"The American people will never knowingly adopt socialism. But under the name of 'liberalism' they will adopt every fragment of the socialist program until one day America will be a socialist nation without knowing how it happened... I no longer need to run as a Presidential candidate for the Socialist Party. The Democrat Party has adopted our platform. " - Norman Thomas, six-time U.S. presidential candidate for the Socialist Party, 1944.
Today’s News & Commentaries:
NEWS
GENERAL
Australian Finance Minister Says More Stimulus Needed
Australian Finance Minister Says More Stimulus Needed http://www.bloomberg.com/apps/news?pid=20601087&sid=a7yaAF022cas&pos=7 Comment: Global stimulus will continue. Stimulus will be the death of the Australian economy. Actions speak louder than words, and whenever you hear an Australian Politician being pro economic growth, you know from their actions in the past 2 1/2 years that they are lying.
2 men decapitated, 2 women killed on Mexico border http://news.yahoo.com/s/ap/20100109/ap_on_re_la_am_ca/lt_drug_war_mexico Comment: Whilst down south in Mexico...the drug war continues. Mexico has an outside chance of becoming a failed state...and this statement is not meant to be hyperbole...it is THAT serious! Just wait til the Canterell Oil field runs out of oil by 2012, maybe sooner, and Mexico has to import all of its petroleum products...It could get rather chaotic in Mexico by then.
Economist: U.S. needs to fix financial market, China needs to stimulate domestic demand http://news.xinhuanet.com/english/2010-01/03/content_12746947.htm Comment: The Chinese always tell it like it is. However, this "wish" of theirs may not be what "Mr. Market" wants. Trying to impose political wills onto markets never works in the long run, since it eventually leads to economic dispair via distortions & their concomitant fallouts. The current downturn is as a result of all the distortions placed on it over the past decades. How ridiculous is it to have an economic system based on counterfeiting & fraud? We are about to find out in the next 5 1/2 years...
2000-'10 has been Lost Decade for US economy--American government's official statistics http://www.itar-tass.com/eng/level2.html?NewsID=14695312&PageNum=0 Comment: It's healthy to look at the US from a non-US view, although one must take Russian views of the US with a grain of salt, these figures come straight out of the Washington Post.
Heavy snow brings Beijing to standstill http://news.yahoo.com/s/nm/20100103/ts_nm/us_china_weather Comment: Note to everybody: Natural phenomena rules over us. We do not rule over natural phenomena. All attempts to do so, are absurd. This not only includes the weather, but also other phenomena, such as markets, the economy, the tides, the currents, and other such natural phenomena.
IMF assess ways to raise money from banks http://news.yahoo.com/s/ap/20091002/ap_on_bi_ge/world_economy_imf_taxing_banks Comment: As if the IMF can wring its hands of any responsibility with regards to global "systemic risk" caused by governments, central banks & their agents such as the NY Money Centre Banks, those in the City of London & Western Europe? We suppose it is naive, to expect the hubris of the "New World Central Bank" to diminish, in the face of its disastrous polices and forecasts for the past 60 years. This is a farcical & phatasmagorical statement from the IMF. Perhaps they should sell more of "their" gold to fund this bureaucratic whim of theirs. "Put your money where your mouth is" - as the saying goes...
Friday 21st August, 2009
Oil Spill Emergency in Timor Sea http://www.abc.net.au/news/video/2009/08/21/2663438.htm Comment: Excerpt - "An emergency operation is underway to stop an oil and gas leak at an oil rig in the Timor Sea. The leak at the West Atlas drilling rig happened early this morning about 700 kilometres north-west of Darwin."
As California struggles, Fitch cuts debt rating http://news.yahoo.com/s/nm/20090706/bs_nm/us_economy_california Comment: We're following the implosion of California here at AA, so best that you know what's going on. One needs to remind oneself that this US State is the 10th largest economy in the World.
