-futures trading Friday, September copper HGU3 +0.69% climbed almost 2 cents, or 0.6%, to $3.35 a pound. It still fell 0.4% for the week.
Among the platinum-group metals, October platinum PLV3 -0.01% added $1.50, or 0.1%, to $1,541.60 an ounce, 0.9% higher than a week ago, but September palladium PAU3 -0.52% ended down $4.20, or 0.6%, at $750.85 an ounce, losing 1.6% for the week.
On the equities front, metals mining shares climbed Friday afternoon. The Philadelphia Gold and Silver index XAU +2.76% was up 3.1%, set for a weekly gain of 2.3%. The gold-backed SPDR Gold Trust GLD +0.11% tacked on 1.7%, up over 5% from a week ago.
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong. Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer.

Matt Taibbi Rips Idea Of Larry Summers Running Federal Reserve

Ever since it leaked that Larry Summers could very well replace Ben Bernanke as Federal Reserve chairman, he's become the intellectual punching bag of many a critic -- Paul Krugman and Bette Midler included.
Add to that list Rolling Stone columnist Matt Taibbi. The bestselling author joined HuffPost Live Thursday and while there expressed his reservations with the idea of the former chief economic adviser to President Barack Obama taking over the Fed.
"I don’t want to see Larry Summers in the job," he said.

Wall Street sues California city looking to bail out homeowners

A city in California has become ground zero in a battle with mortgage lenders and now the federal government in its push to implement a radical new plan to assist homeowners who cannot meet the terms of their loans.

New U.S. home sales drop to 394,000 rate in July

By Ruth Mantell
WASHINGTON (MarketWatch) -- Sales of new U.S. homes dropped 13.4% to a seasonally adjusted annual rate of 394,000 in July, the lowest rate since October, as all four regions posted declines, according to government data released Friday. Economists polled by MarketWatch had expected sales to pull back in July to a rate of 485,000, compared with an original June estimate that pegged the rate at 497,000. On Friday the U.S. Department of Commerce revised June's rate to 455,000. Rising mortgage rates may be behind July's drop, though the monthly data are quite volatile and economists had expected some pull back after sales gains in recent months. Looking longer-term, new-home sales in July were up 6.8% from the year-earlier period. By region, monthly sales fell 16.1% in the West, 13.4% in the South, 12.9% in the Midwest and 5.7% in the Northeast. The median price of new homes ticked down to $257,200 last month. The supply of new homes on the U.S. market in July jumped to 5.2 months at the current sales pace -- the highest since January 2012 -- from 4.3 months in June.

Wall Street Criminal Referrals: 96% Decline

How deep in the tank have our regulators gone over the years to protect Wall Street rather than upholding their mandate to provide real investor protection?
Really deep.
How might we measure the depth?
Check out the following incredible statistic highlighted by one of my favorite financial journalists, that being Bloomberg’s Jonathan Weil
In 1995, bank regulators made 1,837 criminal referrals to the Justice Department, according to data the Times reporters [Gretchen Morgenson and Louise Story] obtained from the Transactional Records Access Clearinghouse at Syracuse University. From 2007 to 2010, the average number of referrals for criminal prosecution was 72.
The plunge makes it seem like this must have been the result of a policy choice, perhaps motivated in part by a desire to promote financial stability.
Weil might be too deferential here.
Is there any doubt that the plunge — a 96 percent decline in criminal referrals — was largely the result of a regulatory system that was bought and paid for by the industry itself? I have no doubt. As a nation we have paid the price in spades as a result.
Despite whatever anybody might say, that 96 percent decline in criminal referrals is the legacy of all those who ran Wall Street’s regulatory oversight during this period of time.
The numbers do not lie although certainly many a regulator and others involved in this travesty of justice certainly may have in order to cover their a$$ over the years.
Props to Weil, Morgenson, and Story for bringing us the badly needed truth.
Navigate accordingly.
Larry Doyle
Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.
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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved. 

This entry was posted on Friday, August 23rd, 2013 at 7:00 AM and is filed under General, regulation, regulatory capture, Wall Street Washington Incest. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

U.S. Economic Hegemony: Consolidation and Deepening of the Pacific Alliance Trade Bloc

Dana Gabriel
Activist Post

In a short period of time, the Pacific Alliance has emerged as one of the leading economic integration projects in Latin America. It aims to succeed where others have failed by creating a gateway to Asian markets and building a Pacific-rim trade deal. The U.S. and Canada are both pursuing deeper ties with the group and have been granted observer status.

