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Thoughts For The Day
1. A curtailment of bank trading department’s activities will not impair the price of gold as the gold banks are not on the long side.
You can forget that foolish rumor. It is more likely if any bnak regulation is passed that it will require short covering.
2. The propaganda that China will not buy IMF gold is back.
China already said the contrary but who listens to China when Reuters quotes some unknown as saying the opposite.
Jim Sinclair’s Commentary
There is no such thing as a Jobless Economic Recovery.
Unemployment rises in 30 states in January
By CHRISTOPHER S. RUGABER, AP Economics Writer –2 hrs 51 mins ago
WASHINGTON – Unemployment rose in 30 states in January, the Labor Department said Wednesday, evidence that jobs remain scarce in most regions of the country.
The data is somewhat better than December, when 43 states reported higher unemployment rates, but worse than November, when rates fell in most states.
Still, five states reported record-high joblessness in January: California, at 12.5 percent; South Carolina, 12.6 percent; Florida, 11.9 percent; North Carolina, 11.1 percent; and Georgia, 10.4 percent.
Michigan’s unemployment rate is still the nation’s highest, at 14.3 percent, followed by Nevada, with 13 percent and Rhode Island at 12.7 percent. South Carolina and California round out the top five.
There were some signs of job creation. Thirty-one states added jobs in January, up from only 11 in the previous month. But the job gains weren’t enough, in many cases, to lower theunemployment rate.
Jim Sinclair’s Commentary
The US dollar is not a safe haven.
Record monthly deficit for U.S.: $221 billion
By Annalyn Censky, staff reporterMarch 10, 2010: 4:19 PM ET
NEW YORK (CNNMoney.com) — The United States dropped a record $220.9 billion further into the red in February, the Treasury Department reported Wednesday.
The shortfall was up from the previous record $193.9 billion shortfall in February last year.
It’s the 17th straight month that the U.S. government has posted deficits. The last time the government posted a monthly surplus was in September 2008, when the government reduced the deficit by $45.7 billion.
The cumulative deficit for fiscal 2010, which started in October, reached $651.6 billion, up from $589.8 billion in the same period the year before. The Obama administration is forecasting that the deficit will hit $1.56 trillion this year.
Receipts totaled $107.5 billion, up from $87 billion in February last year and outlays totaled $328.4 billion, up from $281 billion.
Despite the government’s record losses, the year-over-year boost in revenue during February is at least one hopeful sign that the economy is faring better, said Robert Bixby, executive director for the Concord Coalition, a federal budget watchdog group. It was the first time since April 2008 that the government posted higher revenue when comparing monthly data year-over-year.
Jim Sinclair’s Commentary
QE to infinity or the Fed is history.
Jobless claims bill OK’d by Senate
By Tami Luhby, senior writer March 10, 2010: 3:17 PM ET
NEW YORK (CNNMoney.com) — The Senate on Wednesday approved a wide-ranging bill that would push back the deadline to file for extended unemployment insurance until year-end and extends dozens of expired tax breaks.
The bill, passed by a 62-36 vote, is the latest job creation effort to go before lawmakers, though it contains virtually no new initiatives. Its price tag has wavered between $140 billion and $150 billion, which is partially offset. Its next stop is the House.
Lawmakers have come under pressure from both the White House and unemployed Americans to do more to spur hiring. But after many speeches, officials have enacted little to help the nearly 15 million looking for work.
The latest efforts — which include a $15 billion job creation effort that the Senate will take up next — have come under fire from both sides. Some say that more must be done to boost employment. Others, particularly Congressional Republicans, have voiced concerned about adding to the deficit.
While the House passed a comprehensive $154 billion job creation bill in December, the Senate has opted to address the unemployment issue with a series of smaller measures. Senate Majority Leader Harry Reid, D-Nev., has said he will soon unveil additional efforts, including those aimed at small businesses.
The bill passed Wednesday would push back the deadline to file for extended jobless benefits and the federal subsidy for COBRA health insurance until Dec. 31.
Jim Sinclair’s Commentary
There is no such thing as a Jobless Recovery outside of economic propaganda.
No bottom yet
Big revenue source down 12th straight month
By BRIAN BARBER World Staff Writer
Published: 3/9/2010 2:23 AM
Last Modified: 3/9/2010 10:15 AM
Tulsa’s sales-tax revenue this month dropped 11.6 percent or about $2 million from March 2009, capping off 12 straight months of negative numbers.
That’s actually $122,000 above the revised budget projections for the month, Finance Director Mike Kier said.
Considering the city’s use taxes — those levied when products are bought from another state — were below estimate by $332,000, there’s still less money going out of than into the general operating fund.
But at this point, no additional cuts are planned, Kier said.
"We are going to hold for the moment," he said. "I think succeeding months are becoming more important, not just for the rest of this fiscal year (which ends June 30), but for expectations for next year."
April’s sales-tax check will be particularly telling because it was April 2009 when the city’s downward spiral began, Kier said.
Jim Sinclair’s Commentary
The only improvement in the financial industry is FASB’s permission to lie and TARP.
We have been saying this for quite some time yet just now you are reading it in the New York Times.
Ailing Banks May Require More Aid to Keep Solvent
By STEVE LOHR
Published: February 12, 2009
Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking.
A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.
None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.
But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.
The Treasury program leans heavily on a sketchy public-private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts say, the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.
Jim Sinclair’s Commentary
I do not consider economic statistic developed by the survey method to be indicative of anything. They do however influence transactions and expectations of the glib.
There is no such thing as a Jobless Economic Recovery in a consumption driven Western world.
Consumer Confidence Lowest Since March 2009: IBD
March 9, 2010
NEW YORK (Reuters) – U.S. consumer confidence fell in March to its lowest level in a year, as high unemployment and the ways in which the government is using taxpayer money draw mounting apprehension in households, a research group said on Tuesday.
Investor’s Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index slipped to 45.4 in March from February’s reading of 46.8.
It was the lowest level the gauge has hit since March 2009. Readings above 50 indicate optimism, while those below 50 point to pessimism.
"Confidence has been hurt by continued job declines and concerns about the economy’s lack of vigor," said Terry Jones, associate editor of Investor’s Business Daily.
"Despite the spending of trillions of dollars of taxpayer money on stimulus and ‘too-big-to-fail’ bailouts, the economy doesn’t appear to have entered into anything resembling a self-sustaining expansion," Jones said, adding that persistent attempts to pass a "wildly unpopular" health care bill has added to Americans’ apprehensions.
Small business spirits downcast in February
Tue Mar 9, 2010 10:49am EST
(Reuters) – Optimism among the country’s small businesses slipped in February as entrepreneurs worried about repeatedly weak sales, the National Federation of Independent Business said in a survey released on Tuesday.
Small Business
The NFIB said its monthly small business optimism index dropped 1.3 points to 88.0 in February from January with the index below 90 for 17 straight months, and below 90 in all but four months since January 2008.
"Credit access is not a major factor holding up economic growth, at least the kind of growth we want," said William Dunkelberg, chief economist for NFIB.
The survey showed 34 percent of the small business owners said weak sales are their top business problem.
"Owners will borrow when expectations that sales will rise and generate new revenue to pay for investments and new hires become positive," Dunkelberg said.
