[Bank of England executive] Paul Tucker told MPs that Barclays’ abuse of the Libor system may be only
one part of the banks’ dishonesty over crucial financial information,
suggesting that other markets should now be investigated.
An official inquiry into Libor – which helps determine interest rates for householders and businesses – should be broadened to include several over markets where banks are trusted to report their own data, he said.
***
The Libor scandal could be repeated in a number of other “self-certifying” markets where prices are determined, he said.
“Self-certification is clearly open to abuse, so this could occur elsewhere,” he said.
A Financial Services Authority inquiry into Libor should be extended to other self-certifying markets, he said. The Treasury said last night that the review, led by Martin Wheatley, was free to examine markets other than Libor. *** Some markets in gold and oil are also based on self-certification.
Mainstream commentators are starting to publicly discuss manipulation in the precious metals markets. See this, this and this.
Avery Goldman noted last year:
On March 15, 2011, the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) advised the CFTC that they had approved J.P. Morgan’s application to become a licensed vault facility, using a “self-certification” process. The newly licensed vault, located at 1 Chase Manhattan Plaza, NY, NY, is ready to roll as both “weighmaster” and depository, for delivery of gold, silver, platinum and palladium contracts, as of March 17, 2011, two days later.”
ETFs, bullion banks, storage facilities and other holders of gold
that are “self-certifying” – without any checks by third party auditors
– have been caught misreporting and raiding even allocated precious metals accounts, and using the loot to speculate or pay off other debts.
As such, manipulation in the self-certifying portions of the oil and
gold markets could have a huge impact on assessing the true health of
financial institutions, the economy as a whole, and the assets of individual investors.
Yesterday, the Guardian reported on the stunning similarities between the daily “fixing” of the gold price and of the Libor rate:
London’s financial sectorwas last night bracing itself for another
official investigation into alleged price-fixing following reports that a
US regulator is considering launching an inquiry into the City’s gold
and silver markets.
The Commodity Futures Trading Commission is discussing whether the
daily setting of gold and silver prices in London is open to
manipulation, according to the Wall Street Journal, which stated that
the CFTC is examining whether prices are derived sufficiently
transparently. The system of setting gold prices in London is unusual and
involves a twice-daily teleconference involving five banks – Barclays,
Deutsche Bank, HSBC, Bank of Nova Scotia and Société Générale – while
silver is set by the latter three. The price fixings are then used to
determine prices worldwide.
*** The fixing of the gold price in London dates back to September 1919,
when the process involved NM Rothschild & Sons, Mocatta &
Goldsmid, Samuel Montagu & Co, Pixley & Abell and Sharps &
Wilkins. At the start of each gold price-fixing, the chairman
announces an opening price to the other four members who relay this
price to their customers. Based on orders received from them, the banks declare themselves as buyers or sellers at that price.
Provided there are both buyers and sellers at that price, members are then asked to state the number of bars they wish to trade.
***
If at the opening price there are only buyers or only sellers, or if
the numbers of bars to be bought or sold does not balance, the price is
moved and the same procedure is followed until a balance is achieved. The silver fix dates back to 1897.
Unemployment, Taxes and Unfunded Retirement are Squeezing Each Generation
The American spirit is rooted in the belief of a better tomorrow. Its
success has been due to generations of men and women who toiled,
through both hardship and boom times, to make that dream a reality.
But at some point over the past several decades, that hope for a better tomorrow became an expectation. Or perhaps a perceived entitlement is more accurate.
It became assumed that the future would be more prosperous than
today, irrespective of the actual steps being taken in the here and now.
And for a prolonged time – characterized by plentiful and
cheap energy, accelerating globalization, technical innovation, and the
financialization of the economy – it seemed like this assumption was a certain bet.
But these wonderful tailwinds that America has been enjoying for so
many decades are sputtering out. The forces of resource scarcity, debt
saturation, price inflation, and physical limits will impact our way of life dramatically more going forward than living generations have experienced to date.
A new Rasmussen Reports national telephone survey finds that just 27%
of American Adults now say it is possible for anyone in the country to
work hard and get rich, generally unchanged since late 2012.
