Capital Flight in Spain Hits 15-Year High

"If Spain is going to be saved, someone better convince Spanish citizens because Deposit flight from Spanish banks hits 15-year high as bailout rumours grow

Spanish banks lost €1 out of every €20 deposited with them in July, making it the worst month for deposit flight in 15 years as rumours grew that the country is edging closer to a full bailout.

News that banks were losing deposits came as Spain's statistics institute revealed the current recession is worse than thought, with the economy shrinking at an annual rate of 1.3% in the second quarter.

"The downturn in the Spanish economy is deeper than previously thought and accelerating," warned Robert O'Daly of the Economist Intelligence Unit..."
 

at http://globaleconomicanalysis.blogspot.com/2012/08/capital-flight-in-spain-hits-15-year.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29#WS8LP04bR883IERX.99

Rick Rule - The Frightening Global Ponzi Scheme Continues

"Today Rick Rule told King World News the frightening global Ponzi scheme continues. Rule also stated that he thinks, “... it’s very, very scary.” Rule, who is now part of Sprott Asset Management, also believes the current action in gold, “... will lead to a much stronger gold market.”

Rule also warned about the ongoing bank run in Europe: “... about 5% of the retail deposits in Spanish banks have been pulled out of the banks in the last two weeks.” But first, here is what Rule had to say regarding the gold market: “I’ve looked at a lot of speculation concerning the reason for the increase in the gold price in the last two or three weeks. There are a lot of factors involved. Obviously there is some fear involved, and what I think is really healthy, in terms of the price increase, is that it doesn’t seem to have come about from an increase in institutional demand, that is from hot money.”

Rick Rule continues:

“It doesn’t seem to be a momentum or greed trade, but rather a fear trade. These are concerns about international bank solvency or concerns about what might happen at Jackson Hole, or what might happen with quantitative easing. I think it’s constructive that the gold price is moving on fundamental news, rather than the way it moved in 2010, which was a response to institutional momentum buying.

This will lead to a much stronger gold market...."

 

at   http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/28_Rick_Rule_-_The_Frightening_Global_Ponzi_Scheme_Continues.html

Agnico CEO Warns Gold To Hit $3,000 On Supply Concerns

"Today one of the top CEO’s in the world told King World News that going forward, “... we will see increasing central bank demand for gold.” He also warned, “We will (also) see reduced supply.” Sean Boyd, who is CEO of $8 billion Agnico Eagle, also discussed why the gold price is set up to frustrate the bears by nearly doubling from current levels.

Here is what Boyd had to say: “We are just looking at further stimulus, this time coming out of China, where they are looking to spend over one trillion dollars on stimulus projects to try to boost the economy. This takes us back to late 2008, when the powers that be were trying to sort out the financial crisis.”

 

Sean Boyd continues:

“The answer was more stimulus, and at the time gold was $700. Gold went from $700, on the back of that stimulus (in 2008), to $1,900. I think we are about to repeat that same pattern. Here we are, gold is at (roughly) $1,600, and there are a lot of question about the weakness in the global economy. 

There are certainly expectations that we are going to see a renewed round of stimulus coming out of Europe and the US...."

 

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/29_Agnico_CEO_Warns_Gold_To_Hit_$3,000_On_Supply_Concerns.html

RICHARD KOO: If History Is Any Guide, Hitting The Fiscal Cliff Will Lead To 'Economic Meltdown

"In his new note, Nomura's Richard Koo comments on the fiscal cliff (the automatic spending cuts and tax hikes that will kick in this year if Congress doesn't do anything), and a CBO report that anticipates a mild recession if that happens.

...I think the CBO estimates of a 0.5% contraction in output and a 9.1% unemployment rate are overly optimistic. Under current conditions it is extremely unrealistic to assume that a tax hike equal to 3% of GDP will only depress GDP by 0.5%.

In Japan, the Hashimoto administration undertook a fiscal consolidation program equal to 3% of GDP in 1997. The result was an economic meltdown, with data at the time indicating five straight quarters of contraction. GDP shrank by 3.0% in real terms and 4.0% in nominal terms. The resulting double dip sparked major bad loan problems in the banking sector, and the fiscal deficit, originally projected to decline by ¥15trn, increased by ¥16trn instead..."

at http://www.businessinsider.com/richard-koo-on-the-fiscal-cliff-2012-8#ixzz24rlE9Csc

Richard Russell: This Is The Beginning Of A Major Move In Gold

"The Godfather of newsletter writers, Richard Russell, believes we are seeing the beginning of a major move in gold. Here is what Russell, who is now 88 and has been writing about the markets for nearly six decades, had to say: “The wild cards --- the stock market takes an unexpected spill in September, and the employment and unemployment statistics worsen just around election time.”

 

Richard Russell continues:

“But what's this? Headline in (the) Financial Times -- “Republicans to Push Gold Standard Back Into Center of Political Debate.” I think this is just a feeler, I doubt whether the US is ready to go back to the gold standard. That will happen out of desperation when there's no where else to go. 

Of course, the Fed will fight any suggestion of going back to the gold standard. The Fed wants to have the sole right to create money, and the gold standard means discipline, the last thing the Fed wants. But it's interesting that the subject of gold has come up at this time.

Lets start with some basic fundamentals. With the entrance of Asia, China and the emerging nations into the world economic system, more products were made than the world could digest. This was the beginning of world deflation. The planet was chocking on competitively-priced goods. And it produced deflation.

The US and Europe would not tolerate deflation and the high unemployment that went with it. There was only one proven method of attacking deflation, and that was to print more currency or to devalue the currency. A second huge problem emerged -- the problem was that the new trend of deflation came at a bad time -- the deflation came at a time when the world was drowning in debt. 

Again the formula to handle debt was to print more currency -- to devalue the various currencies. Actually, the world's debts were so huge that it required a huge devaluation in order to service the debts. In the face of these problems, the Fed and the various central banks went on a currency-printing binge. This is the difficult background that we now face..."

 

at   http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/27_Richard_Russell__This_Is_The_Beginning_Of_A_Major_Move_In_Gold.html

Marc Faber : The Fiscal Deficit in the US is an insurmountable Problem

"Marc Faber : ..I think the debt situation the fiscal deficit in the US is in my view an insurmountable problem , it does not matter who is in the white house the republicans will have a deficit of around 1.3 trillion next year and the democrats will just spend it on different things but the deficit will still be there and that deficit over time will have to continue to be monetized and eventually there will be a depreciation of the purchasing power of money as had happened over the past ten years eventually since the foundation of the federal reserve , so that paper money loses value over time is very clear because the temptation to print money and to have deficit is very high in democracies in particular , so I think there is a risk of hyperinflation , the question is this , if you print money you don't really where the money that is been printed will flow to , it can create inflation in India it can create inflation in China and eventually it will also create inflation in the western world , but it is conceivable that before we have this hyper inflation we would have a deflationary shock and then the central banks knowing nothing else will print money like water and don't forget say the political elite and their cronies who are in the corporate sector they all benefit from asset inflation so if there was a deflationary shock and the market sell off by thirty percent even the republicans will suddenly say well we need more money printing ..... - in Goldseek Radio interview"
at http://marcfaberchannel.blogspot.com/2012/08/marc-faber-fiscal-deficit-in-us-is.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

Gold, Jim Grant, Bernanke, Draghi & A Collapse In Confidence

"Today four-decade veteran John Hathaway spoke with King World News about what a prominent Fed watcher, and friend of his, warned him about: “Here’s a guy who’s been watching the Fed since 1970, maybe longer, and he said, ‘They are in danger of losing their credibility.’ When you think about it, the dollar, as Jim Grant has always put it, is a ‘faith-based currency.’ The credibility of the Fed is integral to that confidence the world has in the dollar, and the dollar’s value.”

