Bill Cara's Blog for Sep 9, 2011

Les -

Stockcharts is my usual place to find gold priced in euros. I don't do it every day, but your mention of a double top and my memory of the recent big currency moves triggered the thought.

An example:

http://stockcharts.com/h-sc/ui?s=$GOLD:$XEU&p=D&b=5&g=0&id=p36751039828

$gold:$xeu, $gold:$xbp, $gold:$xsf, and just for fun, $wtic:$xeu.

We also know that big moves in the buck can suppress moves in the US equity market too.

As for moves in the USD itself - yesterday the buck stopped right at the 200 DMA. Today's intraday chart has USD at 76.70, which means its blown clean through the 200 dma. The 50 dma is hinting at turning up now. This all looks pretty bullish to me. We've had a USD trend change. When in doubt assume the trend continues.

I think this is all just reinforcing my existing macro perspective that Europe is the source of concern today, that the Greek issue is yet unresolved, that no solution seems in the offing, and so the trend is up for USD and down for the Euro. Some part of me feels like once the eurozone lances these boils and takes the banking hits, what remains of the eurozone will be the stronger for it, and more tightly integrated. Kind of like when the Admiralty court-martialed and shot Admiral Byng in 1757 for not doing his utmost to destroy the enemy. It happened for a bunch of crazy reasons, and it sucked for Byng, but the British Admirals that followed really worked hard to avoid the same fate, and may have been a contributor to British naval successes in the years that followed.

I think the banks overstate their importance to the world at large. "Oh my gosh if our bondholders suffer a loss the WORLD WILL END!" Better to endlessly bail out Greece (i.e, "us") than risk such a fate.

Sure I think there will be turmoil, but if Europe metaphorically shoots the banks (and bankers, and profligate eurozone borrowers) for their stupidity in the same way Iceland did instead of going the Irish (and American) routes, in a year or two the turnaround should be amazing to behold. And the surviving bankers will be a chastened and smaller bunch. All to the good, I think.

I think the Euro is a buy once we see how Greece & friends are permanently resolved. A big currency controlled by the Germans is definitely a good place to store your wealth. And the Chinese know this very well, so they'll be supportive once there is a regime in place for resolving "issues" like Greece. Of course prices will tell us when this is likely to happen. I think the Chinese will be in there buying when they see a hint of "real solution" daylight.

I'm not as hopeful about the US, however. We have the printing press, after all.

(Reuters) - President Barack Obama proposed a $447 billion package of tax cuts and spending measures on Thursday aimed at spurring growth and hiring.

Here are some of the key elements of his American Jobs Act, which he announced to a rare joint session of Congress:

EMPLOYEE PAYROLL TAX HOLIDAY

Obama is proposing a $175 billion one-year extension and expansion of the employee payroll tax holiday that would halve the tax rate to 3.1 percent in 2012.

EMPLOYER PAYROLL TAX HOLIDAY

Obama is seeking $65 billion to encourage small businesses to hire more workers. This includes halving employer payroll taxes to 3.1 percent for the first $5 million of a company's wage bill in 2012, which the administration says will reach 98 percent of small businesses. He also wants a complete payroll tax holiday for increasing the size of the payroll by up to $50 million above the prior year, either by hiring new workers or raising the salaries of the existing labor force.

HOUSING

Obama wants to broaden homeowner access to mortgage refinancing and help the battered housing market by allowing households to take advantage of ultra-low borrowing costs that would help them put their finances on a sounder footing.

Administration officials say he hopes to push forward with a plan in the next few weeks. To hammer out a proposal, the Treasury Department is talking with U.S. mortgage finance giants Fannie Mae and Freddie Mac, and their regulator the Federal Housing Finance Agency, to figure out ways to broaden access for homeowners by removing barriers to refinancing.

EXTENDING 100 PERCENT COMPANY EXPENSING INTO 2012

At a cost of $5 billion, Obama wants to extend a 100 percent expensing tax break for companies, allowing them to immediately take a tax deduction for investment in new plant and equipment.

$85 BLN IN AID FOR STATE AND LOCAL GOVERNMENTS

-- $35 billion to keep teachers, firefighters and police officers in their jobs, of which $30 billion would go to schools and $5 billion to police and firefighters.

-- $30 billion to modernize schools and community colleges.

-- $15 billion to rehabilitate and refurbish vacant and foreclosed homes.

-- $5 billion to help low-income youths and adult workers, supporting summer and year-round jobs for young people and support subsidized work for unemployed low-income workers.

ROAD, RAIL AND AVIATION INFRASTRUCTURE SPENDING

Obama seeks $50 billion to invest in highways, transit, rail and aviation, including upgrading U.S. airports and supporting Nextgen Air Traffic modernization.

INFRASTRUCTURE BANK

Obama wants $10 billion to capitalize an infrastructure bank to leverage private and public infrastructure investment "without earmarks or traditional influence," the White House says.

EXTENDING UNEMPLOYMENT INSURANCE, BRIDGE TO WORK

-- $49 billion for a one-year extension of long-term unemployment benefits that would otherwise expire, which the White House says prevents 6 million jobless Americans from losing benefits. It includes reforms to the jobless aid system and a "bridge to work" program to help get unemployed people back to work.

-- $8 billion for tax credits for long-term unemployed.

thanks. The bearish divergence in RSI of the three currencies vs. gold is noted. Suggests the metal eases of in the not too distant future. As always we shall see.

Dave,

"It's about jobs"

This is the only truth on the news lately — but it's about THEIR jobs.

• Obama wants another four years. He'll say or do whatever gets him votes — nothing like more "free" money to entice people to the polls.

• All in Congress want to keep their contributors happy to keep their cushy jobs. (They got a raise this year.) They push tax cuts for the wealthiest, both individuals and corporations with, "The rich create jobs!" (Yeah, in China.)

A toast to the person who invented the mute button.

Grym

Good morning.

10:00 Wholesale Inventories

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CEO - Upgraded to Hold @ Jefferies.

CSCO - Upgraded to Sector Perform @ RBC. PT Lifted from $14 to $17.

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"According to a report, the Post Office could go out of business this winter. On the bright side, the Post Office won't receive the report in the mail for another two years." -- Conan O'Brien

Thanks Dr. Strange! I've been looking and IB for a while, but i would have to liquidity my current positions (which i lucked out and got alot of great companies at really low prices) to move my money over...unless there is another way that I am not aware of.

This seems like the wrong approach to me. Continual fiddling with tax credits is ultra short term that benefits select groups. It's not fair.

Where's Thomas Jefferson when you need him?

Years ago when I quit my private broker to move to Scottrade I moved each stock and paid no tax as I did not sell the shares but changed the custodian of the account that held the physical shares for me. It was like walking the paper from one box to another.

RTRS-ECB CHIEF ECONOMIST STARK ABOUT TO RETIRE -SOURCES

RTRS-SOURCES SAY REASON FOR DEPARTURE IS CONFLICT IN ECB OVER BOND BUYING

I have been scalping this stock frequently so I won't bother detailing the trades anymore. But for those wanting to initiate a holding now, a price under $9 is a great opportunity to establish a position. Premarket, I picked some up at $8.83. If it goes lower I'll keep adding. The stock fundamentals are so strong that I think the price is a giveaway under $9. Good luck.

http://bloom.bg/puOPFC

Between the terror alerts, DOA jobs plan, and euro bank concerns over weekend, holding into weekend is throwing the dice.

papad I've just sold mine again for a nice overnight hold. I'm watching my FXE short get greener and greener and the banks have just fallen off a cliff. I think I can get it back at better prices.

Stepping closer to a liquidation panic IMO, so I am very cautious here and heck, doing very nicely taking little bites out of this awful volatility.

JMO of course.

http://uk.finance.yahoo.com/q?s=DBK.DE

SLW puts starting to kick in.
----------------------------------------

FCX - watch to see if the September bottom holds here or its going to retest the August lows.

Bank of America officials have discussed slashing roughly 40,000 jobs during the first wave of a restructuring, The Wall Street Journal reported, citing people familiar with the plans.

'Thank you for bailing out a nonviable business, but we still have to cut.'

http://bit.ly/nzzSlD

Hi GW, I sold my shorts yesterday afternoon with having to leave and not able watch the market in the afternoon. I bought some calls on DOW and KSS this morning- good price on both, if SPX can get back through 1180 today I think it could move up soon to maybe 1260 before selling off again. I'll be watching close today - can always reverse course if necessary.

