Socio-Economics History Blog

Socio-Economics & History Commentary

UK Minister Warning on A/H1N1: 40 A Day Could Die & 100,000 New Cases A Day By End Of August

Warning: Health Secretary Andy Burnham issues the swine flu predictions in the Commons earlier this week where he warned that as many as 40 people a day could die from the disease.

Warning: Health Secretary Andy Burnham issues the swine flu predictions in the Commons earlier this week where he warned that as many as 40 people a day could die from the disease.

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July 6, 2009 Posted by | Economics | , | Comments Off on UK Minister Warning on A/H1N1: 40 A Day Could Die & 100,000 New Cases A Day By End Of August

Gold Bull Market Next stop is $2,100 not $1,300

  • This is a nice piece by Jordan Roy Byrne. He is largely correct IMO. The 1st stop will be $1250-1320/ouce. But gold price is definitely going higher, alot higher. I still see a parabolic rise towards US$10,000/ounce. But this should be seen as a monetary collapse, ie USD collapse perspective. It is not that gold will be worthed more but that fiat currency is being debased. 
      
    Practically everyone in the gold community has mentioned the inverse head and shoulders pattern on the gold chart and the corresponding $1,300 target. The target is correct but the interpretation of the pattern is not entirely correct. That target comes from the pattern being a reversal pattern but in the current case of Gold it is not a reversal pattern. There is no downtrend it is reversing from. However, the pattern can actually function as a continuation pattern as John Murphy explains in his book, Technical Analysis of the Financial Markets:
      
    “In the previous chapter, we treated the head and shoulders pattern at some length and described it as the best known and most trustworthy of all reversal patterns. The head and shoulders pattern can sometimes appear as a continuation instead of reversal pattern. In the continuation head and shoulders variety, prices trace out a pattern except that the middle trough in an uptrend tends to be lower than either of the two shoulders.”
     
    Below is a picture from the book:

    The pattern is a continuation pattern because it ensures the continuation of the prior trend. Continuation patterns themselves don’t produce price targets. In a continuation pattern like a flag or pennant, you usually take the length of the preceding move and add it to the top of the flag/pennant to get a price target. Point being, it’s possible for $1,300 to be a target but it’s not the level that we should be focusing on. 
     
    Cup and Handle Pattern (see top picture)
    Gold has formed sort of a cup and handle pattern more than a few times. The first example is from 1999 to 2003 and the second example is from 1996 to 2004. Please note the four steps of the pattern that occurred in both cases. The pattern can have a simple target and a logarithmic target. I find that the logarithmic target is achieved in the long-term patterns. The target is calculated by taking the percent distance from the bottom of the cup to the top and then adding it to the top. (Example- 200 to 400 is 100%, so the target is 800).  
      
    Far more important than the inverse head and shoulders, is this mega long-term cup and handle pattern. It has completed the three steps and a move above $1,000/oz would confirm that the 4th step (impulsive advance) is underway. Using $730 and a low of $255, I calculate a logarithmic price target of $2,089. In the previous two patterns, which evolved over eight years and four years, it took less than a year in both cases for the target to be reached (following the third step). 
     

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.

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July 6, 2009 Posted by | Economics | | Comments Off on Gold Bull Market Next stop is $2,100 not $1,300

Market Continues To Be Propped Up By Government Intervention And Manipulation!

Vodpod videos no longer available.

  • The US prides itself of being a free market and totally devoid of government intervention and interference. Of course, to people in the know: this is pure propaganda and government lies. What is galling is the fact that the US government has always been openly critical of other countries that openly intervene in the free market, yet at the same time commits the same sins knowingly. The PPT (Plunge Protection Team) setup during Reagan’s era is alive and well. It has been very active in the past few months I believe!
     
  • Zero Hedge reports :
     
    Amusing to see the biggest propaganda voice for the administration and General Electric let this one slip. At 2:22 in the video above, Larry Levin discloses the truth about ongoing flagrant market manipulation.
     
    go 2 minutes into the video 
     
    Larry Levin:  “….this market continues to be propped up by government intervention and manipulation and unfortunately as that continues to happen this market can go higher the government has been doing a good job of keeping it that way no matter what the real underlying current is. …
     
    (Question CNBC: What about the second half?)
    Levin: “If the government can keep putting out all these IOUs and printing money, I guess not. Many professional traders would have told you that this market should not continue to move up as it has; move up 4 months in a row basicallymonths ago,  … You’re gonna have to pin it on Obama and his staff that they’ve kept this market propped up the way they have……They’re doing a good job  Every single day we have some backstop from the government These are NOT free markets anymore.”
      
    Wilbur Ross (fund manager): We’re facing an environment where Washington is the new Wall Street. It seems like no capital transactions get doe at all without some kind of  intervention from washington. And it makes me wonder; How do we ever get off those vitamin pills?…all we are doing is transferring liabilities from private to public sectors.  

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July 6, 2009 Posted by | Economics | , , | Comments Off on Market Continues To Be Propped Up By Government Intervention And Manipulation!

Banks Own the US Government

  • Uncle Sam spent over US$14T to bailout the banks but will not spend a dime to help California. The California deficit is estimated at only US$25B. Does this make sense? When the state government shuts down many thousands of people will be out of job. Yes, banksters own the US government. Dean Baker opines :
      
    Last month, when the US Congress failed to pass a bankruptcy reform measure that would have allowed home mortgages to be modified in bankruptcy, senator Dick Durbin succinctly commented: “The banks own the place.” That seems pretty clear.
     
    After all, it was the banks’ greed that fed the housing bubble with loony loans that were guaranteed to go bad. Of course the finance guys also made a fortune guaranteeing the loans that were guaranteed to go bad (ie
    AIG), and when everything went bust, the taxpayers got handed the bill. The cost of the bailout will certainly be in the hundreds of billions, if not more than $1tn when it is all over.
     