This is part of efforts to revive and expand their presence in Latin America. In some areas of integration, the Pacific Alliance has surpassed NAFTA. By merging the two together, it could be used to fill the void left by the collapse of the Free Trade Area of the Americas (FTAA).

The Pacific Alliance was officially launched by Chile, Colombia, Mexico and Peru in June 2012. Its objectives include to construct, “an area of profound market-driven economic integration that will contribute to the free movement of goods, services, capital and persons.” The group also seeks to, “become a platform for economic and commercial integration as well as political coordination with global outreach, particularly towards the Asia Pacific.”

A key requirement in joining the Pacific Alliance is to have free trade agreements with all existing member states. Costa Rica recently received approval to become a permanent member. Other countries have also shown interest with a growing number requesting observers status. The goal of the Pacific Alliance is to go beyond traditional free trade deals and pursue even more liberalized economic policies.

The May 23, 2013 Pacific Alliance Summit in Cali, Colombia marked the next steps in the consolidation and deepening of the Latin American trade bloc. The presidents of the four founding member countries agreed to remove tariffs on 90 percent of the goods traded between them and to gradually eliminate duties on the remaining 10 percent. They also adopted measures to begin visa-free travel between member states and moved closer towards full labor mobility. In addition, the leaders announced the creation of a cooperation fund and ratified agreements to open up joint embassies and trade offices in Asia and Africa. They also pledged to continue to deepen regional financial integration. The stock markets of Chile, Peru and Colombia have already been merged together and Mexico is expected to join them within the next year. While other Latin American countries are seeking to curb U.S. influence, Pacific Alliance members seem to have a willingness to maintain and increase ties with Washington.

Just days after the Pacific Alliance Summit, Vice President Joe Biden met with Colombian President Juan Manuel Santos where he praised the progress the economic bloc has made and also expressed interest in the U.S. joining as an observer country. On July 19, the Department of State announced U.S. participation as an observer in the group. While full membership may be far off, the U.S. is expanding cooperation with Alliance members. Over the years, there has been a steady erosion of U.S.-Latin American relations. Some analysts have pointed out that that both the U.S. and Canada’s grip on Latin America is loosening. This ties in with an article from Global Research which noted that the Obama administration is stepping up its strategy of regime change against the left-of-center governments in the region. The U.S. could use the Pacific Alliance as a means to recover political and economic influence in Latin America.

When Prime Minister Stephen Harper attended the Pacific Alliance Summit in May, it was expected that he would request full membership. Canada already achieved observer status back in November 2012. While Harper acknowledged their accomplishments, he said that it was too soon to decide whether Canada should join the trade bloc. During his trip, Harper also took the opportunity to meet with mining company executives. The Conservative government has been criticized for not putting enough emphasis on corporate accountability with regards Canadian mining operations in the region. Maude Barlow explained that, “The Pacific Alliance, like Canada’s existing trade and investment deals in Latin America, puts the profits of those companies above anything else. The deals, like the Alliance, have nothing to say about the environmental and human rights impact of mining in the region.” The Pacific Alliance appears to be another attempt to accelerate the privatization of natural resources. It goes against the efforts of some Latin American countries that have joined together to fight the growing problem of investor-state privileges found in NAFTA-style trade agreements. These rules allow foreign corporations to sue for any potential profit losses related to government policies.

A recent article by Eric Farnsworth advocated linking NAFTA with the Pacific Alliance. He recommended that the leaders from both trade groups, “should consider meeting to forge a pragmatic economic agenda for cooperation. This offers an important opportunity to kick-start a common agenda with willing partners that has languished since the FTAA.” Farnsworth also described how, “building out a NAFTA-Pacific Alliance economic relationship would improve the collective regional approach toward the Asia-Pacific region, which currently includes precisely the same Western Hemisphere nations within APEC and the Trans Pacific Partnership (TPP) negotiations except Colombia. It would also offer a means to improve market efficiencies and update NAFTA without the need to re-open or re-negotiate its provisions.” There is an overlap between the Pacific Alliance and the much larger TPP trade talks. Both initiatives seek to bridge the Americas with Asia and create Pacific-based trade blocs. With the possibility of TPP negotiations dragging on and the difficulty the deal might have getting ratified by the U.S. Senate, the Pacific Alliance could open new doors to trade with Asian countries sooner.