Small business owners continued to liquidate inventories and weak sales trends gave little reason to order new stocks.
Jim Sinclair’s Commentary
There are two considerations here:
1. Wall Street owns Washington and derivatives are their main source of income. That makes it doubtful that meaningful changes will occur.
2. The argument will be that they did not play the euro short via CDS pressure on debt. They are correct. They played the debt itself short.
CFTC Chairman Gensler urges end to derivatives secrecy
By Aline van Duyn
Financial Times, London
Wednesday, March 10, 2010
A leading US financial regulator on Tuesday called for the prices of derivatives trades to be disclosed in the same way as stock prices, saying only large Wall Street banks benefited from the current lack of transparency.
Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), said standard credit default swaps and other privately traded over-the-counter derivatives needed drastic reform, reflecting their role in the financial crisis.
His call came as European leaders including Angela Merkel, German chancellor, called for a clampdown on speculative trading in sovereign credit default swaps, which offer investors protection against a government default.
"The only parties that benefit from a lack of transparency are Wall Street dealers," Mr Gensler told a New York derivatives conference. "Right now we have a dealer-dominated world, and that nearly drove us off a cliff."
Mr Gensler, a former Goldman Sachs executive, said: "To promote public transparency, standard over-the-counter derivatives should be traded on exchanges or other trading platforms." He also called for explicit regulation of derivatives dealers and the use of clearing for standard OTC derivatives.
Jim Sinclair’s Commentary
The US dollar is not a safe haven. Stay the course!
Foreign versions of our coming crisis
Greece and the United Kingdom are suffering a dire funding problem that is headed for US shores.
By Bill Fleckenstein
Regrettably, these days it seems that ferreting out the right investment decisions is sort of all macro, all the time. The top-down economic overview is far more important, I think, than the bottom-up fundamental view of any company or stock.
Important pieces to that macro jigsaw puzzle are Greece and the United Kingdom, as the U.S. is headed for a variation of the funding crisis, though how severe ours will be remains to be seen. Without a money-printing press — because it uses the euro, not a currency of its own — Greece is forced to consider austerity measures to deal with its debt woes. The U.K., on the other hand, is not as bad off as Greece, and it does have a press.
For America: A Greco-Anglo scenario?
A crisis of confidence has invaded Greek and U.K. shores, and we can all learn a bit about what our future might look like as we watch developments there. (The U.K. may be the most useful example for us, since we also have a printing press.)
We will soon find out whether Bank of England Gov. Mervyn King will extend quantitative easing and, if he does, how the bond market will respond to a renewed effort to pump money directly into that economy. (The pound is already under a good deal of downward pressure.)
I would say that the U.K.’s funding crisis — to use my ballgame analogy — is probably in the third inning or so, even if we are still taking batting practice over here. (Read "Economy sinks as we save bankers" and "The next crisis has already begun" to brush up on that analogy.)
Jim Sinclair’s Commentary
Wall Street owns Washington, making the advent of serious and effective new regulations questionable.
Financial reform tips toward bankers
So far in congressional debate, it’s lenders 1, consumers 0
updated 8:42 a.m. MT, Tues., March. 9, 2010
WASHINGTON – As Congress this week inches toward a new set of rules to avert another global financial collapse, it is focused on two conflicting goals: reforming the banking system to protect consumers while still giving lenders the freedom to take risks.
So far the score looks like: Bankers 1, Consumers 0.
More than a year after a wave of risky mortgage bets brought Wall Street to its knees, banks and other financial institutions are still playing by the same rules that got them into the mess.
Reforming the sprawling financial regulatory system ― a patchwork of federal agencies and state commissions ― is a tall task under the best of circumstances. It’s even tougher with Congress already polarized over the health care debate, an economy on a wobbly path to recovery, banks facing a wave of foreclosures and households licking their wounds from $7 trillion in lost home equity and near double-digit unemployment.
Proponents of comprehensive regulatory reform hope for sweeping measures to protect consumers from predatory lending, rein in high-stakes Wall Street trading in arcane derivatives, boost capital requirements for banks that want to bet big with depositors’ money and spread some regulatory sunshine on the dark pools of the “shadow banking system” that caught regulators flat-footed when the market spiraled into the abyss in the fall of 2008.
“We cannot afford to let the status quo continue,” Sheila Bair, head of the Federal Deposit Insurance Corp., told a meeting of business economists in Washington.
Jim Sinclair’s Commentary
Effectively this means nothing. As long as the CDS market is anywhere in the universe and is quoted daily by F-TV as the ultimate common denominator of a sovereign debt it will impact that sovereign debt.
Wall Street will retain North Korea to launch a rocket to the moon and make the market from there if they have to.
Unless the CDS OTC derivative is made a capital crime in every country on the planet, it cannot be stopped.
Europe eyes ban on CDS contracts used against Greece
Europe’s leaders have launched a concerted attack on financial speculation, blaming the crisis in Greece on the use of debt derivatives by hedge funds.
By Ambrose Evans-Pritchard
Published: 6:00AM GMT 10 Mar 2010
German Chancellor Angela Merkel called on Washington to back proposals for a restrictions on credit default swaps used to target countries in trouble. "The US needs to make a gesture. We believe that the persistent speculation against the eurozone countries must be dealt with as soon as possible," she said.
Jose Manuel Barroso, the European Commission’s chief, said Brussels is examining a ban on "purely speculative naked sales" of CDS contracts where traders do not own the underlying collateral.
There is clearly a joint move across the EMU-system to rein in hedge funds. France’s Nicolas Sarkozy has been working with Eurogroup chair Jean-Claude Juncker to craft a joint assault on derivatives. Greek premier George Papandreous said in Washington that "unprincipled speculators" had brought his country to its knees, adding that he intended to lobby President Barack Obama for help in taming Wall Street.
Whether CDS swaps make much difference is questionable. The contracts are traded between banks or funds. They have little impact on the underlying debt, except to create mood music in the markets.
What matters is whether long investors continue to buy Greek bonds at tolerable prices, given the parlous state of Greek finances and debt compound risks. If they stay away, this will show up quickly in bond spreads, replacing CDS as a barometer.
Jim Sinclair’s Commentary
The West debt-wise is imploding, and only gold is a currency with no liability attached to it.
All week EU states will be bailed out. All weak US states will be bailed out.
Only gold will bail you out.
Fitch Ratings warns UK about debt
March 10th, 2010
Author: Jeff Taylor
According to the Ambrose Evans-Pritchard in Times, the head of Fitch Ratings, Brian Coulton, has branded the British government’s response to its growing public debt as “pedestrian”. He said that Britain has “the most rapid rise in the ratio of public debt to GDP of any AAA-rated country” and that a clear plan of austerity is needed for us to maintain world-wide confidence.
This after hugely disappointing trade deficit figures and the pound sliding below $1.50.
With other nations biting the bullet with clear plans to cut deficits the danger is that the UK’s mountainous debt will soon overshadow every other countries’ with the clear risk that our AAA rating may be affected.
According to Fitch, the UK seems to be relying on a Korean model of recovery by hoping that increased output and tax revenues will eventually fill the gap. Fitch believes this to be optimistic and believe that Britain is more likely to be heading for a Japanese style ‘lost decade’ unless we change course soon.