Obama seeks to rally glum Dems amid GOP challenges http://www.vaildaily.com/article/20100206/NEWS/100209714/1006&parentprofile=1062 Comment: Excerpt: "The president said political leaders must plot their way forward to November with an understanding of the economic difficulties Americans face.". "Plot"? "With an understanding of the economic difficulties Americans face"? Seems like the penny's just dropped for the Obama administration. We'd stake a 50/50 chance that this US administration will be a one term wonder. If that were to eventuate, it would be the first such occurance in decades.
Migrants bused from riot-struck Italian town http://news.yahoo.com/s/ap/20100109/ap_on_re_eu/eu_italy_immigrant_riot Comment: Blaiming immigrants for unemployment woes, reminds one of Nazi Germany or Mussolini Italy. We humans do not learn from history. This story is an example of beggers wanting to be choosers: Italians don't want hard labour jobs in agriculture in the south, or industrial jobs in the north, but will stop migrants from taking those unwanted jobs too. Pretty soon, there will be no one working in these jobs in Italy. Berlusconi ought not to worry, because as soon as Italy defaults on their sovereign debt, immigrants will be moving out in droves.
NYC man charged with getting al-Qaida training http://news.yahoo.com/s/ap/20100109/ap_on_re_us/us_nyc_terror Comment: The phantom witch hunts continue? We will never know as the nature of the exact charges were NOT laid out in court by prosectors. Excerpt: "Outside court, defense attorney Robert C. Gottlieb told reporters that his client's not guilty plea was "emphatic." He accused authorities of holding and interrogating Medunjanin for two days without letting him see his family or a lawyer..."The questioning was illegal," Gottlieb said. Prosecutors declined to comment.".
Yemen's conflicts flare amid al-Qaida fight http://news.yahoo.com/s/ap/20100109/ap_on_re_mi_ea/ml_yemen_al_qaida Comment: The truth is that the US backs Saudi Arabia who backs the Yemeni puppet government, whilst Russia backs Iran who backs the Shiite Houti rebels...forget about the fictitious Al Qaida on the Arabian Penninsula (AQAP), they are merely CIA sponsored hokem, designed to distract analyst focus. Focus on the real issue in Yemen. It is just standard geo-political fair as described above. One could almost invert the description of US involvement in this article in order to get at the real truth.
US: Government health insurance option appears doomed http://news.yahoo.com/s/ap/20100110/ap_on_bi_ge/us_health_care_overhaul Comment: We shall see what happens here. If it is truly doomed, then expect consequences for Obama from the health insurance & big-pharma establishment which backs him.
Australia govt may get A$1.5bn in spectrum auction http://www.totaltele.com/view.aspx?ID=451877 Comment: And you thought that an Australian government couldn't behave like an authoritarian regime? Yes, it's Telstra they are dicating to, but you know the old saying about encroaching on one, encroaching on all? First internet censorship, ala Iran, China or Saudi Arabia, now Conroy dictates to Telstra that they can't bid for the NBN if they don't break themselves up? Smells rather authoritarian to this editor.
Fiscal Policy Cannot Stimulate the Economy, Redux http://www.marketoracle.co.uk/Article16190.html Comment: Excerpt: "...As we know, the government has no money of its own. It has only the power to tax and spend the money of others. There can only be a transfer that takes place, not a creation of wealth: jobs in X are gained, but jobs in Y are lost. However, this transfer is actually a loss. Taxing away a person's ability to fulfill his own wants and then providing him with things he may not care about makes him worse off. This process condescendingly supposes that individuals cannot decide for themselves what they need...".
Iran Agrees to Send Enriched Uranium to Russia http://www.nytimes.com/2009/10/02/world/middleeast/02nuke.html?_r=2&emc=na Comment: Iran, Israel and the countries of the UN Permanent Security Council plays a game of high stakes poker that could end up involving the Middle & Near Eastern countries who are "the crowd" observing the 'poker game'...
Tent City America - The Expiring Economy http://www.counterpunch.org/roberts08062009.html Comment: Coming from the mouth of Paul Craig Roberts, this is a conservative American's eyewitness account of what's going on in the US...