Regarding correlation between the miners (GDX) and gold or the S&P, I agree with Bill's take, I also see this as a question of relationships.

Ratio charts provide an excellent overview of the relationships at play:

The first chart is GDX to GLD. This shows us the 3 year trend of GDX relative to gold, if they were closely correlated you would see more of a straight line as one's value relative to another would vary marginally. This is not the case. The GDX has lost value vs. gold the past 3 years but the relationship is not entirely negative nor is it positive accept for recent action which has created bullish divergence at both the key 14 and 21 series RSI. The argument has been building for and against the question if miners are ready to finally break out of their slump:

http://www.hostpic.org/images/72gdxgld.bmp

This chart of the GDX vs. the SPY (S&P 500 index) shows slightly more correlation but in the opposite way- the GDX has steadily gained ground vs. the SPY for the past 3 years. The TA shows ongoing momentum of this pattern and fundamentals suggest no reason why gold miners cant outperform equities considering the downward pressure bank stocks will exert on the broad market:

http://www.hostpic.org/images/85gdxspy.bmp

I have often wondered why people ask the question of correlation between gold miners and bullion. I agree with Bill's observation that it is a matter of timing. I would humbly add to that and offer that it is also a matter of metal. Check the books of many mid to large cap mining outfits and we find often they mine more copper than gold. In the case of Barrick Gold, their share price moving at times against gold, most analysts neglected to mention or consider the relationship of their copper holdings, sales, forward contracts and currency hedges as applied to those discoveries. The example of Newmont previously posted is a great case in point.

Gold remains in a bull market, but copper like other base metals is below its high of early 2011. This can and does have material impact on share prices, but thus far I find little if any nuanced examination of these relationships in analyst reports that speak to the ongoing mismatch between gold miner valuations and gold itself.

I suspect this will go down in the financial history books when it all plays out as this gold bull continues.

Earl just a little heads up, there has been a lot of talk the last couple of weeks in the FOREX world that Greece was going to default by the end of Sept. Today I am hearing talk possibly this weekend. That would sent the markets reeling Monday. Add to that a possible attack this Sunday and there will be fireworks next week for sure.

simple?

- capital flows to low cost producers
- big US firms can still make money exporting capital and jobs overseas
- meanwhile not so hot for jobs here
- firms and consumers step away
- Government steps UP to try to maintain aggregate demand

how did austerity work out so far in Greece? Aside from low GDP and imminent default, riots and such, unhappiness in Germany and France, it's been great.

the convergence of lifestyles between the low-cost producers/savers and the high-cost producers/debtors is 'working'. People want the genie back in the bottle. I don't see it.

Bought some SDS october calls for protection a few minutes ago when SPX hit 1175 - no buying volume...

Earl - I am staying short [well in the green as of now].

This is how I am seeing the current wave count.

- The drop from 1204 is wave (1) of minor 3 of major [5]-PA. The drop to 1165.34 was wave iii-(1) and now in a wave iv-(1) bounce.

-The wave iv-(1) bounce can not overlap the wave i-(1) low of 1183.52 to remain valid.

-I’m looking for (1) of minor 3 to complete near 1154. Then a bounce to the 1177 pivot area for wave (2) of minor 3. Maybe by EOD.

-Then Monday the devastating wave (3) of minor 3 of major [5]-PA heads to a refresh new low below 1101

This is one count. I have a few Alt counts but I am going with this one as of now. A lot of interesting things could happen over the weekend. Earlier this week I saw things staring to fall in place and I figured yesterday's quick run up was a bull trap which I used to add to my short positions. The only disappointing short is that blasted PCLN short. This thing seems to be bear proof for some reason.

FXE short - a 3 handle short overnight. That's starting to look pretty dangerous for precious metals and the market overall.

SVM - I sold it above 9 Loonies at the open. One can always buy back lower, especially when everything looks like its about to go on sale.

SLW looking weaker by the minute in daily. EOD is key. still long a couple of Oct 40 puts.

So I've been having a nice discussion with a friend of mine about a return to the gold standard, and what the implications of that might be. As with every policy there will be winners and losers. If the world were to go back on a gold standard, what would be the impact?

In a "gold standard" exchange rate system, each nation issues currency & credit based on its gold reserves. Less gold means less currency & credit in circulation. Less currency & credit, of course, means deflation. More gold means more currency & credit which means inflation.

So if your country gets gold, that essentially means you can print money. If your country sends gold overseas, you deflate - crucifying indebited mankind on a cross of gold, as it were.

When a country has a trade deficit, the only way that international debt can be extinguished is by sending gold overseas. That causes deflation, because your central bank must suck credit money out of the system in direct proportion to the lost gold.

Which brings me to my key question: which country in the world has the largest trade deficit? If you guessed "The United States", you'd win the prize!

A return to "sound money" (i.e. gold-backed money with the ability to convert dollars to gold) would mean a huge outpouring of gold from the US to foreign lands. This is why Nixon slammed the gold window shut in 1972. If he hadn't done so, there would be no gold at all in Fort Knox.

Right now, we have a massive trade imbalance, and a big export is paper FRNs. If we moved onto a gold standard, our biggest export (for a while) would be gold. And the more we sent, the more deflation the US would have to endure.

This is why, in my opinion, there will never be a gold standard here in the US unless and until we have a balance in trade. And while we want to import 2/3 of the oil we use from overseas suppliers and give them IOUs in return, its unlikely our trade will be balanced.

Now for the lead-in question: what are the gold standard winners and losers in the US? Savers win big. Anyone in debt loses - most likely loses everything. Good luck paying your debt in a deflationary depression.

Just some food for thought, next time you hear someone advocate for a return to Sound Money. He's really telling you, "we are tired of exchanging paper IOUs for oil & flatscreen TVs - we'd prefer to send gold instead."

I await what I think will be an interesting response. :)

Looking at the 60 min TBT chart the Bollinger Bands set up I have, it shows it compressing like a spring. Looks like there is a big move coming.

http://www.mineweb.com/mineweb/view/mineweb/en/pag...

I had a decent position at 7.45 that got stopped out at 6.95 (price dropped to 6.92) last week. The challenges of trading for a couple of hours a night from Australia. I don't like leaving too many open positions without any type of protection.

Arrghhhh.

Looking for my next re-entry but will probably wait for next week.

http://www.mineweb.com/mineweb/view/mineweb/en/pag...

"Wikileaks published a cable going back to 2009 in the year that European central banks halted their sales of gold. It said the following:

"The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries toward reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the Renminbi [Yuan].""

Not sure if this was posted or not. I get Mineweb sent to my inbox daily.

http://www.mineweb.co.za/mineweb/view/mineweb/en/p...

You can subscribe to the GOLDMineweb Daily News and/or Mineweb.com Top Stories

Well off to bed...

to around 1177 if the final wave v of 1 was put in at 1154 [wave v = wave i]. Will be interesting how far we melt up by EOD. Still holding short.

Well still melting down right now - if ANF gets close to $60 I'll go long on it again.

More wonderful news

@jimcramerJim Cramer

RT @daily_finance: Bank of America May Cut 40,000 Jobs aol.it/ptfkq2

I enjoyed your chart of the day. That's a pretty brisk move down.

thank you for the reminder Bill!!! I'll add MRO Luggie mentioned a month ago - all good names to have on a buy list.

Hi Jock, I'm loaded with gold stocks LOL - have you checked NUGT? I'm looking for a pullback to 41. very trade-able

Southwestern Energy (SWN) might also be worth putting in a watch-list; its well off its July peak of 49.25 now at just over 36 (the August low was around 34 intraday on the 9th).

GW - sold my short for a nice gain when the VIX hit 40. may get back in if it looks bad again but picked up Jan XOM calls and well green already.

I'm glad to hear voters are comming down on both dems and repubs -

Earl my intra day charts are showing this bounce. I will add to my short position especially if we get to 1177 area. My other charts are still showing more downside to come but how much. They could be playing with us. If we drop later today to below 1140 and especially below 1130 before EOD then I will close out my shorts and may go long for a nice bounce next week. But if we stay above 1150 today then I will stay short over the weekend. Too much drama in the air not too. Anyhooooo that is my game plan as of 1:15PM

LOL;-) CGR has been very strong! I think your analysis on it will materialize.
take care.
Earl

Wonder if they can pull a rabbit out of their hat?

"Things In Europe Go From Bad To Worse As Germany's FDP Party Seeks Referendum Over EFSF"

http://tinyurl.com/3z5emlo

http://bit.ly/oqnxqD

i am going on a limb and guessing they never go public, and will sell for peanuts privately. And it won't be to Google.