The prolific manager of the Tocqueville Gold Fund also said, “So if that credibility, which I think is shot, once that veil of confidence is removed, you just don’t know what the market reactions could be.” Hathaway also discussed the recent action in gold: “It’s characteristic of bull markets that when they enter their most dynamic reversals or breakouts, nobody is on board. And it almost has to be that way because who is going to buy at the top?” 

Here is what Hathaway had to say: “Back in February, he (Bernanke) gave testimony before Congress that said, ‘Further QE is off the table.’ That was a very significant moment because gold got hammered once he made that statement. Since then, there were several other occasions where, either through the Fed minutes or in Congressional testimony, he said, ‘No more QE.’”

 

John Hathaway continues:

“The market began to think that was it for Operation Twist. Then, lo-and-behold, at the end of June they decided to extend Operation Twist, which is neutral in terms of the Fed balance sheet, but is really designed to put a cap on long-term interest rates. As the summer progressed, the numbers for the economy were lackluster at best.

Here we are going into Jackson Hole, where all of the central bankers get together for a few days in Wyoming, and they are now talking up QE. And this time you are hearing them talk about open-ended bond buying by the Fed...."

 

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/27_Gold,_Jim_Grant,_Bernanke,_Draghi_%26_A_Collapse_In_Confidence.html

One Man Against The Wall Street Lobby

"Two diametrically opposed views of Wall Street and the dangers posed by global megabanks came more clearly into focus last week. On the one hand, William B. Harrison, Jr. – former chairman of JP Morgan Chase – argued in the New York Times that today’s massive banks are an essential part of a well-functioning market economy, and not at all helped by implicit government subsidies.
On the other hand, there is a new powerful voice who knows how big banks really work and who is willing to tell the truth in great and convincing detail. Jeff Connaughton – a former senior political adviser who has worked both for and against powerful Wall Street interests over the years – has just published a page-turning memoir that is also a damning critique of how Wall Street operates, the political capture of Washington, and our collective failure to reform finance in the past four years. “The Payoff: Why Wall Street Always Wins,” is the perfect antidote to disinformation put about by global megabanks and their friends.
Specifically, Mr. Harrison makes six related arguments regarding why we should not break up our largest banks. Each of these is clearly and directly refuted by Mr. Connaughton’s experience and the evidence he presents..."

at http://baselinescenario.com/2012/08/25/one-man-against-the-wall-street-lobby/

Vive La Stagnation!

"There was a time when the market at least pretended to be influenced by the economy. Alas, with the advent of officially endorsed central planning those days are gone. Which in turn may be the primary reason why so many retail investors, brought up on the myth that the market is efficient and anticipating the facts instead of, as it has now become all too clear, reactionary, and anticipating liquid release by central planning academics who have never held a real job in their entire lives, have left the rigged casino. So what's a status quo regime that needs the retail dumb money (which is anything but in the past three years) to do? The only thing it can do: lower expectations. Which is precisely what Goldman has done. Because apparently one no longer needs growth to justify insane multiples. All one needs is a, drumroll please, stagnation. That's right - all you need, apparently, to buy stocks is hope and prayer that the US economy can sustain its stagnant state, and all shall be well. Of course, with GDP rising at best at a 2% rate each year, even as the public debt soars at 4-5x times that level, stagnation may well be the best thing the US economy can hope for.

So without any further vague references to a certain day in 1789, all we have to say is, Proletarians of the world, rejoice, for the great October Stagnation, and its 17x average historical P/E multiple is almost upon us!"



at http://www.zerohedge.com/news/vive-la-stagnation

Jim Rogers Warns : Financial Armageddon after U.S. election

"Jim Rogers : “People need to stop spending money they don’t have. The solution to too much debt is not more debt. What would make me very excited is if a few people went bankrupt or a few people started paying off their debt. We are going to have financial Armageddon anyways, when the rest of the world is not going to give these people any more money.”
"The Americans and the Germans they want to do everything they can to hold the world together until after the next election. It's going to be bad after the next election." - in CNBC"

at http://jimrogers1.blogspot.com/2012/08/jim-rogers-warns-financial-armageddon.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Keiser Report: Debt Bomb

"In this episode, Max Keiser and Stacy Herbert discuss CNBC swooning for Biebanke,' Warren Buffett waving many red flags and tax revenue plummeting in UK after a dose of Georgie Porgie's bubble and fraud pudding. In the second half of the show, Max Keiser talks to Dominic Frisby, resident gold bug at Moneyweek, about debt bombs and the City of London. They also discuss how North Sea oil enabled the big bang and how a property bubble could undo it..."

at http://ausbullion.blogspot.com/2012/08/keiser-report-debt-bomb.html

3 Reasons Why China Wants Its Citizens To Own Precious Metals

"Due to China's huge size, its developing economy is having a growing influence on the globaleconomic system. One commodity that has been particularly strongly affected by Chinese popular demand is silver, as well as other precious metals like gold.

Not only has the Chinese government been moving toward holding precious metals in reserve as an alternative to paper currencies like the U.S. Dollar, it has also recently encouraged its citizens to own precious metals as a way to store their wealth in a valuable physical asset.

The following sections will discuss at least three reasons which come to mind that may be behind this official Chinese policy switch.

Reason #1: Controlling Inflation as the Chinese Economy Lands

Monetary policy is often aimed at keeping the population at ease, 'as they ease'. To help ensure a soft landing for the Chinese economy means assuming an inflationary monetary policy..."

at http://seekingalpha.com/article/828111-3-reasons-why-china-wants-its-citizens-to-own-precious-metals?source=feed

Marc Faber : The Real US Fiscal Deficit is Over 4 Trillion a Year

"Marc Faber : 'True' US Fiscal Deficit Is Over $4T Annually "...The way I feel it's going to play out is basically it doesn't matter whether if the republicans win the election or Mr. Obama. the fiscal deficit will stay around $1.3 trillion for a long time , and in my view it will go up. Either way, the fiscal deficit as published by the media, not have a true fiscal deficit, because the true fiscal deficit one would have to include the accumulated unfunded liabilities, and if you report that the fiscal deficit already today it would be in the order of over $4 trillion annually."

at  http://marcfaberchannel.blogspot.com/2012/08/marc-faber-real-us-fiscal-deficit-is.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

Roubini : Markets Should go Down after lousy Capex Report

"Nouriel Roubini :" Dismal capex report: core capital goods orders are falling at a 9.3% 3months over 3months SAAR rate. Capex is contracting at very rapid pace "

at http://nourielroubini.blogspot.com/2012/08/roubini-markets-down-capex-report.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

We Will Be Destroyed By Inflation That Paralyzes The Economy

"Today legendary value investor Jean-Marie Eveillard, who oversees $60 billion, warned King World News that we are headed towards runaway inflation and an economy that will become paralyzed by the enormous distortions created by this inflation. Here is what Eveillard had to say: “Inflation creates enormous distortions, and if you take the extreme example of Weimar Germany in the early 30s, it (inflation) paralyzes and almost destroys economic activity because the distortions become gigantic...”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/24_We_Will_Be_Destroyed_By_Inflation_That_Paralyzes_The_Economy.html

Why Does Wall Street Always Win?