In Latin America, there is a growing divide over the future of continental political and economic integration. Some countries have banded together to resist U.S. imperialism and any attempts to destabilize the region. There is also a move to end the destructive cycle of investment treaties and replace it with an alternative economic structure that better respects the sovereignty of nation states. The Pacific Alliance stands as a counterbalance to some of the other regional integration efforts that are trying to protect against the dangers of globalization. It is designed to signal a commitment to free trade and open markets to its neighbours and to the rest of the world. In many ways, the Pacific Alliance represents a resurgence of the failed U.S. initiated FTAA which was part of an agenda to consolidate corporate control.

CATO Institute report says poor Americans have it too good

These papers are then amplified by the right-wing media, forming the basis for calls to further eviscerate a social safety net that’s already been tattered and torn by 30 years of ascendant neoliberalism.
Running the numbers in all 50 states and the District of Columbia, Tanner and Hughes claim that “the current welfare system provides such a high level of benefits that it acts as a disincen­tive for work” and urge lawmakers to “consider ways to shrink the gap between the value of welfare and work by reducing current benefit levels and tighten­ing eligibility requirements.”
So a study that claims to tell us about the “typical” poor family is really describing a rarity — the equivalent of a four-leaf clover. But the purpose of these studies isn’t to inform good policymaking. They feed a narrative that the poor are lazy and undeserving, and provide wonky cover for further weakening our social safety net. When studies like this one are picked up by the conservative media, all of the authors’ caveats tend to be stripped away, and they become straightforward claims that poor families sit back enjoying a good life, forcing overburdened tax-payers to pick up the tab.
With one in seven Americans either unemployed or underemployed, and the sequester already resulting in deep cuts to programs designed to help the neediest, it’s a profoundly immoral pursuit.
Correction: an earlier version of this post claimed that a household could receive TANF benefits for a maximum of 24 months. 

