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SilverHawk
14th August 2009, 01:18
Well, here we are again. Next WEBBOT prediction coming up. During the week of Aug 17th, and possibly as late as the 24th (gotta give the guys a little leeway), there will be a Economic quake that will happen, that has to probably do with the Derivatives Market. You know the one, that some value over $1,400,000,000,000,000. Yep, that's Quadrillion! So everyone keep your TV and XM radio tuned to CNBC next week. Can't wait to hear Larry go bezerk after the walls start crumbling.

Last prediction AUG 3-4, about an Earthquake/Weather came true. They're on a roll...

Looks like the precursor of this panic could be what's driving up Gold and Silver this week. Silver has been on this non stop march upward this week that is mouth watering. Wonder if the Commercial Shorts have been trying to beat it down.

You can check out the latest WEBBOT show here... (AUG 13th)

http://www.youtube.com/view_play_list?p=C72A9BF0D0FEC984

BullionBob
14th August 2009, 07:10
On a previous show 8/11/09 Webbot said expect Bank Holiday anywhere between August 26th-October. Fast forward to the 4 min mark of the video

http://www.youtube.com/watch?v=4TMLFJkQKxw

Argyria
14th August 2009, 07:39
On a previous show 8/11/09 Webbot said expect Bank Holiday anywhere between August 26th-October. Fast forward to the 4 min mark of the video

http://www.youtube.com/watch?v=4TMLFJkQKxw

Well, I guess its a good thing this one is more specific.

BullionBob
14th August 2009, 08:38
Well, I guess its a good thing this one is more specific.

FDIC is scheduled to release it's 2nd quarter report on the 25th most likely after hours and supposedly it's really bad that it will cause a bank run- FDIC is broke

SilverJim
14th August 2009, 08:49
I've been listening to a few recent radio interviews with Cliff High too including the one yesterday when he mentioned the derivitives issue which will come to light next week. This bank holiday rumor is also gaining steam with mentions from Bob Chapman and now Steve Quayle (see my post under Current Events). Very interesting, if not surreal and frightening stuff. I've double checked to make sure I have done all I can to be as prepared as possible on this bank front thing (silver hoard - check, cash on hand - check, bills paid - check, money in bank - hahahaha! fogetaboutit).

SilverHawk
16th August 2009, 14:06
(I miss ya, Mick)

AS OF FRIDAY AUG 14, 2009, FDIC IS BANKRUPT



Bank Failure Friday is in full swing. Tonight there were 5 more failures, numbers 73 through 77 on the year. In the biggest failure since WaMu, BB&T Takes Over Colonial (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOTAckySeznw).
Colonial BancGroup Inc., the Alabama lender facing a criminal probe, had its banking operations closed by regulators and taken over by BB&T Corp. in the biggest bank failure since Washington Mutual Inc. collapsed last year.



Branches and deposits of Colonial, Alabama’s second-largest bank, were turned over to Winston-Salem, North Carolina-based BB&T in a deal brokered by the Federal Deposit Insurance Corp., the regulator said today. The failure of Montgomery-based Colonial followed a Florida expansion that saddled the lender with more than $1.7 billion in soured real-estate loans.



Colonial’s failure will deplete the FDIC’s deposit insurance fund by $2.8 billion, the agency said. The fund, which the agency uses to pay customers of a failed bank for deposit losses up to a $250,000 limit and is generated by fees paid by banks, stood at $13 billion at the end of the first quarter, according to the FDIC. The agency has set aside an additional $25 billion for bank failures, agency spokesman David Barr said.Is There Any Money Left In The Fund?



Tonight, inquiring minds are asking "Is There Any Money Left In The Fund?"



For clues, please consider Saxo Bank Research FDIC’s Shrinking Deposit Insurance Fund – A Testimony of Current Accounting Standards (http://www.tradingfloor.com/EN/Documents/Research%20Note/2009-08-12%20Saxo%20Bank%20Research%20Note%20-%20FDIC%20DIF.pdf).
As late as in the end of April just before the release of the bank stress tests, Ms. Bair Chairman of the FDIC said they would not need any additional bailouts from the U.S Treasury within the immediate future according to The Bulletin. After three new bank failures last Friday, the FDIC’s Deposit Insurance Fund (DIF) diminished by another $185 million for a total remaining balance of $648.1 million.



Below is a graph showing the DIF capital as a percentage of total bank deposits insured by the FDIC. Note that this graph is based on the old insurance limit with a maximum coverage of $100.000/account. This limit has been changed to cover up to $250.000/account until January 1st 2014. Estimates say that the change increases the deposits covered under FDIC insurance to approximately $6 trillion in total.



FDIC Reserve Ratios & Insured Deposits



http://1.bp.blogspot.com/_nSTO-vZpSgc/SoYymWazPNI/AAAAAAAAGpY/adaz4n4OFVg/s400/FDIC+Reserve+Ratio.png (http://1.bp.blogspot.com/_nSTO-vZpSgc/SoYymWazPNI/AAAAAAAAGpY/adaz4n4OFVg/s1600-h/FDIC+Reserve+Ratio.png)



click on chart for sharper image



The current reserve ratio of 0.014%1 strongly indicates how bad this crisis has affected U.S financial institutions. However, this is not the entire story. If we take a closer look at non-current loans and charge-offs from banks one realizes that the FDIC still has a lot of work to be done. Combined non-current loans and charge-offs amounted to nearly $100 billion in Q109 compared to $15 billion/quarter pre-crisis. Moreover, according to analysts at the Royal Bank of Canada the U.S still has banking failures in the thousands to face before the crisis is over. In turn that should result in the FDIC requesting the pre-approved funding signed by the Congress in May 2009, including $100 billion from the U.S Treasury Department....



http://globaleconomicanalysis.blogspot.com/2009/08/as-of-friday-august-14-2009-fdic-is.html

...FOR REST OF ARTICLE.

SilverHawk
16th August 2009, 14:09
WORST PERFORMANCE EVER FOR BACK-TO-SCHOOL SALES


There are two things retailers thought they could always count on, a robust Christmas shopping season and strong back-to-school sales. However, the Christmas fairy tale shattered last year and back-to-school sales are in the midst of their first ever collapse this year.

Inquiring minds are reading Retailers See Back-to-School Sales Slowing (http://www.nytimes.com/2009/08/15/business/15school.html?_r=2&th=&adxnnl=1&emc=th&adxnnlx=1250352536-ZKZ9u/tm1Dy+zHZjRLHgNg).

Halfway through the back-to-school shopping season, retail professionals are predicting the worst performance for stores in more than a decade, yet another sign that consumers are clinging to every dollar.

Stock analysts at Citigroup are predicting a decline in back-to-school sales for the first time since they began tracking the figures in 1995. They estimate August and September sales at stores open for at least a year — known as same-store sales — will fall 3 to 4 percent, compared with an increase of nearly 1 percent in the same period last year.

The National Retail Federation, an industry group, expects the average family with school-age children to spend nearly 8 percent less this year than last. And ShopperTrak, a research company, predicted customer traffic would be down 10 percent from a year ago.

“This is going to be the worst back-to-school season in many, many years,” said Craig F. Johnson, president of Customer Growth Partners, a retailing consultant firm.
“This is going to be the worst back-to-school season in many, many years,” said Craig F. Johnson, president of Customer Growth Partners, a retailing consultant firm.

This year’s frugality may hark back to an earlier age, but consumers are using up-to-the-minute tools in their determination to save money. They are scouring the Internet for coupons. They are planning their shopping trips around e-mail alerts that tip them to bargains.

One mother, Clarissa Nassar, signed up for alerts about sales on a Web site called Shop It To Me. When she saw that her daughter’s favorite brand, Baby Phat, was on sale at Macy’s, she promptly drove to the department store to shop for school clothes.

“I got an alert for the cutest tie-dye pink top,” said Ms. Nassar, a mother of two, Mikayla, 7, and Joseph, 3, in Johnstown, N.Y. “Originally it was $36 and I got it for $9.75.”

Executives at Google said Internet searches for back-to-school bargains had soared this year. Searches for coupons are up 40 percent over last year and searches for buy-one-get-one-free deals are up 30 percent. The article notes that Staples lowered prices on 250 back-to-school items in an attempt to compete with Walmart. With that, we can safely add Staples to the ever growing list of Peas In The Deflationary Pod (http://globaleconomicanalysis.blogspot.com/2009/08/peas-in-deflationary-pod.html).

In a flashback to the past, coupon sales are soaring. Anyone remember their parents clipping coupons? Except perhaps for huge discounts, how many routinely did it 3 years ago, two years ago?

Some thought last season's Christmas sales were bad. This year is going to be a disaster.

http://globaleconomicanalysis.blogspot.com/2009/08/worst-performance-ever-for-back-to.html

SilverHawk
16th August 2009, 14:15
Toxic Loans Topping 5% May Push 150 Banks to Point of No Return

