Meltdown

[BachQ]

Will Gordon Brown become UK's "Social Landlord" ?

http://www.bloomberg.com/apps/news?pid=20601102&sid=aGC7OOyZWXW0&refer=uk

[BachQ]

Friday: oil < $40/bbl 

[ezodisy]

No surprises there. 



It's called FRAUD.  Hanky Panky Paulson = Fraudster

LOL 

haha stop making me laugh, it really shouldn't be funny! 

Friday: oil < $40/bbl 

Hmm. You know we've got the commodity index rebalancing upon us now which could result in some large moves, particularly in gold which is being shot down by 3% (oil up by 4%). Ironically this is set to happen just as gold is at a critical resistance level. It's getting quite volatile up there, weekly MACD is just below the 0 waterline and I still favour a big fall of 10-15% this week and this announcement can only help I'd guess.

http://ftalphaville.ft.com/blog/2009/01/05/50769/beware-commodity-index-rebalancing-ahead/

Those boys are crooked as sin. Short-term it may work but in the long run gold's going beyond $5000 baby.

However here's a short piece from RGE Monitor in which the writer expects the rebalancing ploy in gold to fail:

http://www.rgemonitor.com/globalmacro-monitor/255006/here_comes_the_commodity_index_rebalancing

And yet another contrarian view that gold sentiment is too high at present for further short-term profitability:

http://www.marketwatch.com/news/story/gold-timers-more-bullish-theyve/story.aspx?guid={385CB7CF-0F71-4BE2-936C-246A12E2F4F4}&dist=msr_7

[BachQ]

I don't know if anyone wants to listen to Paul Craig Roberts ("was Assistant Secretary of the Treasury in the Reagan administration"), but he questions whether there will be a recovery at all, which I have to say sounds a lot more sensible than all thosee economists on Bloomberg now predicting recovery in the second half of '09

Will There be a Recovery?

It is true that the US economy has lost its "real basis," and that it will take a miracle for this "hollow shell" of an economy to recover.  But let's assume that any recovery will be shallow and short-lived (if there is any recovery at all): won't that same fate befall all other nations?  Given that most first-world nations are built on a house-of-cards financial system that is collapsing into quicksand, isn't it reasonable to assume that they will fail along with the US?  Many European nations are leveraged to an even greater extent than the US.



There is no denying that the US economy is deeply and fundamentally troubled, perhaps beyond repair.  But even a one-eyed person is king in a land of the blind.  Given that all (most) other nations will be dragged into the quagmire along with the US, it's probable that the US will remain the world's largest economy even after a massive systemic collapse.  If not, who will replace the US?  It's true that the US is in a particularly dire situation thanks to trillions wasted in Dubya's and Cheney's Iraq debacle ... but one can be hopeful that Obama will minimize the longterm adverse effects of this Dubya-catalyzed catastrophe.  Unfortunately, Obama is already on the wrong track (see Peter Schiff interview), and there is little cause for optimism.

This map shows the USA with its states replaced by countries with similar GDP (note, e.g., that Russia has similar GDP to NY state; and Australia's GDP is comparable to Florida's).



A question that we don't have an answer for is: will there be any countries that emerge from this global meltdown largely intact (or better off)?  China is reeling, and may be headed for a fast crash.  Russia is Russia.  And even Dubai is in meltdown!

[BachQ]

Time Magazine:  The Great California Fiscal Earthquake (08 Jan 2009) ... "The list of cuts and shortfalls is almost apocalyptic. According to the UCLA Anderson Forecast, thousands of lost jobs in the public and private sectors will cause California's unemployment rate to leap to 8.5% by the end of 2009 (it was 6.5% in October 2008). If the state runs out of cash by mid-February, as has been predicted, hundreds of state vendors, such as electrical-supply wholesalers, food-service companies and building- and grounds-maintenance firms, will be sent IOUs from the state government. Deductions for each dependent may drop from $309 to $103 on Californians' 2009 income tax forms. And, by the way, don't count on a tax refund showing up soon after you file in April — one of those IOUs may find its way to your mailbox instead, explaining that the refund may be delayed."

[BachQ]

New York Times facing bankruptcy?

[ezodisy]

"Great Britain does not meet the entry criteria for the euro," said Lorenzo Bini Smaghi, the ECB's board member in charge of international affairs.

oh this is rich, coming from a man whose country leapt into the Euro only after the entry requirements were dropped. Hopefully we never get to join their little party as the last thing I want to see is this country lose autonomy and go headlong into a doomed currency. I wonder what Lorenzo will say when Germany starts to wobble and the EU loses its life support of the UK consumer. Long live the pound baby, the next best thing to gold and the swiss franc. and oil 

[BachQ]

"Great Britain does not meet the entry criteria for the euro," said Lorenzo Bini Smaghi, the ECB's board member in charge of international affairs.

Ambrose Evans-Pritchard:

If anything, Mr Bini Smaghi may have been too kind to Britain. The Treasury expects the deficit to reach £118bn in the 2009 tax year - almost 8pc of GDP - but there are now fears that this will rise even higher as tax revenues collapse. Some analysts have begun to warn that Britain will soon face a deficit of 10pc, the sort of catastrophic levels seen in Latin America in the 1980s.