South Korea to buy gold, expecting it to replace dollar http://gata.org/node/7564 Comment: Another Central Bank adds itself to the list of Bidders. Unlike the 1990's, we now have a situation where Central Banks are NET buyers of the stuff. You wouldn't know this judging by the behaviour of Western Central Banks though. However, one must look beyond those geographical blinkers, to garner this perspective.
G7 to continue economic stimulus http://www.rnw.nl/english/article/g7-continue-economic-stimulus Comment: This comes from that other meeting of the G7 in Northern Canada. So, we have 2 meetings this weekend going into Monday by the world's central bankers and finance ministers. One down under, in Australia. And the other near the Artic region in Norther Canada. Looks like further QE is on the menu.
Japan's high debt not a problem short-term: IMF http://www.sbs.com.au/news/article/1168257/Japan Comment: Oh yeah? Really? We don't believe it. Japan is in big trouble in the next 5 years or so...
Nepali central bank changes gold import procedure http://news.xinhuanet.com/english/2010-01/09/content_12780869.htm Comment: You want it? Well, you better pay more upfront for it. No more buying on tick... Now, if this story does not tell you how important gold is, to global monetary matters, then nothing will. The implications of this story are many. It is at the margins where we see changes happening. This story is at the margins.
Using Gold To Measure Average Wages http://news.goldseek.com/GoldSeek/1262971380.php Comment: This story is US centric in figures, but is global in theme & applicability. From a recent Australian point of view, the average salary in Australia in 1995-96 was A$28,494 according to the ABS, and the average gold price in 1995 was A$518 according to Bullionvault, giving an average salary in gold terms for 1995-96 of 55 troy ounces. By 2000-2001, the average salary was A$34,745, and the average gold price was A$478, giving an increase in gold terms to 72 ounces. Since then by late 2007, the midpoint between the average salary for men & women in Australia is A$55,975, and the average gold price in Nov 2007 was approx. A$917, giving a decrease in gold term to 61 ounces. In 2009, the average salary is A$62,270, whilst the average gold price was approx. A$1300.50, giving the average salary in gold terms of approx. 47 ounces. Lower in gold terms than 1995-96. About 15 years ago. This is the trend in Australia: We are getting poorer, on average, in gold (ie. real money) terms.
Beware the Current Bull Market in Derivatives http://seekingalpha.com/article/164077-beware-the-current-bull-market-in-derivatives Comment: If this sort of news is now making it into the "online mainstream", if there is such a thing as an "online mainstream" such as SeekingAlpha, then your editor's contrarian gut-feel is telling us that the largest borrowers in the world ie. governments, especially the indebted "Western" types of government may just be starting to accelerate their spending to prop up the 'too big to fail' western financial institutions at the heart of the derivatives problem, and that such talk of an imminent toppling of the derivatives 'tower of debt' is premature. It will take the implosion of the US Treasury market to designate an imminent toppling of said 'tower of debt' and nothing else. However, this article shows that more & more are becoming aware of the root problem in world finance - the gargantuan 'tower of debt' laid upon debt and more debt, in an almost limitless amount. So much so, that the so called "value to maturity' amount of all global derivatives is more than 10 times global GDP, and the notional amount, which is the actual amount required to retire and extinguish this debt is more than 24 times global GDP. This is a problem no matter whether we face it tomorrow or 10 years from now.
Adobe, Google sued by Textscape over patents http://www.networkworld.com/news/2009/100209-adobe-google-sued-by-textscape.html?hpg1=bn Comment: And you thought that the cowboy frontier that is, Information Technology, is played nice & cleanly... How sily of you. "Monkey see, Monkey do" ain't a saying for notin' ya know... Copying is the highest form of flattery, but Copying and making a Profit from it, is the highest form of thievery. Especially in IT. There's 6 letters, in the English alphabet, that separates the meaning "Flattery" from "Thievery", and that is "Profit"...HA!
PIMCO Says Dollar to Weaken as Reserve Status Erodes http://www.bloomberg.com/apps/news?pid=20601087&sid=aCM5WaqsP.98 Comment: And this is the doorway that leads to Banana Republic status. Which in historical terms, has always led to a Military Coup... Remember the date of this prediction 20th August 2009...