Aug. 14 (Bloomberg) -- More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival.
The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 percent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full.
The biggest banks with nonperforming loans of at least 5 percent include Wisconsin’s Marshall & Ilsley Corp. (http://forums.silverseek.com/apps/quote?ticker=MI%3AUS) and Georgia’s Synovus Financial Corp. (http://forums.silverseek.com/apps/quote?ticker=SNV%3AUS), according to Bloomberg data. Among those exceeding 10 percent, the biggest in the 50 U.S. states was Michigan’s Flagstar Bancorp (http://forums.silverseek.com/apps/quote?ticker=FBC%3AUS). All said in second- quarter filings they’re “well-capitalized” by regulatory standards, which means they’re considered financially sound.
“At a 3 percent level, I’d be concerned that there’s some underlying issue, and if they’re at 5 percent, chances are regulators have them classified as being in unsafe and unsound condition,” said Walter Mix (http://search.bloomberg.com/search?q=Walter+Mix&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), former commissioner of the California Department of Financial Institutions, and now a managing director of consulting firm LECG (http://forums.silverseek.com/apps/quote?ticker=XPRT%3AUS) in Los Angeles. He wasn’t commenting on any specific banks.
Missed payments by consumers, builders and small businesses pushed 72 lenders into failure this year, the most since 1992. More collapses may lie ahead as the recession causes increased defaults and swells the confidential U.S. list of “problem banks,” which stood at 305 in the first quarter.
Cash Drain
Nonperforming loans can eat into a company’s earnings and deplete cash, leaving banks below the minimum capital levels required by regulators. Three lenders with nonaccruing ratios of at least 6.2 percent as of March were closed last week. In addition, Chicago-based Corus Bankshares Inc. (http://forums.silverseek.com/apps/quote?ticker=CORS%3AUS), Austin-based Guaranty Financial Group Inc. and Colonial BancGroup Inc. (http://forums.silverseek.com/apps/quote?ticker=CNB%3AUS) in Montgomery, Alabama, each with ratios of at least 6.5 percent, said in the past month that they expect to be shut.
“This is a fairly widespread issue for the larger community banks and some regional banks across the country,” said Mix of LECG, where William Isaac (http://search.bloomberg.com/search?q=William+Isaac&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), former head of the Federal Deposit Insurance Corp., is chairman of the global financial services unit.
Ratios above 5 percent don’t always lead to failures because banks keep capital cushions and set aside reserves to absorb bad loans. Banks with higher ratios of equity to total assets can better withstand such losses, said Jim Barth (http://search.bloomberg.com/search?q=Jim+Barth&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), a former chief economist at the Office of Thrift Supervision. Marshall & Ilsley and Synovus said they’ve been getting bad loans off their books by selling them.
Exclusions
Bloomberg’s list was compiled by screening U.S. banks for nonperforming loans of 5 percent or more, and then ranked by assets. The list excluded U.S. territories and lenders that have already failed. Also left out were the 19 lenders that underwent the Treasury’s stress tests in May; they were deemed “too big to fail” and told by regulators that government capital was available to keep them in business.
Excluding the stress-test list, banks with nonperformers above 5 percent had combined deposits of $193 billion, according to Bloomberg data. That’s almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter.
About 2.6 percent of the $7.74 trillion in bank loans outstanding in the U.S. at the end of March were nonaccruing, the highest in 17 years, according to the most recent data from the FDIC. (http://www.fdic.gov/) Nonaccrual loans peaked at 3.27 percent in the second quarter of 1991, during the savings and loan crisis, and averaged 1.54 percent over the past 25 years.
‘Off the Charts’
“These numbers are off the charts,” said Blake Howells (http://search.bloomberg.com/search?q=Blake+Howells&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), an analyst at Becker Capital Management in Portland, Oregon, referring to the nonperforming loan levels at companies he follows. Banks are losing the “ability to try and earn their way through the cycle,” said Howells, who previously spent 13 years at Minneapolis-based U.S. Bancorp. (http://forums.silverseek.com/apps/quote?ticker=USB%3AUS)
Corus, with more than two-thirds of its loans nonperforming, has the highest rate among publicly traded banks. The company said last month that it’s “critically undercapitalized” after five consecutive quarterly losses tied to defaults on condominium construction loans. Randy Curtis (http://search.bloomberg.com/search?q=Randy+Curtis&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), Corus’s interim chief executive officer, didn’t respond to calls for comment.
Marshall & Ilsley, Wisconsin’s biggest bank, reduced its nonperforming loans last month to 5.01 percent from 5.18 percent after selling $297 million in soured loans, mostly residential mortgages in Arizona, the Milwaukee-based company said Aug. 10.
Deadline for Nonperformers
The bank has “been very aggressive in identifying and tackling credit challenges,” Chief Financial Officer Greg Smith (http://search.bloomberg.com/search?q=Greg+Smith&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said in an Aug. 12 interview. Smith said 26 percent of loans classified as nonperforming are overdue by less than the industry’s typical standard of 90 days. With those excluded, the ratio would be around 3.7 percent, he said.
Synovus, plagued by defaulting construction loans in the Atlanta area, said nonperforming loans rose to 5.4 percent in the second quarter from 5.2 percent the previous period. Disposals of nonperforming assets reached $404 million in the quarter ended in June, the Columbus, Georgia-based company said.
Synovus is selling troubled loans and will continue its “aggressive stance on disposing of nonperforming assets” as long as the level is elevated, spokesman Greg Hudgison (http://search.bloomberg.com/search?q=Greg+Hudgison&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said in an e-mailed statement.
Michigan Home
Flagstar is based in Troy, Michigan (http://forums.silverseek.com/apps/quote?ticker=USUSMICH%3AIND), the state with the nation’s highest unemployment rate. Flagstar has $16.4 billion in assets and reported last month that 11.2 percent of its loans were nonperforming; about two-thirds were home mortgages. Flagstar CFO Paul Borja (http://search.bloomberg.com/search?q=Paul+Borja&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) didn’t return repeated calls for comment.
The bank’s allowance for loan losses was 5.4 percent of total loans at the end of the second quarter, compared with 3.3 percent at Synovus and 2.8 percent at Marshall & Ilsley, according to company filings. All three reported at least three straight quarterly deficits.

SilverHawk
16th August 2009, 14:16
The FDIC doesn’t comment on lenders that are open and operating and doesn’t disclose which banks are on its problem list. The agency will probably impose an emergency fee on the more than 8,200 banks it insures in the fourth quarter to replenish the insurance fund, the second special assessment this year, Chairman Sheila Bair (http://search.bloomberg.com/search?q=Sheila+Bair&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said last week. The FDIC attempts to sell deposits and assets of seized banks to healthier firms to avoid eroding the fund, said agency spokesman David Barr (http://search.bloomberg.com/search?q=David+Barr&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1).
Capital Levels
To determine which banks are most troubled, regulators compare the ratio of nonperforming loans to the percentage of equity a firm has relative to its assets, said Barth (http://search.bloomberg.com/search?q=Barth&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), the former OTS economist. A company with 5 percent nonperforming loans and equity of 8 percent is better positioned than one with the same amount of troubled loans and equity of 4 percent, he said.
Flagstar’s equity-to-assets ratio in the second quarter was 5.4 percent, Synovus’s was 8.9 percent and Marshall & Ilsley, which raised $552 million through a stock sale in June, was at 11 percent, according to the banks.
The three lenders that failed last week -- Florida’s First State Bank and Community National Bank and Oregon’s Community First Bank -- all had nonperforming loans above 6 percent and equity ratios below 4.5 percent.
“The nonperforming ratio, in and of itself, should be a great concern,” said Barth, a professor of finance at Auburn University in Alabama and senior finance fellow at the Milken Institute in Santa Monica, California. “It becomes even more troublesome when it goes above 3 percent and the equity-to-asset ratio is quite low.”
Toast Time
While 5 percent can be “fatal” for home lenders, commercial real estate lenders may be able to withstand higher rates, said William K. Black (http://search.bloomberg.com/search?q=William+K.+Black&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), former lawyer at the Federal Home Loan Bank of San Francisco and the OTS. Commercial loans carry higher interest rates because they’re riskier, he said.
“At the 5 percent range, you’re probably hurting,” said Black, an associate professor of economics and law at the University of Missouri-Kansas City. “Once it gets around 10 percent, you’re likely toast.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTTT9jivRIWE

SilverHawk
16th August 2009, 14:21
The nation quickly descending into chaos

August 13, 1:24 PMhttp://image.examiner.com/img/greydot.gif

A very dangerous thing occurred last Thursday and Friday. The Federal Reserve monetized roughly 40% of the nation's enormous debt. This means that the Fed printed money to flow into the economy in order to cover over 40% of the debt burden the U.S. now carries.
Within days the U.S. government quickly sold off this portion of the debt, creating even more debt, leading Treasury Secretary Timothy Geithner to request from Congress a lifting of the debt ceiling so that we could cover our obligations. That, of course, will create even more debt.
This economic shop talk may sound like gobbledygook to most average citizens, like myself. But the bottom line is that what the Fed did last week will create what is known as 'hyper-inflation.' The cost of goods and services rises so fast that average citizens can't afford the basic essentials of living.
However, the dirty little secret among economists and government bureaucrats is that what's bad for the citizens in this scenario is actually good for the government. In a hyper-inflation scenario the government makes more money due to the tax structure being based upon percentages. Thus, the government makes more money without having to enact an official tax increase.
In a free, Constitutional Republic, a very careful balancing act must be undertaken by government in this situation. The amount of hyper-inflation that benefits government must be carefully balanced with the tolerance level of the public for the ever-rising costs of goods and services, or else the citizens will vote out every politicians who contributed to this dastardly plan.
The salient point here, though, is that we are headed for a round of heavy hyper-inflation. We'd better get set.
But this is not the only troublesome area.
Many economists who closely watch the mortgage and housing markets are saying that we are going to experience yet another major crisis with foreclosures within the next year or two. The reason? Homeowners will owe more on their mortgages than their homes are worth on the market. One economist in particular stated on Fox News that this crisis will not only prevent a recovery but throw the nation back into a deeper recession or even a depression.
Barack Obama has stated, on the record, that the U.S. is 'out of money.'
For once in his life, he told the truth. We are broke. Yet at the worst point in at least 30 years for our economy, Obama and the Democrats wish to pass a 9 trillion-dollar healthcare plan, just so roughly 10 million Americans can have some insurance. And to boot, they want a cap-and-trade plan that will cripple business, decimate jobs, and add $1500-$3000 per year in extra energy costs to the average American family.
There are only 2 ways that the government can cover the costs of such a head-splitting load of debt, on top of the debt we already have. One is to raise taxes. The other is to print more money. Neither solution is acceptable. If inflation is headed through the roof, how will the citizens pay for more taxes? If the government continues to print more money, inflation will only continue to increase.
In short, the Barack Obama plan for the nation is a prescription for chaos. Some would argue we are already sliding into chaos without the healthcare plan or cap & trade. Obama and the Democrats have led us to a point in our history where the very survival of the Republic hangs in the balance. We are edging ever closer to a precipice, and if we fall off of it the Republic will be lost.
Obama and the Democrats who control Congress have given us snake-oil remedies that are leading us closer and closer to that precipice. Perhaps this is a slight hint as to why the citizens who shout at town hall meetings are so passionate.
And perhaps this is why the voices calling for a complete change in Congress, from top to bottom, are growing.

http://www.examiner.com/x-3704-Columbia-Conservative-Examiner~y2009m8d13-The-nation-quickly-descending-into-chaos

SilverHawk
16th August 2009, 14:43
SA gold output dropped 12% in June

By: Creamer Media Reporter (http://forums.silverseek.com/author.php?u_id=1013)
13th August 2009



JOHANNESBURG (miningweekly.com) – South Africa’s total mining production fell 7,3% year-on-year in June, with gold production down 12,2% year-on-year and nongold production dropping 6,4% year-on-year, official data shows.

Statistics South Africa (Stats SA) reported on Thursday that the total mining production for the second quarter of the year increased by 4,5%, compared with the first quarter of the year.

Platinum-group metals (PGMs) production was the main contributor to the increase, it added, highlighting that nongold production was 5,8% higher quarter-on-quarter, while gold production was down 4,2% quarter-on-quarter.

However, production in the second quarter of this year fell by 10,7%, compared with production figures for the second quarter of 2008.

Meanwhile, Stats SA reported that the total seasonally adjusted value of mineral sales of R17,9-billion for the three months ended May, declined by 0,8%, compared with the previous three months, owing to a 2,5%, or R1,2-billion, decline in the sale of nongold minerals.

The actual estimated total value of mineral sales for the three months was down 24,1%, compared with the three months ended May 2008.

PGMs sales contributed to 15% of the decline, manganese ore sales to 4,4%, coal to 3,8% and other nonmetallic minerals to 1,7% of the decline.