"After a long summer of high-profile scandals – JPMorgan Chase trading, Barclays rate-fixing, HSBC money-laundering and more – the debate about the financial sector is becoming livelier.
Why has it has become so excessively dominated by relatively few very large companies? What damage can it do to the rest of us? What reasonable policy changes could bring global megabanks more nearly under control? And why is this unlikely to happen?
If any of these questions interest you – or keep you awake at night – you should take another look at the last time we had this debate at the national level, and reflect on the work of Ted Kaufman, the former Democratic senator from Delaware, who was far ahead of almost everyone in recognizing the problem and thinking about what to do.
Senator Kaufman represented Delaware in 2009 and 2010, and Jeff Connaughton – his chief of staff – has a new book that puts you in the room. In “The Payoff: Why Wall Street Always Wins,” we see Senator Kaufman as chairman of oversight hearings on the Justice Department and the F.B.I.’s pursuit of financial fraud, pushing the Securities and Exchange Commission on the dangerous rise of computerized trading and working with Senator Sherrod Brown, Democratic of Ohio, on the legislative fight to impose a hard cap on the size and debts of our largest banks. (I wrote many pieces supporting the work of Senator Kaufman at the time, including in this space, but I never worked for him.)
Mr. Kaufman was unique in ways that should give us pause. He was appointed to his seat (after Joe Biden became vice president) and immediately said he wouldn’t run in the next election. So he never had to raise any money to reach the Senate or stay there longer. His experience gives us a glimpse of what we would get if we could really remove the money from politics.
Mr. Connaughton is a fascinating witness and raconteur because he’s been through the revolving door several times: in between work in the Senate and the Clinton White House, he spent 12 years in one of Washington’s top lobbying firms. This author has really lived in and understood the Wall Street-Washington corridor. The book is partly about his education – and ultimate disappointment, most of all with the Obama administration but definitely with both parties.
The system is rotten, to be sure, but this president came to office promising change – and that is exactly what we did not get on most crucial dimensions related to the financial sector. The failure depicted on this front is political and ultimately about money – and all the power that Wall Street can buy, one way or another..."

at http://baselinescenario.com/2012/08/23/why-does-wall-street-always-win/

Trends in Interest Rates on National Debt Suggest Currency Crisis is Coming

"Here are a couple of charts from Tim Wallace regarding interest on the national debt. The first chart shows the interest rate is falling as debt skyrockets.

Interest Rates vs. National Debt

click on any chart for sharper image

Key Questions

1. How long can the trend last?
2. How low will the rate go?

I do not know the answers to those questions, nor does anyone else. However, a rise in interest rates would cause a shocking increase in interest on the national debt.

Interest on National Debt at Current Rate vs. Historical Average



Should interest rates rise to the long-term average, interest on the national debt would more than double from the 2011 figure of $454 billion dollars.

Here is a chart from the National Debt Clock site.



The site notes "Maturity of U.S. debt ranges from less than a year to over 20 years, with the average maturity about 3 years. More than half of the debt, however, is short term, maturing in less than a year."

That is an interesting assertion short-term debt is at .09%, 10-year notes yield 1.67%, and the 30-year bond yields a mere 2.79%.

However, interest is on outstanding securities. A bond with a 6% yield maintains that yield until maturity. The average yield in Wallace's charts paid comes from Treasury Direct.

Currency Crisis Coming

If you get the idea a crisis of some sort is coming, fueled by out-of-control deficit spending as well as the Fed's ridiculous "Operation Twist Policy", then you get the right idea.

The Fed ought to be selling long-term bonds at these rates, locking in financing at attractive rates, not buying those bonds hoping to drive yields still lower.

Of course, that latter statement assumes there should be a Fed or deficit spending in the first place, neither of which I believe."

at http://globaleconomicanalysis.blogspot.com/2012/08/trends-in-interest-rates-on-national.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29#0AHaMiQtixB4fiJs.99

Sprott - We Are Staring At Chaos & Collapse In Front Of Us

"Today billionaire Eric Sprott spoke with King World News about one of his frightening predictions, “I always postulated that the financial system would go bankrupt, and it has, save for one thing, it got bailed out.” Sprott, who is Chairman of Sprott Asset Management, also added, “But I don’t think the central planners have a winning hand here. They’re not going to win.” 

Sprott then warned, “God knows when we get there (to the end of the current system) what we are all staring at.” But first, here is what he had to say about the last decade: “When I reflect back over the decade, I think my God, I can come almost come up with 2,500 tons of net change in physical demand, in a 4,000 ton market on the supply side, which hasn’t changed in that 12 years, that was in balance 12 years ago. How do these ETF’s get to buy gold? How do these central banks go from sellers to buyers?”

Eric Sprott continues:

“How does China come in and buy 500 tons? How did all of this happen with no increase in the supply of gold? It’s getting more extreme by the day. If I take today’s numbers, I think there’s probably a 2,500 ton shortfall of physical gold. I must conclude that the G6 central banks are continuing to lease their gold into the market.

It’s not called a ‘sale’ because theoretically they still own it (on paper), but it’s been leased to a bullion bank that’s sold it to someone, and it’s not coming back again....

“I am sniffing that there’s going to be a day when those central banks that are leasing it, realize they won’t get it back, are going to put up the sign and say, ‘No mas. We’re not going to sell any more. We’ve lost this game.’ (They will ask themselves) what are we doing here? Why do we keep suppressing the price of gold? 

Everyone knows there’s a financial crisis going on. And if they (central banks that have leased out gold) ever try to get it back, they’ll never get it back, and who knows where the price of gold can go, but it can go a long, long way from here.

I argue that there is 6,500 tons of demand and 4,000 tons of supply (each year), and the extra 2,500 tons is coming out of central banks that are leasing it. Imagine if they just stopped leasing it. Who knows where the price would go? You would get such chaos (disorderly upside trading in gold). 

I can sense it has a lot of upside here. Total chaos can happen when we all realize that on a sovereign basis, the ‘Emperor has no clothes.’ Who knows how high it’s going to go, but we’re not talking about just hitting a new high above $1,920. We’re looking at much bigger numbers..."

 

at  http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/24_Sprott_-_We_Are_Staring_At_Chaos_%26_Collapse_In_Front_Of_Us.html

Back in the Economic Danger Zone

"In its State Coincident Indexes report, the Federal Reserve Bank of Philadelphia publishes gauges, calculated from four state-level indicators, that summarize current economic conditions in each of the 50 states.

The Philly Fed also produce one- and three-month diffusion indexes derived from aggregate changes in the state-level indexes that offer a read on what is happening in the U.S. economy as a whole.
If the history of the past three decades or so is any guide, the latest data indicates, contrary to what the experts keep telling us, that we are in or entering an economic downturn..."



at http://www.financialarmageddon.com/2012/08/back-in-the-economic-danger-zone.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+financialarmageddon+%28Financial+Armageddon%29

Italy’s 'this time it’s different' moment: With rejoinder by Giavazzi

"The recent article by Francesco Giavazzi is both depressing and déjà vu all over again.

• In early 2010, when the situation started to deteriorate in Greece and some eggheads opinionated that an IMF program was unavoidable – the Greeks replied "we are not Latin America";
• Half a year later, the Irish stated that they were not Greeks;
• Then the Portuguese insisted that they were not Ireland;
• Just a few months ago, the Spaniards claimed that they were not Portuguese.

Now guess what – the Italians remind us that Italy is not Spain.