Fifty-nine percent (59%), though, say that is no longer possible, up
from 55% in late January and the highest level of pessimism in over four
years of surveying. …
From Global Economic Policy Journal:
In the last 5 years:
•
The Civilian Institutional Population rose 9.9 Million
•
The Labor Force rose 0.9 Million
•
Those Not in the Labor Force rose 9.8 Million
•
Employment fell by 2.3 Million
•
Full-Time Employment fell by 5.3 Million
•
Part-Time Employment rose by 0.9 Million
•
Unemployment rose by 4.5 Million
•
Food Stamp usage rose by 20.3 Million
Non-Workers to Workers
Let’s consider the ratio of workers to non-workers. Workers are those
employed, non-workers are everyone else (the unemployed + those not in
the labor force).
In the last five years, the number of non-workers rose by 14.3 million while the number of workers fell by 5.3 million.
In 2008, there were 144.6 million workers supporting 88.3 million not working.
There are now roughly 142.2 million workers supporting 102.6 million not working.
… In the year 2000, there were 1.78 workers for every non-worker. Now
there are only 1.39 workers for every non-worker. Meanwhile, food stamp
usage is up from 17.2 million to 46.6 million, and medical costs are
soaring…
Worldwide approval of U.S. leadership dipped considerably during
President Barack Obama’s fourth year in office — but it increased in
some countries, including Mexico. The median approval rating for U.S. leadership for 130
countries was 41 percent in 2012, down 8 percentage points from the 49
percent approval during Obama’s first year in office, according to a
Gallup poll released Wednesday.
Gallup asked, “Do you approve or disapprove of the job performance of the leadership of the United States?”
“This shift suggests that the president and the new secretary of
state may not find global audiences as receptive to the U.S. agenda as
they have in the past. In fact, they may even find even once-warm
audiences increasingly critical,” Gallup’s Julie Ray wrote.
…
Figures for skilled tradesmen plummeted by 7% in the last year alone
Plumbers have been the worst hit with a 25% drop in the last four years
Only cleaners, chimney sweeps and female-run businesses are on the up
Britain is facing a growing shortage
of tradesman following a dramatic fall in the number of plumbers and
bricklayers, new research reveals today. Figures for skilled tradesmen plummeted
by seven per cent in the last year alone after being badly hit by the
economic downturn and depressed housing market. Independent
businesses are dwindling and plumbers have been the worst hit, with a
25 per cent drop in numbers the last four years.
Growing crisis: The number of independent
tradesmen such as plumbers, carpenters and window cleaners has fallen in
recent years - with the number of bricklayers down 19% since 2009
Bricklayers
are down 19 per cent, window cleaners by 18 per cent, and the number of
joiners has fallen by 17 per cent in the last three years, the UK's
biggest small business insurance provider Simply Business found. Only
cleaners, chimney sweeps and female-run businesses are bucking the
trend, the findings from more than 300,000 small businesses show.
Output in the construction industry has plunged to its lowest level since 2009, figures demonstrate. And the amount we're paying tradesmen for home improvements has nosedived by 40 per cent since 2001. Ex-bricklayer, Scott Ogden, 37, left the building trade to become a tour manager for a recording company. Mr
Ogden, who works for All Inn Records, said: 'I got into the building
trade after leaving school because it was quite a well-paid job at the
time.