Fitch also believes that, although Greece was in bad shape and not out of the woods yet, the danger of the Greek problem spreading around the globe has been overhyped. Whereas the dire position that Italy is in has been understated.
Jim Sinclair’s Commentary
My experience tells me that the following says any Chinese bank and its banker that deals in an OTC derivative has not getting paid as the least of his worries.
Executive Pay at Chinese Banks to be Tied to Risk Management Performance
By Cheng Zhiyun
Published: 2010-03-10
Chinese bankers may find it a little harder to earn annual bonuses running into the millions of yuan at the end of this year, as, according to a source working in one of China’s commercial banks, the China Banking Regulatory Commission (CBRC) is currently considering a plan that will link executive pay to a banker’s ability to handle long-term risk management.
Under the proposed plan, the CBRC may even require banks to cancel any bonus payments made to executives that are later found to have engaged in business that exposed the bank to excessive risk.
Jim Sinclair’s Commentary
Greece presents its case for the banning of the CDS market, and gets the following answer in Washington:
"The U.S. made clear it doesn’t believe Greece’s primary budget problems stem from market speculators."
That sounds like a rebuke of a request to ban the CDS market.
Greek PM meets with White House on debt reduction.
Greek Prime Minister George Papandreou met with Obama yesterday to discuss a European proposal to crack down on speculative trading (see details below) and to outline the steps his country will take to reduce its debt. Papandreou said he didn’t ask the U.S. for financial help, which is good because the White House says Greece’s problems "can and should" be resolved by the EU. The idea of curbing financial speculation will be discussed at the next G-20 meeting, though the U.S. made clear it doesn’t believe Greece’s primary budget problems stem from market speculators.
EU discusses ban on speculative trading.
The European Commission may ban "purely speculative naked sales on credit default swaps of sovereign debt," and will ask for a similar move globally at the G-20 meeting in June. European officials are pushing the U.S. to join in the crackdown on speculators, with Germany’s Merkel saying "quick action is needed" and the U.S. should "make a gesture" to curb the trades in question. Though he didn’t go so far as to recommend a ban, Commodity Futures Trading Commission Chairman Gary Gensler said in a speech yesterday that there should be new limits on credit-default swaps.
The Alex Jones Show – ARCHIVE – March 10th With Dick Russell
Alex welcomes to the show Dick Russell who co-authored Jesse Ventura’s New York Times’ best-selling book Don’t Start the Revolution Without Me and Ventura’s latest book, American Conspiracies: Lies, Lies, and More Dirty Lies that the Government Tells Us, available at the Infowars Store. Russell’s previous book is Eye of the Whale, which was named among the Best Books of 2001 by the Los Angeles Times, the Washington Post, and the St. Louis Post-Dispatch. Alex also talks with film producer and author G. Edward Griffin.
Watch the video archive and access the high quality MP3 by logging in at Prison Planet.tv and clicking on the “LIVE” page.
MEDIUM QUALITY FREE MP3 FILE: http://rss.nfowars.net/20100310_Wed_Alex.mp3
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SS Trust Fund 1st Q 2010 Results - Still Slipping
The Social Security Trust Fund is able to make accurate estimates on
the major components of its monthly cash flows. Therefore the first
quarter operating results for the Fund are in. Only the payroll taxes
and benefits paid numbers are currently available for January, February
and March of 2010. The raw numbers show clear acceleration of the
deterioration in the Funds dynamics. They also give us some insights
into the employment situation in the country. The conclusions are not
good.
This chart summarizes the payroll tax (both FICA and SECA) receipt numbers for 09 and 10.
The 1st Q 2010 YoY top line for the Fund is down by 6%. A very
significant drop. There are 160mm workers that contribute to SS. The
simple math would suggest that there are 9.3mm workers that are no
longer contributing to the system (or are contributing at a much lower
rate). The BLS NFP report, which looks at a different set of numbers
for employment, suggests that the drop in payrolls is only 2.5mm during
the same period. This is not an apples to apples comparison, however, I
have looked at this from every which way and it is my conclusion that
the BLS numbers have to be significantly understating the loss in jobs.
The payroll tax receipt numbers can’t be that badly skewed. They are
hard numbers.
There is no good new for the Fund on the expense side either. While
there has been variations on a month to month basis, the trend line for
benefits is northward at a 5% compounded growth rate. And that percent
number has nowhere to go but up as the boomers get checks. The
following chart looks at the growth in benefits over the past ten
years.
The actual results for the Fund are not available. The reporting for
interest income, income tax receipts (outside of FICA and SECA), the
operating expenses and the costs of the Railroad Retirement are not
available. In 2009 these numbers were +$118b, +$20b, -$6b and -$4b
respectively. It is unlikely that these numbers will vary too much in
2010.
Based on the assumption that these other numbers will remain static and
that payroll receipts will stabilize to the 2009 numbers for the
remainder of the year the following forecasts of the full calendar year
can be made:
The Fund uses the ratio of total tax receipts to benefits paid as its soundness measurement. Based on the 1st Q results it would appear likely that the full year results of this ratio will be negative $20b ($700b-680b). Should that happen, it would be the first time in the Fund’s history. The Trustees of the Fund have suggested that this significant milestone will not occur until 2017. This party seems to be starting six years early than was planned.
When I look at the Fund I look at cash flow. All of the experts on this
topic say that is a dumb way to look at it. Annual cash flow is
meaningless when you are looking at something that has $2.5T in assets
and will, under the very worst of conditions, be able to pay the bills
for 15 years or so. I disagree. It’s all well and good to ignore cash
flow when cash flow is positive. But when it goes negative it is the
first gentle step that leads to a very slippery and steep slope.
Interest income for the Fund is a non-cash item. They get credit for
more paper. There is something about this process of automatic money
creation that bothers me. I believe the Fund must ponder this question
as well. In their reports they publish on a monthly basis their net
cash position. The following is their annual summary for 2009. Note
that the net cash flow is a positive $3b.
The
following is a graph of the annual net cash flow of the Fund. You can
see that the surplus is crashing. Based on the 1st Q 2010 results we
will be in the red for the full year. This problem could make health
care look like a walk in the park by comparison.
How a 22-year-old student uncovered peak oil fraud
When will we reach the peak of global oil production? Its a question of crucial importance as governments around the world prepare for a world of declining oil resources, in which we will be much more reliant on alternative sources of energy.
The body on which the UK and others rely heavily to make that assessment is the International Energy Agency (IEA) based in Paris and set up in the aftermath of the oil crisis between 1973 and 1974.
Another Record: Treasury-Mortgage Spread Just Took Out 60 bps Support
The 10 Year Treasury To Mortgage spread just broke the 60 bps barrier, and is now trading at a record tight 59.61 bps, after dropping as low as 58 bps earlier. Is the Fed now launching a short squeeze in MBS as well? Pretty soon Mortgages will be trading at negative rates, when the Fed realizes that the only way to get house prices higher is to pay Americans to take out a mortgage.