As Reinhart and Rogoff (2009) have recalled, every country that faces a crisis always denies that it is fodder for IMF-style conditionality. In fact, you know that the point of no return has been reached the minute policymakers – or influential commentators – explain that their country is different.
And, yet, they are right. It is true that Italy’s fundamentals are clearly different from Spain’s fundamentals, which are different from those in Greece, Ireland and Portugal. What these countries have in common is that they have lost market access, at least at 'normal' interest rates.

The underlying economic mechanism is self-fulfilling market expectations, a.k.a. multiple equilibria. Rightly or wrongly, once markets conclude that a country’ situation is hopeless:

• Interest spreads start rising;
• Debt service becomes explosive; and
• The situation eventually becomes hopeless.

Back in 2009, Greece did not have to get into a crisis. Nor did Korea in 1997, nor Mexico in 1986, nor Chile in 1982. In all these cases, the fundamentals were less than rock-solid, but they were not completely disastrous either. In each case, once the crisis occurred, hard-nosed observers, who had failed to predict what was to happen, went on drawing a list of alarming policy failures that fully justified the crisis and the harsh treatment imposed on the now-delinquent country.

What we know full well, at least since Obstfeld (1986) and Krugman (1986), is that a crisis can (but does not have to) occur when a country suffers from a vulnerability. We also know that, once a self-fulfilling crisis occurs, it tends to spread in a contagious way. Research has still to unearth cases when a country that moved into a bad equilibrium was able to recover to a good equilibrium..."

 

at http://www.voxeu.org/article/italy-s-time-it-s-different-moment-rejoinder-giavazzi

Eurozone PMI Declines 7th Month; German Private Sector Output Falls at Faster Rate; New Business Declines 13th Month

"As easily predicted, at least in this corner, the Markit Flash Eurozone PMI® shows Downturn in Eurozone economy extends into seventh month.

Key Points

 •Flash Eurozone PMI Composite Output Index(1) at 46.6 (46.5 in July). Seventh straight contraction.

 •lash Eurozone Services PMI Activity Index(2) at 47.5 (47.9 in July). Two-month low.

 •Flash Eurozone Manufacturing PMI(3) at 45.3 (44.0 in July). Four-month high.

 •Flash Eurozone Manufacturing PMI Output Index(4) at 44.6 (43.4 in July). Two-month high.

The Markit Flash Eurozone PMI® Composite Output Index – based on around 85% of usual monthly replies – was broadly unchanged at 46.6 in August, from a final reading of 46.5 in July. The index has now signalled a contraction of the Eurozone private sector for seven successive months..."

at http://globaleconomicanalysis.blogspot.com/2012/08/eurozone-pmi-declines-7th-month-german.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29#sWjAgLYvrk2jfxju.99

Guest Post: Venezuela Ramps up China Oil Exports Unsettling Washington

"The biggestgeostrategic change of the past decade overlooked by Washington policy wonks in their fixation on their self-proclaimed “war on terror” is that Latin America has been throwing off the shackles of the Monroe Doctrine.

These ignored developments may well soon refocus Washington’s attention on the Southern Hemisphere, as Venezuela’s President Hugo Chavez reorients his country’s to China.

It is not an inconsiderable element of concern for the Obama administration. According to the U.S. Energy Administration, the United States total crude oil imports now average 9.033 million barrels per day, with the top five exporting countries being Canada (2.666 mbpd), Mexico (1.319 mbpd), Saudi Arabia (1.107 mbpd), with Venezuela in fourth place at 930 thousand barrels per day. Note that two of America’s top four energy importers are south of the Rio Grande.

Furthermore, Venezuela’s reserves according to OPEC now top those of Saudi Arabia, with Venezuela now estimated to have the largest conventional oil reserves and the second-largest natural gas reserves in the Western Hemisphere. Two years ago OPEC reported that of the organization’s 81.33 percent of the globe’s known oil reserves Venezuela had 24.8 percent, exceeding Saudi Arabia with 22.2

So, why is Chavez in Washington’s bad books? Well, among other reasons, for the company he keeps, as the Russian Federation, Iran and Cuba are all allies. Note that the first two are also major oil exporters..."

at http://www.zerohedge.com/news/guest-post-venezuela-ramps-china-oil-exports-unsettling-washington

Guest Post: Spreading Insolvency Around Does Not Create Solvency

"The central illusion of Central Planning everywhere is that distributing insolvency will somehow magically create solvency.

I recently received a brief but powerful summary of the global financial system's intrinsic instability and unsustainability from correspondent Ray W., author of A Change in the Weather.

One key point is that spreading insolvency (debts that will never be paid back, debt based on totally phantom assets) over a populace does not somehow conjure up a solvent financial system or State. Distributing insolvency only destroys the last remaining islands of solvency in a bankrupt world.

The entire global financial "recovery" engineered by central banks and Central Planning is based on the absurd notion that if we spread unpayable debt over the entire body politic (be it a nation or regional entity such as the European Union) then that distribution will somehow make the debt payable and the phantom assets real.

The debt remains unpayable and the assets (collateral) remain stubbornly phantom. As for adding more debt (selling Eurobonds, Treasury bonds, etc.), please note the diminishing return on additional debt: it is now negative..."

at http://www.zerohedge.com/news/guest-post-spreading-insolvency-around-does-not-create-solvency

Jacob Rothschild, John Paulson And George Soros Are All Betting That Financial Disaster Is Coming

"Are you willing to bet against three of the wealthiest men in the entire world? Jacob Rothschild recently bet approximately 200 million dollars that the euro will go down. Billionaire hedge fund manager John Paulson made somewhere around 20 billion dollars betting against the U.S. housing market during the last financial crisis, and now he has made huge bets that the euro will go down and that the price of gold will go up. And as I wrote about in my last article, George Soros put approximately 130 million more dollars into gold last quarter. So will the euro plummet like a rock? Will the price of gold absolutely soar? Well, if a massive financial disaster does occur both of those two things are likely to happen. The European economy is becoming more unstable with each passing day, and investors all over the globe are looking for safe places to put their money. The mainstream media keeps telling us that everything is going to be okay, but the global elite are sending us a much, much different message by their actions. Certainly Rothschild, Paulson and Soros know about things happening in the financial world that the rest of us don't. The fact that they are all behaving in a consistent manner right now should be alarming for all of us..."

at http://theeconomiccollapseblog.com/archives/jacob-rothschild-john-paulson-and-george-soros-are-all-betting-that-financial-disaster-is-coming

Nick Barisheff – $10,000 Gold within 5 Years

"...Gold prices will rise with U.S. debt levels, and they are skyrocketing. Barisheff says, “If you plot a chart, the price of gold compared to the U.S. debt is almost a perfect correlation.” Join Greg Hunter as he goes One-on-One with the CEO of Bullion Management Group, Nick Barisheff..."

at http://usawatchdog.com/nick-barisheff-10000-gold-within-5-years/

Jim Rogers: Protect Yourself From Debased Currencies by Owning Real Assets

"Jim Rogers explains How to 'Protect Yourself' From 'Debased' Currencies :"..may I suggest that you learn about real assets like silver and rice and real things because they are printing more money and it is coming again , and the way you protect yourself when the government prints money and debases the currency is you own real things gold silver wheat oil natural gas that's the way you protect yourself , and I assure you it's coming again..."

at http://jimrogers1.blogspot.com/2012/08/jim-rogers-protect-yourself-from.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Large Entities Creating Major Breakouts In Crucial Markets

"Today acclaimed commodity trader, Dan Norcini, told KWN that well-financed, very large entities are creating major breakouts in various markets as they position themselves ahead of an important shift. Norcini also issued this warning, “... there is a great deal of money on the sidelines and this means we will see some violent action as these markets move to the upside.” 