THE TRADES DOWNING TOOLS
The percentage fall in the number of tradesmen since 2009: Plumbers - down 25 per cent Bricklayers - down 19 per cent Window cleaners - down 18 per cent Joiners - down 17 per cent Roofers - down 11 per cent Gardener - down nine per cent Builders - down seven per cent Carpenters - down seven per cent Painter and decorators - down five per cent Plasterers - down three per cent
'But during the recession, everything
changed. Tradesmen suffered a 40 per cent pay cut while also taking on
more responsibilities. 'You
always feel like a dispensable employee without any rights - you don't
know whether you'll have a job from one day to the next and I would
rarely work a full week. 'The situation made me realise that I wanted a job where I was respected, doing something I am really passionate about. 'I
now work as a tour manager and as a Reiki healer on the side. My new
career suits my personality and interests so much more than bricklaying. 'The change has transformed how I feel about working and I definitely have no regrets so far.' Despite
the dip, there's evidence that female-run businesses are on the rise,
with the proportion of female-led bricklaying businesses up 16 per cent. Window
cleaning businesses run by women are up 10 per cent, building
businesses by eight per cent and painter and decorator businesses up
five per cent. The cleaning trade is prospering, up by 33 per cent since 2009, as more people find the time to clean their own homes. Chimney
sweeps have also seen a revival, with a four per cent rise over the
last three years, which could be thanks to the rising popularity of open
fires. Jason
Stockwood, CEO of Simply Business said: 'Independent tradesmen provide a
vital, often highly-skilled service to both home owners and the
commercial industry. 'It
is therefore worrying to see a decline in some trades over recent
years, as the slow economy has hit spending on infrastructure and home improvements. 'However, there are tentative signs of recovery this year with house prices and confidence on the up. 'But
with Government spending on infrastructure and housing slow to
materialise, commercial construction could be in for a more drawn-out
recovery. 'While there
are still thousands of talented tradesmen doing a fantastic job across
the country, investment is needed to ensure there is enough work to keep
them all afloat.'
Trillions In Subsidies to the Giant Banks Are Continuing to This Day
Chris Whalen is one of America’s top banking analysts.
Nouriel Roubini notes:
Chris Whalen is one of the leading independent analysts of the US banking and financial system.
Whalen notes today that the big American banks get a subsidy in excess of $780 billion dollars per year.
Specifically, Whalen estimates the following types of subsidies to the giant banks:
$360 billion in Federal Reserve subsidies, by creating an artificial “spread” in interest rates
$120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)
At least $100 billion in government-guaranteed loans, especially mortgages
At least $100 billion in monopolistic advantages in the secondary
market for home mortgages. Specifically, the government subsidies the
big banks to steal away fees earned from smaller banks, gain on sale
into the TBA market and servicing. Whalen quotes a veteran banker
explaining:
The smaller players lived on the bleeding edge of the
mortgage market, but they were also far more efficient lenders than the
large banks. Now, care of the Fed, we have a highly inefficient
oligopoly in the US mortgage market that is built around the largest
banks.
More than $100 billion in fees in the over-the-counter (OTC) derivative market. Whalen explains
The lack of capital required in these transactions and
other special dispensations from the Fed provide the zombie banks with
unlimited leverage and almost no public scrutiny. The fact that OTC
contracts are exempt from the automatic stay in bankruptcy is a huge
subsidy. The bilateral market structure is another.
That totals $780 billion per year.
But Whalen notes that there are many other subsidies as well:
The above points are only a partial list
of the subsidies and other flows that allow the members of the banking
industry to pretend to be profitable, risk-taking organizations in a
free market economy.
[These are] structural subsidies blessed by Congress and
the Fed that make large banks look more profitable than they truly are.
In fact, the TBTF banks are not really profitable at all.
***
The reality, sad to say, is that banks in 21st Century America are government sponsored enterprises ….
While mainstream financial and a growing number of economic forecasters focus on investors fleeing the gold bullion market, I am following in the footsteps of central banks around the world. As investors sold ETFs in February, central banks around the world added to their gold bullion reserves.
Submitted by Michael Lombardi, MBA
Investors pulled out a record amount of money from gold bullion-backed
exchange-traded funds (ETFs) this past February. A total of $4.1 billion
was withdrawn from gold bullion ETFs last month, the largest
single-month outflow since January of 2011. (Source: ETF Trends, March
6, 2013.)
Gold investors fled the market on speculation that gold bullion
prices will plummet, as the metal’s future looks anything but bright—the
theory being the global economy is improving and central banks will
need to pull back on their easy monetary policies.
But, as investors sold ETFs in February, central banks around the world added to their gold bullion reserves.
South Korea added another 20 metric tons of gold bullion to its
holdings in February—raising its gold reserves by 24% to 104.4 tons.
Since June of 2011, South Korea has purchased gold bullion five times.
(Source: Bloomberg, March 6, 2013.)