As Budget Deficit Hits Record High, Interest On US Public Debt Hits Record Low
What is wrong with this picture: the MTS just announced that the February budget deficit was $220.9 billion, after receipts of just $107.5 billion with vastly surpassed by outlays of $328.4 billion. This is a record. Yet the interest on the public debt was a mere $16.9 billion (page 13 of the MTS report). The reason for this is because as TreasuryDirect points out, in February the interest on public marketable debt (actual cash outlays), which as of Monday stood at $8.061 trillion, hit an all time low of 2.548%. How is it possible that unprecedented debt accumulation can result in ever declining interest rates, and Treasury auctions, such as today's 10 Year reopening, in which the Bid To Cover hit an all time high? One answer: The Federal Reserve, which through complete domination of the entire capital market courtesy of ZIRP and QE has now turned market logic upside down by 180 degrees. In a normal world, the more money you borrow, the greater the associated risk, and the greater the interest payments on this debt. Not in America though. So can we assume that the Fed can forever keep rates on debt at record low levels? No. Which begs the question: what happens when interest rates do finally start going up?
Here is the relevant page highlighting the deficit. In a word: the US collects enough money organically (via taxes) to cover less than a third of its outlays.
A look at the distribution of receipt components should lead to questions about the sanity of anyone who claims that the budget trajectory is sustainable - in a word, tax revenues are plunging. Of course, this has to be evaluated in parallel with the observation that tax refunds in January and February of 2010 have actually surpassed those of 2009 as Zero Hedge discussed previously, explaining why consumers have shown abnormal resilience so far in 2010.
So even as the income side of the Federal ledger has rarely if ever been quite as bad, the expenditure side has exploded, and not as a function of debt funding: the bulk of outlays have to do with entitlement programs which came in over $160 billion, and which still could not have been covered organically.
Here is where debt comes in. We know that recently the debt ceiling was raised to $14.3 trillion which is expected to be hit in less than a year. Observant readers will recall that the previous ceiling of $12.4 trillion was supposed to last the US until the end of March - well, not only was this number passed over a week ago, it is now, less than half way into March at $12.5 trillion, which would have broken the debt ceiling far in advance of expectations. This leads us to believe that the $14.3 trillion ceiling will likely have to be raised once again and at a very critical time for the administration: around mid-term election time.
Yet if one were looking just at the interest rate paid by the government on the marketable debt portion of the public debt (which was $8.06 trillion as of most recently), it would appear that America's economy was cranking on all cylinders. Of course, this is not the case, and the rate is merely an indication of the Fed's direct intervention in all possible markets.
The chart below shows the absolute level of the interest on marketable debt, and the MoM % change. In February the rate came in at a record low 2.548%, a 1.8% decline from the 2.595% in March.
To be sure, this is expected with the Fed running a Zero Interest Rate Policy, and QE adding direct purchases by the Fed.
Yet what is notable is that even with the effective Fed Funds rate at zero for over a year, the rate on marketable debt has bottomed out, and the spread from FF to the Interest Rate has held constant at about 2.5%.
The primary reason for this is the duration distribution of US debt. The short-term portion has already reaped the benefits of issuance at or near 0%, while the longer-dated side of the curve is keeping rates higher. If indeed the Treasury is serious about extending the average maturity on public debt from 4 to 6 years, the new baseline for this spread will eventually be at about 3%, where it was earlier in the decade.
Yet the logical next question is what happens when rates start going up? It was as recently as September 2007 that we had a interest rate on marketable debt of nearly 5%. The plunge to 2.5% took just over a year. Even the mere mention of actual tightening will spring rates right back to 5%. What does that mean for actual outlays. Well: if indeed we are correct that total debt will hit $14.3 trillion in less than a year, it means the marketable debt will be about $10 trillion, and the incremental 250 bps of interest will mean about $250 billion of additional interest outlays a year, or half a trillion annually. That comes to about $42 billion a month. In January this amount would have been double the net withheld income taxes.
It becomes obvious why the Fed simply can not allow rates to go up. It has nothing to do with excess liquidity, which of course is a major concern as America goes from one excess-liquidity bubble to another. The problem is that the surging budget, which will need ridiculous amounts of debt for funding, will truly explode if rates were to go up merely to 5%. What happens if rates hit 7.5%... or 10%? At that point it is game over. And that sad ending will occur once the Fed and the administration realize that all ongoing efforts to kick start a consumption driven economy will fail. In the meantime, the economy will slowly grind to a halt as the servicing of public debt takes over a greater and greater portion of all tax receipts, until all taxpayer money is used merely to cover the interest expense. At that point buying CDS on the US denominated in euros, dollars, gold, .556, watermelons, or what have you, will be completely pointless as the bankruptcy of the US will be entirely priced in.
Hand to Hand Combat in the Options Pits
Things are really starting to get wild. CNBC should just eliminate the NYSE trading floor shots and replace them with battle scenes from "Hamburger Hill" or some of the medieval battles in "Lord of the Rings". Basically, everyone is out for blood today as panicked put and call holders are getting barbecued with Goldman's flamethrowers or getting bludgeoned to death by spiked clubs.
The games started on the open with moonshot moves in RF, ZION, STI, etc. as panicked short sellers ran for the hills.
Then the "Oil Glut" report came out, and once USO spiked up, everyone started dryhumping OIH, XLE, GDX, etc. But then came a sudden collapse in gold and oil, and immediately any and all commodity, emerging market, infrastructure stocks were sold with the utmost urgency.
That sent stocks down and the robots immediately started playing the "failed double top" play by shorting aggressively for the "net big leg down".
But unfortunately, the massive bout of selling intraday left most REITs, retailers and banks completely unfazed.
And as the QQQQ's blew out to new highs led by the BRCM meatball, everyone looked around and started second guessing the idea of shorting.
Just the same old battlefield tactics for Options Expiration.
Any stock that was heavily shorted was skying non-stop. Examples like SWN, FSLR.
Of course, banks, mortgage insurers, retailers, etc. were unfazed through it all. Check out the non-stop meltup in Wells Fargo:
And any stock with upside momentum that looked like it was going to break out was shanked. Pick any gold stock today. Completely smoked.
"Hard Asset" plays got bombed, despite the repeated, tiring, clarion calls of:
"This Is It!!"
"It is Now!!"
"OTC Derivatives are going to kill us all!!"
"Gotta be in it to win it!"
"It's up to $1,650, and then to Alf's numbers!"
Who the heck is Alf anyway? The one from Sesame Street?
LOL...
Anyway, just more of the same with all sorts of junk being bought today. Like Furniture Brands hitting new, 52-week highs..
Who is going to stop the consumer?
Funny how Goldman's efforts to squeeze out shorts in consumer and finance stocks and blow away call buyers on "Gloom and Doom" sectors creates a self-perpetuating, self-fufilling momentum on its own.
How else can the retail sector be performing so well with consumer confidence waffling around world record lows?
Today's intraday chart on the OIH pretty much sums up the absurd stop-running action today....
Watching these intraday charts during Options Expiration, I feel like I'm watching The Outer Limits....
Party Boy Roubini Worries About Double Dip
From The Daily Capitalist
My favorite party boy economist, Nouriel Roubini, just came out with his analysis for the second half and he notes that we may be heading toward a double-dip recession. Too much negative news, he frets. I have been saying this for some time. The difference between me and Roubini is that he believes in the necessity and efficacy of fiscal and monetary stimulus whereas I don't. He went to Mises University but, apparently, only took Austrian Econ 101, not 201.