Fracking Boom Slouching Toward Bust

Stop me if you’ve heard this one. What’s an obscenity that starts with “f” and ends with “ck”?
Oh wait, sorry, this is supposed to be a serious article about fracking. That’s right, we’re talking about The Biggest Development in the energy world since the birth of the sun, the Revolution that is freeing America forever from bondage to oil imports.
But here’s the thing: though this revolution is only a few years old, it’s already losing steam. There are two big reasons why.
The first has to do with environmental problems that can’t be swept under the carpet any longer. The image of a homeowner lighting his tap water on fire in Josh Fox’s documentary film “Gasland” has become a cliché; still, for a while the industry was successfully able to argue that adverse impacts from fracking to water, air, soil, wildlife, livestock, and human health are negligible. Industry-funded studies declared the practice safe, and the EPA appeared to back them up.
Drilling companies tended to target economically depressed regions, where poverty forced most townsfolk to take whatever short-term jobs and production royalties were offered, while stuffing their concerns about nosebleeds, headaches, dying pets, intolerable noise, and tainted water. Meanwhile, citizens who suffered the worst health effects or property damage were led to sign non-disclosure agreements in order to receive settlement payoffs (including two children ages 7 and 10 who have been given lifetime bans from speaking about fracking), thus keeping their plight out of public view.
But the bad news just keeps leaking, like methane through a bad well casing. Former Mobil Oil VP Louis W. Allstadt, who spent his career running oil production operations and company mergers, now speaks on behalf of anti-fracking resistance groups,  pointing to studies revealing that compromised casings (and resulting instances of water contamination) are far more common than the industry claims.
Meanwhile Los Angeles Times has uncovered documents showing that the EPA has systematically ignored evidence of environmental harms from fracking, choosing not to publicize or act on data collected by its own staff.
A few years ago fracking for shale gas or tight oil was still novel and confined to small regions, but now tens of thousands of wells have been drilled and millions of Americans have personal experience with the noise, truck traffic, fumes, and local political turmoil that seem inevitably to follow in fracking’s wake. Hundreds of anti-fracking citizen groups have formed, public sentiment is turning, and communities have begun seeking bans or moratoria on the practice. The industry is on the defensive: Wayne County, PA activists are currently celebrating the cancellation of 1500 drilling leases covering 100,000 acres of land.
Americans are being subjected to a massive PR assault attempting to persuade them that shale gas and tight oil have brightened America’s energy future. The problem? It's simply not true.
New York State’s moratorium on fracking remains in effect, despite massive industry efforts to end it. Meanwhile the Colorado city of Longmont has voted to ban fracking altogether, and the State of Colorado is suing the city.
Fracking’s second problem is actually a bigger one, though less publicized: its production potential was over-sold. Everyone who pays attention to energy issues has heard that America has a hundred years or more of natural gas thanks to the application of fracking to shale reservoirs, and that the US is on track to out-produce Saudi Arabia now that oil is flowing from fracked fields in North Dakota and Texas. To most, the news at first sounded hopeful and reassuring. Yet as actual production numbers accumulate, it appears that claims made for fracking were simply too good to be true.
It turns out there are only a few “plays” or geological formations in the US from which shale gas is being produced; in virtually all of them, except the Marcellus (in Pennsylvania and West Virginia), production rates are already either in plateau or decline.
Why so soon? A major challenge bedeviling drillers is the high variability within shale plays. Each tight oil or shale gas-bearing geologic formation tends to be characterized by a small core area (usually a few counties) where production is profitable and plentiful, surrounded by a much larger region where per-well production rates are lower to start with and drop fast—often falling 60 percent during the first year. Given the expense of horizontal drilling and fracking, it’s hard to make money in non-core areas unless oil and gas prices are stratospheric. As the “sweet spots” get drilled to capacity, producers are being forced to the fringes, taking on more debt because sales of product don’t cover operating expenses.
With decline rates so high, promised production volumes are turning out to be so much hype. America’s hundred years of natural gas, heralded by President Obama as a national energy game-changer, actually amounts to a mere 24 years by official estimates, even less according to unofficial but well-informed calculations.
Oil analyst Rune Likvern says shale gas and tight oil suffer from the “Red Queen” syndrome, citing a character in Lewis Carroll’s Through the Looking Glass. In the story, the fictional Red Queen jogs along at top speed but never gets anywhere; as she tells Alice, “It takes all the running you can do, to keep in the same place.” Similarly, with worsening well decline rates, it will soon take all the drilling the industry can do just to keep production steady; then, as all the best drilling sites are exhausted, the Red Queen will start falling behind. Before 2020, shale gas and tight oil production will top out and start to decline. Americans will wonder what happened to the lavish economic benefits the industry promised.
Recently Shell took a $2 billion write-down on its liquids-rich shale assets in North America. While no details were released, it’s likely the company was simply acknowledging the unprofitability of leases in non-core regions, purchased back when shale plays were being advertised as “manufacturing operations” in which companies could successfully sink a drill bit virtually anywhere.
The oil industry itself is starting to learn that the shale revolution just ain’t all it was fracked up to be.
Despite continuing profits, the oil-and-gas industry as a whole appears to have entered its sunset years. Major oil companies have seen production decline by over 25% in the last decade. Both the number of wells drilled and the amount of inflation-adjusted capital invested in exploration and production have doubled, with negligible results. Raymond Pierrehumbert, Professor of Geophysical Sciences at the University of Chicago, recently summarized the situation with crystalline brevity: “Oil production technology is giving us ever more expensive oil with ever-diminishing returns for the ever-increasing effort that needs to be invested.”
Which brings us to the bottom line. Americans are being subjected to a massive PR assault attempting to persuade them that shale gas and tight oil have brightened America’s energy future. What has really changed is the nation’s energy conversation: until recently, it was about how we should reduce our dependency on depleting, climate-changing fossil fuels. Now our “conversation” has become a one-sided harangue about the energy, jobs, and tax revenues the industry insists will flow from fracking from now ’til kingdom come, and how these outweigh environmental concerns.
The data do not support these claims. Therefore it is critically important that we return America’s energy focus to the most critical imperative of our time—the necessary and inevitable transition away from our current dependence on fossil fuels.

