Socio-Economics History Blog

Socio-Economics & History Commentary

Gerald Celente – Famine and Riots Worldwide!

March 5, 2009 Posted by | Economics | , , , , , , , , , | 7 Comments

Gold Daily Chart

gold-chart-5-mar-09

  • Gold has been disappointing to gold bulls for the past 8 trading days. However, the bullish picture is still intact. The price action is clearly tracing a rising channel. The low of this channel is marked by the 50 days MA line. I expect MA(50) support to hold. So gold will rebound from a test of US$900/ounce and start to move up to test the upper channel limit in the coming weeks.
     
  • What will be the test high? Looking at the chart above it will likely test the US$1035/ounce all time high. There is a high probability that this will be broken and it will head towards US$1250/ounce region. This up move will last from 5-7 weeks.
     

gold-chart-tea-cup-5-mar-09

  • The 2nd possibility (and more likely scenario) is shown above. Gold is tracing a Tea Cup chart formation. The handle is being formed and the breakout above US$1000/ounce will occur in the coming 2 weeks (?). The price target is around US$1320/ounce.

Disclaimer – I am not a financial advisor. This is not an advice to buy, sell or hold any stocks or bonds or any precious metals.

end

March 5, 2009 Posted by | Economics | | 3 Comments

Banksters Rule America !

Senator Sanders : My question to you is, will you tell the American people to whom you lent $2.2 trillion of their dollars?
  
Ben Bernanke : No !
  • Federal Reserve Chairman Ben Bernanke will not reveal their loan recipients. The FedRes, a private bank, is apparently above the law and not accountable to anyone. Despite the fact that it is taxpayers monies! Reuters reports U.S. senator wants Fed to name loan recipients:
      
    WASHINGTON, March 3 (Reuters) – A U.S. senator berated Federal Reserve Chairman Ben Bernanke on Tuesday for refusing to name banks that borrow from the central bank and introduced legislation that would require public disclosure.
     
    In a testy exchange at a hearing before the Senate Budget Committee, Vermont Sen. Bernie Sanders, an independent who usually votes with the Democrats, said he found it “unacceptable” that the central bank risked taxpayer money without detailing where the funds went.
     
    “My question to you is, will you tell the American people to whom you lent $2.2 trillion of their dollars?” Sanders asked, referring to the size of the Fed’s balance sheet. Bernanke responded that the Fed explains the various lending programs on its website, and details the terms and collateral requirements.
     
    When Sanders pressed on whether Bernanke would name the firms that borrowed from the Fed, the central bank chairman replied, “No,” and started to say that doing so risked stigmatizing banks and discouraging them from borrowing from the central bank.
     
    “Isn’t that too bad,” Sanders interrupted, cutting him off. “They took the money but they don’t want to be public about the fact that they received it.”
     
    According to the text of the proposed legislation, e-mailed by Sanders’ staff, he wants the central bank to identify any firm that has received financial assistance since March 24, 2008, including details on the type of borrowing, amount, date, terms and the Fed’s rationale for lending. Sanders wants the Fed to publish those details on its website and update them at least every 30 days.

     
  • Who rules America? Here are some quotes :
     
    “The real rulers in Washington are invisible, and exercise power from behind the scenes.”
    – Supreme Court Justice Felix Frankfurter, 1952
     
    “Since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the United States, in the Field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they better not speak above their breath when they speak in condemnation of it.”
    – Woodrow Wilson, The New Freedom (1913)
     
    “Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people. To destroy this invisible government, to befoul the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.”
    – Theodore Roosevelt
     
    “A power has risen up in the government greater than the people themselves, consisting of many and various powerful interests, combined in one mass, and held together by the cohesive power of the vast surplus in banks.”
    – John C. Calhoun, Vice President of the United States
     
    “I believe that banking institutions are more dangerous to our liberties than standing armies…The issuing power should be taken from the banks and restored to the Government, to whom it properly belongs.”
    – Thomas Jefferson
     
  • Americans must wake up! The banksters have bought the best government money can buy. Banksters control the military industrial complex and many large corporations. What is happening to America is Corporatism. Remember Mussolini? The country exists to serve large corporate interests and it is heading towards fascism!
     