Here is his research note:
V, U and W
A slew of poor economic data over the past two weeks suggests that the U.S. economy is headed for a U-shaped recovery—at best—in 2010. The macro news, including data on consumer confidence, home sales, construction and employment, actually suggests a significant downside risk even to the anemic levels of growth which RGE forecast for H1. The U.S. faces continued challenges in H2—particularly as historic levels of fiscal stimulus fade—and appears far too close to the tipping point of a double-dip recession.
This is not the conventional wisdom. Heated debate continues to rage in the United States on whether the economic recovery will be V-shaped (with a rapid return to robust growth above potential), U-shaped (slow anemic, sub-par, below trend growth for at least the next two years) or W-shaped (a double-dip recession). The V camp includes distinguished research groups and individuals such as Ed Hyman’s ISI, Larry Meyer’s Macroeconomic Advisors, the research group of JP Morgan, Michael Mussa and others. The U camp includes—among others—Roubini Global Economics, Goldman Sachs’ U.S. economic research group, PIMCO and Ken Rogoff. As early as August 2009, I worried in a Financial Times op-ed about the risk of a double-dip recession even if our RGE benchmark scenario characterizes the risk of a W as still a low probability event (20% probability) as opposed to a 60% probability for a U-shaped recovery. Others concerned about the double-dip risk include also David Rosenberg, Gary Shilling and John Makin.
Ed Hyman and I debated whether the recovery would be U or V-shaped on a February 22 conference call attended by over 2,200 listeners. Since that call, a slew of new U.S. macro data have come out. They have been almost uniformly poor, if not outright awful. Consumer confidence, based on the Michigan survey, has tanked. On the real estate front, new home sales are collapsing again, existing home sales are also falling sharply, and construction activity (both residential and commercial) is sharply down. Durable goods orders are down, initial claims for unemployment benefits remain stubbornly high (way above the 400K mark). Real disposable income for Q4 has been revised downward while real disposable income (before transfers) for January was negative again. The manufacturing ISM index—while still expanding being above 50—has now fallen a couple of notches and its production and new orders index levels are falling, too; and global PMIs suggest a loss of momentum in the global economic recovery. Real inventories look unchanged in Q1 relative to Q4; auto sales were at best mediocre; core CPI was falling and core PCE was close to 0%, suggesting anemic demand and economic weakness. Q4 GDP growth was revised upward to 5.9% but most of it (3.9%) was due to inventories; final sales grew at a 1.9% rate while consumption grew at a dismal 1.7% (down from 2.8% in Q3). Q3 growth has been revised from an initial 3.5% to 2.8% to 2.2%, with final sales growing only 1.7%. So, at the time of maximum policy stimulus (H2 of 2009), final sales were growing only at a pathetic 1.8% average rate.
The eurozone (EZ) debt crisis, which RGE discusses in depth in a major new paper, predisposes Europe to a rising double-dip risk, due to the wave of fiscal austerity sweeping the periphery of the EZ. Even if the EZ doesn’t enter a double dip, the growth of domestic demand there will be as or more constrained than in the United States. This, in turn, will be a drag on the potential for U.S. export growth. The U.S. dollar rally on risk aversion reflects this risk. The U.S. dollar is settling back down and the threat of a debt crisis is headed off by a stronger Greek fiscal adjustment and potential adjustment package. But fiscal spending cuts, confidence hits and the looming threat of either rising unemployment or falling wages in the public sector—on top of private sector retrenchment—will remain. A similar retrenchment may well lie ahead in the United Kingdom, given rising fiscal sustainability concerns and the threat of a sterling crisis. Europe then will have great difficulty being a source of demand for U.S. exports, and may even provide impetus to faltering global demand growth, contributing to the threat of a wider double dip across high-income countries.
Goldman, GETCO & Ken Griffin Tighten their Vulcan Death Grip on Gold Futures
GATA must be gulping hard as Goldman, GETCO, Citadel, MS, UBS & DRW announce the purchase of minority stakes in NYSE Liffe U.S., which administers 100 oz. gold futures, 5,000 oz. silver futures, options on gold and silver futures, and mini-sized 33.2 oz. gold and 1,000 oz. silver futures. The long-suspected ringleader of silver futures short-sided shenanigans, JPM, was conspicuously absent from today's NYSE press release.
NYSE Liffe U.S. Completes Sale of Ownership Stake to Leading Market Participants
-Reinforces Commitment to Competition, Innovation and Customer Service-
-Semi-Mutualized Exchange Structure Now with Six Partners in Total-
New
York, March 10, 2009 – NYSE Euronext (NYX) today announced that it sold
a significant minority ownership stake in its U.S. futures exchange,
NYSE Liffe U.S., to six leading firms and liquidity providers: Citadel
Securities, DRW Ventures LLC (an affiliate of DRW Trading Group),
GETCO, Goldman Sachs, Morgan Stanley, and UBS. NYSE Euronext will
continue to be the largest shareholder in NYSE Liffe U.S., managing the
exchange’s daily operations. NYSE Liffe U.S. will continue to operate
under the supervision of a separate Board of Directors, chaired by
James J. McNulty, former CEO of the Chicago Mercantile Exchange.
"With the completion of this transaction, NYSE Liffe U.S. is well
positioned to deliver innovation, competition and value to the U.S.
derivatives marketplace," said Duncan L. Niederauer, Chief Executive
Officer, NYSE Euronext. "We are committed to building a diverse,
customer-driven U.S. futures exchange, and are confident that
partnering with our clients is the right strategy for success."
"The NYSE Liffe U.S. partnership includes some of the most
sophisticated and forward-thinking participants in today’s global
markets," said Thomas F. Callahan, Chief Executive Officer, NYSE Liffe
U.S. "The addition of a world-class partner like DRW to this group will
only accelerate our efforts to deliver a vibrant, liquid U.S. futures
exchange."
"Citadel Securities is committed to innovation as a means to promote
open, fair and transparent markets. NYSE Euronext shares these
principles and we welcome the opportunity to become a founding partner
in this innovative new exchange," said Patrik Edsparr, Global CEO of
Citadel Securities.
Don Wilson, Founder and CEO of DRW Trading Group added, "DRW’s
partnership with NYSE Liffe U.S. is an exciting opportunity to
influence the evolution of the futures industry in this time of
unprecedented regulatory change."
"GETCO has a long-standing tradition of supporting competition and
efficiency across the spectrum of global capital markets. We look
forward to working with NYSE Euronext to build a world class U.S.
futures exchange," said Dave Babulak, Managing Director of GETCO.
Reinhardt Olsen, North American Head of Exchange Traded Derivatives of
UBS said, "In closing this agreement with NYSE Euronext, UBS clearly
shows our dedication to expanding our leadership presence in the listed
derivatives marketplace and our commitment to delivering more trading
options and better value to our customers."
NYSE Liffe U.S. is a fully electronic, liquid market for 100 oz. gold
futures, 5,000 oz. silver futures, options on gold and silver futures,
and mini-sized 33.2 oz. gold and 1,000 oz. silver futures as well as
equity index futures based on MSCI Emerging Markets, MSCI EAFE, and
MSCI USA indices. NYSE Liffe U.S. has plans to further expand into
futures on other asset classes, including U.S. interest rate products.