However I do hope they come public. it will be a great shorting vehicle.

My entire screen is in the red for the precious metals sector. With the Dow down over 300 and the SPX down over 30, just grin and bare it!
As the eternal optimist, I still think SVM can get back to $8.50 or higher. My 5, 10 and 15 minute intraday charts are showing extreme down levels and a rebound is due. Good luck!

davefairtex,

I will wait for post market (perhaps tomorrow), so as not to disrupt the activities of the trader's side of this uniquely divided community pursuing social equity.

Thanks,
pulse

HUH?

With so much talk about the wonders of pork products such as bacon Im often left yearning to expand the pork paradigm to better express my love of all things pork.

In my sutides I learned that in 828, relics believed to be the body of St. Mark was stolen from Alexandria by two Venetian merchants and taken to Venice. A basilica was built there to house the relics.

A mosaic on this basilica depicts how the sailors covered the body of St. Mark with a layer of pork, this was done in the hope that the Muslim guards would avoid coming in contact with any pork products on their ship.

When people speak of a nation's obsession with pork they often think in limited terms of consumption and cooking preparations. They neglect to consider the cunning and stealth required to use pork in a military sense. The smuggling of St. Mark's body is the earliest example of pork's use in naval maneuvers.

St. Mark's basilica stands as a center-piece in the ancient city of Venice. If you ever have the chance to visit, you will see a grand and intricate tower built in the name of a revered and miraculous saint, but dedicated to a sacred yet humble animal.

Have a great weekend gang,

new LoD.

-------------------

Note position of SPY at this bottom of channel. Am looking for indications of reversal here, or further weakness and potential to go lower.

Down 20pts... BEAUTIFUL [wiping tears from eyes :-)]

GW - the battle over 1150 is what it is at this point - I'm looking at the volume and it's not where it was a month ago when we started down this road...

http://on.fb.me/r3BnSo

If can't be reached by non-facebook-users, I'll post it later to trading log, gotta run out now

Well, I wish you'd get your wish and clear this negativity out for a while:-) If we get below ll40 I might just buy some SSO calls. I'm glad I get to watch this... I'll check out your mcclellan oscillator when I get a chance.

TLT weekly is overextended and outside its volatility bands. Implies a retreat next week improving likelihood of a bounce at this support level. And we know how enthusiastic the authorities are for interventions. No sense giving them the weekend to take my profits.

SLW puts were good for 20+% but it is not a strong position going into weekend. The metal looks like a rollover but that doesn't mean the miners are going down.

FCX is pulling back from the brink.

36% YTD and happy to enjoy a stress free weekend. It was a good week.

A sad reflection on the state of the union.

http://www.truth-out.org/goodbye-all-reflections-g...

Mike Lofgren retired on June 17 after 28 years as a Congressional staffer. He served 16 years as a professional staff member on the Republican side of both the House and Senate Budget Committees.

I have been updating my webpages and could use any solid webpages that you feel we can use to learn about this world market we track. If you have some why not share out this weekend and I will add them to my page. There are no ads and I don't sell anything I use it in my classroom and about 4 hours a day myself.

Many here know and use it but I would like to improve it.

http://cvip.fresno.com/~mag77/stocks/marke.htm

Sharing is caring :)

papadynamite , I know it was mentioned yesterday that Silvercorp CEO Rui Feng purchased another 100,000, shares , but the Grand total is a towering 3,854,500 shares , on a direct ownership basis ???? http://tinyurl.com/3uumgoe

- Global markets shifted from risk aversion to optimism and back again this week as investors responded to developments in the European debt crisis. Markets have historically been at their most volatile in the month of September and this year is proving to be no exception.

European markets dropped precipitously on Monday (US markets were closed for the Labor Day holiday) on fears about Italy's shaky fiscal situation. On Tuesday equity markets fell further and Germany's DAX hit fresh 25-month lows below 5,170. Optimism returned after the German Constitutional Court authorized German participation in the Greek bailout and Italy's Senate passed a key package of austerity measures.

On top of that, the BoE and ECB kept rates on hold. But fear returned as rumors of an imminent Greek default made the rounds late in the week, compounded by the sudden resignation of German economist Jrgen Stark from the ECB, reportedly over disagreements about the central bank's bond buying program.

The G7 finance ministers are meeting in France this weekend and ahead of the conference IMF Director Lagarde called on nations to act boldly to sustain the recovery while suggesting austerity can wait. Some are wondering whether a coordinated monetary policy response might be announced at the conference, although Treasury Secretary Geithner noted that he does not expect any dramatic developments at the meeting.

President Obama delivered his much anticipated jobs proposal to a joint session of Congress, but the response from Republican legislators has been lukewarm at best.

Economic data this week had little market impact. The US trade balance data indicated that US exports rebounded sharply in July, rising 3.6% to a new all-time high of $178 billion. Imports were softer than projected due to an unexpectedly large decline in petroleum products.

China's CPI data declined on a y/y basis for the first time in four months, to a mere +6.2%. For the week the DJIA lost 2.2%, the S&P500 dropped 1.7% and the Nasdaq fell 0.5%.

- Share prices of the leading US banks names sew-sawed through the week. Banks opened deep in the red on Tuesday after the big slides in global equities on Monday, with shares of both Bank of America and Citi down 6% or so right at the open, following reports that the banks had been offered a deal on questionable mortgage foreclosure practices from the states.

Midweek there were reports that regulators were asking banks how they would raise capital if market conditions worsen and reviewing results of mandated tests for various banks. Recall that just last week, the Fed requested that Bank of America disclose its contingency plans for dealing with the worsening environment.

Over at Goldman Sachs, New York prosecutors expanded their probe related to firm's sales of CDOs. Press reports indicated that Morgan Stanley and other investors in certain Goldman transactions received subpoenas in relation to the Goldman probe.

- Three leading semi names trimmed their Q3 guidance this week, after Novellus cut its outlook last week. Altera, Fairchild, and Texas Instruments cut their outlook due to weaker demand. Altera cited flagging demand in vertical markets including Telecom and Wireless, particularly outside Asia. Texas Instruments is seeing broadly lower demand across a wide range of products and markets.

Nvidia offered a relatively robust initial FY13 forecast, saying that the company is projecting growth across its entire GPU and mobile-processor business. Shares of Yahoo are up sharply this week following the ouster of CEO Bartz and the resumption of chatter that the company might try to sell itself.

- It was more of the same for trading in fixed income markets. Contagion concerns in Europe continued to hammer financial stocks and fears are growing that financing markets are gumming up. The Euribor-OIS spread reached its highest level since the spring of 2009 and even the 3-month USD Libor touched multi-year highs after rising for 34 straight days.

Usage of the ECB's deposit facility topped €170B for the first time in more than a year as well. The resulting safe haven flows sent rates in Germany and the United States to historic lows. The US 10-year yield by Friday tested 1.9% for the first time in 60 years while the Bund hit fresh lifetime lows below 1.75%.

- In FX markets, the euro zone debt crisis and associated news remained the focus as worries continued that Greece and Italy might fail to follow through on their fiscal consolidation commitments. As traders returned to the market on Monday, Italy got hit with a round of sovereign downgrade rumors after press reports suggested that the country would miss its 2011 and 2012 growth targets.

ECB's Trichet again singled out Italy and urged the country to stick to its planned cuts, and there was concern that the ECB might be tempted to halt Italian bond purchases (although dealers observed the bond purchases continue throughout the week). With the US out on Labor Day holiday, the major European bourses tanked. On Tuesday the Swiss National Bank set a minimum exchange target for the EUR/CHF cross of 1.20 and said that it was ready to buy foreign currency in "unlimited quantity."

European indices fell even further on Tuesday, and then recouped some losses through Thursday, after the German Constitutional Court ruled that German participation in the EFSF did not contradict constitutional rules. Thursday also saw the ECB and BoE leave policy unchanged in respective rate decisions.

In his penultimate press conference, ECB President Trichet staunchly defended the ECB from criticism and loudly reiterated the bank's commitment to its central mandate, but did acknowledge that the balance of risk has changed to the downside. Reflecting this change, the ECB staff lowered projections of euro zone growth for 2011 and 2012, and the IMF further reduced its global 2011 GDP growth outlook to +4.0% from the +4.2% estimate offered just last week.