  • See also :
     
    The Federal Reserve: Secretive And Incompetent Organization ! The Creature From Jekyll Island.
    History of Money & Fractional Reserve Banking System
    How International Bankers Gained Control of America!
    Federal Reserve is a Private Company. 
    Ron Paul – Federal Reserve is the Culprit!

end

March 5, 2009 Posted by | Economics | , , , | 6 Comments

FDIC Could Be Insolvent This Year !

  • Every weekend, we hear of American banks going bust. The organisation that takes over such banks is the FDIC. With so many banks failing and the number expected to increase, the FDIC will be hard pressed to pay depositors of insured deposits. At some point in time, I am quite sure tax payers will have to bailout the FDIC also.
     
  • Bloomberg reports :
      
    March 4 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.
     
    “Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.
     
    “A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”
     
    The FDIC last week approved a one-time “emergency” fee and other assessment increases on the industry to rebuild a fund to repay customers for deposits of as much as $250,000 when a bank fails. The fees, opposed by the industry, may generate $27 billion this year after the fund fell to $18.9 billion in the fourth quarter from $34.6 billion in the previous period, the FDIC said.
     
    The fund, which lost $33.5 billion in 2008, was drained by 25 bank failures last year. Sixteen banks have failed so far this year, further straining the fund.
     
    Angry Bankers
    Smaller banks are outraged over the one-time fee, which could wipe out 50 percent to 100 percent of a bank’s 2009 earnings, Camden Fine, president of the Independent Community Bankers of America, said yesterday in a telephone interview.
     
    “I’ve never seen emotions like this,” said Fine, adding that he’s received more than 1,000 e-mails and telephone messages from angry bankers.
     
    “The FDIC realizes that these assessments are a significant expense, particularly during a financial crisis and recession when bank earnings are under pressure,” Bair wrote. “We did not want to impose large assessments when the industry and economy are struggling. We searched for alternatives but found none better.”
     
    The agency, which has released the change for 30 days of public comment, could modify the assessment to shift the burden to the large banks “that caused this train wreck,” Fine said. “Community bankers are feeling like they are paying for the incompetence and greed of Wall Street,” he said.
     
    Legal Constraints
    Bair dismissed that suggestion. “For risk-based assessments, our statute restricts us from discriminating against an institution because of size,” Bair wrote.
     
    The deposit insurance fund won’t dry up because the government can get funds from the industry and congressional appropriations, and borrow from the Treasury, Chip MacDonald, a partner specializing in financial services at law firm Jones Day, said today in a telephone interview.
     
    “As a depositor, I am not worried in the least,” MacDonald said. “No one is going to let the FDIC go without any money.”
     
    Consumers should watch this issue closely, said Edmund Mierzwinski, consumer program director at U.S. PIRG, a Boston- based consumer-watchdog group. “I wouldn’t take their money out of the bank yet,” Mierzwinski said. “If the FDIC is saying that there is this serious problem, then we should all be concerned. I think there is a chance the FDIC is going to have to ask taxpayers for money in the future.” 
     

end

March 5, 2009 Posted by | Economics | , , , , | Comments Off on FDIC Could Be Insolvent This Year !

Eastern Europe Crisis & Financial State of Western Europe !

uk-debt-liabilities
  • How bad is it in Eastern Europe? See my earlier posts :
     
    Ukraine Teeters on Collapse !
    Eastern Europe on the Edge
    Eurozone Nears Breaking Point !
    Eastern Europe Collapsing !
    Eastern Europe – Hungary on the Edge of Bankruptcy!
    European Monetary System At Breaking Point ! Eastern Europe Bad Debts set to Bankrupt European Banks!
    Eastern Europe Contagion Fear ! Ukraine Crumbling !
    Next Wave of Banking Crisis to come from Eastern Europe
    Eastern Europe Economic Collapse & Looming Debt Defaults
     
  • Merkel and her EU counterparts have taken a rather small step in helping Eastern Europe. Over the past weekend, they have put up only US$30B to assist Eastern European countries on a case by case basis. Considering the fact that all of EU is in serious trouble, it is understandable. You cannot help other countries much when your own country is in deep deep depression.
     