Startling strawberry crab discovered off Taiwan http://news.xinhuanet.com/english/2010-01/10/content_12784097.htm Comment: We thought the professor who found the crabs deflecting the blame for their deaths after capture, to a cargo ship which ran aground in the area, was the best statement vouching for human incompetence one could ever see. Excerpt: "...The crabs died shortly afterwards, possibly because the water in the area was polluted by a cargo ship that ran aground..."
Cocaine Effects on Brain Genes Could Help Treat Addicts http://news.yahoo.com/s/time/20100108/hl_time/08599195241100 Comment: The lower down the chain of life's building blocks one goes, the more those building blocks have wider effects. Hence why side effects to genetic drugs will be something to watch for.
20 Years of Moving Atoms, One by One http://www.wired.com/gadgetlab/2009/09/gallery-atomic-science Comment: Excerpt - ""The ability to manipulate atoms, build structures of our own, design and explore their functionality has changed people's outlook in many ways." says Eigler. "It has been identified as one of the starting moments of nanotech because of the access it gave us to atoms, even though no product has comes out of it."".
Key Gene For Bone Development Discovered: When Mutated It Lead To Dwarfism http://www.sciencedaily.com/releases/2009/07/090708073942.htm Comment: Excerpt - "Scientists have just discovered the gene behind Recessive Omodysplasia, a rare skeletal disease characterised by short-limbed dwarfism and craniofacial anomalies. The work, just published in the American Journal of Human Genetics, reports the identification, on chromosome 13, of a gene - GPC6 – that is shown to be crucial for normal bone development.".
Commentary
GENERAL
Tuesday 5th January, 2010
Does Deflation only exist when priced in Gold? By: Aggregated Awareness
The ongoing "Inflation vs. Deflation" Debate had us thinking lately. Yes, you may claim that this "thinking" is dangerous. And even though it is foolhardy to make any inference from this data, we will still add to the noise by presenting it here.
Now, whether one defines these two 'flations as monetary inflation or price inflation; or monetary deflation or price deflation; doesn't matter for the purposes of this missive. It is enough to know that Inflation is the phenomena of being able to buy less of a given thing with one dollar or one unit of a given currency or money, whatever you would define currency or money to be, and Deflation is the phenomena of being able to buy more of a given thing with one dollar or one unit of a given currency or money.
Now that we've got that out of the way, this "Inflation vs. Deflation" discussion got us thinking: Why would the so called "Deflationists", argue that one dollar, or one unit of a given currency, buys more today than it did, say, 3 years ago? There are many economic & market commentators out there whose observations we respect, and they are calling for deflation. Presumably, this deflation they are calling for is in respect to a given unit of paper currency. We do not agree with this simple prognosis. However, we wanted to do some analysis which would show that deflation exists, even if the place where it exists is not necessarily the dollar or any other unit of a given paper currency. So, we started charting various things that we found from Stockcharts.com, in terms of Gold.
What were the results?
Well, we'll let you figure that out for yourself when you view the attached charts. All that can be said, from our point of view, is that out of 20 things that were priced in terms of gold, the only thing that had a 200 week, long term exponential moving average which was NOT pointing down, was the Shanghai Composite Index. And even then, it was pointing up by only a very slight amount.Everything else, had a long term moving average that was pointing down.
What does this mean?
It means that these things were getting cheaper when priced in Gold over the past 3 years. By the above definition, this is deflation. But only in terms of Gold. Which means that one unit of money, in this case: one troy ounce of Gold, is buying more now, of whatever that thing is, that Gold was priced against, than it was 3 years ago. And this condition exists for all 20 things that are priced in terms of Gold.
A caveat to the above inference, would be to note that the 50 week, short term moving average for most of these 20 things priced in Gold, is moving up. Whilst some other things listed here, has a short term moving average which is moving down, especially certain stock indices. This at best provides short term mixed signals. That is, noise. So it could mean that short term, as in the past few months, these things are getting more expensive in terms of Gold, whilst other things are getting cheaper. A good example of the phenomenon that the shorter the timescale, the more noise one sees. So, if we see noise short term, where some things are not cheaper in terms of gold whilst other things are, then a conclusion would be to stick to what the 200 week, long term moving average infers, if one is inclined to infer, which is that yes, Deflation exists, but only when things are priced in terms of gold.