- Last week it became clear that Greece's fiscal situation has decayed significantly, putting Athens's ability to follow through on its commitments at risk and prompting EU/IMF/ECB Troika investigators to temporarily suspend their mission. Coming into this week markets were watching news about commitments to the Greek private debt swap, with reports suggesting that Greece would only get a 70-80% participation rate, below the desired 90% target.

Chatter that Greece might be preparing to default was making the rounds late in the week, after German Chancellor Merkel warned that a possible Greek exit from the euro zone could trigger a "domino effect." Despite vociferous denials from Greek officials (who called the rumors of default 'organized speculation'), there were press reports suggesting that Europe was battening down the hatches ahead of a possible default event.

Germany was said to be preparing a contingency plan to help protect the German banking industry from a Greek default, with some unconfirmed comments that Europe is working on 'plan B' for Greece. Adding fuel to the fire, ECB Chief Economist Jurgen Stark resigned from the ECB on Friday, ostensibly for "personal reasons," although the word is that he is fed up with the ECB's policy of buying the debt of peripheral euro zone nations to keep down their borrowing costs.

EUR/USD began the week at three-week lows testing 1.4130 and extended the losses by the end of the week to its lowest level since March below 1.3750. Technical factors also played a role late in the week as the EUR/USD moved below its 1-year uptrend line that was violated once it crossed below the 1.3940 on Thursday

-The EUR/CHF cross was hovering around the 1.10 as the week began. Swiss CPI data registered its third monthly decline, adding to concerns that franc strength was triggering renewed deflation. Then on Tuesday the Swiss National Bank, in another effort to dampen franc strength, took the extraordinary measure of setting a 1.20 floor in the EUR/CHF. The SNB's move effectively reversed safe-haven flows, sending USD/CHF from the 0.7950 area to test above 0.88 while EUR/CHF surged over 9% to test above the 1.22 area.

Dealers immediately wondered when markets would test the SNB's resolve, however, some Far East analysts responded that maintaining a peg was not that difficult, provided the central bank possessed enough ammunition to carry out daily maintenance. Recall Bretton Woods dictated a peg that was maintained for three decades. The current belief among dealers is that if the SNB wants to maintain its currency reserves at present ratios, it would sell EUR/USD rather than buy USD/CHF to maintain the floor in EUR/CHF at 1.20.

Talk about currency war and protectionism picked up momentum following the SNB move, which received mixed reviews from other central bankers. Trichet said that the move was the SNB's own responsibility, while Norway started to feel the heat as traders sought out new safe havens. The Japanese government warned South Korea that efforts to weaken the won were not desirable.

- A late-week barrage of monthly economic data out of China saw some relief on the inflation front but also offered a stark reminder of a slowdown in global manufacturing. August CPI fell for the first time in four months to 6.2% y/y, below the 6.3% consensus and the 6.5% three-year high in July.

In turn, Industrial Production at 13.5% was at a 3-month low and also below consensus. Subsiding inflation coupled with further slowing in industrial production are seen as increasingly likely to keep PBoC from engaging in further tightening through either the RRR or 1-year lending rates.

- Elsewhere in the region, Reserve Bank of Australia, Bank of Japan, and the Bank of Korea all kept policy rates unchanged as widely expected. RBA reiterated inflation would decline further toward the end of the year, prompting Goldman Sachs to withdraw its forecast for a rate cut as early as October.

Bank of Japan offered no additional easing measures despite the politically motivated calls to deal with strong Yen coming from the new cabinet members, even though Japan Q2 final GDP saw a more accelerated slowing at -0.5% q/q than initially reported. Bank of Korea also deferred to powerful macro headwinds in striking a cautious note, despite the minority faction clamoring for a rate hike after hotter than expected CPI data.

TradeTheNews.com

Political discussion is always bound to push some people's buttons. But, I think we need to step back and look at what both major parties have become.

Your comments came to mind as I read this story: "Is Romney a tea partier?"

http://tinyurl.com/3fb9pok

The author's conclusion is that it's a complicated answer. I suspect that's because there isn't a simple definition of the tea party. It started out as a prospective 3rd party movement that gained momentum with the anger at the TARP bank bailouts. But, I believe its become the home of the far right wing of the Republican party, or at least labeled as such. Thus, while a Pres. candidate may have a favorable view of some or many Tea Party positions, they are very hesitant to turn off voters by labeling themselves as such.

The article points out the debate between 2 tea party groups about whether someone's views are 'pure enough.' I don't think it's too far of a leap to go from 'maintaining ideological purity' to nazi-ism. On the other hand, Obama's belief in big gov't as savior has taken the country closer to fascism.

Where did all the moderates go?

ChrisM,

While this article concentrates on the GOP, I have come to view it s typical behavior of both parties.

My own falling out with the GOP happened when Tom Delay's office contacted me to be on a Small Business Advisory Board for W. I was assured this was NOT a fundraising job. Then first paragraph, pg3, of the agreement — I was "... to be in charge of fundraising for northern Illinois ad southern Wisconsin."

I called his office, left a few choice words, and demanded never to be called or written again. So far it's working.

More then anything else we need to revise the powers and tenure of Congress.

Grym

Tremendous11,

"Where did all the moderates go?"

Well, I suppose we have always had a few and most likely still do, but moderation doesn't make headlines. Our political history is rich in underhanded dealings, accusations and mud slinging. Some of our most esteemed politicians wrote pamphlets full of exaggeration and outright lies about their opponents — including Thomas Jefferson.

I don't remember anything the moderates ever did ;-)

As someone sympathetic to the Tea Party movement I'm less inclined to give a simple one sentence definition.

I have always viewed it as an outpouring of frustration on a wide variety of issues — some national and some more limited in scope. Certainly the debt is one important concern, but others such as:
• the Congressional auction of our jobs through favorable legislation,
• the failure to protect our borders and patent rights
• the importation of sub-standard and even unhealthy products (only one percent is inspected)
• the double standard on regulations here vs on foreign imports

If there is one overriding complaint I would expect it to be the elitist ramming through of legislation when all the major polls should opposition by the majority of US citizens, ie: First TARP, then the Healthcare bill. Both were major debt increasing factors and seem to have been the last straw on that issue, but the "People be Damned" attitude I believe is a major factor.

So far, I don't see either party dealing with the whole picture — including the "Tea Party Candidates" who were elected.

In my opinion, unless we alter the powers and rules of Congress, a new party would soon fall into the same pattern as the two.

Grym

http://tinyurl.com/3za9bae

Former Orioles manager Earl Weaver had a saying, "you're never as good as you look as you win or as bad as you look when you lose."

So far, despite all the sturm and drang, it's volatility within a rangebound market.

Seriously Dave;
1. (It should have been evident to clear-eyed observers that the Republican Party is becoming less and less like a traditional political party in a representative democracy and becoming more like an apocalyptic cult, or one of the intensely ideological authoritarian parties of 20th century Europe.)
Classical disinformation warfare – call your adversary what you actually are.
2. (in order to strong arm some union-busting provisions into the FAA reauthorization.)
Opinion and hardly fact. Edit - not the only radicals are the Peta people that burn down lumber mills and radical left unions (Hundreds of Longshoremen stormed the Port of Longview early Thursday, overpowered and held security guards, damaged railroad cars, and dumped grain that is the center of a labor dispute, said Longview Police Chief Jim Duscha.) http://seattletimes.nwsource.com/html/localnews/20...
3. (now requires a presidential candidate to raise upwards of a billion dollars to be competitive in the general election?)
I can’t recall who was in charge of the house, senate… Democrats maybe?
4. (Allen West) crackpot – lunatic?
I don’t consider Allen West a lunatic.
5. ( Then, they would use that fiscal crisis to get what they wanted, by literally holding the US and global economies as hostages.)
Hostages???????? If I disagree with the President I’m holding the government and people HOSTAGE – these are all Saul Alinsky “rules for radicals” words. This entire document was written as if Saul Alinsky had written it himself.
6. (The left is often afraid of militant extremists. This happened in Germany. The Nazi party was able to terrorize the other parties (except the Communists) into passivity. Different tactics today, but same result)
WOW – really Dave! Let me tell you something Dave – I don’t mind supporting people that need a hand up – what I have a problem with are these pseudo vulnerable on government cheese by the 10s of millions. I didn’t send the jobs overseas, I didn’t import the drugs, I didn’t sell weapons to mexican gangs and drug lords, I don’t pump out baby’s to increase my income… I am and support the Tea Party Movement – it’s not perfect, 2 years old but people talk like they have been around longer then dirt, we’re for constitutional government, not necessarily democratic (mob rule) government – most of us want some rational change – some of us feel you have to ask for the moon and hope to hit somewhere in the middle – all of us realize we’re going to have to deal with the 'real radicals' in this nation on both sides of the divide, so part of that is responding as I do. Earl

Nice breakdown of Euroland crisis by countries and developments

http://stks.co/A1e

Appreciate the link. For the record, I am long SVM and a strong believer in the Company.

