The Goldman Sachs project — New World Government?

By leading the world's economies into chaos, Goldman Sachs is creating a situation where they can replace key government leaders with their own people.

It's a cheap con: scare your victim then move in to offer “protection.”
That’s the technique that’s now being used on a global scale to oust world leaders and effectively take over world government.

Goldman Sachs is a global bank that specializes in mergers and acquisitions, asset management and prime brokerage. It provides financial advice to corporations and governments around the world. Its executives can be found in all key levels of government - Mark Carney, head of the Bank of Canada, Stephen Friedman, Chairman of the Federal Reserve Bank of New York, Mario Draghi, President of the European Central Bank and Henry Paulson, former Treasury Secretary (USA) and Otmar Issing, a one-time board member of the Bundesbank and ex-chief economist of the European Central Bank.

Goldman Sachs are the world's foremost experts on taking over large institutions and running them. Their people - current and former Goldman Sachs executives - have been quietly advising world leaders on economic policy for years. No one is in a better position to take over and manage the world, for their own profit.
Goldman Sach's plan is simple: run the economy into the ground and step in to save the day.

Look at the results so far. In two European countries, elected leaders have been removed and replaced with executives with sweeping powers. What's not apparent from news reports is that the new leaders of Italy and Greece are closely connected with Goldman Sachs.

Lucas Papademos, named new Greek Prime Minister was former head of Greece's Central Bank, where he worked closely with Goldman Sachs to help the Greek government mask the true extent of its deficit.

Mario Monti was an international adviser to Goldman Sachs from 2005 until his nomination to lead the Italian government. He also worked closely with Goldman Sachs to reduce the apparent size of Italian government debt.

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The Collapse of the Euro & the Fed’s $7 Trillion Bailout of the Banks November 28, 2011

After almost a year of litigation, Bloomberg finally won access to information detailing the full scope of the Fed’s bailout of the banks. The chart below, detailing the daily amounts MorganStanley was borrowing from the Fed, relative to its market value should keep European officials awake at night:

Ladies and Gentlemen, this is what a lender of last resort looks like. What you’re looking at here are three lines. The black line is Morgan Stanley’s market capitalization, which tends to hover in the $40 billion range but which fell as low as $9.8 billion in November 2008. The orange line is the amount that Morgan Stanley owed to the Federal Reserve on any given day — an amount which peaked at $107 billion on September 29, 2008. And the red line is the ratio between the two: Morgan Stanley’s debt to the Federal Reserve, expressed as a percentage of its market value. That ratio, it turns out, peaked at some point in October, at somewhere north of 750%.

The lack of transparency here is bad enough, let alone the $13 billion figure.

Secret Fed Loans Gave Banks Undisclosed $13B

And it isn’t only the U.S. bailing and re-bailing itself out.

If you’re looking for some good Euro-scare meat, look no further than this column from the FT’s Wolfgang Münchau. The basic gist: No really, now we’re getting into endgame. Why now? Because the increase in core yields, the failure of that German bund auction, and the increase in Spanish and Italian short-term yields, as well as the tightening of money for the banks, means it’s all almost over unless Europe immediately cooks up some kind of ECB-backed/Eurobond/fiscal union concoction.

Enter the IMF.

IMF drawing up £500bn package to save Italy, Spain and the euro

Heh: The #OccupyWallSt crowd is about 99% white:

A Fast Company survey last month found that African Americans, who are 12.6 percent of the U.S. population, make up only 1.6 percent of Occupy Wall Street.

Newt has surged to a nine-point lead over his closest rival, Mitt Romney.

Texas Governor Rick Perry can’t be all that bad on the illegal immigration issue given this news.

NBC News has confirmed with a source familiar with the matter that Sheriff Joe Arpaio of Maricopa County, Arizona, will endorse Rick Perry this week.

The DNC has released a devastating ad against Mitt Romney. To say that this is going to be a theme over the next few months is the understatement of the year.

One would think there wouldn’t be that much money to give to politicians today, given the news cited above. Perhaps this is more along the lines of investing, than donating to politicians. What goes around comes around and all that.