[BachQ]

I wonder what Lorenzo will say when Germany starts to wobble and the EU loses its life support of the UK consumer.

Indeed. Lorenzo should take notice of the significantly deteriorating condition of Eurozone member countries.  To mention just three:

GERMANY = German exports and industrial orders have both plunged at the steepest rate since modern records began ... "Industry is in free-fall," said Dirk Schumacher, from Goldman Sachs. Germany's industrial orders have plummeted 27pc year-on-year, heralding a drastic economic contraction this year. ...

SPAIN = "Spain's unemployment has surged above three million to 13.4%, capping one of the most disastrous days for Europe's economy since the Second World War."  Spain also suffers from a massive real estate bubble.

FRANCE = 4th Quarter GDP is projected to fall between 1% to 1.8%; Nov. industrial production fell 2.4% and October industrial production was revised downward for a 3.7% monthly decline ; Nov. manufacturing output dropped 3.1%.

[BachQ]

Another reason why gold will skyrocket (Peter Schiff: bond market bubble = giant ponzi scheme)

http://uk.youtube.com/v/ZNQ4lP6vvB8&feature=related (BNN Canada; 5.17 minutes; 07 Jan 2009)

[Bu]

Time Magazine:  The Great California Fiscal Earthquake (08 Jan 2009) ... "The list of cuts and shortfalls is almost apocalyptic. According to the UCLA Anderson Forecast, thousands of lost jobs in the public and private sectors will cause California's unemployment rate to leap to 8.5% by the end of 2009 (it was 6.5% in October 2008). If the state runs out of cash by mid-February, as has been predicted, hundreds of state vendors, such as electrical-supply wholesalers, food-service companies and building- and grounds-maintenance firms, will be sent IOUs from the state government. Deductions for each dependent may drop from $309 to $103 on Californians' 2009 income tax forms. And, by the way, don't count on a tax refund showing up soon after you file in April — one of those IOUs may find its way to your mailbox instead, explaining that the refund may be delayed."

You're a bad news bear, Dm..............this really ruins my day. 

[ezodisy]

Another reason why gold will skyrocket

this is a few months old but worth a read

GOLD: Not the "Safe Haven" You Think It Is

just to keep an open mind.

and: "07 January 2009 UAE: gold sales in Dubai fell 15 per cent last month from a year earlier as higher prices for the metal and the slowing economy deterred buyers, the managing director of the Dubai gold and Jewellery Group said."

mate of mine sent me all that, very good stuff to know. Hopefully it tanks this week so we can all load up under $500. Very nice US/country map by the way

[Bu]

In Bob's own words: "All huge gains in gold have come while the economy was expanding... The idea that gold reliably rises during recessions and depressions is wrong. In fact, like most such passionately accepted lore, it's backwards."

Fascinating, and goes against everything I have read/heard.  I was about to buy Ron Paul's A Case for Gold (published back in the early 80's, but I've heard its been updated and is still relevant) and am wondering now if it would be to able answer any objections brought up in this article.

[ezodisy]

yes well I haven't read that one yet. I'm sure it'll still be worth it.

Two things to observe IMO. One, from the article:

"unless you count the Great Depression era, when the government fixed the price of bullion as all other asset classes were plunging in value."

and two, from the news:

that the Gulf Cooperation Council plans by 2010 to have created a unified currency most likely tied to gold and gulf oil reserves.

Some reading on the latter:

Gulf Cooperation Council to create new currency

Gulf takes wrong currency path

[ezodisy]

£3-an-hour sweatshop in UK 'supplied Primark'

[ezodisy]

Hugh Hendry video. doom to the euro and no money sitting on the sidelines to come in

http://www.cnbc.com/id/28616631

and on oil

http://www.cnbc.com/id/15840232?video=994375164

[BachQ]

Hugh Hendry video. doom to the euro and no money sitting on the sidelines to come in

http://www.cnbc.com/id/28616631

Yes, the plight of the PIIGS amid this global recession may cause the euro to splinter in favor of a more flexible system ..... but when?

Good interview, btw.

[BachQ]

Monday 10:15 AM E.S.T.: Oil < $38/bbl 

and on oil

http://www.cnbc.com/id/15840232?video=994375164

Hendry notes that oil is in contango, with future prices exceeding $60/bbl several years forward.  However, we are entering uncharted territory amid a deflationary depression on the one hand (exerting downward price pressure), versus peak oil; OPEC cutbacks; and disinvestment in oil extraction on the other hand (exerting upward pressure).

For the winter/spring of 2009, the deflationary forces are showing signs of being far more potent than the countervailing forces of peak oil, OPEC, and disinvestment.  Oil may fall significantly lower before these countervailing forces overcome the deflationary forces.  But as Hendry so tactfully notes, nobody really knows what's going to happen, and any strategist who claims to know is either a liar or a fool (or both). 

[BachQ]

[ezodisy]

Gold futures for February delivery fell $34, or 4 percent, to $821 an ounce on the Comex division of the New York Mercantile Exchange, the biggest drop since Dec. 1 for a most- active contract. Earlier, the metal touched $817.10, the lowest since Dec. 12.

lol!