On your chart, there are 10 insider sales from March thru April and one in mid-July.

Do you know the amount of shares, seller etc. on these transactions?

Vad, could you update the link for this, please? Thanks.

Earl, I'm sure if you were in government, you would act differently. You seem quite reasonable. I don't see you - or people like you - as a problem at all. Since I didn't make that clear, let me apologize in advance.

As for authoritarian parties, I'd suggest the Democrats are anything but. A bunch of - lets face it, pussies - can't agree long enough on anything even when they have control of government to do anything meaningful. Of the two, Republicans have much better party discipline.

The apocalyptic cult reference is pretty straightforward. He refers to the tens of millions people in the US who imagine the Rapture will take them away in the relatively near future soon after the antichrist makes his appearance. That by itself isn't a big deal, but if you are fully expecting the Rapture, you are less likely to be concerned with long term planning here on earth. Perhaps the words "apocalyptic cult" are perjorative - maybe we should use a more politically correct term: "religious group that implicitly believes in an impending near-term end of the world event where believers are saved, nonbelievers go to hell." Its not a small section of the party. Keywords pop up from time to time. Hurricanes being messages from God to wake up politicians in DC, for instance. That one got past the handlers, oops.

As for "intensely ideological", that has more to do with folks who demonize anyone who doesn't agree with them. Happens on both sides, but I see it more often on the right than the left. Accusations of being anti-american if you don't support the GWOT, the war on drugs, the war in Iraq, the war in Afghanistan, etc. And the right tends to generate scarier people than the left. Imagery like Sarah Palin's crosshairs are creepy. Reagan may have been shot, but two Kennedys and MLK were actually killed. Just as an example.

The FAA issue is neither here nor there for me. It wasn't a major point. Not sure why it was for the author.

As for holding things hostage - I think that characterization was appropriate. In a democracy, in order to get things done, you compromise. That's how business works. If everyone holds to their position 100% and won't move, nothing will happen given that not everyone thinks the same way. It was clear that the radicals in the congress wanted their bits passed, and didn't mind defaulting on the debt if they didn't get their way. Given they don't control government, that's just not a reasonable attitude. Being in government means making sure the country continues to function. Unless you fundamentally don't believe in government at all, of course.

Ultimately, I come to the conclusion that there's no sense that "reasonable people can differ". One side - a small minority actually - thinks that they have The Answer, and their job is to shove that answer down the throats of everyone or else the world can end and they're fine with that. Ideological purity. Apocalyptic cult. It all adds up. If God is talking directly to you, it simply isn't possible that others might have valid points as well. Anyone who differs is quite simply wrong. This attitude doesn't lend itself to compromise.

80% of the article resonated with me. It aligned with other things I've read by other former republicans who were disappointed with how things have developed. You saw it as a propaganda hit job. Reasonable people can differ. :) It all depends on where you are, what you've experienced, who you've read, and so on.

One last point. I suspect you and I would agree on most things that matter.

Dagong Global Credit Rating, downgraded US-Treasury’s debt from A+ to single-A last week. Beijing is the biggest foreign holder of US Treasury notes, and it’s much better at managing state finances.China posted a fiscal surplus of 1.25-trillion yuan ($193-billion) in the first half of the year

In a commentary published by the China News Agency on the evening of August 7th, the technocrats in the Politburo dropped the equivalent of a nuclear bombshell that ignited a worldwide meltdown in global stock markets and sent gold soaring above $1,700 /oz. “China, the largest creditor of the world’s sole superpower, has every right to demand the US to address its structural debt problems and insure the safety of China’s dollar assets. If no substantial cuts were made to the US’s gigantic military expenditure and bloated social welfare costs, the latest credit downgrade would prove to be only a prelude to more devastating credit rating cuts, which will further roil the global financial markets all along the way,” it said.

http://www.sirchartsalot.com/article.php?id=155

Here is a link to trades in SVM.

http://www.gurufocus.com/InsiderBuy.php?symbol=SVM

Goldbug,

sure, http://tradinglog.realitytrader.com/2011/09/sep-09.... If Facebook link doesn't let you in, then the latest post at http://tradinglog.realitytrader.com mirrors it the same day, just being updated posted after the market close.

A couple of points.

"Why is it any debt has to be paid back"

Perhaps you can explain further what you mean when you say this.

Currently if you don't pay your mortgage debt, you lose your house. Same with your car. Unless part of the conversion to Sound Money involves a debt jubilee where all debts are wiped out, most people in significant debt will eventually default. And that will result in even more deflation. And since most savings are located in instruments that rely on debt repayment (money market accounts, etc), even the savers will be hosed unless the Fed picks winners again. And a debt jubilee (doesn't that sound nice?) once again hoses the savers - it acts the same way as a default. Jubilee for the debtors, pennies on the dollar for the savers.

In other words, I'm missing there mechanism whereby savers get to retain 100% of their savings, and debtors don't lose the things they owe money on but can no longer pay because deflation will make servicing that debt impossible.

"Why can't foreign trade imbalance be settled with US gold trade dollars on a $10,000,000:1 gold basis?"

A gold standard, at least to me, implies the willingness of the treasury to either buy or sell gold at the stated price, in order to "enforce" the standard. The price is critical. Is your price for gold right now $10M/ounce?

Too low, and people will trade dollars for gold until there is no more gold left. Too high, and people will pony up gold until massive inflation prints enough dollars to compensate. I think gold at 10M/oz would bring a lot of gold out of hiding. I'd certainly try it with an ounce or two. Then I'd buy a house or five. The inflation there would be - astonishing. That doesn't sound like very Sound Money to me.

Now I'm not sure what a Trade Dollar is. Is it anything like a Non Marketable Security? Dollars are not backed merely by confidence, they are backed by the ability to buy property and goods in the US. Does a Trade Dollar have that virtue? The Chinese can always come to the US and buy buildings, land, gucci bags, foreclosed houses, you name it, with their dollars. Could they do the same thing with Trade Dollars? If not, why on earth would they accept them?

We can default on anything, of course, but we can only play that trick once. Then our foreign suppliers will get wise and demand things that can't be defaulted on, the same way Finland is asking for Greek Islands as collateral for the loans. Do we imagine that OPEC will continue to export oil to us with an implicit $10M/oz gold price? Fantasy, its just fantasy. Right now they can take their dollars and buy the MGM grand, or US equities, or whatever. If you take that away and instead give them gold at $10M/oz, we're not going to get any NEW oil at all.

So we default on all our overseas dollars, and we try to pay for new deliveries of oil with gold at $10M/oz. Which brings me back to my original point about standards of living. Imagine the US living on its own oil production, cuz there ain't nobody gonna sell us oil at two cents a barrel.

I'd like to see a step by step architecture for a real Sound Money system rather than what I would call a bunch of hand-waving. How is discipline maintained? What is the price for gold? Who is empowered to exchange gold for money? If there are two currencies, what is the implicit exchange rate? Does it float? If not, assume the black market will provide a float (we're trying to do a Soviet Ruble). How does the conversion process work? How about all the current dollar holdings around the world? All the debt we owe the chinese? All the debt we owe ourselves? Current savers? Current debtors?

Next, what are the implications for the US economy? What must happen for the US to remain in equilibrium with a Sound Money system?

You've been talking about Sound Money so long, you should know all the answers to these questions cold! If not, what is it exactly you've been talking about all this time?

A Sound Money discussion is only as Sound as its Proposal! HA!

:-)

from last week. my lord, he didn't discuss anything new. I thought he was at least going to try.

all i could do was think i was watching a re-run of the elections. And how abandoned the 48m on food stamps and millions who are unemployed, must feel.

There are no more solutions that can come out of DC, that will work. It is time for you and I to become our own president and move forward.