Democrats post big fundraising numbers for 2012 House races

No wonder the cocktail circuit loves him: Colin Powell blames the tea party for “divisiveness” or something or other. If civility got us $15 Trillion in debt, perhaps its a tad overrated.

BigPeace: 28-Nov-11 World View—Four Major Party Coalitions Vie For Seats In Egypt

No justice, no peace? Or, something like that.

A senior insurgent commander planned attacks on Nato soldiers is among those to have been granted amnesty under a British funded scheme to reintegrate Taliban fighters into Afghan society.

Is There a Risk The Euro Will Collapse?

Wells Fargo Chief Economist John Silvia and Euro Pacific Capital Senior Market Strategist John Browne on the European debt crisis and its impact to the Euro and U.S. economy.

JPMorgan, Goldman Sachs Sued Over MF Global Collapse

Reuters reports that Bank of America (BAC), Citigroup Inc. (C), Deutsche Bank (DB), Goldman Sachs (GS) and JPMorgan (JPM) were among the banks sued Friday afternoon in Manhattan federal court by two pension funds over losses on securities of broker-dealer IMF Global Holdings Ltd. (MF).

The complaint, which seeks to represent other shareholders in a class-action, or group suit, was filed by IBEW Local 90 Pension Fund and the Plumbers & Pipefitters’ Local #562 Pension Fund. In their complaints both funds state that the “registration statements and prospectuses for about $900 million of MF Global note offerings this year omitted how the New York based company was using high leverage, investing heavily in risky European sovereign debt, and not properly segregating client assets from its own.”

The complaint also said that the “banks helped draft the offering documents and sell the notes, collecting $21.2 million of fees”, but that their “failure to conduct an adequate due diligence investigation was a substantial factor” in MF Global’s collapse, as well as in defaults on the notes.”

The lawsuits seeks damages for investors “between February 3, 2011 and October 31, 2011 in MF Global securities, including its 1.875 percent convertible senior notes maturing in 2016, its 3.375 percent convertible senior notes maturing in 2018, and its 6.25 percent senior notes maturing in 2016.”

Other defendants in the complaint include several officials associated with MF Global, including former Chief Executive Jon Corzine.

MF Global Holdings filed for bankruptcy Oct. 31, 2011 after getting margin calls and listing debt of nearly $40 billion.

Gold/Silver Stake for Zombie Terrorist Bankers : Max Keiser

Italy's new prime minister, Mario Monti, has began work on forming a new 'technocrat' government to tackle the country's towering debt. An economist and former EU-commissioner, he now has to implement structural economic reforms to pull Italy out of its financial chaos. For more on this, RT talks to Max Keiser, financial analyst and host of the Keiser Report.

Eurozone to Boost Bailout Fund

The 17-nation eurozone is set to shore up its bailout fund to contain the debt turmoil that threatens to engulf more countries across Europe, and German MPs say the plan could boost the fund’s lending capacity to more than one trillion euro($A1.34 trillion).

A document obtained by The Associated Press shows the currency zone wants to boost the 440 billion euro ($A587.65 billion) bailout fund by offering sovereign bond buyers an insurance against possible losses and by attracting capital from private investors and sovereign wealth funds.

Eurozone governments hope that the enhanced European Financial Stability Fund, or EFSF, will be able to protect countries such as Italy and Spain from being engulfed in the debt crisis. To do that, however, it needs to be bigger or see its lending powers magnified.

Leading German opposition MPs, who were briefed earlier on Monday by Chancellor Angela Merkel on the plan, said the fund’s lending capacity will be boosted ‘‘beyond one trillion’’ (euros).

But the draft document by the eurozone working group - which Germany’s government was sharing with key MPs on Monday - did not provide a headline figure for the bailout fund, stressing ‘‘a more precise number on the extent of leverage can only be determined after contacts with potential investors’’ and rating agencies.

Because of the move’s significance, members of Merkel’s party proposed that the change receive full parliamentary approval on Wednesday - although it would have been enough for the parliament’s budget committee to approve the plan.