Research: Gold Acts As A Safe Haven Against USD And GBP

by GoldCore
Today’s AM fix was USD 1,374.50, EUR 1,028.59 and GBP 880.30 per ounce.
Yesterday’s AM fix was USD 1,370.50, EUR 1,027.28 and GBP 879.60 per ounce.
Gold climbed $7.20 or 0.53% yesterday, closing at $1,374.60/oz. Silver rose $0.13 or 0.57%, closing at $23.05. Platinum surged $29.34 or 1.9% to $1,535.74/oz, while palladium climbed $10.85 or 1.5% to $752.35/oz.
Gold is flat on the week after a near 5% gain last week. Gold is well bid in Asia with volumes and premiums remaining robust which will support prices.  As will continuing futures backwardation and the fact that gold borrowing costs remain in backwardation at near Lehman Brothers lows.
In China, the volume for Shanghai’s benchmark spot contract climbed to the highest in almost three weeks. Volumes for gold of 99.99% purity jumped to 14,872 kilograms yesterday, the highest since August 2nd, according to data from the Shanghai Gold Exchange.

Gold Prices/ Fixes/ Rates / Volumes – (Bloomberg)

Premiums on the Shanghai Gold Exchange fell to $16 per ounce (0800 GMT) over London spot but remained healthy showing robust physical demand in China (see table above).
Demand from the over 2.3 billion people, rich and poor,  in China and India alone in just 2013 is set to be 1,000 metric tonnes which is worth over $87 billion. It is important to juxtapose this with the $85 billion that the Federal Reserve is printing every single month.
Gold holdings in the SPDR, the biggest exchange-traded product held steady and appear to be stabilising.
Silver continues to consolidate at $23/oz. It has entered a bull market leading to increased demand for the precious metal as an alternative investment. Silver is more than 25% higher from its June low of $18.23, placing it firmly in bull-market territory—defined as a roughly 20% rise off a recent low.
The risk of a Black Swan event leading to a stock market crash was seen again yesterday after a faulty connection between  two of the biggest operators of U.S. stock exchanges brought half of the world’s largest equity market to a standstill. This is the second time this week U.S. trading was shaken by a computer malfunction.
Connectivity was disrupted between NYSE Arca and the data processing subsidiary of the Nasdaq, where some 2,150 U.S. companies trade. That ledNasdaq to freeze thousands of stocks, from Apple to Facebook and led to a complete shutdown for three hours.
Dennis Gartman’s announcement that he is buying gold once more has again resulted in much publicity.

Gold in USD, 1 Year – (GoldCore)

As recently as August 7th Gartman warned that the “panic stage of gold selling” may be “just ahead” and said that “only gold bugs still believe in a rally”. Gold reached its lowest point in August on that day, August 7th, at $1,273/oz and has risen $100 or 8% since then.
In July, Gartman wrote in what he called a “watershed commentary” that gold was going to go “several hundred dollars higher.”
Gartman would save his clients a fortune in trading costs and missed price appreciation if he advised them to adopt a buy and hold, physical for long term strategy. This is the course being followed by the smart money internationally including hedge fund managers such as Kyle Bass and David Einhorn.
Gold is off almost 20% year to date, but has  risen 16% from a 34-month low of $1,180.71/oz on June 28 as lower prices and concerns about macroeconomic and monetary risk led to physical gold demand throughout the world.
The somewhat silly debate as to whether gold is a safe haven or not, or a bubble or not, will be seen for what it is in the coming years and people, experts and sections of the media will ask how could we have gotten gold so wrong.
Many notables such as Paul Krugman, Nouriel Roubini and Warren Buffett have in recent months suggested gold is a ‘barbaric relic’, is a bubble and is not a safe haven, and have dissuaded investors and savers from diversifying some of their wealth into gold.
A recent World Gold Council survey found that most family offices investing in goldtoday employed a strategic asset allocation framework and nearly 50% had a specific allocation to gold. Of those offices with a gold allocation, over one third plan to increase this allocation.
They will soon be shown to have misled investors and savers and will lose credibility. People in India, Cyprus, South Africa, in the Middle East and Africa and much of the Eurozone who owned gold have been protected from recent financial, economic and geopolitical dislocations. Thus, proving the simplistic anti-gold thesis badly wrong.