Iron-ore had made a 3% positive contribution to the change in sales, while gold had made a 1,4% positive contribution.

SilverHawk
16th August 2009, 14:47
China Tell Its Citizens: "Buy Silver Now!"


...."Over the past week, a youtube.com video of a commercial from China promoting the retail purchase of silver, has been circulated on the Internet, and the link is here (http://news.silverseek.com/SilverSeek/1249958982.php). Since the government there heavily controls the media, it is not hard to imagine this encouragement of silver ownership is intended by Chinese leadership. Considering China’s silver history, this is potentially profound. (I especially appreciated the commercial’s special noting of how cheap silver was in relation to gold). I don’t think I have to explain the significance of great numbers of Chinese citizens buying physical silver for the first time in half a century.".....


http://www.caseyresearch.com/displayGsd.php

skijake
16th August 2009, 15:31
Good stuff Hawk, Thanks for the updates.:cool:

SilverHawk
18th August 2009, 09:53
Welcome SkiJake...

Monday's Activity:



Stocks Backslide Across Globe
http://www.thestreet.com/_yahoo/story/10578220/1/stocks-backslide-across-globe.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Consumer Sentiment Falls
http://www.thestreet.com/story/10576155/1/consumer-sentiment-falls-so-do-shares-updated.html

Capital One Financial Corp. said Monday that defaults on its U.S. credit cards rose in July.
http://www.thestreet.com/story/10578232/1/ahead-of-the-bell-capital-1.html

Banks' Problem Loans Keep Growing
http://seekingalpha.com/article/156339-banks-problem-loans-keep-growing?source=yahoo

China cut U.S. Treasury holdings in June
http://www.reuters.com/article/bondsNews/idUSN1737034720090817

Katwoman
18th August 2009, 11:05
SA gold output dropped 12% in June

By: Creamer Media Reporter (http://forums.silverseek.com/author.php?u_id=1013)
13th August 2009



JOHANNESBURG (miningweekly.com) – South Africa’s total mining production fell 7,3% year-on-year in June, with gold production down 12,2% year-on-year and nongold production dropping 6,4% year-on-year, official data shows.

Statistics South Africa (Stats SA) reported on Thursday that the total mining production for the second quarter of the year increased by 4,5%, compared with the first quarter of the year.

Platinum-group metals (PGMs) production was the main contributor to the increase, it added, highlighting that nongold production was 5,8% higher quarter-on-quarter, while gold production was down 4,2% quarter-on-quarter.

However, production in the second quarter of this year fell by 10,7%, compared with production figures for the second quarter of 2008.

Meanwhile, Stats SA reported that the total seasonally adjusted value of mineral sales of R17,9-billion for the three months ended May, declined by 0,8%, compared with the previous three months, owing to a 2,5%, or R1,2-billion, decline in the sale of nongold minerals.

The actual estimated total value of mineral sales for the three months was down 24,1%, compared with the three months ended May 2008.

PGMs sales contributed to 15% of the decline, manganese ore sales to 4,4%, coal to 3,8% and other nonmetallic minerals to 1,7% of the decline.

Iron-ore had made a 3% positive contribution to the change in sales, while gold had made a 1,4% positive contribution.

When the miners produce less gold it means that gold is under valued relative to other goods and services and so they are trying to make it more scarce to drive the price back up. IMHO this sector may be the only one in a modern economy where the fundamental laws of economics still apply.

SilverHawk
18th August 2009, 11:47
The Size of Derivatives Bubble = $190K Per Person on Planet

By Tom Foremski - October 16, 2008



The Invisible One Quadrillion Dollar Equation -- Asymmetric Leverage and Systemic Risk According to various distinguished sources including the Bank for International Settlements (BIS) in Basel, Switzerland -- the central bankers' bank -- the amount of outstanding derivatives worldwide as of December 2007 crossed USD 1.144 Quadrillion, ie, USD 1,144 Trillion. The main categories of the USD 1.144 Quadrillion derivatives market were the following:
1. Listed credit derivatives stood at USD 548 trillion;
2. The Over-The-Counter (OTC) derivatives stood in notional or face value at USD 596 trillion and included:
a. Interest Rate Derivatives at about USD 393+ trillion;
b. Credit Default Swaps at about USD 58+ trillion;
c. Foreign Exchange Derivatives at about USD 56+ trillion;
d. Commodity Derivatives at about USD 9 trillion;
e. Equity Linked Derivatives at about USD 8.5 trillion; and
f. Unallocated Derivatives at about USD 71+ trillion.
Quadrillion? That is a number only super computing engineers and astronomers used to use, not economists and bankers! For example, the North star is "just" a couple of quadrillion miles away, ie, a few thousand trillion miles. The new "Roadrunner" supercomputer built by IBM for the US Department of Energy's Los Alamos National Laboratory has achieved a peak performance of 1.026 Peta Flop per second -- becoming the first supercomputer ever to reach this milestone. One Quadrillion Floating Point Operations (Flops) per second is 1 Peta Flop/s, ie, 1,000 Trillion Flops per second. It is estimated that all the data found on all the websites and stored on computers across the world totals more than One Exa byte of memory, ie, 1,000 Quadrillion bytes of data.
Whilst outstanding derivatives are notional amounts until they are crystallised, actual exposure is measured by the net credit equivalent. This is normally a lower figure unless many variables plot a locus in the wrong direction simultaneously. This could be because of catastrophic unpredictable events, ie, "Black Swans", such as cascades of bankruptcies and nationalisations, when the net exposure can balloon and become considerably larger or indeed because some extremely dislocating geo-political or geo-physical events take place simultaneously. Also, the notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. This means that no large OTC derivative house can be allowed to go broke without falling into the arms of another. Whatever funds within reason are required to rescue failing international investment banks, deposit banks and financial entities ought to be provided on a case by case basis. This is the asymmetric nature of derivatives and here lies the potential for systemic risk to the global economic system and financial markets if nothing is done.
Let us think about the invisible USD 1.144 quadrillion equation with black swan variables -- ie, 1,144 trillion dollars in terms of outstanding derivatives, global Gross Domestic Product (GDP), real estate, world stock and bond markets coupled with unknown unknowns or "Black Swans". What would be the relative positioning of USD 1.144 quadrillion for outstanding derivatives, ie, what is their scale:
1. The entire GDP of the US is about USD 14 trillion.
2. The entire US money supply is also about USD 15 trillion.
3. The GDP of the entire world is USD 50 trillion. USD 1,144 trillion is 22 times the GDP of the whole world.
4. The real estate of the entire world is valued at about USD 75 trillion.
5. The world stock and bond markets are valued at about USD 100 trillion.
6. The big banks alone own about USD 140 trillion in derivatives.
7. Bear Stearns had USD 13+ trillion in derivatives and went bankrupt in March. Freddie Mac, Fannie Mae, Lehman Brothers and AIG have all 'collapsed' because of complex securities and derivatives exposures in September.
8. The population of the whole planet is about 6 billion people. So the derivatives market alone represents about USD 190,000 per person on the planet.
The Impact of Derivatives
1. Derivatives are securities whose value depends on the underlying value of other basic securities and associated risks. Derivatives have exploded in use over the past two decades. We cannot even properly define many classes of derivatives because they are highly complex instruments and come in many shapes, sizes, colours and flavours and display different characteristics under different market conditions.
2. Derivatives are unregulated, not traded on any public exchange, without universal standards, dealt with by private agreement, not transparent, have no open bid/ask market, are unguaranteed, have no central clearing house, and are just not really tangible.
3. Derivatives include such well known instruments as futures and options which are actively traded on numerous exchanges as well as numerous over-the-counter instruments such as interest rate swaps, forward contracts in foreign exchange and interest rates, and various commodity and equity instruments.
4. Everyone from the large financial institutions, governments, corporations, mutual and pension funds, to hedge funds, and large and small speculators, uses derivatives. However, they have never existed in history with the overarching, exorbitant scale that they now do.
5. Derivatives are unravelling at a fast rate with the start of the "Great Unwind" of the global credit markets which began in July 2007 and particularly after the collapse of Freddie Mac and Fannie Mae in September this year.
6. When derivatives unravel significantly the entire world economy would be at peril, given the relatively smaller scale of the world economy by comparison.
7. The derivatives market collapse could make the housing and stock market collapses look incidental.
Three Historical Examples
1. Derivatives bet on the direction of the Japanese Nikkei index brought on the collapse of Barings Bank in 1995.
2. The collapse of Long Term Capital Management (LTCM), a hedge fund that collapsed because of huge leveraged bets in currencies and bonds in 1998.
3. Finally, a lot of the problems of Enron in 2000 were brought on by leveraged derivatives and using derivatives to hide problems on the balance sheet.
The Pitfall
The single conceptual pitfall at the basis of the disorderly growth of the global derivatives market is the postulate of hedging and netting, which lies at the basis of each model and of the whole regulatory environment hyper structure. Perfect hedges and perfect netting require functioning markets. When one or more markets become dysfunctional, the whole deck of cards could collapse swiftly. To hope, as US Treasury Secretary Mr Henry Paulson does, that an accounting ruse such as transferring liabilities, however priced, from a private to a public agent will restore the functionality of markets implies a drastic jump in logic. Markets function only when:
1. There is a price level at which demand meets supply; and more importantly when
2. Both sides believe in each other's capacity to deliver.
Satisfying criterion 1. without satisfying criterion 2. which is essentially about trust, gets one nowhere in the long term, although in the short term, the markets may demonstrate momentary relief and euphoria.
Conclusion
In the context of the USD 700 billion rescue plan -- still being finalised in Washington, DC -- the following is worth considering step by step. Decision makers are rightly concerned about alleviating immediate pressure points in the global financial system, such as, the mortgage crisis, decline in consumer spending and the looming loss of confidence in financial institutions. However, whilst these problems are grave, they are acting as a catalyst to another more massive challenge which may have to be tackled across many nation states simultaneously. As money flows slow down sharply, confidence levels would decline across the globe, and trust would be broken asymmetrically, ie, the time taken to repair it would be much longer. Unless there is government action in concert, this could ignite a chain-reaction which would swiftly purge trillions and trillions of dollars in over-leveraged risky bets. Within the context of over-leverage, the biggest problem of all is to do with "Derivatives", of which CDSs are a minor subset. Warren Buffett has said the derivatives neutron bomb has the potential to destroy the entire world economy, and is a "disaster waiting to happen." He has also referred to derivatives as Weapons of Mass Destruction (WMD). Counting one dollar per second, it would take 32 million years to count to one Quadrillion. The numbers we are dealing with are absolutely astronomical and from the realms of super computing we have stepped into global economics. There is a sense of no sustainability and lack of longevity in the "Invisible One Quadrillion Dollar Equation" of the derivatives market especially with attendant Black Swan variables causing multiple implosions amongst financial institutions and counterparties! The only way out, albeit painful, is via discretionary case-by-case government intervention on an unprecedented scale. Securing the savings and assets of ordinary citizens ought to be the number one concern in directing such policy.

silverheartbone
18th August 2009, 11:48
When the miners produce less gold it means that gold is under valued relative to other goods and services and so they are trying to make it more scarce to drive the price back up. IMHO this sector may be the only one in a modern economy where the fundamental laws of economics still apply.