Here is what Norcini had to say: “Obviously, Eric, we would not see these chart patterns breaking out the way they are (see below), unless large, well-financed, and well-connected entities were positioning themselves ahead of what they see coming down the road. This is simply too large of a move for this to be some momentary blip on the radar.”

 

Dan Norcini continues:

“It took a lot of firepower to break these markets through these resistance levels. We have had two days of solid action, along with good volume, on this breakout and it signifies a change in direction. It also signifies that some very large players anticipate something very significant down the road.

What happened yesterday was word about the crop tour sent both corn and soybean prices strongly higher. This also dragged wheat along for the ride. The supply seems to keep shrinking as each successive yield estimate comes in with a lower number..."

 

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/22_Large_Entities_Creating_Major_Breakouts_In_Crucial_Markets.html

Are The Government And The Big Banks Quietly Preparing For An Imminent Financial Collapse?

"Something really strange appears to be happening. All over the globe, governments and big banks are acting as if they are anticipating an imminent financial collapse. Unfortunately, we are not privy to the quiet conversations that are taking place in corporate boardrooms and in the halls of power in places such as Washington D.C. and London, so all we can do is try to make sense of all the clues that are all around us. Of course it is completely possible to misinterpret these clues, but sticking our heads in the sand is not going to do any good either. Last week, it was revealed that the U.S. government has been secretly directing five of the biggest banks in America "to develop plans for staving off collapse" for the last two years. By itself, that wouldn't be that big of a deal. But when you add that piece to the dozens of other clues of imminent financial collapse, a very troubling picture begins to emerge. Over the past 12 months, hundreds of banking executives have been resigning, corporate insiders have been selling off enormous amounts of stock, and I have been personally told that a significant number of Wall Street bankers have been shopping for "prepper properties" in rural communities this summer. Meanwhile, there have been reports that the U.S. government has been stockpiling food and ammunition, and Barack Obama has been signing a whole bunch of executive orders that would potentially be implemented in the event of a major meltdown of society. So what does all of this mean? It could mean something or it could mean nothing. What we do know is that a financial collapse is coming at some point. Over the past 40 years, the total amount of all debt in the United States has grown from about 2 trillion dollars to nearly 55 trillion dollars. That is a recipe for financial armageddon, and it is inevitable that this gigantic bubble of debt is going to burst at some point.
In normal times, the U.S. government does not tell major banks to "develop plans for staving off collapse".
But according to a recent Reuters article, that is apparently exactly what has been happening....

U.S. regulators directed five of the country's biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.
The two-year-old program, which has been largely secret until now, is in addition to the "living wills" the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress..."

at  http://theeconomiccollapseblog.com/archives/are-the-government-and-the-big-banks-quietly-preparing-for-an-imminent-financial-collapse

People Are Frightened, Money Pouring Into Switzerland & Gold

"With continued volatility in global markets, including gold and silver, today King World News interviewed one of the legends in the gold world, Keith Barron. Barron consults with major gold companies around the world, as well as major brokerage houses, and he is also responsible for one of the largest gold discoveries in the last quarter century, a remarkable 14 million ounces of gold. 

Here is what Barron had to say about the ongoing crisis in Europe: “Well, there are a lot of scared people here. There is a lot of money that’s been pouring into Switzerland and the Swiss franc. As you are aware, the Swiss National Bank has pegged the Swiss franc to the euro, so there is tremendous pressure on the franc.”

Keith Barron continues:

“They (the Swiss) have to take these euros and go and buy other currencies. So they have actually been sending the Norwegian kroner and other currencies such as the Canadian dollar higher, just because of these massive inflows into Swiss francs. Eventually that peg is going to break, but they are doing whatever they can right now to keep it in place.

There is a headlong rush into getting out of the euro and into other currencies...."

at  http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/12_People_Are_Frightened,_Money_Pouring_Into_Switzerland_%26_Gold.html

Embry - Gold To Spike As Physical Market Is Shockingly Tight

"Today John Embry, who is Chief Investment Strategist of Sprott Asset Management, spoke with King World News about the shockingly tight physical gold market. He also discussed Europe, the United States, stocks and silver. Here is what he had to say: “The US stock market has been levitating over 13,000 for a bit, and I was struck by an article in the NY Times which featured Jack Bogle, who started Vanguard Funds. Jack said, ‘It’s urgent that people wake up because this is the worst time for investors that he’s ever seen, and he’s been in the business for more than 60 years.”

John Embry continues:

“When you put what he said together with the fact that the VIX is at the lowest level since 2007, they contradict each other. But I would be inclined to go with Bogle. It’s my firm belief that the stock market is being supported by the PPT (Plunge Protection Team). 

Right now I think the market is extraordinarily vulnerable to the realities of what’s going on in the world...."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/13_Embry_-_Gold_To_Spike_As_Physical_Market_Is_Shockingly_Tight.html

Gold And Grand Theft Economics

"The tectonic battle between a market trying to deflate its debts and the central banks attempting to reflate the impaired assets to maintain the status quo is becoming increasingly violent. In a brief clip, Santiago Capital's Brent Johnson explains the fallacy of fiat money, the dynamics of the velocity of money in a 'troubled' economy, the 'we are going to give the banks a lot of money' plans, and the inevitable 'there's no more money' moment when the inflationary and deflationary tremors come unstuck and become shock-waves. There will be no warning, no bell-ringing at the onset of the end of the monetary system itself as he notes the slate of Stability & Growth Pacts (EU) and The Recovery and Reinvestment Act (US) will inevitably be seen as the greatest unauthorized transfer of wealth in history - and being exposed to gold stored outside of the banking system, there is a protected route as the world staggers from tremor to tremor..."

at http://www.zerohedge.com/news/gold-and-grand-theft-economics

"The Beijing Conference": See How China Quietly Took Over Africa

"Back in 1885, to much fanfare, the General Act of the Berlin Conference launched the Scramble for Africa which saw the partition of the continent, formerly a loose aggregation of various tribes, into the countries that currently make up the southern continent, by the dominant superpowers (all of them European) of the day. Subsequently Africa was pillaged, plundered, and in most places, left for dead. The fact that a credit system reliant on petrodollars never managed to take hold only precipitated the "developed world" disappointment with Africa, no matter what various enlightened, humanitarian singer/writer/poet/visionaries claim otherwise. And so the continent languished. Until what we have dubbed as the "Beijing Conference" quietly took place, and to which only Goldman Sachs, which too has been quietly but very aggressively expanding in Africa, was invited. As the map below from Stratfor shows, ever since 2010, when China pledged over $100 billion to develop commercial projects in Africa, the continent has now become de facto Chinese territory. Because where the infrastructure spending has taken place, next follow strategic sovereign investments, and other modernization pathways, until gradually Africa is nothing but an annexed territory for Beijing, full to the brim with critical raw materials, resources and supplies. So while the "developed world" was and continues to deny the fact that it is broke, all the while having exactly zero money to invest in expansion, China is quietly taking over the world. Literally."


at http://www.zerohedge.com/news/beijing-conference-see-how-china-quietly-took-over-africa