We will likely see some furious back pedalling and claims that “nobody saw this coming” when indeed there have been many financial and economic analysts warning about exactly these risks for years.
Rather than sitting nervously and passively and awaiting the coming financial dislocations and expropriations – investors and savers need to be prepared for the uncertain financial scenarios that seem increasingly likely.
Opinions and extreme anti-gold opinions tend to get much media coverage but it is important to always focus on real people and families and their experience of owning gold – both in recent years and in history.
It is also very important to look at the facts, the figures and the academic research.
One of the most published academics on gold in the world is Dr Brian Lucey of Trinity College Dublin (TCD) and he and another academic who has frequently covered the gold market, Dr Constantin Gurdgiev have just this week had an excellent research paper on gold published.
They have researched the gold market, along with Dr Cetin Ciner of the University of North Carolina and their paper,  ‘Hedges and safe havens: An examination of stocks, bonds, gold, oil and exchange rates’ finds that gold is a hedge against US dollar and British pound risk due to “its monetary asset role.”
In this paper we investigate the return relations between major asset classes using data from both the US and the UK. Our first objective is to examine time variation in conditional correlations to determine when these variables act as a hedge against each other. Secondly, we provide evidence on whether the dependencies between the asset classes differ during extreme price movements by using quantile regressions. This analysis provides evidence on whether these asset classes can be considered as safe havens for each other. A noteworthy finding of our study is that gold can be regarded as a safe haven against exchange rates in both countries, highlighting its monetary asset role.
> We determine pairwise hedging properties of various major asset classes.
> We analyze if the dependencies between the assets differ in extreme price movements.
> We determine whether asset classes can be considered as safe havens for each other.
>We find that gold acts as a safe haven against the USD and GBP exchange rates.

Dr Brian Lucey and Dr Constantin Gurdgiev of Trinity College

Dr Gurdgiev has engaged in much evidence based academic research on gold and found that gold is a “hedging instrument and a safe haven” and presented his findings to the World Bank, ECB and BIS more than two years ago.
Dr Lucey has consistently pointed out how physical gold is financial insurance or a hedge against political uncertainty.
Both have advocated an allocation to physical gold in a portfolio and accumulation through dollar, pound or euro cost averaging.
Actual real world experience, evidence and academic research on the gold market are frequently ignored in favour of the simplistic and often the misleading.
This will change in the coming years when there is a realisation as to the importance of gold as a diversification and as a means of preserving wealth.
Those who continue to focus on gold’s academically and historically proven safe haven qualities as an important diversification will again be rewarded in the coming months.

UPDATE: Gold Surges to 9-Week High on Technical Buying and as U.S. Dollar Index Sinks, Euro Rallies

(Kitco News) - Comex gold futures prices rallied sharply and hit a nine-week high in late-Morning trading Friday. Gold and silver prices were boosted as the U.S.
dollar index dropped to its session low following a U.S. housing report that came in below expectations. At the same time Euro zone consumer confidence numbers came in at a two-year high, which in turn boosted the Euro currency.
Technical buying is also featured Friday morning as gold prices are in a seven-week-old uptrend on the daily bar chart. Gold prices are also poised to close at a technically bullish weekly high close on Friday. December gold last traded up $19.00 an ounce at $1,390.00.
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By Jim Wyckoff