I don't think so.

If that were true,
why is silver 1/67 the price of gold?

http://goldseek.com/news/2009/7-13jt/6.jpg

When available silver stocks are 1/5 the amount of gold?

SilverHawk
18th August 2009, 11:51
How to Understand The Derivatives Market

Jul 16 2009, 1:00 pm by Charles Davi (http://business.theatlantic.com/author/charles_davi/)

In 2006, few people outside of the derivatives market had used the word "credit default swap" in casual conversation. By 2008, it had become an inescapable household term. People continue to throw around buzz words gleaned from the pink pages of the FT, but as my colleague, Daniel Indiviglio (http://business.theatlantic.com/2009/07/wanted_someone_who_understands_the_derivatives_mar ket.php) recently asked: Does anyone out there really understand what the Over-The-Counter (OTC) Derivatives market is? Since I consider myself the resident derivatives wonk (http://xrayvision.today.com/files/2009/02/comic-nerd.jpg) at Atlantic Business, I felt compelled to respond. But rather than focus on any particular instrument or issue, I thought it would be best to focus on the overall structure of the market - who the people in the market are, what they do, and what relationships they have to each other - and leave the banker-bashing to somebody else.

Market-Makers
If you were to base your understanding of financial markets on your experiences as a consumer of financial products, you would probably think that any and all types of financial products are available upon demand - all you need to do is pay for them, right? No. The reason you can purchase stocks over the internet with a few clicks of the mouse is because at the other end of that trade is someone else willing to assume the exact opposite end of the trade. If you want to buy, they're willing to sell. If you want to sell, they're willing to buy. The folks that do this are known as market-makers. Simply put, their willingness to both buy and sell assets creates a market in which others can trade these assets.
Liquidity risk is the risk that you won't be able to sell an asset, or more generally unwind a trade, for an amount of cash close to its expected value at any given moment. So which assets carry the most liquidity risk? As a general rule, the greatest liquidity risk comes from assets in thinly traded markets. That is, the fewer times an asset is traded on any given day, the greater the liquidity risk. For example, stock in Coca Cola carries much less liquidity risk than a Victorian mansion for the simple reason that Coca Cola stock is heavily traded every business day all over the world. As a result, Coca Cola stock trades can be executed quickly through intermediaries who are willing to buy it from or sell it to you, since these intermediaries know that at some point in the near future, someone else will show up at their door asking to buy or sell some more. So these market-makers must be the greatest people on the Earth, willing to devote their time to make markets liquid, all for the greater good of humanity, right? No. You bought your lunch, even if you don't remember paying for it. In exchange for providing liquidity, market-makers get to pocket the difference between the prices at which they buy and sell.
A swap is a very common type of OTC derivative, which includes that destroyer of economies, the credit default swap (CDS). While industry folk commonly speak of a buy-side and a sell-side to the swap market, you can't really buy or sell a swap in the classic sense, since a swap is an instrument in which both sides have obligations to perform in the future. That is, if the underlying rate moves against either party, that party will have to pay up, much like a future or forward contract. This is in contrast to an option from the perspective of its holder. An option grants the right, not the obligation, to the option holder to buy a particular asset; and creates an obligation on the part of the option writer to sell that asset. You can sell a right and assume an obligation. You cannot sell an obligation. Well, there are probably a few bozos out there.But in any case, both parties to a swap could end up having an obligation to pay at some point in the future.
The Sell-Side
Swap dealers are market-makers for swaps: the sell-side of the market. But how do they create markets when you can't really buy or sell a swap? At all times except execution, swaps have positive value to one of the parties to the swap and negative value to the other. At execution, the market value of the swap to each side of the swap is zero. This is because the price of the swap will be based upon the value of some rate at execution. One party will be long on the rate (benefiting if the rate goes up) and the other will be short on the rate (benefiting if the rate goes down). After execution, that rate will move, up or down, which will create value to one of the parties. What swap dealers do to net their positions is offset their long positions with short positions; and offset their short positions with long positions. In reality, this process is not so simple. The face value of each trade, known as the notional amount, is not likely to match up so perfectly with the other trades, despite being executed by masters of the universe (http://content.artofmanliness.com/uploads/2008/03/masters-of-the-universe.jpg). As a result, they have to work pretty hard to make all of their trades match up.
The Buy-Side
So who is out there using these swaps aside from those evil useless bankers? Well, I'm sorry to disappoint you, but pretty much everyone: corporations of every variety, particularly heavy consumers of energy products, municipalities of every variety, and of course, hedge funds. There are others, like insurers, who have played a now infamous role in the OTC derivatives market, but the preceding list, while not exhaustive, at least provides some insight into the broad variety of market participants out there using these weapons of mass financial destruction.
So why do these firms voluntarily use these evil, destructive, terrible things which will inevitably cause them to suffer? Well, it's not original sin. It's because firms that engage in various types of economic activities have natural exposure to various types of risk. And swaps get traded on pretty much every type of rate you can think of. There are the typical and fairly well known swaps like credit default swaps, which are priced against credit spreads; interest rate swaps, which are priced against interest rate spreads; FX and currency swaps, which are priced against currency spreads; and then there are less well known swaps such as energy, weather, and catastrophe swaps, each priced against their own respective spreads. Liquidity varies across these different categories, for the same reasons outlined above: some are less commonly traded than others. Some swaps, known as bespoke swaps, are never traded at all. They are custom tailored trades designed to hedge the risks of specific parties.
So how do these rates correspond to risk? Taking a position on a given rate, long or short, allows you to assume the risk that the rate will move. If you're naturally exposed to increasing energy prices, taking a long position on a swap keyed to some energy rate, say the price of oil, will allow you to cash in when the price of oil moves up. Because your business loses money when oil prices go up, the net effect of your business losses and your swap gains are zero, if it's done right. And what if the price of oil goes down? Then your business does well and your swap does not. Again, if that's done right, your net position is zero with respect to the price of oil. This lets you forget about the price of oil and focus on your business activities. So who takes up the other end of the trade? Even if a dealer takes on the short position in our example, the dealer will usually find someone else who wants to take the short position of the trade and pass the exposure onto them. So why would this other party want to short the price of oil? There are a number of reasons. They could have the exact opposite business problem that you have, and lose money when the price of oil goes down. Or, they could be one of those evil speculators. Yes, speculators serve a bona fide economic function and actually help make markets more liquid. Again, sorry to disappoint.
Inter-dealer Trading
Dealers rely on each other to supply liquidity to the OTC market. That is, as mentioned above, it is unlikely that any one dealer's clients will demand a perfectly balanced set of products. As a result, dealers rely heavily on their ability to trade with each other, and smooth over any imbalances in their books. And because of this heavy inter-dealer trading, swap markets have a lot of inter-dealer credit risk, which means that dealers are exposed to the risk that another dealer will default. In general, counterparty risk, which is the risk that the party you're trading with won't pay as promised, is of paramount concern in the swap market. The general market practice is and has been to require your counterparty to post collateral based on daily mark-to-market valuation against the relevant spread. But dealers are so important to the market and their positions are so large that even well-collateralized positions that fail to payout in full can have disruptive, even devastating effects. As a result, a central counterparty (CCP) has been set up, which acts as a heavily capitalized hub through which trades are channeled, and most importantly, netted against each other. Right now, there is only one CCP and it is dedicated to a subset of the CDS market. Other CPPs may very well follow. For more on CCPs, go here (http://derivativedribble.wordpress.com/2009/05/05/rethinking-central-cds-counterparties/)....

Katwoman
18th August 2009, 11:54
I don't think so.

If that were true,
why is silver 1/67 the price of gold?

http://goldseek.com/news/2009/7-13jt/6.jpg

When available silver stocks are 1/5 the amount of gold?

Because silver has been decoupled from the economy for years. It has only recently attracted interest as a currency again. This is why silver is also more likely to rocket upwards in price if the SHTF.

SilverHawk
18th August 2009, 11:56
The image below, which does not take into account any CCP, provides an overall graphical representation of the OTC swap market, with dealers performing the classic bank-style role of intermediary between end-users of financial products.
http://derivativedribble.files.wordpress.com/2009/07/market-structure1.jpg?w=604&h=471
One thing you should notice about the image above is that the swap market connects otherwise disparate parties in the financial system. This has the beneficial effect of providing each with the risk profiles they desire. But it also has the effect of causing the entire system to assume the credit worthiness of the entire system. In other words, as I mentioned above, swaps create exposure to counterparty risk, which is in essence credit risk. One of the obvious-in-hindsight lessons of this crisis is that counterparty risk is highly correlated to macroeconomic credit risk. That sounds fancy and deep, but really it's just restating the obvious: counterparty risk is a type of credit risk, and so, as the overall risk of default rises, so does the risk of counterparty default. This means that CDS protection sellers are least likely to payout at the very moment they're obligated to: upon someone else's default. That said, the OTC derivatives market - the CDS market in particular - has done a simply incredible job of maintaining functionality through even the worst parts of this crisis and has adapted quickly to increase liquidity and administrative efficiency. While those outside the industry seem convinced there's some kind of trillion-dollar ruse going on, that is certainly not the case. The OTC derivatives market is an invaluable and remarkably sophisticated market that adds real value to the financial markets and the world's economies. Without it, our lunch will get a lot more expensive.
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Comments (12)

Anal_yst July 16, 2009 2:21 PM (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-226926)
Despite your clear, cogent explanation, I fear it will fall on deaf ears, at least among those who would benefit the most from reading it, sigh...


strawman July 16, 2009 2:46 PM (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-226971)
@Analyst
Whose deaf ears are you referring to? Those lacking a basic understanding of the market, or those seeking to regulate it more efficiently?
I'm open to the idea that the OTC derivatives market is flexible and a prime method of managing risk exposure, even the author would admit that it has severe structural deficiencies. As he stakes, an active OTC swap market is a key factor in creating a systemic failure- as all institutions begin to share the same basic risk profile, they fail in unision.
The only thing I'd challenge is the phrase "the OTC derivatives market . . . has done a simply incredible job of maintaining functionality. . ." The market has remained functional due to huge external injections of liquidity into counterparty institutions. If a market requires these types of non-counterparty injections to survive market crashes, isn't it, at heart, deeply flawed?
I think that's the primary argument of the reformers, either through significant adjustment of allowed leverage ratios or similar means.

Anal_yst (Replying to: strawman (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-226971)) July 16, 2009 5:25 PM (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-227138)
I'm referring to mostly regulatory types, the vast majority of which seem (key word) to have a severely biased and limited understanding of that which they intend to regulate. Sorry for not clarifying.