From Chicago To New York And Back In 8.5 Milliseconds

"Back in 2009 when the world wasn't filled with HFT 'experts', we deconstructed the topic of High Frequency Trading on a daily basis, and predicted not only the flash crash, not only debacles such as the Knight trading fiasco, not only the death of capital markets as a fund raising vehicle for companies who wish to go public (i.e. the FaceBook IPO fiasco), but much more (all of which has yet to pass before the stock market, as it was once known, is no more). The reason why little if anything can and will be done to fix the persistent threat to capital markets that is HFT is two fold: i) none of the current regulators understand anything about modern market topology, and ii) HFT is so embedded in markets that unrooting it would result in a complete reboot of "fair" stock valuation: imagine what would happen to stock prices if Knight and its "buy everything" algos were no longer present. Mass hysteria as the realization that vacauum tubes are now TBTF.
That said it is always amusing to observe as more and more people get in on the scam that is the "equity market", now completely dominated by robots which do nothing but accelerate and perpetuate momentum moves - after all it is all they can do in lieu of being able to read financials, or anticipate events. Remember: it is always the market that makes the news, never the other way around.
So it was entertaining and informative to read the latest recap of all events HFT-related as narrated by Wired's Jerry Adler, whose write up "Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading" does an admirable job of showing how not only nothing has changed since those days in 2009 full of warning, but how in fact things are moving ever faster to what will one day be a trading singularity, limited strictly by the speed of light (and maybe even surpassing that). Of all the things in the article, the one we found most curious is that since 2009, the round trip from the biggest quant trading hub in Chicago to the exchange hubs in NY and NJ, has been cut by over 50%, or from over 13 milliseconds to just about 9 milliseconds, courtesy of Microwaves..."

at http://www.zerohedge.com/news/chicago-new-york-and-back-85-milliseconds

Buy Neutrinos

Must read article in Spetember edition of Wired Magazine on How Wall Street Got Addicted to HFT. In light of the JKnight Trading snafu, Wired decided to post it on line earlier than suual.
Here is an excerpt:

“Faster and faster turn the wheels of finance, increasing the risk that they will spin out of control, that a perturbation somewhere in the system will scale up to a global crisis in a matter of seconds. “For the first time in financial history, machines can execute trades far faster than humans can intervene,” said Andrew Haldane, a regulatory official with the Bank of England, at another recent conference. “That gap is set to widen.”
This movement has been gaining momentum for more than a decade. Human beings who make investment decisions based on their assessment of the economy and on the prospects for individual companies are retreating. Computers—acting on computer-generated market trend data and even newsfeeds, communicating only with one another—have taken up the slack. Conventional economics views all this as an unalloyed good: It is axiomatic that all trades are a net benefit to the economy because they enhance “liquidity,” the ability of investors to buy or sell assets at the best price. Indeed, in 2007 the SEC instituted an ambitious new rule, the national market system, that opened the door to dozens of new venues for stock trading, but now that transaction times are measured in micro­seconds and prices are carried out to six decimal places, those opportunities have arguably gone past a point of diminishing returns.”

Go read the full article . . .

Source:
How Wall Street Got Addicted to Light-Speed Trading

at http://www.ritholtz.com/blog/2012/08/buy-neutrinos/

Guest Post: Does Easy Monetary Policy Enrich The Financial Sector?

"Yesterday, I strongly insinuated that easy monetary policy enriches the financial sector at the expense of the wider society. I realise that I need to illustrate this more fully than just to say that when the central bank engages in monetary policy, the financial sector gets the new money first and so receives an ex nihilo transfer of purchasing power (the Cantillon Effect).
The first inkling I had that this could be the case was looking at the effects of quantitative easing (monetary base expansion) on equities (S&P500 Index), corporate profits and employment.

While quantitative easing has dramatically reinflated corporate profits, and equities, it has not had a similar effect on employment (nor wages).
However there are lots other factors involved (including government layoffs), and employment (and wages) is much stickier than either corporate profits or equities. It will be hard to fully assess the effects of quantitative easing on employment outcomes without more hindsight (but the last four years does not look good).
What is clear, though is that following QE, financial sector profits have rebounded spectacularly toward the pre-2008 peak, while nonfinancial sector profits have not:

Yet it is not true that in recent years the growth of financial profits or financial assets has been preceded by growth in the monetary base; the peak for financial profits occurred before QE even began. In fact, the growth in the monetary base from 2008 reflects a catching-up relative to the huge growth seen in credit since the end of Bretton Woods. During the post-Bretton Woods era, growth of financial assets in the financial sector has significantly outpaced growth of financial assets in the nonfinancial sector, and growth of household financial assets:

This disparity has not been driven by growth in the monetary base, which lagged behind until 2008. Instead it has been driven by other forms of money supply growth, specifically credit growth.
This is the relationship between financial sector asset growth, and growth of the money supply:

And growth of the money supply inversely correlates with changes in the Federal Funds rate; in other words, as interest rates have been lowered credit creation has spiked, and vice verse:

The extent to which M2 was driven by the Federal Funds rate (or vice verse) is not really relevant; the point is that the Fed’s chosen transmission mechanism is inherently favourable to the financial sector.
The easing of credit conditions (in other words, the enhancement of banks’ ability to create credit and thus enhance their own purchasing power) following the breakdown of Bretton Woods — as opposed to monetary base expansion — seems to have driven the growth in credit and financialisation. It has not (at least previous to 2008) been a case of central banks printing money and handing it to the financial sector; it has been a case of the financial sector being set free from credit constraints..."

at http://www.zerohedge.com/news/guest-post-does-easy-monetary-policy-enrich-financial-sector

Charles Biderman-What else is there besides gold?

"Charles Biderman, CEO of Trim Tabs Investment Research, says, “If Europe, the U.S and Japan are all printing money to pay bills, what else is there besides gold?” Everone should be holding physical gold in their portfolio. Biderman thinks Europe is a mess, and tax revenue is “nowhere near enough to pay government expenses.” So, he thinks, “Europe has to implode!” The U.S. will follow Europe. Will the banking system survive? Biderman says, “Probably the bug guys won’t, but so what!” In America, Biderman says, “The U.S. government is printing $100 billion a month, and it’s not generating growth.” He expects “stocks to go down by 50%.” Join Greg Hunter as he, once again, goes One-on-One with Charles Biderman..."

at  http://usawatchdog.com/charles-biderman-what-else-is-there-besides-gold/

Jim Rogers Issues Dramatic Warning : prepare for Financial Armageddon after the U.S. election

"Jim Rogers says the world is "drowning in too much debt." "[They] need to stop spending money they don't have," "The solution to too much debt is not more debt... What would make me very excited is if a few people [in the government] went bankrupt..." Rogers said. "Mrs. Merkle has an election next year," Rogers said. "Mr. Obama has an election in November. The Americans and the Germans - they want to do everything they can to hold the world up until after the next election." "It's going to be bad after the next election." - in CNBC via moneymorning"

at http://jimrogers1.blogspot.com/2012/08/jim-rogers-issues-dramatic-warning.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Roubini : Germany in Recession

"Nouriel Roubini :" Germany in recession @MarkitEconomics: German IP down -0.1% over Q2. Yesterday's chart of factory orders & IP updated. http://twitpic.com/agva6m " - in twitter"

at http://nourielroubini.blogspot.com/2012/08/roubini-germany-in-recession.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

Currency Wars: Move to Make Treasury's Geithner a Permanent Member of US National Security Council

"Looks like the US is getting ready to flex its financial muscle. I don't think the Anglo-American banking cartel will relinquish the dollar reserve currency supremacy easily. This is currency war.

I somehow missed this editorial when it first came out. But over the weekend and today I heard echoes of the same sentiment from various places in what looks like a loosely organized public relations campaign.