  • The likelyhood of an Eastern European wide collapse is even more probable. I doubt the IMF, World Bank and EU have enough resources to solve this looming collapse. It does not help that many of these former Soviet republics have burnt their bridges with Russia. So assistance from Russia, who itself is facing economic crisis and rising unrest, is highly unlikely. Averting disaster looks more and more improbable as the weeks goes by.
     
  • Nadeem Walayat writes in a rather lucid article Subprime Eastern Europe to Bankrupt Western European Banks :
      
    The long ticking time bomb of Eastern European debt is starting to explode with an even greater inevitability as that of subprime mortgages exploding in the United States, as at least in the United States the determining factor of whether or not the mortgage market would go bust is the state of the US housing market. With Eastern Europe the big and obvious question mark that has been raised many times long before the housing markets peaked and the stock markets crashed was the degree of borrowing by Eastern Europeans in foreign currencies that set the borrowers up for the ticking currency time bomb when the forex trends reversed against them would send the value of debts soaring in the domestic currencies thus pushing for example the housing borrowers into negative equity WITHOUT A FALL IN HOUSE PRICES.
     
    This originally implied that the eastern european governments would be forced to raise interest rates much higher than they would like to so as to defend their currencies that weakened against the creditor nations namely the Euro and Japanese Yen so as to reduce the debt burden on borrowers for if they failed to do so then the debt levels would explode to levels that would bankrupt the borrowers both corporate and mortgage borrowers, which would trigger economic contraction and hence worsen the situation as debt default rates soared.
     
    However now we have the added problem of the world economy going into a deep economic slump that has resulted in the collapse of global trade and hence Eastern European economies are falling off the edge of a cliff as they are hit from all sides, by currencies collapsing as exports slump and investments being repatriated back to western countries coupled with the frozen credit markets.
     
    Latvia the Next Iceland?
    The situation has reached such a crisis point in Latvia that anyone that reports on the truth is being arrested by the Latvian security forces as an omen that economic turmoil means a return towards tyranny as I wrote of in early December 08 –
    (Latvia Protects its Banking System by Arresting Economist For Speaking the Truth),as the Latvian secret police arrested Dmitrijs Smirnovs, a university professor for delivering gloomy forecasts on the prospects for the Latvian economy and the state of the Latvian banking system.
     
    Since then, Latvia has continued its economic and financial meltdown as evidenced by the 10% slump in GDP as the credit rating agencies cut the countries credit rating to junk level. Latvia following the collapse of the soviet union had sought to burn its bridges with Russia with a view to moving towards the EU, now the EU has shut its door in the face of its own banking sectors toxic liabilities of $23 trillion that threaten a collapse of the Euro, Latvia is left a drift on its own seeking an IMF bailout that itself has gone cap in hand to the EU for more emergency funds.
     
    Not far behind Latvia are Lithuania and Estonia, which are all along the same path as Latvia having adopted similar policies of burning their bridges with Russia, which must now be looking on with gleeful satisfaction. Although the collapse in the crude oil price has put a severe strain on its own state budget as much of it was on the expectations that crude oil would stay north of $80 instead of the recent range of $45 to $30.
      
    The rest of eastern europe is gearing up for a chain reaction of Iceland-esk collapses, with those topping the list in addition to the 3 already mentioned being Bulgaria, Romania and Hungary in total threatening to default on some $2 trillion of debt to the European banks.
     
    EU countries hit hardest by loans to Eastern Europe are Austria, Italy and France as most exposed, for example Austrian banks have loaned as much as 70% of the countries GDP to Eastern Europe. That liability is OFF its public debt level which stands at 60% of GDP therefore real liability is somewhere north of 250% of GDP for Austria allowing for all banking sector liabilities.
     
  • What is the economic and financial situation in Western Europe? Why aren’t they doing more for Eastern Europe? Nadeem Walayat adds :
     
    Western European Iceland’s
    The most at risk of government debt default within the European Union are Spain and Greece which is reflected in the reduced credit ratings of less than triple AAA enroute towards junk bond status, which further increases the strains within the Euro block and means that these countries are in effect being bailed out by Germany, for if they had been outside of the Euro then their currencies and economies would resemble the stage at which the eastern european countries are at i.e. GDP contraction of 10% or more and currencies in freefall.
     