Rupee hits record low of 65.56, continues to struggle

(Reuters) - The rupee fell through 65 to the dollar to a record low on Thursday, after Federal Reserve minutes hinted the United States was on course to begin tapering stimulus as early as next month and as foreign investors become sellers of Indian stocks.
In an ominous sign for Asia's worst-performing currency this year, overseas investors, who had been net buyers of Indian stocks so far in 2013, headed for the exits this week, selling a net amount of more than $700 million worth of shares in the five sessions through Thursday.
Foreigners have also sold a net amount of nearly $1 billion of Indian government and corporate bonds so far this month.
"Unless growth signals emerge in the next few quarters, foreign institutional investors will continue to pare down Indian equities, which will weigh on the rupee," said Deven Choksey, managing director of KR Choksey Securities.
Indian stocks, however, snapped a four-day losing streak, with the benchmark BSE index .BSESN ending up 2.27 percent despite continued selling by foreign institutions.
The rupee fell as much as 2 percent to 65.56 to the dollar, before recovering losses to close at 64.55/56, a sixth straight session of declines, and is down 14.8 percent so far this year despite policymakers' efforts to prop it up.
Finance Minister P. Chidambaram sought to lift confidence, telling a news conference that while economic growth remained flat in the first quarter of the fiscal year ending March 2014, it was likely to pick up in the remaining three quarters.
"We are in better health than many other countries in the world," he said in New Delhi. "Therefore there is no reason for excessive or unwarranted pessimism."
Currencies in Indonesia, Malaysia and Thailand all hit multi-year lows on concerns that the Fed's scaling back of stimulus would trigger further capital outflows from emerging markets, which have benefited for the last two years from waves of cheap money printed by Western central banks.
Ratings agency Fitch warned that governments in India and Indonesia, also facing a crisis of confidence among investors, needed to halt the slide in perception.
India's credit rating is one notch above junk grade.
"Rapid private-sector credit growth, widening fiscal deficits or sustained higher inflation could lead to a broader and more sustained loss of confidence among investors," Fitch said in a statement on India and Indonesia.
"This could potentially undermine economic and financial stability, and ultimately lead to negative rating action."
Rupee buyers in the forex market seemed to be drying up, with the central bank suspected to have intervened in the last several sessions to support the currency, including late in Thursday's session.
Some strategists made increasingly bearish calls on the rupee, with Credit Agricole saying that unless capital flows returned, it did not see the fundamental value for the rupee below 70 to the dollar and would not recommend buying it for fundamental reasons below 75. Deutsche Bank said on Wednesday the rupee could fall to 70 in a month or so.
The 1-month offshore non-deliverable forward contract was quoted at 65.60 compared to the onshore one-month forward of 65.07, suggesting offshore players are betting against the rupee.
Asia money & markets
Rupee, bonds, FX yields
The Reserve Bank of India's efforts to support the currency have failed to do so but have sent bond yields surging, pushing up borrowing costs and undermining an economy that grew at its weakest in a decade in the last fiscal year to March 2013.
ICICI Bank, the country's second-largest lender, became the latest to raise interest rates, lifting its base rate by 25 basis points to 10 percent, effective Friday.
A weak coalition government facing national elections by May has been unable to push through structural reforms to lure long-term foreign investment, with the current parliamentary session all but paralysed by political bickering.
"Barring a galvanising economic crisis, pending tax, land acquisition and insurance reforms will likely be delayed for several years, providing no respite for India's faltering economy," Eurasia Group analyst Anjalika Bardalai wrote.
In what was seen as a partial roll-back considered by some market participants to have sent a mixed message, the RBI took steps on Tuesday to support a bond market hurt by its rupee defence.
Bond prices continued to recover on Thursday, with yields ending down 18 basis points at 8.23 percent.
Some analysts said the RBI's move was similar to the Fed's "Operation Twist" begun in 2011 to buy long-end bonds.
"Policymaking is essentially in a quandary, as the framework comprises of multiple and often conflicting objectives," said Radhika Rao, economist at DBS Bank in Singapore.
"To this end, a single-minded focus on correcting the currency's course entails collateral damage - dampens equity and bond markets and carries risks to growth," she added.
(Additional reporting by Abhishek Vishnoi; Editing by Tony Munroe, Kim Coghill and Clarence Fernandez)