The changes look likely to pass by a wide margin in Germany’s parliament.

MPs will vote only hours before an EU summit in Brussels that is set to adopt the new rules for the EFSF.

The enhanced bailout fund rules are meant to guarantee ‘‘continued market access of euro area member states under pressure and the proper functioning of the sovereign debt market’’, the document said.

Therefore the EFSF is set to have the ability to provide investors with a partial insurance against losses from its member states’ government bonds, thus making them a safer and more attractive investment.

The eurozone document also foresees setting up one or several special investment vehicles that would partly compensate possible losses on sovereign bonds in a bid to attract outside investors such as sovereign wealth funds, combining ‘‘public and private capital to enlarge the resources available’’.

The draft document stressed that the EFSF would ‘‘benefit from the flexibility to deploy both options, which are not mutually exclusive’’.

The insurance model is designed to increase the demand for newly issued eurozone government bonds, lower the yields, ‘‘thereby supporting the sustainability of public finances’’, the document said.

Lowering the yields for troubled eurozone governments is a key step to counter the widening debt crisis because spiralling yields on debt issued by Greece, Portugal and Ireland eventually cut them off from market financing, forcing the eurozone to provide those nations with an emergency loan package.

In the event of a default, ‘‘the investor could surrender the partial protection certificate’’ and ‘‘receive payment in kind with an EFSF bond’’, the document said, referring to the insurance model.

The new investment facility, a so-called Special Investment Purpose Investment Vehicle (SPIV), is meant to create ‘‘additional liquidity and market capacity to extend loans, for bank recapitalisation via a member state and for buying bonds in the primary and secondary market,’’ the eurozone draft document said.

Any assistance from the fund for member states, however, would come with tough strings attached and the ‘‘appropriate monitoring and surveillance procedures’’, the document said.

Greece, for example, must implement harsh austerity measures in return for last year’s 110 billion euro ($A146.91 billion) bailout.

Beefing up the EFSF is one part of a three-pronged eurozone plan to solve the crisis.

The other two parts are reducing Greece’s debt burden so the country eventually can stand on its own and forcing banks to raise more money so they can take losses on the Greek debt and ride out the financial storm that will entail.

Greece’s private bondholders agreed in July to accept losses of 21 per cent on their holdings, and getting them to take deeper losses to lighten the country’s debt load is proving particularly difficult.

Experts agree that Greece needs to write off more of its debt - German officials have said up to 50 or 60 per cent - if it is ever to make it out of its debt hole.

But many say such a deal with private creditors needs to be voluntary. Imposing sharp losses against the banks through a so-called haircut could trigger massive bond insurance payments that could cause panic on financial markets.

Charles Dallara, managing director of a global banking lobby group currently negotiating a wider Greek debt reduction with eurozone officials in Brussels, cautioned that ‘‘there are limits to what could be considered as voluntary’’.

He insisted that any approach not based on co-operative discussions but unilateral actions would be tantamount to a Greek default, isolating the country for years from capital markets.

‘‘It would also likely have severe contagion effects, which would cost the European and the world economy dearly in terms of employment and growth,’’ Dallara said in a statement.

The European Central Bank, meanwhile, has been taking on the role of firefighter by buying the bonds of financially weakened governments on the open market. That keeps the bond prices up and the rates down, allowing the countries to borrow on financial markets at lower rates than they otherwise could.

The ECB said it bought 4.5 billion euro ($A6.01 billion) in government bonds last week. That was up from 2.2 billion euro ($A2.94 billion) the week before, bringing the total of sovereign bonds held by the ECB to 169.5 billion euro ($A226.38 billion).

The ECB hopes it will be able to stop the bond-buying program once the bailout fund’s new powers are active.

Read more: http://www.smh.com.au/business/eurozone-to-boost-bailout-fund-20111025-1mh80.html#ixzz1bnFvC8Ux

Fed's Evans: Global Economy Growing Less Than Expected

The global economy is growing less than expected and countries should not bet on exports as a growth driver, Chicago Federal Reserve Bank President Charles Evans said on Wednesday.