    More importantly, we are looking at the most severe economic downturn since the Great Depression. The cumulative lost output over the years 2008-2012 will almost certainly exceed $5tn. That comes to more than $60,000 for an average family of four. This is the price that we are paying for the bankers’ greed, coupled with incredible incompetence and/or corruption from our regulators.
     
    Under these circumstances, it would be reasonable to think that the bankers would be keeping a low profile for a while. That’s not the way it works in Washington. The banks are aggressively pushing their case in Congress and
    Obama administration. Not only are we not going to see bankruptcy reform, but any financial reform package that gets through Congress will probably contain enough loopholes that it will be almost useless.
     
    In this political environment, the poor might get empathy, but Wall Street gets money, and lots of it. Even when the issue is global warming Wall Street has its hand out. The fees on trading carbon permits could run into the hundreds of billions of dollars in coming decades. A simple carbon tax would have been far more efficient, but efficiency is not the most important value when it comes to making Wall Street richer.
     
    This is why it was so encouraging to see congressman Peter DeFazio’s proposal to tax trades in oil options and futures. DeFazio proposed
    a tax of 0.02% on trades in oil futures and options as a way to make up a shortfall in the federal government’s highway trust fund. This tax could raise billions of dollars each year in revenue and make speculation in the oil market a more dangerous affair.
     
    The logic is very simple. For someone using these markets to hedge, the tax will be inconsequential. For example, a farmer that hedges a $400,000 wheat crop will pay $80 when selling a future. Similarly, airlines that hedge by buying oil futures will barely notice the higher cost. In fact, because trading costs have fallen so much in recent decades, a tax at this level would just be raising costs back to their levels of two decades ago, a point at which there was already a very vibrant futures and options market.
      
    However, even a modest tax will make life much more difficult for speculators. Many of them expect to make quick short-term gains, often buying and selling the same day. For these traders, an increase in transactions costs of 0.02% would be a burden.
     
    Of course, a modest tax will not drive the speculators out of the market altogether, it is just likely to reduce the volume of speculation. For this reason, even a modest tax can still raise an enormous amount of money in a market where tens of trillions of dollars of derivatives changes hands each year.
     
    This tax can best be thought of as a tax on gambling. Gambling is heavily taxed in every state that allows it. DeFazio’s bill is effectively a tax on gambling in the oil markets. It will not stop it, but it would discourage it, and in the process raise a huge amount of money that could go to productive purposes.
     
    The bill faces an enormous uphill struggle in Congress. As Durbin said, the banks own the place, and they are not going to just step aside and let Congress impose a tax on such a lucrative business. But, it is important that people know about the DeFazio bill. First, DeFazio deserves a place on the honour roll for standing up to Wall Street.
    Also, it is important for the public to know that there is a relatively low-cost way to make up the shortfall in the highway trust fund. When Congress raises some other tax and/or cuts a useful programme, people should know that there was a better alternative. It just didn’t happen because, as we know, the banks own the place.

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July 6, 2009 Posted by | Economics | , | Comments Off on Banks Own the US Government

Major General (Ret) Albert N. Stubblebine: Official Version of 9/11 is a Fraud!

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July 6, 2009 Posted by | GeoPolitics, History | | 20 Comments

India Joins Russia, China in Questioning US Dollar Dominance

  • Looks like the BRIC (Brazil, Russia, India and China) is united in their bashing of the USD. Chunk by chunk the USD hegemony is being carved away. Bloomberg reports :
      
    Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said he is urging the government to diversify its $264.6 billion foreign-exchange reserves and hold fewer dollars.
     
    “The major part of Indian reserves are in dollars — that is something that’s a problem for us,” Tendulkar, chairman of the Prime Minister’s Economic Advisory Council, said in an interview today in Aix-en-Provence, France, where he was attending an economic conference.
     
    Singh is preparing to join leaders from the Group of Eight industrialized nations — the U.S., Japan, Germany, Britain, France, Italy, Canada and Russia — at a summit in Italy next week which is due to tackle the global economy. China and Brazil will also send representative to the G-8 summit.
     
    As the talks have neared, China and Russia have stepped up calls for a rethink of how global currency reserves are composed and managed, underlining a power shift to emerging markets from the developed nations that spawned the financial crisis.
     
    “There should be a system to maintain the stability of the major reserve currencies,” Former Chinese Vice Premier
    Zeng Peiyan said in a speech in Beijing today, highlighting the nation’s concerns about a global financial system dominated by the dollar.
     
    Fiscal and current-account deficits must be supervised as “your currency is likely to become my problem,” said Zeng, who is now the head of a research center under the government’s top economic planning agency. The People’s Bank of China said June 26 that the International Monetary Fund should manage more of members’ reserves.
     
    Russian Proposals
    Russian President
    Dmitry Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the dollar’s future as a global reserve currency. Russia’s proposals for the Group of 20 major developed and developing nations summit in London in April included the creation of a supranational currency.
     
    “We will resume” talks on the supranational currency proposal at the G-8 summit in L’Aquila on July 8-10, Medvedev aide
    Sergei Prikhodko told reporters in Moscow today.
     
    Singh adviser Tendulkar said that big dollar holders face a “prisoner’s dilemma” in terms of managing their holdings. “That’s why I’m telling them to do this,” he said. He also said that world currencies need to adjust to help unwind trade imbalances that have contributed to the global financial crisis.
      
    “The major imbalances which led to the current situation, the current account surpluses and deficits, have to be addressed,” he said. “Currency adjustment is one thing that suggests itself.”

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July 6, 2009 Posted by | Economics | , , , | Comments Off on India Joins Russia, China in Questioning US Dollar Dominance