Claudius July 16, 2009 3:03 PM (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-226990)
I find it curious that throughout this primer on the OTC derivatives market, the author fails to give the reader any idea whatsoever on what the scale of that market is, and how even a smallish shift can have HUGE effects of the rest of the economy.
As of spring 2009, the nominal value of all outstanding OTC derivatives was $1.28 quadrillion. That's right. Quadrillion. More than one thousand trillion dollars. That's more than 15 times the the annual production of the entire planet. The entire nominal value of all U.S. equities is a mere $31 trillion. And hardly any of it is subject to any kind of central clearinghouse, so there is no real price discovery, and no one knows who owns how much of what.
What can happen when the derivatives daisy chain goes "boom"? Something akin to what happened to A.I.G., that's what, something the author fails to mention, either. As Strawman noted earlier, the only reason the "market" for OTC derivatives still functions at all is because governments have put huge amounts of taxpayer dollars on the line to keep the big financial firms from going bust.


Vicious Virtue (Replying to: Claudius (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-226990)) July 16, 2009 8:41 PM (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-227234)
Claudius,
While the notional amount of OTC derivatives certainly looks terrifying, it shouldn't trouble anyone who actually read the good Dr. Davi's article. With respect to swaps, at least, the net economic effect is zero (ignoring the fractional spread taken by a market maker) because there will be an equal and opposite counter-part for every swap. But to come up with these frightening numbers, the amount is counted twice rather than being properly netted out.
The same is largely true with most derivatives because everyone entered into offsetting transactions. They made money off of spreads and origination fees without having to bear any of the underlying risk. (They did bear the general counter-party risk, however...) AIG almost blew up the market because they didn't bother netting anything out. They were betting instead of banking.
But thanks for playing. It's always entertaining to see people instinctively attack what is essentially a descriptive post because deep down inside they know reality doesn't jibe with their preconceived notions of Good and Evil.

Claudius (Replying to: Vicious Virtue (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-227234)) July 17, 2009 10:37 AM (http://business.theatlantic.com/2009/07/understanding_the_otc_derivatives_market.php#comme nt-227469)
"...the net economic effect is zero (ignoring the fractional spread taken by a market maker) because there will be an equal and opposite counter-part for every swap..." and "The same is largely true with most derivatives because everyone entered into offsetting transactions. They made money off of spreads and origination fees without having to bear any of the underlying risk. (They did bear the general counter-party risk, however...) AIG almost blew up the market because they didn't bother netting anything out. They were betting instead of banking."
With AIG, the net economic effect wasn't zero at all. I guess everyone DIDN'T enter into offsetting transactions, did they? Which was sort of the point of my original post. If everyone played the game as you think they ought to have, then you're right, there would have been nothing to worry about. But not everyone played the game correctly, right? So one subsidiary of one firm DID almost blow up the market because it was "betting, not banking." Because there is (was) no central clearinghouse, AIG's counter-parties had little to no idea how badly positioned the firm was, thus how much risk they were in turn exposed to.
"But thanks for playing. It's always entertaining to see people instinctively attack what is essentially a descriptive post because deep down inside they know reality doesn't jibe with their preconceived notions of Good and Evil."

SilverHawk
18th August 2009, 12:01
Because silver has been decoupled from the economy for years. It has only recently attracted interest as a currency again. This is why silver is also more likely to rocket upwards in price if the SHTF.

I thought it was because the Commercial Shorts are artifically suppressing the price

SilverHawk
18th August 2009, 12:05
Geithner Dissembling On Derivatives (http://forums.silverseek.com/archives/1202-Geithner-Dissembling-On-Derivatives.html)



July 10 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner is urging Congress to rein in the $592 trillion derivatives market with new laws that are “difficult to evade.”
The complexity of over-the-counter derivatives contracts and industry growth let corporations take on excessive risk and caused a “very damaging wave of deleveraging” that exacerbated the global credit crisis, Geithner said in prepared testimony to be delivered today at a joint hearing of the House Agriculture and Financial Services committees in Washington.

-----------------------------------------------------------------
That's really simple Turbo Tax Timmy. Let me lay it out for you.

All derivatives that are not backed by an insurable interest for the purchaser must be traded on an exchange, with a central counter-party, and must be of standardized and published form and contract (just like PUTs, CALLs and futures.) This is a proven business model that "just works." All regulations that apply to the trading of PUTs, CALLs and the like must apply to derivatives (including the illegality of insider trading, manipulating the market involved, position limits if applicable, etc.)
All other derivatives are and must be regulated as insurance, with the issuer of same subject to strict capital controls and regulation as an insurance company - which is exactly what they are. Falsification of insurable interest (by the buyer) or falsification of capital adequacy (by the seller) must be treated as the fraud that it is.
There 'ya go. Two paragraphs and we're done.
Yes, I know the ISDA will howl. So what? They can bite me, and the old tired threat of "we'll go offshore" should be met with "fine - go wreck YOUR economy, and by the way, any firm that buys or sells that crap outside of these rules is denied a business license to operate in the United States."
Quit working for Goldman Sachs Timmy. Your actions are far too transparent in this regard - in fact, you're not nearly as good at hiding it as Paulson was (and he wasn't really any better at it than he was at hiding his stuttering.)

Katwoman
18th August 2009, 12:05
I thought it was because the Commercial Shorts are artifically suppressing the price

It is because the banks are not using it as money that this can occur. You are not seeing this with gold because the big banks still use it as a money. If the big banks were using silver as money they would not be letting commercial interests short it.

silverheartbone
18th August 2009, 12:23
Because silver has been decoupled from the economy for years. It has only recently attracted interest as a currency again. This is why silver is also more likely to rocket upwards in price if the SHTF.
Decoupled?
How can that even be possible?
__________________________________________________ _

There is about 5,200,000,000 troy ounces of Au in total above ground.
There is about 1,000,000,000 troy ounces of Ag in total above ground.

About 87,000,000 troy ounces of Au is mined each year.
About 671,000,000 troy ounces of Ag is mined each year.

About 80,000,000 troy ounces of Au is used each year.
About 880,000,000 troy ounces of Ag is used each year.
__________________________________________________ _
Easy shot to the moon unless the Federal government steals our bullion.

SilverHawk
18th August 2009, 13:10
Derivatives Are Focus of Antitrust Investigators

By ERIC DASH (http://topics.nytimes.com/top/reference/timestopics/people/d/eric_dash/index.html?inline=nyt-per)
Published: July 14, 2009
The Justice Department is investigating the role of several major companies in the credit markets, in another indication that the government is intensifying its scrutiny of derivatives,
Markit Group Holdings, a data warehouse controlled by several big banks, said Tuesday that it had been notified by antitrust officials at the Justice Department of an inquiry into the “credit derivatives markets and related markets” and that it would “provide any information requested.”
The department is conducting a similar inquiry at several banks to determine if they had unfair access to pricing information, according to a person briefed on the situation.
The investigation is a sign of the increased attention the derivatives business is getting in Washington.
Derivatives are sophisticated and profitable instruments that were intended to limit risk but instead were at the center of the financial crisis last year. The derivatives market now represents transactions with a face value of $600 trillion.
They were blamed for the near collapse of the American International Group (http://topics.nytimes.com/top/news/business/companies/american_international_group/index.html?inline=nyt-org), the insurance company that was a crucial trading partner with Wall Street firms in one widely used form of derivatives.
Over the last several months, lawmakers and regulators have stepped up their efforts to get a handle on these complex instruments. Some watchdog groups say the regulatory proposals do not go far enough.
At the same time, the financial industry is waging an aggressive campaign against more stringent regulation of derivatives. The Justice Department inquiry, however, may reflect an effort to rein in the products without legislation.
It is unclear exactly what the investigators are looking for, but it appears they are examining whether Markit’s bank shareholders received an advantage as owners and providers of trading data for one type of derivatives known as credit-default swaps (http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_default_swaps/index.html?inline=nyt-classifier). Some market participants also believe that federal officials may also be requesting information from Markit to gather evidence of possible dealer involvement in manipulating prices.
Markit is the dominant provider of pricing information in the derivatives industry, providing the data to more than 300 financial firms that use it to determine the prices of similar contracts on their own books.
The data provider is majority-owned by several Wall Street firms, including JPMorgan Chase (http://topics.nytimes.com/top/news/business/companies/morgan_j_p_chase_and_company/index.html?inline=nyt-org), Bank of America (http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html?inline=nyt-org) and the Royal Bank of Scotland (http://topics.nytimes.com/top/news/business/companies/royal-bank-of-scotland-group-plc/index.html?inline=nyt-org). Representatives of JPMorgan and Bank of America declined to comment.
In a statement released Tuesday, Markit said that it was working “to enhance transparency and efficiency in the credit derivatives market.” The investigation may also fit into the changing political environment in Washington. The Obama administration has made bolstering oversight of derivatives a central part of its plan to reform the financial industry and rein in excessive risk-taking, and has called for requiring certain kinds of credit-default swaps to be traded through a central clearinghouse and possibly one or more exchanges.
Wall Street banks are extremely worried about the impact of additional government scrutiny, and have proposed their own set of voluntary rules.
Even so, most Wall Street executives expect that regulators will more aggressively police the market in the future.

SilverHawk
18th August 2009, 14:45
Berkshire defends estimates of derivatives' value
Thursday, August 13, 2009
By JOSH FUNK

Warren Buffett's company is defending the assumptions it makes to estimate the value of its derivatives even though they don't fully account for the broad market losses experienced in the last two years.
Berkshire Hathaway Inc. revealed additional details about how it values its derivatives and a couple of other investments in correspondence with regulators that was disclosed Thursday. The Omaha-based company was responding to questions from the Securities and Exchange Commission about its 2008 annual report.
Berkshire's Chief Financial Officer Marc Hamburg said the company assumes an average 22 percent volatility for its derivatives tied to four equity indexes. That's well short of the 30 to 45 percent decline the four equity indexes experienced in 2008.
"Even though these short-term declines are in excess of our volatility inputs, we continue to believe that our volatility inputs are reasonable given the long-term nature of our equity index put option contracts," Hamburg said in one of the letters to the SEC.
The volatility figure Berkshire uses is based on the market circumstances when the contracts were written.
Berkshire spokeswoman Carrie Kizer said no one was immediately available Thursday to answer questions about the letters.
Berkshire officials have said they have no plans to sell the equity-based derivatives before they expire between 2019 and 2028. The equity-based derivatives, along with Berkshire's other derivatives, generated a $1.5 billion gain in the company's second quarter _ nearly half the company's $3.3 billion quarterly profit _ as stock markets improved.
Buffett has predicted the contracts will ultimately be profitable because Berkshire is able to invest the premiums it received for them. The true value of the derivatives won't be clear for several years, but Berkshire has to estimate their value every quarter, which has made the company's quarterly earnings volatile.
During the first quarter, Berkshire's largely unrealized $986 million derivative losses contributed to the company's $1.5 billion loss, which was its first quarterly loss since 2001's third quarter when the company suffered large insurance losses as a result of the Sept. 11 terrorist attacks.
Berkshire promised to expand what it discloses about its derivatives in future earnings reports. In February, Buffett also devoted nearly five pages of his annual letter to shareholders to explaining Berkshire's derivatives.
In the letters disclosed Thursday, Hamburg also provided the SEC with additional information about a $1.8 billion write-down in stock investments that Berkshire recorded in 2008.
Hamburg said the company decided to write down 12 stocks that were trading for 40 to 90 percent less than Berkshire paid for them because Berkshire officials decided the prospects for those companies were uncertain.
Berkshire did not identify the stocks it wrote down, and Hamburg said Berkshire did not write down six other stocks that had lost 20 to 40 percent of what the company paid because Berkshire officials believe those companies and their stock prices will rebound.
The SEC also asked about how Berkshire valued the $2.7 billion in auction-rate securities it held at the end of 2008.
Buffett's company has been selling off its auction-rate securities since mid-2008 when it held $6.5 billion worth. Berkshire says it doesn't plan to sell any of the securities for less than it paid for them, so it hasn't written down their value even though the market for auction-rate securities fell apart during the downturn in credit markets.
And Berkshire says all the auction-rate securities it holds were issued by companies with good credit, so officials are confident the securities will eventually be either sold or redeemed.
Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility businesses. And it has major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.