Biderman’s Daily Edge: Stock Prices Already Vulnerable Even Before Taper Time

Moody’s puts major U.S. Biggest banks on review for DOWNGRADE

New York, August 22, 2013 — Moody’s Investors Service has placed the senior and subordinated debt ratings of the holding companies for the six largest US banks on review as it considers reducing its government (or systemic) support assumptions to reflect the impact of US bank resolution policies. Four — Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo — are on review for downgrade. Two, Bank of America and Citigroup, are on review direction uncertain, as the rating agency considers the potentially offsetting influence of improvements in the standalone credit strength of their main operating subsidiaries, the ratings on which were simultaneously placed on review for upgrade. Included in the review are the short-term ratings of several of these bank holding companies, as described further below. Two additional banks, Bank of New York Mellon and State Street, whose ratings were previously placed on review for downgrade, are also included in this review.
At the same time, and also in response to the possible reduction of government support assumptions, the ratings on the bank-level subordinated debt of JP Morgan Chase Bank N.A. and Wells Fargo Bank N.A. were placed on review for downgrade, while those at Bank of America N.A. are on review direction uncertain. The bank-level subordinated debt ratings of The Bank of New York Mellon and State Street Bank and Trust, which were previously placed on review for downgrade, are also included in the review. There is no rated bank-level subordinated debt outstanding at Citibank N.A., Goldman Sachs Bank USA or Morgan Stanley Bank N.A.
Moody’s actions follow its March 2013 announcement that it would reassess its support assumptions for bank holding companies in the US and that it would consider whether to revise these assumptions by the end of the year.
As US bank resolution policies continue to evolve, Moody’s will assess the opposing forces that may have an impact on bondholders at the holding company level should a bank become financially distressed. The first is a lower level of systemic support that could result in a higher probability of default. The second is the potential for a more orderly workout and a required minimum level of holding company debt that may well limit losses in the event of a default. The reviews will also consider the implications of such policies for bank-level subordinated bonds, which may also be subject to burden-sharing in the event of severe financial distress. In addition, for four of the eight banks — Bank of America, Citigroup, Bank of New York Mellon, and State Street — the reviews will also consider the banks’ standalone or baseline credit assessments — positively for the first two, and negatively for the latter two.
Moody’s Mulls Downgrade of Big Banks as US Support Wanes
Moody’s considers downgrading top US banks
Moody’s eyes downgrade of biggest US banks

China & India’s Gold vs. Silver Imports Diverge as Analysts Warn on QE Taper

China & India’s Gold vs. Silver Imports Diverge as Analysts Warn on QE Taper

The PRICE of gold held just shy of last week’s 2-month closing high in London trade on Friday, retreating $10 from an overnight high of $1380 per ounce as world stock markets also held flat.

Silver prices were similarly unchanged for the day and the week, trading around $23.15.

Both the Euro and British Pound reversed an early rally following stronger-than-expected GDP data.

“The bounce [in gold] may be coming to an end,” said Natixis analyst Nic Brown to Reuters Insider TV today, pointing to the possibility of QE tapering by the US Federal Reserve next month.

“Higher US interest rates would raise the opportunity cost of owning” gold bullion.

“We still don’t think,” adds brokerage INTL FCStone,” that investors have fully discounted September as being a potential start date [for QE tapering].

“Various commodity complexes, including gold, could run into more selling pressure next month as this realization sets in.”

“Rising US Treasury yields,” agrees a note from bullion market-maker HSBC, “are historically negative for gold and the potential for further weakness to US Treasuries may weigh, in our view.

“However, sideways trading is likely to persist for the gold market in the near term.”

On the currency market, the Indian Rupee meantime ticked higher from yesterday’s new all-time lows below 64 per Dollar.

The world’s #1 gold consuming nation “should target structural impediments in the economy,” says an op-ed at Bloomberg, “rather than frantically [trying and failing at] shoring up the currency.”

After Deutsche Bank warned this week that the Rupee could fall to 70 per Dollar, analysts at Barclays today targeted a 12-month rally to 61 instead.

“Sideways trading in silver and gold,” however, “point to near-term bullish exhaustion,” the bank’s technical analysts said separately.

“Watch for a pullback before an attempt at resistance,” advises Barclays – now pegged at $1400 and then $1440 per ounce in gold bullion.

India’s aggressive anti-gold measures, plus the traditional ‘close season’ of Chaturmas, have seen gold imports fall to zero so far this month.

In contrast, India’s silver imports have soared in 2013 so far, rising 285% from the same period last year.

In world #2 gold consumer China, “Once the summer is over, we will see consistent [bullion] buying from September through the end of the year,” reckons Peter Fung at Wing Fung dealers in Hong Kong.

Physical gold deliveries through China’s Shanghai Gold Exchange already total more than 1,100 tonnes this year, overtaking full-year 2012. End-user demand rose 54% in Jan-July. China’s silver imports, in contrast, have dropped by 40% and more.

“Indian imports are robust, where silver demand seems to be benefiting from government policies aimed at constraining gold demand,” the Wall Street Journalquotes HSBC analyst James Steel.

Adrian Ash

Macro Analytics – Is the US in a RECESSION? w/Lance Roberts, Charles High Smith

All Wars Are Bankers' Wars