Similarly, central banks from Russia and Kazakhstan have been
increasing their gold bullion holdings as the prices go down. According
to the International Monetary Fund (IMF), the Russian central bank
purchased 12.2 tons of gold bullion in January.
As the World Gold Council cites, central banks across the world
ramped up their gold bullion buying; they bought 534.6 tons last year,
17% more than the previous year.
When you have the former biggest sellers of gold bullion, central banks, turning into buyers, it is nothing less than a bullish indicator.
What holds true is that central banks need gold bullion because
countries around the world are in an outright war to lower currency
values and thus central bank reserves are in danger.
I will turn bearish on gold bullion the day I find central banks have
both turned to net sellers and stopped printing paper money out of thin
air. Until then, I see the current correction in gold bullion prices as
a great opportunity for investors. Michael’s Personal Notes:
From the S&P Case-Shiller 20-City Home Price Index, we can see
that home prices are still down almost 30% from their peak in early
2007.
As the chart shows, a little change in home prices doesn’t really
mean recovery in the housing market. On average, home prices in the U.S.
economy will have to go up about 42% for the people presently living
with negative equity in their homes to break even. This much of a
recovery could be far away for the U.S. housing market…
According to RealtyTrac, foreclosures in the U.S. housing market dropped
seven percent to 150,864 in January from the previous month. One in
every 869 homes in the U.S. housing market was on the verge of
foreclosure in January. (Source: RealtyTrac, February 12, 2013.)
And, according to real estate research firm CoreLogic, in October of
2012, foreclosures accounted for 11.5% of total home sales. In the same
period of 2011, they accounted for 17.3%. But in the same period when
foreclosures declined, short sales climbed from 10.4% to 8.4% of all
sales. (Source: Wall Street Journal, March 5, 2013.)
Short sales, where a homeowner sells his/her home for less than the
mortgage and the bank takes the loss, have taken up the slack in
foreclosures! Add to this the fact that first-time home buyers are not
present in the U.S. housing market rebound while institutional investors
are buying single-family homes in bulk and renting them, and all of a
sudden the U.S. housing market rebound is questionable.
There is no doubt the U.S. housing market is one of the places that
can drive the U.S. economy towards economic growth. When Americans buy
homes, they spend money to get things needed to run the household;
consumer spending increases, businesses sell more, and so on and so
forth.
As long as the housing market stays distressed, you can forget about
economic growth. There is no doubt prices in the U.S. housing market
have increased since 2012, but looking at the bigger picture, I’m
skeptical. If the U.S. housing market is any indicator of economic
growth, I am certainly not betting that the U.S. economy will do any
better.
Where the Market Stands; Where It’s Headed:
I may be the only bear left standing, but that doesn’t bother me.
We have a stock market that has risen simply from an expanding money
supply (money printing and artificially low interest rates). Corporate
insiders are selling, corporate earnings growth has turned negative,
stock advisors are far too bullish, the economy is slowing—all the
indicators of a market top.
What He Said:
“Even the most novice investor can now read the chart of the Dow
Jones U.S. Home Construction Index and see that it is trading at its
lowest level in five years. If, like me, you believe that stocks are an
indication of what lies ahead, this important index is telling us
housing prices are headed to 2002 levels! What would that do to the
economy? Such an event would devastate the U.S.” Michael Lombardi
in Profit Confidential, December 4, 2007. This devastation started
happening the first quarter of 2008.
(CNN) -- Carnival Cruise Lines will fly all
passengers on one of its cruises back to Florida after the ship suffered
a generator failure while docked in the Caribbean.
The experience on the
Carnival Dream became something of a nightmare for some passengers
Wednesday when power went off, some toilets stopped working, and no one
was allowed to get off the vessel even though the ship was docked at
Philipsburg, St. Maarten, in the eastern Caribbean.
Although power had been restored and facilities were functioning again, the ship still couldn't leave port.
Cruise passengers
received a letter from the captain, according to a passenger who
e-mailed a photo of the correspondence to CNN.
Captain Massimo Marino
told passengers they will be booked on flights to Orlando or another
destination. Passengers with cars at Port Canaveral will be bused from
Orlando to the facility about an hour away.
The letter also offers passengers a three-day refund and a half-price cruise in the future.