Take from these charts what you will. This information is meant to inform not lead your point of view.
Here are the charts. Please click on the thumbnail for a larget picture:
1. ASX All Ords vs. Gold
2. Baltic Dry Index vs. Gold
3. BKX Philidephia Bank Index vs. Gold
4. Reuters-CRB Continuous Commodity Index (CCI) vs. Gold
5. Nasdaq Composite vs. Gold
6. Copper vs. Gold
7. German DAX Composite vs. Gold
8. MSCI Emerging Markets Index vs. Gold
9. US Unleaded Gasoline/Petroleum vs. Gold
10. Hong Kong Hang Seng Index vs. Gold
11. Dow Jones Industrial Average vs. Gold
12. US Natural Gas vs. Gold
13. Nasdaq 100 Index vs. Gold
14. Tokyo Nikkei Average vs. Gold
15. NZ Stock Exchange 50 Index vs. Gold
16. Palladium vs. Gold
17. Platinum vs. Gold
18. S&P 500 Index vs. Gold
19. Shanghai Composite vs. Gold
20. WTI Crude Oil vs. Gold
Friday 2nd October, 2009
Systemic Failure Approaches By: Jim Willie CB http://news.goldseek.com/GoldenJackass/1254464100.php Comment: Alright. No more "tongue & cheek" commentary. This is some hard hitting commentary on some home truths no one in the Western mainstream, publicly talks about. Regardless, one would be a fool or a knave, not to take note of this & sort yours and your family's business out before TSHTF. The public living in the so called "commodity countries" have some reprieve to prepare, but the window of opportunity will not be open to them for any longer than 2 years. Those in the US/UK and the PIIIGS countries of Europe (Portugal, Iceland, Ireland, Italy, Greece, Spain) will have it a lot harder, if it hasn't already happened for them. No wonder Irish Gaelic football players are escaping Ireland for the AFL in Australia. If there's one thing going for Australia, its the fact that the country has shit in the ground that the rest of the world needs. It really does come down to that, and every politician in the country knows it. Even if they flatter themselves with platitudes such as "the strength of Australian regulations and banking"...HAHAHA that kind of delusion of grandeur from politicians & bureaucrats is hillarious.
Keynesianism Delivers a Decade of Zero By: Dr. Ron Paul, U.S. Congressman http://news.goldseek.com/RonPaul/1262636992.php Comment: Heed these words: Excerpt: "...You cannot regulate the economy into oblivion and expect it to function. You cannot tax people and businesses to the point of near slavery and expect them to keep producing...". Here's the Washington Post story to back the claims from Dr. Paul.
Wednesday 8th July, 2009
How Long Can the US-Dollar Defy the Law of Gravity? By: Gary Dorsch http://news.goldseek.com/GoldSeek/1246993200.php Comment: Excellent Political-Economy analysis. In answer to his question. For as long as the juggling act from all major US Dollar stakeholders continues. Like all jugglers though, they will eventually tire from the required performance to keep the Perception Management going. Some say this is only 123 days away. Hmmm...
BUSINESS, ECONOMIC, FINANCE
Sunday 10th January, 2010
Here's a forecast: economists will continue to be useless By: Edmund Conway http://www.theage.com.au/opinion/politics/heres-a-forecast-economists-will-continue-to-be-useless-20100109-lzs1.html Comment: It's obvious that Mr. Conway has never heard of Austrian School of Free Market Economics let alone other economists spawned from that school. Only Keynesian & Friedmanite schooled economists have failed miserably during the GFC. The Austrian School was making predictions about the GFC since during the early 2000's.
Saturday 9th January, 2010
The Dow/Gold Ratio Will Decline Further By: Daniel Aaronson and Lee Markowitz http://news.goldseek.com/GoldSeek/1262971500.php Comment: In terms of a "ringin bell" to sound the alarm of a seismic socio-economic event, it doesn't get any louder than this...