- Pay down your debts. If you cannot, default. They wont kill you. your debts do not go with you to the after life. just start over.
- Own your home outright, or at least by 51%
- Renting is ok, lower rents or moving in with family to reduce costs = better
- lower all your monthly expenses
- make as much as you can and keep spending less and looking for ways to cut spending
- Stop buying cars every yr. stop leasing, stop financing. fix your car if possible. but dont spend thousands if your car is at an end. then buy used from private party.
- invest in learning new skills that people need. skills your neighbor and friends can actually ask for help and barter with you on
- slowly think and setup emergency plans ie blackouts, natural disasters etc
- Take a bigger role and be responsible in your children's education
- get into better shape

'The $hit you think you own, literally ends up owning you'

Europe is going to deal with this Greek crisis. The problem is that this is the beginning of a string of crises and not the end. They do not appear, at least in public, to want to deal with the systemic problem of too much debt in all the peripheral countries...

How do they get out of this without a debt crisis on the scale of 2008? By coming to grips with the problem. Germany is apparently doing that this weekend, by preparing to use the money it was going to pour into Greece to shore up its own banks. That is a much better plan. But as a well-researched report (by Stephane Deo, Paul Donovan, and Larry Hathaway in the London office – kudos, guys!) from UBS shows, solving the problem will be very costly. The next few paragraphs are from their introduction.

Euro Break-Up – The Consequences

“The Euro should not exist (like this)

“Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change.

“Fiscal confederation, not break-up

“Our base case with an overwhelming probability is that the Euro moves slowly (and painfully) towards some kind of fiscal integration. The risk case, of break-up, is considerably more costly and close to zero probability. Countries cannot be expelled, but sovereign states could choose to secede. However, popular discussion of the break-up option considerably underestimates the consequences of such a move.

“The economic cost (part 1)

“The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. There is little prospect of devaluation offering much assistance. We estimate that a weak Euro country leaving the Euro would incur a cost of around €9,500 to €11,500 per person in the exiting country during the first year. That cost would then probably amount to €3,000 to €4,000 per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.

“The economic cost (part 2)

“Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalization of the banking system and collapse of international trade. If Germany were to leave, we believe the cost to be around €6,000 to €8,000 for every German adult and child in the first year, and a range of €3,500 to €4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over €1,000 per person, in a single hit.

“The political cost

“The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s ‘soft power’ influence internationally would cease (as the concept of ‘Europe’ as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.”

http://ce.frontlinethoughts.com/CT00010002MzU3NzA2...

So Muldin (or UBS analysts) put some numbers to what Bill has spoken of, that is that the cost of EU breakup is considerably higher than that of consolidating it fiscally.

No easy choices and a potentially rough ride into the end of year as European politicians are forced into making this choice. It could be that we must must all suffer until November when the pain forces national parliaments to ratify the new bailout mechanism being formed now.

Muldin continues to quote others following this train of thought of a Greek exit from the Euro. You must read it to understand the grave consequences of such an attempt. For example, look at the following Fed St. Louis graph of foreign official deposits with the Fed - now higher than 2008. What's that about?

http://research.stlouisfed.org/fred2/graph/?s%5B1%...

It is worth your time to read this Muldin.

"Christine Lagarde has softened her stance on the amount of capital needed by European banks, as finance ministers and central bankers from the leading advanced economies sought to calm febrile markets at the weekend.

Ms Lagarde, IMF managing director, confirmed that the Fund was revising its estimates of the loss of tangible equity in European banks on Saturday, saying the estimated capital losses of €200bn were “tentative” and the Fund was “in discussions with our European partners to assess the global methodology” until the final estimates are published in a Fund paper released shortly before its annual meetings in a fortnight." (more)

http://www.ft.com/intl/cms/s/0/8d51cc1a-dbb3-11e0-...

So from what I gather from Muldin, TTN and Lagarde's admission here is that firewall may be being placed around banks that have exposure to Greece, like those in Germany. Lagarde calms down the rhetoric, Berlin puts the money it was going to waste in Greece into cushioning against German bank losses (France will do likewise) and Greece doesn't exit the Euro, but a real deal to cut external debt is made so that interest on debt payments become supportable. Greece cannot pay anything at the moment, it's in a steep deflationary spin as the coffers of both Athens and the Greek people contract.

It'll hurt to do that, but the other options noted elsewhere are even more expensive. That's the headline shock I'll be waiting for, to see blood on the streets. Stocks like Boeing will be going for a steal, but I expect not to hear someone posting here that "Boeing is great value". It will be, but most people will be writhing in agony at the pain they're in, real or imagined. I've put in buy orders for MGS.V, ROF.V & DMH.V @ .05. The day they trigger - IF they trigger - then I'll be looking for other buy opportunities in the larger explorer space.

As always we shall see.

Dave, Earl,

"I believe that if you and Earl were politicians you would agree on anything and everything that would get the two of you elected... "

I think Bill has it about right here. IMO, most people in both parties are more concerned with keeping their cushy jobs and benefits than with the condition of the nation. I see most disagreements as theater designed to divert attention from the real lack of meaningful action on the real problems. (They got their raises right on schedule this year. Need any other examples?)

Congress, in a long running game, has spent us into a corner.

• They passed legislation favorable to corporations exporting US jobs.
• Without those well-paying jobs, a 70% consumer dependent economy can no longer thrive.
• They passed legislation promising unfunded mandates which are now choking most states.
• They threw a whole list of groups into the Social Security pool and now we have more drawing on it than paying into it.

All of the above were to get themselves reelected.

Since they have so much more in common with the CEOs who are making up to 500 times as much as their employees that they too have come to believe they deserve it. I worked on over 70 corporate annual reports with a couple dozen corporate execs — nearly all believed they deserved the best of everything.

This has spread to many on the fringes of government even the not elected crew like Bernanke. He said last week that he is "puzzled that consumers are not spending."

To me this means:

1.) Bernanke is an idiot.
Even at 9.1% unemployment (I believe it to be double that.) he ought to be able to work out the effect of that condition.
OR...

2.) He is simply a liar.
He just doesn't care about the lowly working people. Or, more accurately, the no longer working people.

Grym

Dave,

"Currently if you don't pay your mortgage debt, you lose your house. Same with your car. Unless part of the conversion to Sound Money involves a debt jubilee where all debts are wiped out, most people in significant debt will eventually default. And that will result in even more deflation."

and:

"In other words, I'm missing there mechanism whereby savers get to retain 100% of their savings, and debtors don't lose the things they owe money on but can no longer pay because deflation will make servicing that debt impossible."

I can see savers (no debt) actually gaining the things debtors lose, if not the tangible item at least some of the lost value. Today I see far more deflation ahead than inflation.

Bernanke's entire tenure as Fed Chair has been an attempt to inflate away the debt. So far he is striking out and the whole country is suffering while he plays out his experiment.

We have a large amount of unsecured debt today. Everything on credit cards and all those student loans. Those debtors are among the ultimate winners in my view. If I were deeply in debt and out of work — i'd be maxing my credit cards while I can. Feeding my family and to hell with the stupid lenders.

Grym

May the Lloyd Be with You.

Thanks all for the article and the debate. This has helped me connect a lot of dots, such as why Lloyd Blankfein was purportedly quoted as saying that he's "doing God's work".

http://www.youtube.com/watch?v=9xvwhHOK8Rk

Grym and others on the thread,

I thought the "Goodbye to All That.." article was well written. The manner in which he captured how the GOP plays the Christian Right was seen in Rick Perry's recent move a few weeks ago in having a prayer rally for America. That will happen for eternity, politicians using every means possible to secure votes that is. Targeting religion ( both to attack and support} has been happening for thousands of years among the powers at be and will continue in our day. People are religious and it gets heated. The deceitfulness in which the DC crowd plays the sheep is increasingly sickening. Dems have theirs and GOP has theirs. I supported the GOP for years because I liked their choice of Judges, but their raping of America for the sake of corporate success is eroding my support. "Incumbents" are our nations most important problem at present, the career politician is a terrible cancer that is destroying our nation. The antics about the debt ceiling issue put that whole issue on world display.

Dave, (dispensationalism) I am neither evangelical nor fundamentalist – I do however accept the possibility that the earth as we know it can end at any time – it does not stop me from making plans and building our family business with my wife and children. I plan for Hurricanes and have provisions for this as best I can. I am Catholic and cannot speak to the character of evangelical/fundamentalist people, but my heart tells me it’s not ‘bad’; my awareness of such has always considered them a ‘fraction’ of the Christian Community. I’ve always considered Jerry Falwell to be edgy, and I’m ok with his right to ‘be’ as I am to those on the fence (agnostics) and those with feet planted on the ground without hope (atheist). However, I can hardly stomach those that seek to abuse the good will of Americans who work hard for a living by maximizing the government cheese handouts.