The National Security Council, formed in 1947 and comprised of the President, Vice-President, Secretary of State, Secretary of Defense, Director of the CIA, and the Joint Chiefs of Staff.

The National Security Council has an unmistakable military flavor.

The move to add the Treasury Secretary as a permanent member is just another sign of the currency wars heating up. At least from the US perspective, there is an unmistakable convergence between military and economic action..."

at http://jessescrossroadscafe.blogspot.com/2012/08/currency-wars-move-to-make-geithner.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

Embry: Expect Squeeze In Gold, Price Headed Multiples Higher

"Today John Embry told King World News, “I have been a long time proponent of the idea that we may very well be at peak gold production in the world.” He warned, “We may have seen the peak.” Embry also stated that he believes we are headed towards a, “... classic supply/demand squeeze.” This will send gold, “... to multiples of the current price.”

Embry, who is Chief Investment Strategist of the $10 billion strong Sprott Asset Management, discussed both gold and silver, but first, here is what Embry had to say about the ongoing crisis in Europe: “Over the weekend they accepted more collateral at the Greek Central Bank so they could make their payment to the ECB. So I think they will do what they have to, to keep this thing moving forward.”

John Embry continues:

“But the thing that’s the big problem, and question is, are the funders, Germany, Finland, the Netherlands, etc., do they have the balance sheets and the economic strength to bailout these peripherals in the South that are in horrific condition?

And even if they do, do they have the appetite to do it? All I can tell you is that it’s an enormously serious problem...."

 at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/6_Embry__Expect_Squeeze_In_Gold,_Price_Headed_Multiples_Higher.html

Morgan Stanley Gives Four Reasons To Be Bullish On Gold

"Morgan Stanley commodity strategists led by Hussein Allidina write in a new note to clients that although gold may suffer for a bit as a result of the uncertainty surrounding Fed policy, there are four reasons to be bullish on gold long-term:

1. The market probably doesn't have to worry about the ECB as a major seller: Morgan Stanley writes that "since 1999, the risk of sustained and large scale European central bank selling has declined with three consecutive five year Central Bank Gold Agreements (CGBAs)," and that emerging market central bank gold buying since 2006 adds to the tailwinds for gold.
2. Physical gold demand is on the rise: Morgan Stanley says that ETFs have changed the game for investing in physical gold in the wake of the 2008 financial crisis, and that even in China physical gold funds are catching on, which represent a huge source of demand for the precious metal.
3. Central banks are driving an unwinding of gold hedges: Morgan Stanley writes that the CGBAs mentioned above cap the amount of gold central banks can lend, which is "helping underpin a phenomenon known as de-hedging," the practice of "either buying back or delivering into outstanding gold hedge positions," which has provided a supplemental buyer of gold in the market and should continue to do so going forward.
4. Supply in the gold market is falling as mines produce less: This is due in large part to developments in South Africa, the largest gold producer in the world. Morgan Stanley explains that "over the course of the past ten years, South African production has declined every year in absolute terms, presenting the industry with a formidable challenge to increase total output at a time of rising demand."

at http://www.businessinsider.com/morgan-stanley-four-reasons-to-be-bullish-on-gold-2012-8#ixzz22n72lnt1

Nothing Can Be Done to Avoid Coming World-wide Depression! Here’s Why

"Governments everywhere are becoming more distressed and desperate as economic realities dominate the political doublespeak. The world is at a dangerous point. Much of what we thought we knew and assumed regarding governmental behavior and economics is beginning to be reassessed. Governments of the world are out of money and out of ideas. The ponzi scam that has been perpetrated for over fifty years is collapsing under its own weight..."

at http://www.munknee.com/2012/08/nothing-can-be-done-to-avoid-coming-world-wide-depression-heres-why/

Jim Rogers: The good news is the world is always changing dramatically. The bad news is, the world is always changing dramatically.

"Jim Rogers: There are always geo-political possibilities. If oil goes down, Saudi Arabia's going to have more trouble buying peace. Any country's going to have more problems buying peace. Iraq is being driven into the arms of Iran. America has spent staggering amounts of money in this region, and what we're getting for it is a possible alliance between Iran and Iraq. All sorts of things could happen in the future, especially if Iran and Iraq get closer together. That's going to put America in a terrible situation, the world in a terrible situation. The good news is the world is always changing dramatically. The bad news is, the world is always changing dramatically.- in oilprice"

at http://jimrogers1.blogspot.com/2012/08/jim-rogers-good-news-is-world-is-always.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Don Coxe - Get Ready, Gold To Re-Enter The Financial System

"Today King World News is pleased to share with its global readers the investment recommendations of 40 year veteran Don Coxe. Coxe believes, “This schizophrenic period of gold and gold stock valuation is unsustainable.” He feels very strongly that “Investors need to invest where the demand is—and will be for coming decades.” 

Coxe, who is Global Strategy Advisor to BMO ($538 billion in assets), also warned, “We remain of the view that what might be the only way for the eurozone to assemble enough firepower to give credibility to the markets is for governments which have gold to use it to back very long-term convertible bonds.”

He also issued this critical warning: “The euro's death throes could take a long time. The elites may try to drag down as many innocent victims as possible to deflect attention from themselves.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/5_Don_Coxe_-_Get_Ready,_Gold_To_Re-Enter_The_Financial_System.html

Zombified Cities Roundup: Detroit Becomes Dumping Ground for the Dead; Financial Urgency in Miami; Oakland Pension Time Bomb; How Pensions Crashed Stockton and San Bernardino

"Space does not permit a complete discussion of zombified cities. Such a list would be in the many hundreds. Rather this post is about four cities in recent news that are among the walking dead. One is even a dumping ground for the dead.

Fourth Financial Urgency in Miami in Four years

The Huffington Post reports Miami Declares Financial Urgency For Fourth Year In A Row..."

at http://globaleconomicanalysis.blogspot.com/2012/08/zombified-cities-roundup-detroit.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29#2oecpJxasoSOllgw.99

The German Press Responds To Draghi: "Vengeance Will Be Bitter"

"And, as expected, it's not happy. The punchline:

The central bank is to become subordinate to finance ministers in crisis-stricken countries. In Draghi's homeland Italy, such a situation was the norm for decades -- and the result was chronic inflation. Now, he is accepting a repeat of history. On the short term, it will create relief in the debt crisis. On the long term, vengeance will be bitter."

As a reminder from March: Mario Draghi Is Becoming Germany's Most Hated Man

More from Spiegel:

Germany has long been wary of ECB bond purchases and opposition has only grown since the Frankfurt-based central bank largely ceased buying sovereign bonds last year. Jens Weidmann, head of Germany's central bank, the Bundesbank, has been particularly vociferous in his criticism of bond purchases, saying they rewarded debt-ridden countries without demanding reforms in return. Draghi even mentioned Weidmann's opposition to the program in his Thursday press conference.

Still, the widespread resistance in Germany to ECB action, and to many other euro-crisis proposals that could increase German taxpayer liability, has painted Merkel into a corner. With the opposition in Berlin showing a decreased willingness to rubber stamp her euro-crisis measures and a growing rebellion within the ranks of her own government, her ability to respond to the worsening crisis may become increasingly limited.

German media commentators take a closer look at the ECB's approach to the crisis on Friday..."

at http://www.zerohedge.com/news/german-press-responds-draghi-vengeance-will-be-bitter

Why Isn’t Gold Hitting New Highs Given What’s Going On In the World These Days?