Sunday 3rd January, 2010
The Future of the United States, Systemic Fraud, Corruption and Financial Instability By: Global Research http://www.marketoracle.co.uk/Article16189.html Comment: Excellent writeup. Needed to be said, as it is NOT said enough publicly...
Monday 2nd November, 2009
Forgotten Anniversary: One Hundred Years of Legal Tender By: Antal E Fekete http://news.goldseek.com/GoldSeek/1256914800.php Comment: "Until and unless you discover that money [sic gold & silver] is the root of all good, you ask for your own destruction. When money [sic gold & silver] ceases to become the means by which men deal with one another, then men become the tools of other men. Blood, whips and guns--or dollars. Take your choice--there is no other." - Ayn Rand - Atlas Shrugged
USDX Daily Chart Comment: Last night's NY closing was at 78.04, 0.06 points below price on this chart. Breakdown underway. Head & Shoulders clearly evident. All moving averages are pointing down. RSI is negative trend line that is proving difficult to break. Next target 75.78 at the 23.6% Fibonacci. Then 71.49 to retest the lows from May 2008...then eventually 65-69. Click on thumbnail to the right for a larger picture.
US dollar Spot Gold Chart Comment: Last night's NY close was at 954.15...MACD trend is up, CCI & RSI point to a near term pull back, and then onto another run toward 23.6% Fibonacci at 972.40, then a retest of the 4 digit round figure of 1000, then onto 1260-1300. Click on thumbnail to the right for a larger picture.
US dollar Spot Silver Chart Comment: Uptrend from the October 2008 low is clearly evident. RSI & CCI have turned up. Price remains above all moving averages. A move to the upside is imminent. A run toward 15.23 is on the cards. Click on thumbnail to the right for a larger picture.
Aussie dollar Spot Gold Chart Comment: A massive base is building between 1130 and 1160 for the Aussie dollar gold price. Our guess is that we will see a long term base continue to build between 1100 and 1250, perhaps for a year from May 2009 til Apr 2010...
Aussie dollar Spot Silver Chart Comment: Uptrend line from Sept 2008 was broken to the downside in late June 2009. Overhead resistence now capped at 17.50 and then 18.30. Price looks to be moving toward 17.50 where long term moving averages are resistence. If this breaks to the upside then 18.30 is the next target. However, this is unlikely, and price will trade in a range between 16.50 and 18.30 for the near term.
So simple and so crude - yet so very effective. The cockroach is hard to kill and fit for any environment. In markets, we also have cockroaches. One of the types would be the holding company with lots of cash...
US Economy is Some 11 Million Jobs Short of Full Employment
But February saw an unexpected upturn in consumer credit, reports the Times. And unemployment seems to have bottomed out, adds The Wall Street Journal.
Shadow Banking System: A Murky World of Credit, Securitisation and Derivatives
Most of these are interest rate and credit derivatives. As we learned in the last two years, the big risk here is to institutions which owe and own these obligations amongst one another. In our view, the degree of interconnectedness among these obligations (they still aren't unwound) still makes the entire global financial system vulnerable...
A quick follow on from yesterday’s Money Morning. We like this quote we’ve found from Professor Walter Block:
“Consider a man and a woman each with a productivity of $10 per hour, and suppose, because of discrimination or whatever, that the man is paid $10 per hour and the woman is paid $8 per hour. [...]
60 Second Market Wrap
The S&P/ASX200 started Tuesday down, but finished higher by 12 points to close at 4,820.10. The ANZ job survey showed job ads on the internet was higher by 19.6% for February. Overall, total job ads are only 2.3% below the same time last year.
However, economist Warren Hogan has warned that quoting the internet job ad [...]
Why Pay Equalisation is Bad News for Women
Surprisingly, we’ve received quite a bit of feedback as a result of last Friday’s Money Morning on ‘How Patent Protection Stifles Innovation.’
The general gist of most responses – to paraphrase – has been, “patent protection is important to protect small businesses and inventors from greedy thieving big businesses.”
We’re paraphrasing, so no-one actually wrote that. [...]
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