"The global economy is not expanding as vigorously as previous forecasts had expected," Evans said in the question and answer session following a speech at the European Economics and Financial Center in London.

"The idea that any country is going to be able to get a leg up by expanding exports seems difficult to imagine in the current environment," he added.

In his speech, Evans said the U.S. Federal Reserve should ease monetary policy further to help the job market.

Evans also said that the U.S. banking sector was doing fine but the demand for loans was not high at the moment.

Market Turmoil Turns all Eyes Towards the Fed

Monday's dizzying stock market dive has heightened speculation that the Fed could take steps to ease market jitters that some fear could help topple a teetering economy into recession. The recovery is already sputtering amid weakening manufacturing activity, sluggish retail sales and European debt woes.

"I'm looking for (the central bank) certainly to do something," says Nigel Gault, chief U.S. economist of IHS Global Insight.

Yet Gault, like many economists, says any move likely would involve a largely symbolic change in the language of its policy statement, rather than another big purchase of Treasury bonds aimed at lowering interest rates. And Conrad DeQuadros of RDQ Economics notes the Fed's mission is to keep inflation and unemployment low — not to respond to stock market gyrations.

Plus, "It's too soon to give up on expectations that growth will pick up" in the second half of the year, says Jim O'Sullivan, chief economist of MF Global.

Last fall, the Fed launched $600 billion in Treasury purchases to lower interest rates, following a similar $1.7 trillion stimulus during the financial crisis. Last year, however, the central bank worried about deflation, or falling prices, that could have derailed the recovery. This year, inflation has increased to about 2%, and pumping more money into the economy would fuel concerns about rising prices, DeQuadros says.

What's more, he says, borrowing costs are already at historic lows. "It's not … interest rates that's holding back the economy," he says.

Other Fed options:

•The central bank has been saying interest rates are expected to remain near zero for "an extended period" that's widely understood to mean several months. The Fed could provide a more specific, longer time frame. Policymakers also could clarify they won't sell the Fed's more than $2 trillion in securities for a similarly extended period.

•Exchange short-term bonds in its portfolio for longer-term ones to further lower interest rates for mortgages and other loans.

•Cut the interest rate on reserves that banks keep at the Fed to encourage them to lend more. The rate is already 0.25%. "I don't think (the current rate) is causing banks not to lend," DeQuadros says.

Adrian Salbuchi talking with Max Keiser about Hyperinflation of Argentina and US

Adrian Salbuchi talking with Max Keiser about Hyperinflation of Argentina and US

Why Keynesianism Doesn’t Work: Part 1

Any economic theory faces the same tests as any other scientific theory. It isn’t good enough to say well, look, it worked this time but didn’t seem to that time. A theory needs to be able to explain all the evidence: one counter-example is enough to kill a theory.

And Keynesianism, or at least the crude type that is argued over in politics today, has failed just such a test as Don Boudreaux Russ Roberts reminds us.

According to that basic set of theories about how the economy works, there should have been a huge recession in 1946/1947. In both the UK and the US: all those returning servicemen with no jobs. All that huge amount of government borrowing to pay for the war stopping, there should have been a plunge in aggregate demand and thus something between a recession and another Depression.

And yes, economists like Paul Samuelson were predicting exactly that.

According to the prescription, the two governments should have borrowed vastly more, spent more again, in order to prevent such a failure of the economy. This isn’t arcane, this is just straight simple Keynesianism.

However, that’s not what actually happened. The soldiers came home, the governments reduced the borrowing and the spending (the UK actually ran budget surpluses for several years) and yet the economy boomed. There was no recession, certainly not a depression, unemployment did not soar.

We can argue until the cows come home about whether Roosevelt’s New Deal ended the Depression (I think not, it extended it, your view may differ), whether Obamanomics will lead us out of our current difficulties (I think not) But Keynesianism as Keynesianism faces a much sterner test than this.