"…[Y]ou may be curious why, despite continued money-printing and abysmal US economic reports, gold hasn’t been able to hit new highs. The answer is that gold is currently priced for collapse. Many investors believe the yellow metal has topped out and are selling into every rally. Treasuries have temporarily overtaken gold as the primary safe-haven asset [but, as I see it,] once that dynamic is broken the counterflow into gold will be tremendous.

Gold will continue testing the $1,600 barrier until it surprises to the upside spurred by the announcement of QE III, a calming of fears in Europe, or any shock to the Treasury market.
Remember, the key to this market is to understand that the market for US dollars and dollar-denominated debt is headed off a cliff, which will send the price of precious metals soaring. Now is a time for uncommon confidence. [Read: Martin Armstrong Clearly Explains Why the USD is Strong and Gold Weak in This Terrible Economic Environment]
Nerves of Tin

Being a gold investor is tough business. The last thing any government or corrupt big bank wants is to have a bunch of people putting their savings into hard assets – and gold is one of the hardest of all – so we’re constantly up against tides of propaganda saying that gold has no value or is the refuge of doomsayers.

The effect of this is that even heavy gold investors are always waiting for the other shoe to drop. When house prices were rising, no one was worried that the market had peaked or prices were unsustainable. No one was asking whether all the thin-walled McMansions going up would actually be worth anything in a generation, but for gold, Wall Street has been shorting it all the way up!
Nowhere is this pessimism more evident that in gold mining stocks. Rising inflation has driven production costs higher, but the mistaken belief that inflation is contained and Treasuries are a safer haven is keeping a lid on gold prices. As such, many of the major producers have missed their earnings projections, and their share prices have been punished. This has placed a cloud over the entire sector. In fact, the P/E ratios of major gold miners are near record lows. [Below are links to a number of articles suggesting that now is the time to buy gold mining stocks:..."

at  http://www.munknee.com/2012/08/why-isnt-gold-hitting-new-highs-given-whats-going-on-in-the-world-these-days/

Jim Rogers : I expect to see serious economic problems in 2013 and 2014 in the U.S

"Jim Rogers : U.S. natural gas is somewhere near its bottom, in my view. The problem is I expect to see serious economic problems in 2013 and 2014 in the U.S. If and when that happens, we're going to see a final panic in the markets and the economy and everything will have a crescendo and a selling climax.
We're certainly a lot closer than we were. Although, when you have a selling climax in markets, you go to levels much lower than most people believe possible and that may happen. Whatever that bottom is, it's not too far from the recent lows in natural gas..."

at http://jimrogers1.blogspot.com/2012/08/jim-rogers-i-expect-to-see-serious.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FWOHK+%28Jim+Rogers+Blog%29

Eric Sprott: Coordinated Govt bond buying to send Gold higher

at http://ausbullion.blogspot.com/2012/08/eric-sprott-coordinated-govt-bond.html

South Korean Central Bank adds to Gold Holdings

"From Reuters.com

Original source

Aug 2 (Reuters) - South Korea boosted its gold holdings by nearly a third in July, buying 16 tonnes as part of the central bank's efforts to diversify its massive foreign exchange reserves. South Korea is Asia's fourth largest economy and its central bank said on Thursday that it now holds 70.4 tonnes of gold, after paying $810 million last month for the purchase.

The increase barely lifted gold prices but supported expectations that central banks will remain gold's key buyer as increased volatility in global markets and waning confidence in the U.S. dollar fuel a global drive to vary foreign reserves away from the U.S. currency and government debt securities.

The latest purchase was the third by the Korean central bank since June last year, when it started increasing its reserves after leaving them unchanged for more than a decade. In the last 13 months, South Korea's gold reserves have grown five-fold but remain only a fraction of China's over 1,000 tonnes and Japan 765 tonnes, according to the World Gold Council (WGC). Central banks bought 80.8 tonnes of gold in the first quarter, adding to 2011 purchase of more than 450 tonnes, the WGC said..."

at  http://ausbullion.blogspot.com/2012/08/south-korean-central-bank-adds-to-gold.html

Greyerz - The Risk Of Systemic Collapse Is Now Enormous

"Today Egon von Greyerz told King World News, “We’ve had Lehman, AIG, MF Global, PFG, the latest (trouble) is Knight Capital which lost $440 million overnight. This just shows that it’s not safe for investors to keep their money in the system.” Greyerz also spoke with KWN about some lofty targets for both gold and silver.

Greyerz, who is founder and managing partner at Matterhorn Asset Management out of Switzerland, also said, “We are being warned that we should not keep the main part of our money there (in the financial system) because the risk that you will be totally wiped out is massive.” 

Here is what Greyerz had to say: “Short-term let’s just look at some of the figures which have come out. US unemployment was 8.3%, and Nonfarm Payrolls went up by 163,000. Well, first of all we know that 8.3% is not a real figure. I said to you last time that every figure which comes out is false and this figure was incorrect.”

Egon von Greyerz continues:

“The real unemployment is 23%. The Nonfarm Payroll going up by 163,000, if you look at the seasonal adjustments and the birth/death model, those two adjustments were 429,000. So they added 429,000 out of nowhere, on paper. 

If you take those 429,000 off of the 163,000, instead of an increase, you get a 266,000 decline in payroll. So the figures are nonsense...."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/3_Greyerz_-_The_Risk_Of_Systemic_Collapse_Is_Now_Enormous.html

Analyst Presents A Terrifying Vision: THE DECLINE OF THE WEST

"Analysts across the world view the rise of China and the work ethic of developing nations as serious threats to the United States' and Europe's economic dominance.

Banking crises, failing educational standards, and rising unemployment are among the ills that Western economies face today, and many believe that we have not made significant progress to address these concerns.
Jon Moynihan, Executive Chairman of PA Consulting Group, dissects these problems, taking a deep dive into the stagnating western world in his presentation "The Continued Economic Decline of the West," which he delivered at the London School of Economics earlier this year.

Read his massive presentation for more on the troubles Western economies face—and how to fix them..."

at http://www.businessinsider.com/jon-moynihan-decline-of-the-west-2012-8?op=1#ixzz22W1RSWtO

Spain And Italy Are Toast Unless Germany Allows The ECB To Print Trillions Of Euros

"The financial chess game in Europe is still being played out, but in the end it is going to boil down to one very fundamental decision. Is Germany going to allow the ECB to print up trillions of euros and use those euros to buy up the sovereign debt of troubled eurozone members such as Spain and Italy or not? Nothing short of this is going to solve the problems in Europe. You can forget the ESM and the EFSF. Anyone that thinks they are going to solve the problems in Europe is someone that would also take a water pistol to fight a raging wildfire. No, the only thing that is going to keep Spain and Italy from collapsing under the weight of a mountain of debt is a financial nuke. The ECB needs to have the power to print up trillions of euros and use that money to buy up massive amounts of sovereign debt in order to guarantee that Spain and Italy will be able to borrow lots more money at very low interest rates. In fact, this is probably what European Central Bank President Mario Draghi has in mind when he says that he is going to "do whatever it takes to preserve the euro". However, there is one giant problem. The ECB is not going to be able to do this unless Germany allows them to. And after enduring the horror of hyperinflation under the Weimar Republic, Germany is not too keen on introducing trillions upon trillions of new euros into the European economy. If Germany allows the ECB to go down this path, Germany will end up experiencing tremendous inflation and the only benefit for Germany will be that the eurozone was kept together. That doesn't sound like a very good deal for Germany..."

at http://theeconomiccollapseblog.com/archives/spain-and-italy-are-toast-unless-germany-allows-the-ecb-to-print-trillions-of-euros