The Options Clearing Corporation (OCC) acts as clearing house for NYSE
Liffe U.S. futures on precious metals, MSCI index futures, as well as
all ETF options and index options trading on NYSE Arca, creating the
opportunity for unique margin efficiencies for NYSE Euronext customers.
NYSE Liffe U.S. intends to clear its U.S. interest rate futures at New
York Portfolio Clearing, its innovative joint venture with DTCC
designed to offer significant transparency and capital relief to major
market participants by offering ‘single pot’ margining of cash bonds
and interest rate derivatives, subject to regulatory approvals.
While NYSE Liffe U.S. will continue to operate under the supervision of a seperate BoD, chaired by James J. McNulty, GATA might wanna hire Det. Jimmy McNulty from The Wire to search for all the dead bodies hidden within the crooked gold and silver futures markets. Avon Barksdale, Marlo and Omar themselves would each be proud of this gold-cabal's ability to hide the monstrous carnage that lies in its wake; the remnant souls of fallen soldiers soil the soles of this cabal like broken vials beneath Bubbles' shoes. David Simon himself couldn't write a seedier script of flagrant fraud and regulatory remiss.
Gold Futures (GC) ~ Daily
Silver Futures (SI) ~ Daily
" This game is rigged, man "
" We fight on that lie "
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There, you can view a body of our analytic work as well as detailed explanations of the unique design development and technical methodologies within the proprietary technical indicator packages that we employ daily to perform a comprehensive technical analysis of financial instruments (stocks, options, ETFs, bonds, futures, FOREX, etc.) across interval periods of time, tick and volume.
World crude oil production may peak a decade earlier than some predict
Your Usual Table, Mr. Papagiorgio?
It would appear that European leaders are back at their usual table.
Speaking at the Bookings Institute before meeting with the US administration, Greek Prime Minister George Papandreou blamed “unprincipled speculators” and “ill-regulated” financial markets for pushing Greece to the brink of financial ruin and dragging down the euro. Along the way he convinced France’s Nicholas Sarkozy, that another financial crisis is around the corner if the CDS market is not curtailed. Sadly, we agree with the conclusion, but many European “leaders” are confusing cause and effect. Keith McCullough, at Hedgeye, explained it best yesterday when he said, “markets don’t lie; politicians do . . . hearing politicians talk about markets is like watching a southern belle try to ice fish.”
So let’s set the record straight. CDS trades are not the cause of Greece’s problems. Profligate government spending is the 800 pound gorilla jumping up and down in the center of the Parthenon. We wonder how Mr. Papandreou would respond if asked to imagine that the Greek public debt ratio was 50% instead of 135% and the Greek budget deficit was 5% or 6% (or even a surplus heaven forbid) rather than 12.8%. Would insurance against a Greek default cost north of 300 bps and would Greek government interest rates be trading at elevated levels and rising in this unfathomable scenario? We think not.
We’d like to briefly review our “principles” for the benefit of Greece’s PM. We are a small family office in North Carolina, entrusted with protecting family wealth and growing it prudently for future generations. We are also fortunate enough to do the same for a few other families that share the same objectives and same values. Believe it or not, when we lend (i.e. invest) our money to businesses – and governments – we expect to get it back (and occasionally earn a respectable return over time). We have a fiduciary obligation to look after the pool of capital entrusted to us and work hard to earn our investors a consistent rate of return. As Papandreou and Company go cup in hand on their global PR tour blaming “unprincipled speculators” for their own fiscal recklessness, we ask how many of these so-called, evil investment managers have been bailed out with tax-payer dollars during this Global Recession. And we’d encourage Mr. Papandreou to consider the following “principles” as Greek actions speak louder than words:
- As early as 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, hidden from public view because it was treated as a currency trade rather than a loan. This allowed Athens to meet Europe’s deficit rules while continuing to spend beyond its means.
- Greece entered the monetary union with bigger deficits than permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, the Greek government artificially reduced their deficits with derivatives. Ironic how the same politicians are blaming derivatives for the problems they created.
- Aeolos, a legal entity created in 2001, helped Greece reduce the debt on its balance sheet. As part of the deal, Greece got cash upfront in return for pledging future landing fees at the country’s airports. A similar deal in 2000 called Ariadne devoured the revenue that the government collected from its national lottery. Greece, however, classified those transactions as sales, not loans, despite doubts by many critics.
- Then in 2002, accounting disclosure was required for many entities like Aeolos and Ariadne that did not appear on nations’ balance sheets, prompting governments to restate such deals as loans rather than sales.
- After numerous downward budget revisions, the recently appointed “Committee on the Reliability Of Statistics” uncovered $40 billion of previously hidden debt. Per Zero Hedge, “the findings indicate that the possibility of political interference is mainly associated with the close relationship of NSS with the Ministry of Finance and the inability of the General Accounting Office to work independently and responsibly.”
George, George, George. We wonder exactly what is “principled” about levering-up your country’s balance sheet to 135% debt to GDP, with a 12.8% deficit and them blaming others for your problems? Take a look at the recent piece by GaveKal which clearly demonstrates that markets are, indeed, efficiently pricing the risk in government balance sheets. There is nothing speculative about it.
The reality is that, politicians having failed at the task, financial markets have now become the best ally of the Euro’s founding fathers. Indeed, since the beginning of the year, sovereign spreads have been nearly perfectly aligned with the level of fiscal constraint imposed by the Maastricht Treaty to each country of the Eurozone. In other words, the market is doing the job that policymakers could not tackle.
The fiscal data presented on the table above helps us to understand the current structure of bond yields in the Eurozone. Working with publicly available official data rather than with potentially opaque in-house assumptions, we obtain a very good fit (97% correlation) between actual bond yields and a small number of key variables. Thus, for all of the complaints about market manipulation, it seems that the hierarchy of spreads over German Bunds has followed, since the beginning of this year, a pretty rational walk. Actual debt levels and short-term pressure on government accounts have systematically explained more than 85% of yield spreads. When a liquidity risk premium is applied, the explaining power of our model rises to above 95%.
While visiting US President Barack Obama this week, Papandreou urged that “Europe and America must say ‘enough is enough’ to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system.” We can almost visualize those cynical speculators letting it all roll. Yet, we’d much rather invest for long-term returns, with a focus on capital preservation, than bet on the politicized strategy of piling debt, upon debt, upon debt. Believe it or not, it appears that White House officials sent George packing, recommending that Greece focus on righting its economy and dealing with its own debt problems. There is hope!
Fuel-injection System That Delivers 64 Miles Per Gallon
The fuel injection system was developed by a startup company Transonic Combustion and their goal is to increase fuel efficiency of existing gasoline engines. The cost for this ultra-efficient system would be as much as high-end fuel injection systems currently on the market today.
By heating and pressurizing gasoline before injecting it into the combustion chamber places it into a supercritical state that allows for very fast and clean combustion. This in turn decreases the amount of fuel needed to run the vehicle. The gasoline is also treated with a catalyst to further enhance combustion.
FED, BOE, ECB, BOJ, SNB, BOC: Who Will Blink First?