    Implications for the European Union
    As mentioned earlier, the $2 trillions of eastern european debt added to EU domestic liabilities and exposure to U.S. subprime collateralized debt, brings the Euro zones total toxic debt liabilities to more than $23 trillion, this is set against the U.S. liabilities estimated at $11 trillion, therefore Europe is in a far more dangerous position in terms of the fallout from the credit crisis than the United States. The primary reason for such greater exposure is that the European banks were far trickier than the U.S. banks in terms of off balance sheet leverage i.e. many European banks have leveraged up to as much as X60 capital, against typical wall street bank leverage of X30 capital. This therefore in the immediate future implies greater contraction of the European economies than the U.S. economy as well as suggesting higher inflation and therefore supports the view of a stronger US Dollar against the Euro.
       
    Britain’s Trend Towards Becoming Iceland
    The situation with regards Austria is dwarfed by Britain’s liabilities that already project to 300% of GDP as the top graph illustrates as per the recent analysis –
    Gordon Brown Bankrupting Britain as Tax Payer Liabilities Soar- Update 
     
    However the above (chart at top of post) does not take into account the total nationalisation of the whole UK banking system which would push Britain’s liability up towards a currency collapsing 550% of GDP, as total bank liabilities stand at some 400% of GDP i.e. £5 trillion against GDP of £1.2 trillion of which so far Britain is officially exposed to £1.2 trillion.
      
    The consequences
    As Novembers article pointed out (
    Bankrupt Britain Trending Towards Hyper-Inflation?) Britain is already on its way towards becoming a big version of Iceland as liabilities continue to soar, the greater the liabilities the greater the probability that the British economy will collapse into debt default and hyperinflation. Gordon Brown has already loaded the UK tax payer to the tune of £1.2 trillion of bankrupt bank liabilities, with the odds strong that this will pass above £2 trillion by the end of 2009. The amount of liabilities are truly staggering and really do risk the bankruptcy of the country, for example the total amount of revenue the government earns from taxation is just £550 billion AND CONTRACTING. Debt EXPLODING, Revenues CONTRACTING = Further sharp falls in the exchange rate towards parity to the US Dollar.
     
    What Britain Should be doing ?
    The government should protect the country FROM the bankrupt banks which SHOULD be ALLOWED to go BANKRUPT. AFTER bankruptcy the government can pick from within the carcasses of the dead banks the profitable arms that can be restructured into viable retail banking institutions all at limited cost and liability to the tax payer instead of the present situation which NATIONALISES the ever multiplying LOSSES whilst PRIVATISING the REWARDS for bankrupting the banks as we most recently observed with Fred Goodwin who after destroying RBS banked a £700,000 per year pension at age 50. Whereas if the bank had been allowed to go bankrupt his pension would be about £21,000 per year.
     
    What to do ?
    Britain is sowing the seeds of future inflation which means higher interest rates and a falling currency that continues to target parity to the U.S. Dollar, the worlds safe haven reserve currency. This therefore continues to support the strategy of accumulating commodities and other inflation sensitive assets as well as distributing a portion of ones ‘cash’ into the safe haven currency. Also post recession, stagflation will ensure that countries such as China will exhibit greater economic growth and hence capital appreciation than most european countries including Britain that will continue to attempt to inflate their way out of the debt mountain.
     
    IT IS FAR BETTER FOR THE BANKS TO DEFAULT ON THEIR LIABILITIES THAN FOR THE STATE TO BE FORCED TO DO SO.
     
  • There are more than sufficient reasons to be concerned and afraid. When afraid, always use fear as positive motivation to take actions to protect yourself, your family, finances….etc.. To be forewarned is to be forearmed. The next financial tsunami is well on its way!

end

March 5, 2009 Posted by | Economics | , , , , , , | 1 Comment

Jim Rogers – Analysis of Financial Armageddon!

end

March 5, 2009 Posted by | Economics | , , , , , , , | Comments Off on Jim Rogers – Analysis of Financial Armageddon!