What happened to the 1946/7 recession? If it’s not possible to explain that absence within the confines of the theory then the theory is wrong, or at least incomplete, whatever we might say about the other two periods we love to argue about.

Tim Worstall

Dramatic shift in European view a 'big game changer'

THE GOVERNMENT has met all economic, banking and structural targets for the first six months of the year that were required as part of the international rescue package for Ireland, Minister for Finance Michael Noonan said.

The “troika” of the three international bodies – EU Commission, European Central Bank and International Monetary Fund – had yesterday morning completed their quarterly review of Ireland’s performance, he said, and concluded that the country had met all its obligations under the Memorandum of Understanding.

“We have met the fiscal targets. We have met the banking targets. We have met the structural reform targets. I am also pleased that the external partners have concluded that the Irish programme is on track, and we are making good progress.”

Mr Noonan said that notwithstanding the decision by ratings agency Moody’s to downgrade Ireland’s investment grade to junk status, the country was still aiming to fully return to the markets by 2013 in accordance with the rescue programme timetable.

He qualified this by pointing to the huge uncertainties that have beset economies and banking globally over the past two years.

“Looking forward for two years to July [2013], it’s an eternity to be looking forward, given all that has happened,” he said.

Mr Noonan was at a news conference where he and Minister for Public Expenditure and Reform Brendan Howlin gave their response to the conclusion of the review carried out by officials from the troika. Both Ministers held their final meeting with senior troika officials yesterday.

Mr Noonan emphasised European governments’ view of the extent of the issue had changed dramatically in the past week.

Portraying it as a “big game changer”, he said: “For the first time since I became a Minister, everybody around the table at Ecofin [the meeting of EU finance ministers] is seeing the problem as a European problem and a euro problem, rather than, or in addition to, the problem in individual countries.

“If there’s a heads of government meeting next week, the focus will be on that problem,” he said.

The adjustment necessary in December’s budget may be more than the €3.6 billion stipulated in the memorandum, Mr Noonan confirmed. He said it was too early to say with any certainty how much more, as there were too many variables to allow the making of an accurate assessment.

“The Government’s position is we are working towards a correction target of €3.6 billion. We regard that as a minimum. We may have to go slightly above that in a correction,” he said.

He made implicit criticism of Moody’s for the timing of its ratings downgrade for Ireland.

“There were general comments of displeasure across Europe that this decision was taken.

“It’s certainly peculiar that they would have moved to re-rate Ireland within 48 hours of the adjudication of the troika of Ireland’s programme. You’d think it was reasonable to wait until today or tomorrow to see what the troika was saying,” he said.

Moody’s rating was of marginal consequence, he added, as Ireland was currently not in the markets.

Mr Howlin said the Government’s comprehensive review of spending would be in a position in the autumn to offer budgetary choices that might provide alternatives to social welfare rate cuts or increases in income tax.

On reform of wage-setting for sectors including hospitality and security, Mr Howlin said last week’s High Court ruling that joint labour committees had no constitutional basis had fundamentally altered the situation.

Geithner Interview - the Debt Ceiling Fight (Meet the Press)

A Tim Geithner Interview, speaking on behalf of the Federal Reserve - the Debt Ceiling Fight (Meet the Press)

"The Most Important Thing We Can Do Is To Be Taking Steps To Get People Back To Work"

Geithner talking economics theory.. and what's best for Americans...

Greece Deal Constitutes Default

A French scheme involving private lenders in a second rescue package for Greece would "likely" amount to a default in the eyes of leading credit rating agency Standard & Poor's, it stated on Monday, in a blow to European efforts to avoid that assessment.

"It is our view that each of the two financing options described in the (French) proposal would likely amount to a default under our criteria," the London-based agency said in a statement.

Such a finding would precipitate a banking crisis, since the European Central Bank has warned that it would then stop accepting Greek bonds as collateral for loans to Greek private banks.

The European Union and International Monetary Fund (IMF) are currently preparing Greece's new bailout - it needs up to 120 billion euros (174 billion dollars) to remain solvent beyond 2012 - after its parliament last week approved prerequisite austerity measures.