In my 31 years working in the chemical manufacturing industry and working ‘closely’ with hundreds of individuals over those years and I cannot recall anyone I would even remotely consider apocalyptic cultish in nature but I accept they probably do exist. I’m ok with that too. (I'm not sure how you translated my words "if you are fully expecting the Rapture, you are less likely to be concerned with long term planning here on earth" into a Jonestown cult where kids get fed poison kool-aid. They seem pretty far apart to me.) I’m not translating your words, I’m adding my experience to them and I struggle to understand whom you’re speaking of – it’s probably as simple as I ‘don’t know any of them’.

As a human and Christian I don’t struggle with ‘turning the other cheek’ or other brotherly tenants of Christianity – I’m able to consider others circumstances and decide if any harm someone does me is evil at base or misguided – it’s all about ones perspective, sure it’s subjective, I rely on experience and my reaction is based on such. It’s sad to me many people hurt for my lessons learned…

Historically humanity has in many times and places met with abject destruction – in the natural world critters deal with ‘eat or be eaten’ every day. All systems – be it political or ASTM standards must stand up to rigorous proving to be supported, therefore these outside standard deviations serve a valuable purpose (radicals at every end of the spectrum). In the past I asked myself how we were able to erect the NYC Twin Towers in the first place… this nation was built with sweat on ‘hope’; other nations build to the sky as a result of what America created; and the ‘state’ has never and can never offer ‘hope'! With that I think we all need each other. God bless you and God bless the United States.

Earl

This is obviously a tricky subject, or it would already be underway. It occurred to me that if "Eurobonds" were to be issued as an alternative to sovereign bonds that they could be backed by an incremental VAT levy across all Euro zone countries. Very difficult to avoid paying VAT so no cheating in the peripheral counties, and the levy could pass directly to the ECB bypassing national governments.

Equally obvious to me is that I don't understand the problem, since they're not doing it. Can anyone give me a clue please?

and it might be a timely warning this coming week again: http://stks.co/AFC

Sherman Minton Bridge closed indefinitely due to structural cracks
http://preview.tinyurl.com/3se2nod

This is in addition to the bridge in Minnesota a few years ago that collapsed and killed 13, injuring 30+.

This isn't theory, nor analogy. We have an infrastructure deficit in this country. We can resolve these issues for about $2T now or $5T in a couple years + untold lost lives and commerce due to shut downs like this.

We're getting negative real interest rates to handle our business.

http://www.businessweek.com/news/2011-09-10/bigges...

Rumours to begin the week with.

Hi Papadynamite; (Perhaps insurance is needed for protection such as buying the SDS.)

I've read Ron Sen, GW, John Murphy, Les, and many others - I'm waiting to hear from Bill Cara. I have 75 to 80% of my account in long term holdings, mostly miners of gold/silver/diamonds...

I trade SDS/SSO all the time but let my emotions get the best of me Friday.

regards,
Earl

Hi Vad, as always very timely 'great' information - (Disclaimer: this warning will be ignored by majority, just like 1000 similar warnings before. If you, a single reader of this - yes, you - heed it and play it right, that's all reward I count on. If there are two of you, I accomplished a lot today)

I had my head in the wrong place Friday and will probably pay for it Monday. It will be here soon enough...

best regards,
Earl

Thanks Vad for continuing our education. It has taken me almost 2 yrs to learn this very lesson. I have a photo of a hidden sniper in front of my desk as a reminder.

i am more comfortable than ever allowing multiple sessions pass by, with no trades, if i do not see my setups.

I was recently reviewing another very useful piece of advice from davefairtex. I still want to go 'Counter-Trend' WAY TOO SOON instead of accepting that the 'Theme-of-the-Day' is Trend-Continuation-DOWN or Trend-Continuation-UP as the case may be...

What Kind of Market do we Have Today?

Submitted by davefairtex (3335 comments) on Thu, 03/12/2009 - 10:10 #16646
I remember a contributor here said not long ago that a key thing for him was determining at the start of the day what kind of market he was facing. A simple enough observation, but very helpful to me!

I have noticed there are three basic types of "gold market" days. One where movement is slow and gradual, steadily moving either up or down in small fits and starts. This is usually what things look like when asia is open - usually anyway.

Another day has waterfalls of selling pressure that crush the life out of any feeble rallies, with startling $8 dropoffs that happen periodically. On these days, the market starts out getting crushed early, and it just keeps happening again and again the whole day.

And then there are days when any dip finds support, and the price either stays the same or moves higher with high buy volume repelling any selling pressure.

I'm developing different trading strategies depending on what kind of day I face. The concept really makes my life much less stressful. I.e. its a bad idea to buy dips on a day where the selling pressure is intense. Better to sell off and stand aside instead of trying to spend my energy swimming upstream. I know you veteran guys all know this sort of thing, but it's new to me!

Anyhow thanks, whoever it was who clued me in.

trading....

Recovery in stocks does not begin until 50 day then 200 day then recent highs can be overtaken.

Good luck folks

As Bernanke gives us Operation Twist II, or the shift of U.S. debt to intermediate duration, and flattens the yield curve, this will take volatility (and Velocity?) out of the mega Forex (except those being manipulated like the Swissy) and bond markets and into the stock market. Gold is not following the stock market volatilty and he predictably predicts a much higher price.

Stock market crash, anyone?

http://kingworldnews.com/kingworldnews/KWN_DailyWe...

Cheers.

davefairtex: Oops!! My error for the reference to you as " davefairfax " in my prior post. However, I do seek some clarification re your apparent defense of " straight rights ". I don't recall having reviewed any posts in opposition/condemnation to/of " straight rights ". So... what are these "straight rights " to which you reference? Something in the U.S. Constitution? Or, did you intend to refer to " states' rights " but mis-spelled?? Anyhow... so what in the heck is a " straight " and what, consequently, in your world is the opposite... crooked? And what does that mean?? Just seeking some clarity.

Rickards is a very smart man. I agree with much of his prospective. He is also promoting/selling his latest book. I assume book sales is how he earns his upkeep. Perhaps not but I have this penchant to follow the money

Very smart people can oversteer their position for personal gain. Speaking of oversteer, Ralph Nader and his book 'Unsafe At Any Speed' is a prime example.

Ralph took a perfectly good Chevy Corvair and turned it into an iconic death trap. What a hoot! As an engineer, the guy was pathetic..I find it telling that he didn't try to trash rear eng. VW's or Porsches!!!!!!!!!! And this idiot squared actually ran for President!!!?

Every person in the world breathes, acts and speaks for their own benefit. Altrueism is better left to Saints.

Follow the MONEY! Ask, QUI BONO and you might have a better sense of the players in this game and their methods of how they intend to fleece our sorry asses.

To borrow a phrase, the world ain't PRO BONO. Never has been, never will be.

I loved this gem in the WIR:

"Did you see that, for 2012, UBS raised their gold forecast +50% from US$1380/oz to US$2075? The research report states many reasons, but do you really think they’d tell the truth, as in: “The ECB and SNB will save our bacon. Otherwise we are dead. With the monetizing actions of these central banks, the price of gold in 2012 will average US$2075/oz and could hit a high of $2500 in the process. So, we recommend you buy our stock at these low prices and hedge the risk with purchases of gold.”

And now they're working on making gold cheaper for us to buy. Down $20 in 5 minutes. Wouldn't want gold to hit new highs on worries about a Greek bankruptcy now would we? Its funny, they work so hard at making it easier for China and India to accumulate at lower prices. JMO.

They do say a reversal happens when the market opens down and then reverses and snaps back. Or of course it could just mean selling all day long.

This article was probably the most interesting and enlightening article to arrive out of the 10th anniversary of this crime, that I've read anyway:

"SPIEGEL: In your book, you also criticize the fact that the US never really understood its enemy al-Qaida.

Soufan: I think we definitely underestimated the ideological motivations for these groups: what makes people blow themselves up, the religious signification of al-Qaida. It's not politics. The Chinese military strategist Sun Tzu said a long time ago: "If you know your enemy and know yourself, you will win a hundred times in a hundred battles." Unfortunately with the war on terror we forgot who we are, but also we didn't know our enemy.

Look at al-Qaida. On the eve of 9/11, they had about 400 operatives. They led us into a war longer than World War I and World War II. Not because they are such smart people, but because we did not understand our enemy. Instead, we applied waterboarding and enhanced interrogation techniques. We did exactly what al-Qaida wanted us to do. When you do this, what are you proving to the guy? You're proving that everything he thinks about you is right. But if you come with a cup of tea, he doesn't know how to act.