The captain said
passengers could "enjoy another day in beautiful St. Maarten" or stay
onboard for a "full schedule" of activities.
"We sincerely apologize
for the disappointment this unexpected change has caused and regret we
were unable to provide you with the fun and memorable cruise vacation we
had in store for you," he wrote.
In a written statement,
Carnival said the ship's emergency diesel generator failed. The ship's
next voyage was canceled, the cruise line said.
Carnival spokesman Vance
Gulliksen said Thursday that 4,300 guests were aboard the Dream along
with about 1,300 crew members. Carnival's website puts the ship's
capacity at 3,646 passengers, but that's based on only two people per
cabin, and some cabins hold more, Gulliksen explained. There are also
three- and four-person cabins aboard.
Kris Anderson, a
passenger on the ship and reporter for CNN affiliate WREG, said Thursday
that passengers have been told they will be allowed off the ship to
enjoy the island while flight arrangements are made.
On Tuesday, Carnival announced it was conducting "a comprehensive review"
of all of its 23 ships after a fire last month that crippled one of its
ships in the Gulf of Mexico, leaving passengers stranded for days while
the vessel was towed back to land. Carnival President and CEO Gerry
Cahill said the probe will focus on the prevention, detection and
suppression of fires, engine room redundancies, and what additional
hotel facilities might be provided and might run off the emergency
generators.
His comments, posted on Carnival's website, were made at an annual cruise industry conference in Miami.
'Human waste all over the floor'
After the problems began Wednesday, CNN was contacted by passengers describing the conditions.
Gregg Stark, who is
traveling with his wife and two young children, told CNN: "There's human
waste all over the floor in some of the bathrooms and they're
overflowing -- and in the state rooms. The elevators have not been
working. They've been turning them on and off, on and off."
An announcement over the
ship's public address system said the crew was trying to fix the
problem and was working on the generators, according to Stark. A few
hours later, another announcement was made, saying the problem was worse
than originally believed.
"We are not allowed off
of the boat despite the fact that we have no way to use the restrooms
onboard," Jonathan Evans of Reidsville, North Carolina, said in an
e-mail early Thursday. "The cruise director is giving passengers very
limited information and tons of empty promises. What was supposed to
take an hour has turned into 7-plus hours."
But Thursday afternoon,
Carnival told CNN that based on conversations with the ship's management
team, a look at service logs "and extensive physical monitoring of all
public areas, including restrooms, throughout the night, we can confirm
that only one public restroom was taken offline for cleaning based on
toilet overflow and there was a total of one request for cleaning of a
guest cabin bathroom.
"Aside from that there
have no reports of issues on board with overflowing toilets or sewage.
The toilet system had periodic interruptions yesterday evening and was
fully restored at approximately 12:30 a.m. this morning."
The Coast Guard was
notified by Carnival that the Dream was experiencing generator issues.
Carnival has not requested assistance from the Coast Guard, which has no
jurisdiction in the ship's current location, Coast Guard Petty Officer
Jon-Paul Rios told CNN.
U.S. Coast Guard Chief
Petty Officer Ryan Doss said Carnival's original decision to keep
passengers onboard was "for accountability purposes. The last thing we
want to do is have someone get left behind in St. Maarten by accident."
The Dream,
based in Port Canaveral, Florida, was on a seven-day cruise. The ship,
which is 1,000 feet long -- about the length of three football fields --
sailed from Port Canaveral on Saturday.
It was scheduled to leave St. Maarten around 5 p.m. ET Wednesday.
Last month, an engine
room fire left the Carnival Triumph crippled and adrift in the Gulf of
Mexico with more than 4,200 people aboard.
That scheduled four-day
cruise stretched into eight days as tugs pulled the vessel into port in
Alabama. Food was scarce, and passengers sweltered in the heat with no
air conditioning. People aboard also reported overflowing toilets and
human waste running down the walls in some parts of the ship.
The Triumph is still undergoing repair at a shipyard in Mobile, Alabama, Carnival spokeswoman Joyce Oliva told CNN Thursday.
"We are now focused on
the lessons we can learn from the incident and also what additional
operational redundancies might be available," Cahill said at the cruise
industry conference this week.