Germany and other bailout-weary governments have insisted that the private sector share in the risk this time, unlike in the case of the first 110-billion-euro rescue package.

Under the French proposal, financial institutions would receive new Greek 30-year bonds - representing about 70 per cent of their original holdings - in lieu of debt set for repayment in the short term.

That would give Greece more time to repay its loans, taking some of the pressure off of its troubled economy. The remaining 30 per cent of the debt's value would be paid as cash when the bonds mature.

Banks and insurance companies in France and Germany are among the major investors in Greek debt.

German financial institutions also on Thursday agreed in principle with that country's government to roll over Greek debt under a formula modelled on the French plan, but modified to suit Germany.

Standard & Poor's, however, deemed that the general approach would not lower the risk of Greece going bankrupt in the future and lead investors to receive "less value" than originally promised - thus meeting its criteria for a default.

"Greece's near-term reliance on EU/IMF official financing, the government's difficulty in reducing its sizable fiscal deficit, and the current pricing of Greek government debt in the secondary market all underscore the Hellenic Republic's weak creditworthiness," it said.

It, however, also noted that the French proposal is still being worked on and is "just one" of several approaches being considered.

"We understand that the ... proposal may change, and it is possible that it could take a form that results in a different rating outcome," Standard & Poor's said.

A spokesman for EU Economy Commissioner Olli Rehn on Monday declined to comment on the credit rating agency's findings.

EU finance ministers are expected to "clarify the outline" of the next Greek bailout when they meet on July 11, including the issue of private lenders, he said.

"The precise modalities and scale of private sector involvement... will be determined in the coming weeks," EU spokesman Amadeu Altafaj told reporters in Brussels.

"Exploratory talks have been taking place in Europe. But it's not one size fits all."

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Gold and Silver now legal tender in Utah due to Dying Dollar

Video Talking about Gold and Silver now legal tender in Utah in Salt Lake City in America, also no capital gains tax.

Gold Could Lose Glitter with End of US ‘Cheap Money’ Policy

The end of Federal Reserve emergency cash is unlikely to derail gold’s 10-year rally, but the precious metal might face a rockier road as the cheap money that had fuelled its ascent dries up, at least for now.

Fund managers have cited the threat of deflation, slower growth, a resurgent dollar and gold’s overvaluation as just a few reasons why the precious metal’s performance as a safe haven is unclear. In the past, its value tended to rise in times of economic crisis.

Since the global economic downturn, however, gold has benefited from a string of stimulus measures by central banks attempting to boost growth.

Gold prices have doubled since the 2008 crisis, but that rally may be difficult to sustain if the Fed winds down its cheap money policy. Kacper Pempel / Reuters

Bullion has more than doubled from its 2008 low at the depth of economic crisis, and is up 20% since Federal Reserve Chairman Ben Bernanke’s Jackson Hole speech last August, which marked the start of the Fed’s second round of quantitative easing.

On Thursday, the Federal Reserve ended its $600 billion bond-buying program known as QE2, for quantitative easing, because the addition of money to the monetary system effectively lowered US interest rates.

“Even with the QE ending, there is no prospect of the Fed increasing rates any time soon. We have negative US real interest rates. And gold historically did very well in a negative-real-rate environment,” said Bob Haber, chief investment officer of Haber Trilix, which manages $2 billion in assets and runs US and Canadian hedge funds.

On Friday, Gold fell below $1,480 an ounce, nearly $100 below its record high of $1,575.79 set on May 2.

Fed Chief Bernanke has yet to offer any hints of further monetary easing, or QE3. Even though the Fed is not expected to tighten money policy any time soon, gold is likely to rally if the US central bank reintroduces additional market stimulus, which US President Barack Obama called for this week to spur job growth.

“The notion of QE3 is more liquidity, which will likely be dollar-unfriendly. And it would then further run the risk of inflation,” said Mark Luschini, chief investment strategist at broker-dealer Janney Montgomery Scott.