http://townhall.com/news/business/2009/08/13/berkshire_defends_estimates_of_derivatives_value?p age=full&comments=true

SilverHawk
18th August 2009, 15:28
It is because the banks are not using it as money that this can occur. You are not seeing this with gold because the big banks still use it as a money. If the big banks were using silver as money they would not be letting commercial interests short it.

What bank can I get gold from? Are banks paying each other in gold? Banks have no silver cause there's almost none left to be had. Silver is an industrial metal, as well as a money. The members of the Silver Users Association have consumed up almost all the silver thats been dug up. They are only concerned with keeping the price as low as possible, so as to not raise costs, keep profits high.

If what you say, above, is true, then why are the commercials (banks) shorting gold? Commercials in the COT ARE banks. If they were using it as money, which I don't think they are, then they would be going LONG gold, thus boosting it's price and making it worth more to them.

I've never read anywhere, your theory on this subject.

Burticus
18th August 2009, 16:02
Easy, 'Hawk.

You and Cliff got me instinctively diving for the Burticus Battle Bunker, pockets stuffed with silver and guns drawn, peering warily outside for the zombie apocalypse caused by the implosion of the quadrillion-FRN Derivatives Death Star this week.

I sure hope I have enough silver, food and ammo stashed to sustain and protect all the poor large-breasted (and grateful) young women who flee to the security of the BBB...

BullionBob
18th August 2009, 19:42
TENNESSEE Banks prepared for bank Holiday per memo by the Dept of Finance

http://www.youtube.com/watch?v=0fjxnuhzG1k

radiant111
20th August 2009, 11:12
I am hearing from three sources possible bank holiday monday?

SilverHawk
20th August 2009, 12:52
TENNESSEE Banks prepared for bank Holiday per memo by the Dept of Finance

http://www.youtube.com/watch?v=0fjxnuhzG1k


Good Post. First I've seen of this. Been really busy researching any hint of a derivative default, and how it might come about. No luck finding a "smoking gun"

I read somewhere, someone saying, that the bank they work at was going to close for a few days for a "computer upgrade". Reminded me of the world trade center closing down 3 floors, a week before 911, for same purpose. Just so happened to be the area that one of the planes hit. Hummmm....

SilverHawk
20th August 2009, 13:01
I am hearing from three sources possible bank holiday monday?

That wouldn't surprise me. We had a big bank failure last friday. Citibank seems to be in big trouble, again. Although the webbot says more like mid-september for bank holiday.

I need to listen to some more Celente. Haven't heard his latest stuff for a while.

Still have Friday and Monday to determine what exactly this webbot prediction means.

FDIC just came out with a new rule.... Breaking.....

radiant111
20th August 2009, 13:03
a meeting took place telling city and states to get themselves a years worth of swiss francs.

The concern I am hearing is whether our debts will be reconfigured into a lowe amount based on conversion. In France the PTB just copied the debt in the same amount. We would be destitute in 24 hours? Can anyone her have a contact and ask if they Have AMERO'S FOR A TRADE FOR CASH TODAY?

Argyria
20th August 2009, 14:22
I don't know if this is relevant, but I've been reading here and there that the FDIC is broke as of Aug 14. Some say the government will grant them more funds as needed, as they are 'too important to fail'.

silverheartbone
20th August 2009, 15:16
I don't know if this is relevant, but I've been reading here and there that the FDIC is broke as of Aug 14. Some say the government will grant them more funds as needed, as they are 'too important to fail'.

CLICK HERE FOR FDIC DEATH CHART (http://tinyurl.com/ngcsaa)

ccjoe
20th August 2009, 15:23
I think it wise to hedge your bets and keep only a couple grand in the bank at this uncertain time. Like my folks always said to just gamble what you can afford to lose and incredibly that MAY be what keeping money in the bank has come, gambling.
Astonishing what is happening here in our U.S.A.

Argyria
20th August 2009, 15:34
CLICK HERE FOR FDIC DEATH CHART (http://tinyurl.com/ngcsaa)

I had already seen that very chart, among other things I read on the subject.

silverheartbone
20th August 2009, 22:07
You do know that the FDIC is not a governmental agency?

SilverHawk
21st August 2009, 00:02
IMF to US, Rebalance or Else...

Wednesday, 19 August 2009

The International Monetary Fund has been warning for years about the risk of global imbalances — namely huge U.S. current account deficits and surpluses in China. Today its chief economist offered a grim view of how the economy might suffer if the rebalancing act fails.

Olivier Blanchard says unless the United States can refocus its economy more toward exports and China more toward imports, the U.S. recovery will probably be anemic because American consumers aren’t going to quickly revert back to their pre-crisis free-spending ways.

And if the recovery is anemic, there will no doubt be intense political pressure for more stimulus, particular in 2010 when most members of Congress face re-election.

“Were that to happen, one can imagine various scenarios: political pressure may be resisted, the fiscal stimulus phased out, and the U.S. recovery would then be very slow. Or fiscal deficits might be maintained for too long, leading to issues of debt sustainability, worries about U.S. government bonds and the dollar, and causing large capital flows from the United States.

Dollar depreciation may take place, but in a disorderly fashion, leading to another episode of instability and high uncertainty, which could itself derail the recovery,” Blanchard wrote in an article released by the IMF.

http://macedoniaonline.eu/content/view/7928/52/

SilverHawk
21st August 2009, 00:26
I don't know if this is relevant, but I've been reading here and there that the FDIC is broke as of Aug 14. Some say the government will grant them more funds as needed, as they are 'too important to fail'.

That type of news may spark a run on the banks. Most people don't think that even though the FDIC is a private insurance fund, that the Gov't would bail them out. I read that the FDIC is raising premiums to replenish the fund. (They better hurry up!)

The dollar this week, looks weak. It keeps trying to go up but is having a hard time breaking above 79. Gold and Silver are taking it hard on the chin, and keep getting up. And the start of the week with the DOW, dropping a few hundred has been "wobbling" around like a stunned boxer. I can sense something is about to give. We got 109B in T-Bills next week. I'm sure the FED will end up buying most of it again. We used to sell 100B in T-Bills ever 3-4 months, now it's 2-3 weeks. Rumors that some TARP money will be paid back had Peter Schiff laughing today on CNBC. He don't believe it. They took the money and hedged it on the current bull run, instead of lending it out to us like was promised....

Foreclosures keep going up, unemployment at steady 550K range, talk about kicking out Bernanke, Obama screening the audience at HIS "town hall" meetings. Man the people in Montana were PISSED when Obama flew in all the FOOD, CHAIRS and EQUIPMENT for the meeting in Boseman last week. Only people favorable to the plan were let in, at this REMOTE hanger at the airport. Protesters were kept FAR away. Talk about communism!!! Then flys off to vacation in Yellowstone with the family. How many family vacations has this guy been doing since he took office? Under the guise of official business? I thought Bush was bad.... Crooks, all of them. They don't care about the country. Their more concerned about having a good time on the taxpayers dime. They know the game is almost over. One more drink, before the troops hit the street....

The clouds are still getting darker....

SilverHawk
21st August 2009, 00:46
I think it wise to hedge your bets and keep only a couple grand in the bank at this uncertain time. Like my folks always said to just gamble what you can afford to lose and incredibly that MAY be what keeping money in the bank has come, gambling.
Astonishing what is happening here in our U.S.A.

I wouldn't even leave a couple G's in there. Unless you have periodic electronic withdrawals coming due, I'd clean out the account and use cash only. Just keep enough in there to pay automatic withdrawals for bills coming due in the next few weeks. Then feed the account for those purposes. Cash for everything else. Personally I'd stop those type of payments, and just use the bank for cashing your paycheck. Then withdraw everything except for 5-10 bucks, to keep the account open. I wouldn't be surprised if the bank closes, and a company tries to withdraw an electronic payment, gets rejected and then you get hit up with penalties. Money Orders may be the only system that keeps running during the coming freeze. I've been using cash for years except when paying long distant bills. Then it's MO's. I can't remember the last time I wrote a check out of my checking account. Can't tell a thing about me from my bank records !

SilverJim
21st August 2009, 09:09
Here's a couple of very interesting stories that seem to go along with the Webot's scenario in case you missed them.

The first is that tonight, Friday 8-21, the FDIC will likely seize Guaranty Bank in Texas. This will be the second largest bank failure this year after last Friday's largest one.


Guaranty Bank, an Austin-based savings institution with $13.5 billion in assets, is expected to be seized by the FDIC by the end of the week. According to multiple reports late Wednesday, Spanish bank Banco Bilbao Vizcaya (BBV) has won the bidding for Guaranty.

http://money.cnn.com/2009/08/19/news/companies/texas.banks.fortune/index.htm


And from yesterday from the Mogambo Guru -


And what big failures they are going to be, too, as I gather from The Wall Street Journal reporting that “Much to their dismay, Americans learned last year that they ‘owned’ Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages.” Trillion-dollar!

In case you didn’t know, “Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages – quadruple the amount in 2006.”

Now, the scam has gotten so huge that “Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee”! Yikes! 90 percent of mortgages!

This probably explains why “Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June”, which is pretty astonishing when you multiply $43 billion in one month by 12 months in a year, and I suggest you not do it because the answer will scare you to death.