Another ship, the Carnival Splendor, had a fire in 2010 due to "a catastrophic failure of a diesel generator," Cahill noted.
Sen. Jay Rockefeller,
the chairman of the Commerce, Science and Transportation Committee, sent
a letter Wednesday to Micky Arison, the chief executive officer of
Carnival Corporation.
"The Coast Guard has
responded to a string of 90 marine casualty incidents with passengers
onboard Carnival ships in the last five years," the West Virginia
Democrat wrote. "It seems that Carnival has failed to take any
meaningful course of corrective action after these continual incidents.
This needs to change."
Rockefeller said the cost to the taxpayers for the Carnival Triumph incident was almost $780,000.
Cahill said last week that the comprehensive review of the fleet "is our highest priority."
He also emphasized that the vast majority of the time, cruises experience no such problems.
Anderson said when he
booked the cruise tickets for his family, some friends ribbed him about
choosing Carnival, given what had happened with the Triumph. "I said,
'What are the odds of it happening to two ships in such a short period
of time?'" he told CNN Thursday. "Look what happened now."
The Environmental Protection Agency is preparing to implement a new regulation for gasoline that is expected to increase the price consumers pay at the pump.
Although the EPA completed the regulation proposal over a year ago,
sources familiar with the agency’s plans expect the rule to be released
sometime this month.
If the rule is passed, the regulation will require refineries to install new equipment to reduce the sulfur content in gasoline from 30 parts per million of sulfur to 10 ppm. The prior standard of 300 ppm was reduced just a decade ago.
Advocates of the rule argue that the new Tier 3 standards proposal will provide major health and environmental benefits for a relatively low cost.
However, in a letter
addressed to EPA Administrator Lisa Jackson, both Senator Democrats and
Republicans warned that the proposed regulation would impose billions
in additional refinery costs, and could add up to 25 cents to every gallon of gasoline.
The concerned senators explained that it would be “expensive” for
companies to meet the sulfur standards, citing a study that determined
the rule could add up to $17 billion in industry-wide, up-front
expenses, in addition to another $13 billion in annual operating
expenses. How Gas Prices are Affecting Americans Gas prices have already increased by roughly 15 percent
this year, up from a nationwide average of $3.34 for a gallon of
regular unleaded recorded in the last week of 2012 to the $3.86 price
level reached this week.
Despite the fact that gas consumption has been declining in recent
years, pump prices in 2012 accounted for the largest share of U.S.
household income in over 30 years.
Furthermore, the Energy Information Administration (EIA) found that
the average U.S. household spent $2,912 on gasoline last year – roughly 4
percent of American’s pre-tax income.
Both drivers and businesses are already dealing with the financial
pains caused by the spiraling gas prices and the economic difficulties
caused by the recession.
Economic Effects of Climbing Gas Prices
Evidence suggests that when gas prices climb,
the economy also suffers greatly. For instance, when gas prices
increase, consumers have less discretionary income to redistribute into
the economy. For households with multiple drivers, the financial burdens
are compounded.
Stocks for airlines, freight carriers and other companies that rely
on gasoline are also adversely affected because they lack sufficient
pricing power to offset the increased fuel costs.
Therefore, when gas prices climb, the result is a weakened stock market performance, which adversely affects both the market and individuals’ portfolios.
Combined data from the EIA and the U.S. Department of Labor also reveals a strong correlation between gas prices and the unemployment rate. As gas prices climb, the unemployment rate also rises sharply. Implementing the Regulations
If the EPA issues the proposal, it would likely take the agency more
than a year to review public comments and finalize any plan.
The agency has the authority to tighten the sulfur standards under the Clean Air Act. Whether or not the standards are imposed is at the discretion of the EPA.
Because the standard sulfur content of gasoline was reduced by 90
percent just years a few years ago, many argue that the environmental
benefits of the new proposal are not enough to justify the additional
refinery expenses.
Considering the dire economic effects the proposed regulation will
likely cause American drivers and businesses, energy proponents are
lobbying against the rule to help prevent the anticipated pump pains
from hindering our nation’s growth.