Submitted by Nic Lenoir of ICAP
The recovery has been uneven around the globe. The US with heavy stimulus has returned rapidly to positive growth (whether we can sustain it is a completely different debate), Swiss real estate was never really affected by the quasi worldwide slide and GDP in Switzerland is expected to be between 1% and 1.5% for 2010, and Canada has not only returned to positive growth but it also has to consider slowing down a bubbly real estate market. Meanwhile Europe's leading rebounder Germany is not guarantied to post positive GDP for Q1, Greece is wondering whether debt refinancing and what it will take will lead to civil war, Spain's industrial output is still approximately 30% off of what it was in late 2007, and Japan is discussing extending QE. The least we can say is that the bottoming process is rather uneven based on where you live, and with rates at near 0% everywhere or almost, we look at what relative value opportunities may present themselves as central banks debate how to transition from QE to more "normalized" liquidity environment and finally towards higher rates.
The Fed has constrained itself by stressing the 4 to 6 months meaning of "extended period of time". Some in fact view it as a moral hazard because it takes away some flexibility in the Fed's ability to respond to the data should it surprise significantly to the upside. As liquidity is starting to be withdrawn the need for the language and the constraints that come with it are starting to balance each other. While we have not necessarily heard enough from the Fed to believe a change in the statement is coming up necessarily next week, should it happen the sell-off in reds and EDZ0 should be brutal. If this is not the case, I expect the Fed to be at least a lot more vocal in stressing liquidity withdrawal and give details about upcoming operations. The carry remains pretty steep (58bps rolling EDZ0 to EDH0) but policy risk to longs is starting to build up.
The BOC has historically rarely started hiking before the Fed. At the same time, the BAZ0/EDZ0 which was just under 20bps to start the year is now at 60bps. So if history repeats itself and the BOC waits for the Fed to draw first, the spread is probably a bit rich here. I am not sure whether the BOC has the luxury to wait for the Fed, but USDCAD in the lower end of the range between 1.02 and 1.03 is also certain to lead to caution as a strong CAD is not at the top of the BOC'c wishlist. So the Dec BED spread is slightly rich or at best fairly priced we feel.
The SNB has been at the center of many talks in the last few days and it is believed that in the current more risk prone environment the appreciation of the CHF against EUR and USD has been more controlled which may give Switzerland the room to maneuver it needed to consider hikes. Here again outright plays other than for June are carry-expensive and some worry that the overall poor environment in Europe will also make the SNB more hesitant. A relative value play could be to buy ESZ0/ESH1 as a spread against selling ERZ0/ERH1 as a spread. The liquidity normalization in Europe is keeping the Euribor curve relatively steep in the front-end, but at the same time hikes are completely out of the picture. Selling ERZ0/ERH1 rather than buying Euribors outright isolate the liquidity normalization risk while allowing to take a view on a stronger economic environment in Switzerland. (See ERES Z0H1 Chart)
The economic picture in Europe is so obviously bad that rates are completely out of the picture. The ECB is historically a solid year beinh the Fed anyways as the US economy enters faster in recession but also comes out of it a lot faster. However, if the carry to ERZ0 still seems attractive being north of 50bps, a lot of it stems from the expectation of liquidity normalization which would bring Eonia back in line with the 1% target rate. The fact that ERZ0/Z1 is in th mid 80s and EDZ0/Z1 above 140 is already factoring a more aggresive Fed. Still by historical standards more could easily be priced in. We looked at buying EDZ0/H1 against ERZ0/H1 and found that even tough the market could well price more, the box trades already +14bps, so it is a relatively consequent negative carry. Until policy starts physically changing, fighting carry can be a very expensive hobby, so we prefer the SNB/ECB play mentioned earlier when it comes to fading ECB hikes.
The Bank of England has a tough task ahead, but not as tough as fixing the budget gap is. England seems to have the will compared to other countries to balance the budget to avoid a refinancing crisis like what is happening in Greece (claims that the crisis is over today by the way or not only ludicrous but also moronic as there is a huge tranche of refinancing coming up in April and May, and only successful issuance will allow politicians to claim victory). As long as those issues aren't addressed, and the consequences of the austerity required on the economy are evaluated, an extension of QE could well be more likely than talks of hikes. This is why we view a relative value play between ED and short sterling as the best way to express the economic outperformance of North America over Europe. The chart shows that buying EDZ0/H1 against L Z0/H1 allows us to express the view without barely any carry, we would buy the spread around -2/-3 in order to play +10/+15. For those who prefer using options, this morning we priced that selling the EDZ0 99.50 calls to buy the L Z0 99.125 calls could be done receiving 3bps for the structure. If both markets sell-off a gain of 3bps is realized, and the only real downside scenario would be a case where the Fed is on hold through 2010 and the BOE hikes. We view this scenario as very unlikely.
The last central Bank we want to quickly mention is the Bank of Japan. Most market participants expect the BOJ to extend QE and continue to pump liquidity into the system in a desperate 20 year in the making attempt at creating inflation. Whether they succeed or not, it should undermine the vlaue of the JPY. As I have stressed out on many occasions I believe USDJPY is grossly mispriced. The trade is hard to keep on because of risk aversion flight to JPY which can be rather painful, but if one aligns market timing with fundamentals it is a good trade to play from the long side. Watch closely a break past the 91.50 and 92.80 resistances which would confirm an exit outside of the bearish channel and lead to a strong move upward.
Good luck trading,
Nic
Washington Post Omits Fact That Saddam’s Nuke Salesman Was Protected By U.S. Government
Whitewash fails to mention that deal to build nuclear bomb was offered by the Bush administration’s favorite peddler of weapons of mass destruction
Paul Joseph Watson
Prison Planet.com
Wednesday, March 10, 2010
The Washington Post has completely whitewashed new revelations concerning how close Saddam Hussein came to obtaining a nuclear bomb by failing to mention the fact that the provider, Khan Research Laboratories, was shielded from investigation by the U.S. government for decades.
“As troops massed on his border near the start of the Persian Gulf War, Iraqi President Saddam Hussein weighed the purchase of a $150 million nuclear “package” deal that included not only weapons designs but also production plants and foreign experts to supervise the building of a nuclear bomb, according to documents uncovered by a former U.N. weapons inspector,” reports the Post today.
“The offer, made in 1990 by an agent linked to disgraced Pakistani scientist Abdul Qadeer Khan, guaranteed Iraq a weapons-assembly line capable of producing nuclear warheads in as little as three years.”
However, the report completely fails to even mention the fact that Khan Research Laboratories, the source from which Saddam would have procured a nuclear bomb, was protected from investigation by the U.S. government since at least the mid-1970’s, as investigative journalist Greg Palast exposed in a 2001 BBC report.
In 2004, Dr. Abdul Qadeer Khan, the father of Pakistan’s atom bomb program, admitted sharing nuclear technology via a worldwide smuggling network that included facilities in Malaysia that manufactured key parts for centrifuges.
Khan’s collaborator B.S.A. Tahir ran a front company out of Dubai that shipped centrifuge components to North Korea.
Despite Dutch authorities being deeply suspicious of Khan’s activities as far back as 1975, the CIA prevented them from arresting him on two occasions.
“The man was followed for almost ten years and obviously he was a serious problem. But again I was told that the secret services could handle it more effectively,” former Dutch Prime Minister Ruud Lubbers said. “The Hague did not have the final say in the matter. Washington did.”