Not so astonishing, then, is the news that “Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year – or far more than double the dollar amount of 2007.”

http://dailyreckoning.com/an-overdue-collapse-of-money/

SilverHawk
21st August 2009, 09:30
Excellent post, SilverJim. Yeah I missed that one. Had a hunch we'll see some more banks go under today. Wonder where the FDIC is gonna get the money to cover this one? The WEBBOT said that we'll start seeing the signs come out now. I believe this prediction is coming true. I haven't heard this much talk about the dollar in a while. Art Cashen was concerned about PIMCO and Buffett talking about dollar weakness turning into a freefall, this morning on CNBC. The dollar is down .40 to 78.00, before the bell, PM's heading skyward. And no good news about the economy, anywhere. Just more and more distraction about a stupid health care program, that should be at the bottom of the administration's agenda, instead those Jokers should be working on bringing back jobs and lowering unemployment. Wag the dog as usual. Wonder where Obama is going on vacation next week?

SilverHawk
21st August 2009, 09:35
Pimco Says Dollar to Weaken as Reserve Status Erodes

Aug. 19 (Bloomberg) -- Pacific Investment Management Co. (http://www.pimco.com/TopNav/Home/Default.htm), the world’s biggest manager of bond funds, said the dollar will weaken as the U.S. pumps “massive” amounts of money into the economy.
The dollar will drop the most against emerging-market counterparts, Curtis A. Mewbourne (http://search.bloomberg.com/search?q=Curtis+A.+Mewbourne&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), a Pimco portfolio manager, wrote in a report on the company’s Web site (http://www.pimco.com/TopNav/Home/Default.htm). The greenback is losing its status as the world’s reserve currency, he said.
“Investors should consider whether it makes sense to take advantage of any periods of U.S. dollar strength to diversify their currency exposure,” Mewbourne wrote in his August Emerging Markets Watch report. “The massive amounts of U.S. dollar liquidity produced in response to the crisis” have helped reduce demand for the currency, he wrote.
The Dollar Index (http://forums.silverseek.com/apps/quote?ticker=DXY%3AIND), which tracks the greenback against a basket of currencies, touched 78.823 today, the lowest this week. It has fallen 12 percent from this year’s high in March as U.S. authorities pledged $12.8 trillion to combat the recession. China, the world’s largest holder of foreign-currency reserves, and Russia have both called for a new global currency to replace the dollar as the dominant place to store reserves.
“While we have not yet reached the point where a new global reserve currency will arise, we are clearly seeing a loss of status for the U.S. dollar as a store of value even in the absence of a single viable alternative,” Mewbourne wrote.
Percentage of Reserves
The dollar as a percentage of global central banks’ foreign reserves increased to 65 percent in the first three months of the year, from 64.1 percent in the previous quarter, according to the International Monetary Fund. Its share has remained around 65 percent the last five years, after falling from 72.7 percent in 2001.
The U.S. government boosted spending and the Federal Reserve bought bonds to revive credit markets that seized up after financial companies posted $1.6 trillion in writedowns and losses, raising concern there is an oversupply of greenbacks.
The currency rose 0.1 percent to $1.4118 per euro as of 9:06 a.m. in New York. The Dollar Index is down about 2.8 percent this year, after a 6 percent gain in 2008.
Asian currencies stand to benefit as the region’s economy grows and the dollar’s allure fades, said Rajeev de Mello (http://search.bloomberg.com/search?q=Rajeev+de+Mello&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), Singapore-based head of Asian investments at Western Asset Management Co., which oversees $473.4 billion.
Sample Coin
“We are positive on the Asian currencies against the dollar and think they will continue to rally,” de Mello said in an interview. “I do think the diversification of reserves is something that’s important and I think we’ll see some from China into other currencies and this will benefit as well Asian currencies and other emerging currencies.”
China’s central bank renewed its call for a new global currency in June and said the International Monetary Fund (http://www.imf.org/external/np/exr/facts/sdr.htm) should manage more of members’ foreign-exchange reserves. Russian President Dmitry Medvedev (http://search.bloomberg.com/search?q=Dmitry+Medvedev&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) last month illustrated his call for a supranational currency by producing a sample coin after a summit of the Group of Eight nations.
Mewbourne joins investor Jim Rogers (http://search.bloomberg.com/search?q=Jim+Rogers&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), who said last year that he was shifting all his assets out of dollars and buying Chinese yuan because the Fed eroded the value of the U.S. currency. The dollar is losing its status as the world’s reserve currency, said Rogers, who is the author of books on investing including “Hot Commodities.”
Sovereign Funds
Bill Gross (http://search.bloomberg.com/search?q=Bill+Gross&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), who runs the $169 billion Pimco Total Return Fund (http://forums.silverseek.com/apps/quote?ticker=PTTRX%3AUS), is also warning the U.S. currency will fall.
Holders of dollars should diversify before central banks and sovereign wealth funds do the same because of concern government budget deficits will deepen, Gross said in June.
Gross’ fund has returned 12 percent in the past year, outperforming 96 percent of its peers, according to data compiled by Bloomberg.
Billionaire Warren Buffett (http://search.bloomberg.com/search?q=Warren+Buffett&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) wrote in a New York Times commentary today that the dollar is under threat from the “monetary medicine” that has been pumped into the financial system.
“Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects,” Buffett, 78, wrote. The “greenback emissions” will swell the deficit to 13 percent of gross domestic product this fiscal year, while net debt will increase to 56 percent of GDP, he said.
Budget Deficit
The U.S. budget deficit reached a record $1.27 trillion for the first 10 months of the fiscal year and broke a monthly high for July, the government said Aug. 12.
There is no viable immediate alternative to the U.S. dollar for now as the euro region lacks a political union while Japan’s economic weakness makes it impossible to consider the yen for such a role, Pimco’s Mewbourne wrote. The currencies of emerging states such as China can’t play a reserve role as long as they are subject to capital controls, which restrict international traders to using non-deliverable forwards, he wrote.
Pimco, based in Newport Beach, California, is a unit of Munich-based insurer Allianz SE.
To contact the reporters on this story: Garfield Reynolds (http://search.bloomberg.com/search?q=Garfield+Reynolds&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in Sydney at greynolds1@bloomberg.net (greynolds1@bloomberg.net); Wes Goodman (http://search.bloomberg.com/search?q=Wes+Goodman&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in Singapore at wgoodman@bloomberg.net (wgoodman@bloomberg.net).
Last Updated: August 19, 2009 09:21 EDT

http://www.bloomberg.com/apps/news?pid=20601087&sid=a399pOPFwDu8

SilverHawk
21st August 2009, 09:44
Aug 19-

.....
‘Over-Egged’
“The expectations linked to growth seem to be over-egged” in China, HSBC’s Cookson said. “Also there’s some realization that the recovery in the United States is very anemic.”
Investors are concerned that governments and their central banks will struggle to withdraw stimulus packages that have eased the global recession. The U.S. must address the massive amounts of “monetary medicine” that have been pumped into the financial system and now pose threats to the world’s largest economy and its currency, billionaire Warren Buffett (http://search.bloomberg.com/search?q=Warren+Buffett&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said.
“Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects,” Buffett wrote in a New York Times commentary.
Bank of England Governor Mervyn King (http://search.bloomberg.com/search?q=Mervyn+King&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) and two other policy makers were overruled in a push to expand the bank’s bond- purchase program to 200 billion pounds ($329 billion) as the majority favored a smaller amount, according to minutes of the Aug. 6 decision released by the central bank today. ....

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awjwSG3YEQss

of one mine
21st August 2009, 10:53
They say gold could move up to three times value and they are releasing this info publicly on the 26th this month. A small mine is just one that will benefit. So I concurr with the other news about the prices.

We just discovered that Rob McEwen (former Goldcorp CEO) has purchased 41 million shares of a tiny Canadian mining company.
Upon further investigation the VP Director of Investor Relations disclosed the discovery of a "bonanza-grade intercept" that likely contains 3 to 8 million ounces of gold.

of one mine

cowboycarl04
21st August 2009, 11:44
If the bot predicted that Bernake would claim the FED saved the world, and the people are dumb enough to buy it, then that would have been awesome.

SilverHawk
22nd August 2009, 01:10
ProShares Launches Inverse Treasury ETF

<LI class=byline>By Michael Johnston <LI class=datetime>On Thursday August 20, 2009, 10:03 pm EDT
ProFunds Group, a leading provider of inverse and leveraged ETFs (http://us.lrd.yahoo.com/_ylt=AlOqXqMMYmobHeclmE1yrOX.ba9_;_ylu=X3oDMTE3NDg 1YXFlBHBvcwMyBHNlYwNuZXdzQXJ0U3RhcnQEc2xrA2xldmVyY WdlZGV0Zg--/SIG=11omfgadt/**http%3A//etfdb.com/etfdb-category/leveraged-equities/), launched an ETF Thursday designed to provide short exposure to the market for long-term U.S. Treasuries. The ProShares (http://us.lrd.yahoo.com/_ylt=Ai2NYFZ35MyPGaCqOO1E8h7.ba9_;_ylu=X3oDMTE0a2w wcTdjBHBvcwMzBHNlYwNuZXdzQXJ0U3RhcnQEc2xrA3Byb3NoY XJlcw--/SIG=1173fbntv/**http%3A//etfdb.com/issuer/proshares/) Short 20+ Year Treasury is designed to deliver the inverse of the return on the Barclays Capital 20+ Year U.S. Treasury Index for a single day.

Michael L. Sapir, ProFunds Group Chairman and CEO, said:
This new ETF is an useful addition to our two ProShares ETFs currently offering short exposure to the U.S. Treasury market—the ProShares UltraShort 7-10 Year and UltraShort 20+ Year Treasury funds. We are introducing this new ProShare in direct response to strong investor demand for a single beta short treasury fund.
TBF is the latest ProShares products offering inverse and leveraged exposure to Treasuries. Other ProShares ETFs include:
UltraShort 7-10 Year Treasury (NYSEArca: PST (http://finance.yahoo.com/q;_ylt=AmB9aQlaSdJ1xWA0WcmKj5D.ba9_;_ylu=X3oDMTB0a WFlcWtsBHBvcwMxBHNlYwNuZXdzQXJ0Qm9keQRzbGsDcHN0?s= pst&d=t) - News (http://finance.yahoo.com/q/h;_ylt=AlQQWxmCCqKOmroqJkZ03GX.ba9_;_ylu=X3oDMTB1N 2h1ZnF2BHBvcwMyBHNlYwNuZXdzQXJ0Qm9keQRzbGsDbmV3cw--?s=pst))

http://finance.yahoo.com/news/ProShares-Launches-Inverse-etfsa-1342106000.html?x=0&.v=1

SilverHawk
22nd August 2009, 01:13
Regulators shut Guaranty Bank, 2nd largest failure

Regulators shut Guaranty Bank in 2nd largest failure; toll of failed banks mounts


By Marcy Gordon, AP Business Writer
On Friday August 21, 2009, 11:37 pm EDT
WASHINGTON (AP) -- Regulators on Friday shut down Guaranty Bank, a big Texas-based lender felled by losses on loans to homebuilders and borrowers, in the second-largest U.S. bank failure this year.