SPIEGEL: That was your strategy as an interrogator, to come along with a cup of tea?

Soufan: Every interrogation is different. You have to get them out of their comfort zone. Even if conditions are harsh, it can still be a comfort zone. Because you behave like they expect the enemy to behave. You have to confuse them. I interrogated bin Laden's driver, Salim Hamdan, in Guantanamo. Another American before me had promised him that he could make a phone call to his wife. But he never could. When we came, he said to us: "All of you Americans, you are lying." And we found out that indeed they did not fulfill the promise they made. I said to him, "OK, we messed up. Sorry, I apologize." And I gave him the phone.

SPIEGEL: Did your method work?

Soufan: He couldn't believe it. But after he made the phone call and he heard his wife's voice, he kneeled and started crying and thanked God. We took him back, we gave him some water, tea. For about 20 minutes he didn't say a word. And then he started asking me about Yemen and then said: "OK, what do you want to know?"

http://www.spiegel.de/international/world/0,1518,7...

Note the difference between objectifying one's enemy - treating him/her like an object that can be pressured to supply required answers - and treating them like a human being, being nice. It doesn't mean you have to blow sunshine up their butts, but see the difference between the CIA's "enhanced interrogation techniques" aka torture, and what this Lebanese American accomplished for national security in the United States.

In many ways does Soufan's behaviour make me think of the way of Aiki:

http://tinyurl.com/dgzfl3

And whilst on the subject, I look forward to seeing Cheney in The Hague.

"Psychopathy may prove to be as important a construct in this century as IQ was in the last (and just as susceptible to abuse), because, thanks to Hare, we now understand that the great majority of psychopaths are not violent criminals and never will be.

They're the charming predators who, unable to form real emotional bonds, find and use vulnerable women for sex and money (and inevitably abandon them). They're the con men like Christophe Rocancourt, and they're the stockbrokers and promoters who caused Forbes magazine to call the Vancouver Stock Exchange (now part of the Canadian Venture Exchange) the scam capital of the world.

Hundreds of thousands of psychopaths live and work and prey among us. Your boss, your boyfriend, your mother could be what Hare calls a "subclinical" psychopath, someone who leaves a path of destruction and pain without a single pang of conscience. Even more worrisome is the fact that, at this stage, no one -- not even Bob Hare -- is quite sure what to do about it.."

http://jessescrossroadscafe.blogspot.com/2011/09/p...

This is worth a read, potentially an understanding of what is going through the minds of those who've reaped such economic destruction these last 20 years.

ALOHA!!

Dave-Simply put no steps to a SOUND MONEY can be achieved so long as we have a legalized money monopoly of private bankers in the way. The current system of fractional reserve combined with the no holds barred loan practices of the SubPrime derivatives industry has bankrupted this country and its monetary system. Banks really have no skin in the game. What happens is this 10% reserve requirement, even less for some banks with assets less than $10mil only perpetuates the risk factors. It is only the FDIC, which I equate to another AIG, that saves the entire system from the C WORD.

Deposit = $10,000USD
Reserve = $1,000USD
Loan = $9,000USD

So what we have is $1,000USD backing a $9,000USD debt. That to me is the "legalized fraud" that allows for default. Who sets reserve requirements in America and who benefits most from such policy? My point has always been that since 1971 there is no asset backing money now. In other words we have an entire global monetary system built on just "faith and credit", in other words OPL(Other People's Liabilities). We can continue this charade into the quadrillions or until all faith is lost in our credit system(US Treasuries that are marketable) or we can reintroduce asset based money. The latest calling of the IMF and the SDR has been a basket of currencies that make up the SDR should the SDR take on the role of global "reserve currency", but really how is that any different than the current floating currency system we have now where a USD is based on a basket of currencies value like the Euro, Swissie, Yen, etc? Its not. In order for America to continue to attract foreign money to prop up our way of life we need "trade dollars" that have more value than just our liabilities. The rising POG shows there is less and less "faith" in our sovereign credit. The sad part about America today is that we need foreigners to buy our debt. It was only what transpired during the days of Bretton Woods that gave us reserve currency status, but the days and circumstances of Bretton Woods have long since gone. After WW2 we held some 22,000 tons of gold and now we are down to 8,500 tons, still the majority of gold reserves, but then how do we know that without a third party reliable audit of those reserves. I mean Chavez wants the Venezuelan gold back, but do we have it to give back? Has it been loaned or swapped out of existence? Back to possession is 9/10ths ... So my proposal to reintroduce gold, an asset that cannot file bankruptcy, into the SDR or in the current case of "reserve currency" the US "trade dollar", which these days seems to be the marketable US Treasuries(call it a gold bond) to me makes sense. Right now there is no asset in a SDR or a USD or a US Treasury ... only debts. Which is the absurdity of having a $1.3TRIL trade deficit backed by a $14.6TRIL public debt. None of which will ever be repaid since there has not been any evidence of principle repayment during my lifetime even with "inflated dollars". How much more can we inflate already hugely devalued dollars before payment of one dime of debt principle is evidenced? Just paying the "minimum due" is not principal.

You cannot get past the concept of a monetary system not based on liabilities(debt), when in fact we did have one for most of our history. What you are trying to figure out is how America can return to a gold standard and still eat its cake too! With a real gold standard, it can't ... is the answer! We have squandered that. But the other alternative of going down this same unending debt road has a worse consequence. In the end it all collapses and we then have to settle with our creditors via War. That is the worst case scenario or we just hand over all our gold and other assets to settle our liabilities. I use "War" as in a WW3 or since we own the vast majority of nuclear weapons then "trade" becomes the ultimate weapon. Imagine a world where no other producer nations will trade with the USA? In other words no longer accept US Treasuries or a USD as payment for goods and deficits either that or no longer trades with the USA period. Then America is forced to produce our own goods from our own raw materials to supply demand. Not all together undesirable, but under such conditions there would no longer be a livable union scale, since monetary value would be near non-existent like a Argentine Peso(1 Argentine peso = 0.2379 US dollars).

The first step to SOUND MONEY = eliminate the US FED

Only one US Presidential Candidate has that as his platform in recent elections. Only one politician in Congress has been attacking the US FED for decades relentlessly.

I have equated the US FED and its member banks as "monetary middlemen" skimming our wealth for so long even I am tired of writing about it, but it seems you left that out of your equation so apparently that has still not sunk in to even the most astute of Caraistas. Who here would own stock in a company that waits five years to publish its quarterly financial foot notes and then when they are published they are full of white out. I think we deserve a little more "real-time" transparency in the entity that now issues our monetary policy.

"Who is empowered to exchange gold for money? If there are two currencies, what is the implicit exchange rate? Does it float? If not, assume the black market will provide a float (we're trying to do a Soviet Ruble). How does the conversion process work? How about all the current dollar holdings around the world? All the debt we owe the chinese? All the debt we owe ourselves? Current savers? Current debtors?"

The idea of two currencies is not new and in fact came from how the S&P grades sovereign debt. An internal currency and an external currency. I only use that since we must have a "trade dollar"(external currency)that has more viability than just endless US Treasury paper debt issues. The rise in the gold price is an indicator of the C WORD for US Debt and so the POG has risen in every global currency as well. The entire irredeemable floating global monetary system is at stake here. There are no brakes on sovereign debt. If there were we wouldn't see debt numbers in trillions. We did not start seeing trillions until after 1971 when the debt damn burst(aka:gold monetary system).

Dave come on, go back and read the US Constitution for all your "architecture" answers. The US Treasury has the debt power and the US Mint makes the coin and Congress empowers both. Now repeal the Federal Reserve Act and we are back on the road to SOUND MONEY. Either we repeal it and eliminate the US FED or we keep going down this road and the US FED repeals our Freedom and Liberty and exports all our wealth that we have accumulated since 1776. Without the US FED Congress would have to make an attempt at representing WE THE PEOPLE instead of WE THE BANKS!

None of that is "hand waving". Doing nothing but accepting the status quo and saying stuff like "never happen" as you propose and do on a daily basis is what I call "hand waving". Yeah, in that case we are the Soviet Rubble ...

What SOUND MONEY does is offer a platform for discourse and education. There are many strategies out there for SOUND MONEY. One of the first steps should be what Ellen Brown suggests and what I have spoken of is to get rid of the middlemen. Every US State can do that now as modeled by the State of North Dakota. Sometimes people must first figure out what does not work before they can find what does. In fact Thomas Edison used that very strategy his entire life. I appreciate your discourse just not your insults ...