Lubbers stated that Khan was allowed to slip in and out of the Netherlands with the blessing of the CIA, eventually allowing him to become the “primary salesman of an extensive international network for the proliferation of nuclear technology and know-how,” according to George W. Bush himself, and sell nuclear secrets that allowed North Korea to build nuclear bombs.
(ARTICLE CONTINUES BELOW)
“Lubbers suspects that Washington allowed Khan’s activities because Pakistan was a key ally in the fight against the Soviets,” reports CFP. “At the time, the US government funded and armed mujahideen such as Osama bin Laden. They were trained by Pakistani intelligence to fight Soviet troops in Afghanistan. Anwar Iqbal, Washington correspondent for the Pakistani newspaper Dawn, told ISN Security Watch that Lubbers’ assertions may be correct. “This was part of a long-term foolish strategy. The US knew Pakistan was developing nuclear weapons but couldn’t care less because it was not going to be used against them. It was a deterrent against India and possibly the Soviets.”
In September 2005 it emerged that the Amsterdam court which sentenced Khan to four years imprisonment in 1983 had lost the legal files pertaining to the case. The court’s vice-president, Judge Anita Leeser, accused the CIA of stealing the files. “Something is not right, we just don’t lose things like that,” she told Dutch news show NOVA. “I find it bewildering that people lose files with a political goal, especially if it is on request of the CIA. It is unheard of.”
In 2005, Pakistani President Pervez Musharraf acknowledged that Khan had provided centrifuges and their designs to North Korea.
Having armed once branch of the “axis of evil,” it’s no surprise that Khan was also used in an attempt to arm Saddam Hussein with nuclear weapons, opening up another perfect justification for Iraq to subsequently be invaded and occupied by U.S. forces.
Although the 2003 invasion was sold on the lie that Saddam was hiding weapons of mass destruction which proved to be non-existent, it wasn’t for the want of trying, since efforts to arm Saddam with nuclear weapons via the Khan network were a mere continuation of the U.S. government’s program to provide Saddam with chemical and biological weapons, tools used to commit atrocities that were later cited by the U.S. as one of the primary reasons for the attack.
Of course, since the Washington Post is a mouthpiece for the new world order and the Bilderberg Group that owns it, in covering the Khan-Saddam connection writer Joby Warrick knows that his bosses wouldn’t be pleased if he actually gave you more than half the story, which is why his article amounts to nothing more than a misleading whitewash.
Hourly Action In Gold From Trader Dan
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
$21 Billion 10 Year Reopening Closes At 3.735%, Record High Bid To Cover And Direct Bid Ratio, Record Low Primary Dealer Hit Rate
- Yields 3.735% vs. WI of 3.744% as of 1 PM
- Allotted at high 70.94%
- Bid To Cover 3.45 is a new record, previous at 2.67, previous reopening at 3.00
- Indirects 35.1% vs. Avg. 42.01% (Prev. 28.85%), hit ratio on Indirects 51.5%
- Direct Bidders surge to a record 17.5%, hit ratio on Directs 43%
- Primary dealer hit ratio at record low 19.9%
Some Market News commentary discussing the expectations on the 10 year reopening in advance of the auction, which may explain the various records in today's auction.
Wednesday's $21.0 billion 10-year note reopening sale is expected to be sponsored by short covering as well as real and
fast money demand, as specific foreign accounts may be at bay due to the issue's reopening status or its timing ahead of the Japanese fiscal year end, sources said. Given the downtick in prices, the auction should, in theory, be supported by short covering. Dealer desks confirmed that a portion of both Tuesday and Wednesday's downtick is linked to this week's auction trio set up.
Daily Kos Founder Slams Kucinich For Not Capitulating On Government Run Health Care
“I’m going to hold people like Dennis Kucinich responsible for the 40,000 Americans that die each year from a lack of health care.”
Steve Watson
Prisonplanet.com
Wednesday, March 10th, 2010
The founder of the influential left leaning blog, The Daily Kos, has slammed Democratic Congressman Dennis Kucinich for sticking to his principles and refusing to tow the party line on government run health care.
Markos Moulitsas fiercely criticized the Ohio representative’s threat to vote against the health care reform bill, adding that Kucinich should be subject to a primary challenge as a result.
“God knows it’s taken us a long time to even get our toe in the door. … If somebody like Kucinich wants to block that, I find that completely reprehensible.” Moulitsas told MSNBC’s Countdown last night.
Earlier in the week, Kucinich had appeared on the same program, taking the opportunity to make it clear that he is willing to effectively kill the health care reform by voting against it, calling the bill a “bailout for private insurers”.
“This bill represents a giveaway to the insurance industry,” Kucinich said. “$70 billion dollars a year, and no guarantees of any control over premiums, forcing people to buy private insurance, five consecutive years of double-digit premium increases.”
Kucinich stated that even if it meant he had the deciding vote in the House, he would oppose the legislation.
“If that sounded like a no, you’re correct,” the Congressman told guest host Lawrence O’Donnell, describing the proposed reform as akin to “building on sand.”
Moulitsas of the Daily Kos called Kucinich’s stance “a very Ralph Nader-esque approach to politics”:
“Ralph Nader paved the way for eight years of George Bush,” Moulitsas stated. “I’m going to hold people like Dennis Kucinich responsible for the 40,000 Americans that die each year from a lack of health care.”
“I don’t think he gets a pass. I don’t care what his excuse is… He’s not elected to grandstand and to give us his ideal utopian society… He’s not representing the uninsured constituents in his district by pretending to take the high ground here.” Moulitsas added.
“What he is doing is undermining this reform,” he added. “He is making common cause with Republicans. And I think that is a perfect excuse and a rational one for a primary challenge.” the blogger said.
Moulitsas then personally attacked Kucinich, whom he has long sought to demonize in the eyes of his so called liberal readers, claiming “He used his 2004 run for president to score dates. Luckily, he’s married this time around so we’ll be spared that pathetic display of desperation.”
Watch the video:
Visit msnbc.com for breaking news, world news, and news about the economy
Presumably Moulitsas would like to see a bought and paid for corporate Democrat take Kucinich’s seat in the House, someone who has greased their way up the party pole and long left behind any principles or interest in what is best for the good of the American people, as opposed to the giant corporations running the health care industry.
It is no surprise to see Moulitsas or “Kos” as he is otherwise known, shilling for the controlled left once more. He is an admitted former intelligence operative who considers the CIA “a very liberal institution”.
Infowars writer Kurt Nimmo hit the nail on the head in a 2007 piece on Moulitsas, noting:
Moulitsas’ relationship with the CIA makes perfect sense, as Daily Kos appears to be yet another political front operation tasked with cracking the whip over “progressive” Democrats and marching them off to support the Bilderberger Queen Hillary Clinton and her probable running mate, Barack Obama, both on record as supporting the neocon plan to reduce the Muslim world to a smoldering wasteland, albeit with stylistic policy changes. It is no secret the CIA has long stage managed the controlled opposition and Moulitsas’ admitted relationship with the agency should be considered a coup de grâce, an effort designed to reduce the “progressive” Democrat opposition to the invasion and occupation of Iraq and the impending attack to be leveled against Iran as little more than an empty and absurd rhetorical slogan.