Guaranty's failure, along with those of three banks in Georgia and Alabama Friday, brought to 81 the number of U.S. bank failures in 2009, a mounting toll and the most in a year since 1992 at the height of the savings-and-loan crisis.
The Federal Deposit Insurance Corp. seized Guaranty Bank, with about $13 billion in assets and $12 billion in deposits, and sold all of its deposits and $12 billion of the assets to BBVA Compass, the U.S. division of Banco Bilbao Vizcaya Argentaria SA, Spain's second-largest bank. It was the first foreign bank to buy a failed U.S. bank. In addition, the FDIC agreed to share losses with BBVA on about $11 billion of Guaranty Bank's assets.
The collapse of Austin-based Guaranty Bank, whose parent company was Guaranty Financial Group Inc., was the 10th-largest bank failure in U.S. history. It is expected to cost the deposit insurance fund an estimated $3 billion.
The bank, with 162 branches in Texas and California, also suffered losses on mortgage-linked securities it bought from other banks.
Birmingham, Ala.-based BBVA Compass, with 600 branches from Florida to California, said the acquisition creates the 15th-largest commercial bank in the U.S., with about $49 billion in deposits. "This compelling transaction makes excellent strategic sense and represents an exciting growth opportunity for BBVA Compass as we continue to build the leading banking franchise in the high-growth Sunbelt region," Jose Maria Garcia Meyer, chairman of BBVA Compass, said in a statement.
In contrast to the big bank failures early in the financial crisis, many of the recently shuttered banks were undone not by exotic mortgage products but by garden-variety loans.
At the same time, a knot of big, complex banks collapsing in recent months is sapping billions from the federal deposit insurance fund that insures regular accounts up to $250,000, spurring regulators to court potential buyers from the world of private investment.
The FDIC last week seized Colonial Bank, a big lender in real estate development, and sold its $20 billion in deposits, 346 branches in five states and about $22 billion of its assets to BB&T Corp.
It was the biggest bank failure so far this year, and the sixth-largest in U.S. history, expected to cost the insurance fund $2.8 billion.
While losses on home mortgages may be leveling off, delinquencies on commercial real estate loans remain a hot spot of potential trouble, experts say. Many regional banks like Montgomery, Ala.-based Colonial hold large numbers of them. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans.
Also Friday, the FDIC seized two small banks in Georgia and one in Alabama: ebank, located in Atlanta, with $143 million in assets and $130 million in deposits; First Coweta, based in Newnan, Ga., with $167 million in assets and $155 million in deposits; and CapitalSouth Bank, based in Birmingham, Ala., with $617 million in assets and $546 million in deposits.
The agency expects bank failures will cost the fund around $70 billion through 2013. The fund stood at $13 billion -- its lowest level since 1993 -- at the end of March. It has slipped to 0.27 percent of total insured deposits, below the minimum mandated by Congress of 1.15 percent.
The costliest failure was the July 2008 seizure of big California lender IndyMac Bank, on which the fund is estimated to have lost $10.7 billion.
Among the 81 banks closed so far this year -- compared with 25 last year and three in all of 2007 -- were a stream of smaller institutions, many felled by losses on ordinary loans amid the souring economy, tumbling home prices and spiking unemployment. Their business was a far cry from the complex securities favored by Wall Street investment banks that precipitated the financial meltdown.
The average cost to the fund of a bank failure over the past 19 months has run higher than during the savings-and-loan debacle. That's partly due to smaller banks having higher resolution costs than larger ones, and because the steep decline in home prices that set off the current distress wasn't a factor in the earlier crisis, said Jim Wigand, deputy director of resolutions and receiverships at the FDIC.
Because of the tumble in prices, the loss rates on home loans and construction and development loans were higher for banks, with a domino effect on related securities, Wigand said.
Many of the smaller banks that failed in the recent run shared common attributes: rapid growth, heavy concentration of brokered deposits sold by securities firms to customers outside the bank's local area, and heavy lending in "hot markets" like Arizona, California, Florida and Nevada, noted Bert Ely, a banking consultant based in Alexandria, Va.
They are spread nationwide, though there is a concentration of banks in Georgia, where 17 have fallen since the beginning of last year, more than in any other state. That is a reflection of the local real estate market, whose distress has rippled throughout the economy there.
In Friday's other three closings, Stearns Bank, based in St. Cloud, Minn., agreed to buy the assets and deposits of ebank. United Bank, based in Zebulon, Ga., is assuming the deposits and $155 million of the assets of First Coweta; the FDIC will retain the rest for eventual sale. IberiaBank, based in Lafayette, La., is assuming the deposits and $589 million of the assets of CapitalSouth Bank.
Those failures are expected to cost the insurance fund an estimated $63 million for ebank, $48 million for First Coweta and $151 million for CapitalSouth Bank.
Last spring, the FDIC adopted a new system of special fees paid by U.S. banks and thrifts that shifted more of the burden to bigger institutions to help replenish the insurance fund.
The number of troubled banks on the agency's confidential list leaped to 305 in the first quarter, the highest number since 1994. Some analysts expect hundreds of banks to collapse over the next year or so.
Around 2,900 banks failed during the S&L crisis from 1980 through 1994.

http://finance.yahoo.com/news/Regulators-shut-Guaranty-Bank-apf-468075343.html?x=0&sec=topStories&pos=1&asset=&ccode=

SilverHawk
22nd August 2009, 01:59
Days Away From Economic Chaos? (http://informedcitizens.wordpress.com/2009/08/21/days-away-from-economic-chaos/)

by Bill Sardi (BSardi@aol.com)

America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks.
It has not particularly alarmed Americans that its growth and prosperity have been built upon debt. The American public is a bit desensitized, particularly since the Y2K threat fizzled. We must wait and see how Americans respond to the upcoming FDIC report.
The following charts tell the story. There are roughly 8400 American banks that set aside a small portion of their profits to aggregately insure bank depositors should their local bank fail. A plethora of bank failures has depleted the FDIC reserve fund from $52.8 billion in 2008 to $13 billion in the 1st Quarter of 2009. (See chart below)
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(Article too big to copy....)

http://informedcitizens.wordpress.com/2009/08/21/days-away-from-economic-chaos/

SilverHawk
22nd August 2009, 02:03
Timeline I have seen mentioned.....

http://investment-blog.net/timeline-i-have-seen-mentioned-i-hope-its-wrong/

By "Daniel" Aug 14th 2009

Aug. 21/22 - FDIC announces many bank closings.
Aug. 25 - FDIC issues really bad quarterly report. Runs on banks start.
Aug. 26 - Government orders bank holiday. All banks close indefinitely.
http://www.marketwatch.com/story/schultz-paints-bleak-picture-of-future (http://www.marketwatch.com/story/schultz-paints-bleak-picture-of-future)
Bank Holiday?
I thought we were told all of the banks are in wonderful shape now and that the biggest 19 all passed their stress tests, and so wonderful in fact that Goldman Sachs is going to be paying out record bonuses this year.
There Are $2.4 Trillion of Alt-A Mortgages and Their Resets Are Mostly Ahead of Us
http://www.marketoracle.co.uk/Article11001.html (http://www.marketoracle.co.uk/Article11001.html)
The Next Catastrophe For Banks: $3.5 Trillion In Commercial Real Estate Debt
http://247wallst.com/2009/05/24/the-next-catastrophe-for-banks-3-5-trillion-in-commercial-real-estate-debt/ (http://247wallst.com/2009/05/24/the-next-catastrophe-for-banks-3-5-trillion-in-commercial-real-estate-debt/)
AP

SilverHawk
22nd August 2009, 02:20
Well, it's late. I'm gonna hit it. We've had a VERY interesting week.

Friday morning we saw a big spike in Gold and Silver. Someone know something? Placing a bet on next week, or option expiration exercise?

Dollar stuck in "quick sand" this week.

Friday another "Big Bank Down" (then bought up by a Spanish Bank, no less!!)

Thursday night on Coast to Coast a caller mentioned something about the FDIC report next week possibly starting a bank run? That little comment hit an audience of over 3 million listeners. That will be in conversations this weekend.

Lots of negative dollar talk. 109B Auction next week. Can't see the dollar going up. Can't see money going into the equities, but probably will. Super bullish for metals, oil and also food.

Think I heard the FED is arranging foreign Central Banks to buy out debt, outright, and then the FED buying it back in secret to make it look like everything is just fine.

Oh boy things are getting good.....

ccjoe
22nd August 2009, 05:34
This next week will determine if all this net chatter is just that or something that really happens?
Get some sleep Hawk:) It's been a long week. Thanks for the news.

Argyria
23rd August 2009, 23:26
So, nothing cataclysmic happened from Aug 17 to Aug 21.

SilverHawk
24th August 2009, 04:01
So, nothing cataclysmic happened from Aug 17 to Aug 21.

That's right. And the WEBBOT didn't say anything "cataclysmic" was going to happen. It says we "will start to see the signs" of the coming calamity. And I think with the activity over the last week, the WEBBOT is right. The original prediction date was AUG 22. Saturday. Cliff bumped up the date by saying "the week of 17th-21st, we could possibly see things start". If you were watching last week, we no doubt had some turbulence.

We have an exciting week ahead. Those "green shoots" aren't even mentioned anymore. No "mustard seeds". Nothing but negative news and projections. Signs.

And with the latest news about no COLA (Cost of Living Adjustment) for social security receipients next year, on top of an increase of Medicare costs, that's a paycheck decrease. That's not good. Not good at all. Close those wallets up even tighter....

P.S. Silver up nice, tonight. I also wanted to mention that if the Derivative market is melting down behind the scenes, we won't hear about it until the effected institution locks the front doors. The secretive market doesn't get media coverage like the rest. We've had some pretty big bank failures, lately...

radiant111
24th August 2009, 10:08
Obama extended the debt ceiling Friday night from 7-10Trillion. That is pretty significant considering The Congress was not in session, I guess he can just do that with an executive order? So much for that piece of paper the const?? What was it called you know, That thing the plebeians always rally to...Constitution!!!

ryshay
24th August 2009, 14:38
Obama extended the debt ceiling Friday night from 7-10Trillion. That is pretty significant considering The Congress was not in session, I guess he can just do that with an executive order? So much for that piece of paper the const?? What was it called you know, That thing the plebeians always rally to...Constitution!!!

Peter Schiff rants, what is the point of a debt ceiling if you raise it everytime you hit it? It is as if there is no debt ceiling at all!

prahudka
25th August 2009, 15:02
That's right. And the WEBBOT didn't say anything "cataclysmic" was going to happen. It says we "will start to see the signs" of the coming calamity.

People say some interesting things about market behavior predicting all sorts of events. I am curious to how the webbot works. Mining for a prevalence of words like "sell everything"? Unfortunately, this particular prediction may have an Oedipus meets Dad type of event this week, where no one knows until it is too late.