“With that being taken off the table at least for now, it was enough to obviously impair gold prices heavily,” he said. Janney manages $54 billion in assets.

Dollar as reserve currency

A strong US dollar undermines gold’s status is as an alternative currency.

Most commodities, including oil and gold, are denominated in the greenback, which remains the world’s reserve currency, despite an uncertain US economic outlook and political tensions about raising the debt limit in the world’s largest economy.

Most investors see dollar strength limiting gold’s gains.

“If risk assets sell off, and people shun the dollar, that’s when we are in a new regime, that’s when gold’s going to take off. But, I don’t see that happening,” Jeffrey Sherman, commodities portfolio manager of DoubleLine Capital, which oversees $12.5 billion in assets.

Sherman said the threat of deflation, partly created by a European debt crisis, should drive investors toward US Treasuries and the dollar, making gold susceptible to weakness.

“Gold is somewhat of a safe haven, but it’s only a safe haven when you are worried about inflationary pressures,” he said.

Billionaire financier George Soros dumped almost his entire $800 million stake in bullion in the first quarter. Famed gold bull John Paulson remained the largest holder of the SPDR Gold Trust at the end of the first quarter.

Overvaluation?

The precious metal, which notched 10 consecutive yearly gains, has increased fivefold from just $250 an ounce in 2001. Adjusted for inflation, bullion’s all-time high was above $2,200 an ounce set in 1980.

Gold’s rally appeared to stall at the end of the second quarter, but the metal still posted a 4% gain in a quarter that saw the benchmark index of 19 commodities fall 6%.

Jason Pride, director of investment strategy at Glenmede, a wealth management firm with $20 billion in assets, said the extreme valuation of gold is hampering its ability to rise further and perform as a safe haven.

“It has simply gotten to a point now where the value of gold puts investors looking to protect their portfolios at risk simply from the valuation angle,” he said.

Bullion should still offer some protection against inflation and sovereign debt default risk due to its unique role as a global monetary vehicle, but its overvaluation is likely to constantly drag down on prices, Pride said.

“With gold having no dividend, no profit, it’s as much a visual reaction to what you think is going to be the direction of gold as anything, because there is really nothing you can point to from a fundamental standpoint that says it should be worth X or Y,” said Janney’s Luschini.

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Doug Casey on Bitcoin and Currencies

We’ve had a num­ber of read­ers ask for your take on this new Bit­coin sys­tem. As a per­son who likes to see the pri­vate sec­tor com­pete in areas that gov­ern­ments try to reserve for them­selves, this seems right up your alley — what do you think?

Doug: It’s a sign of the times. Lots of peo­ple are actively look­ing for an alter­na­tive to the dol­lar. I think Bit­coin is a very good thing, in prin­ci­ple. But after the recent dis­as­trous hack, it’s prob­a­bly a dead duck, at least in ver­sion 1.0.

It’s appro­pri­ate, how­ever, that we’re talk­ing about Bit­coin — an Internet-driven phe­nom­e­non — while you are in Bishkek, Kyr­gyzs­tan and I’m in Beirut, Lebanon, and we’re speak­ing essen­tially for free over the Inter­net. Money is increas­ingly going to be Internet-related. But first we should explain what Bit­coin is.

L: Sure. There’s a Wiki entry, but the basic idea is that Bit­coin is an online (and there­fore dig­i­tal), non-government-backed cur­rency. It’s not backed by any­thing, actu­ally, but that doesn’t seem to be a prob­lem for many users. The sys­tem has been adopted by a grow­ing num­ber of peo­ple around the world in just the last two years. Peo­ple are used to cur­ren­cies not backed by any­thing, so I guess I shouldn’t be sur­prised, but I am. On the other paw, unlike gov­ern­ment cur­rency, the Bit­coin sys­tem is based on a decen­tral­ized com­puter sys­tem that no sin­gle per­son or entity — includ­ing any gov­ern­ment — has con­trol over. That’s part of a design to keep the num­ber of Bit­coins in cir­cu­la­tion (infla­tion) strictly in check. So I can see why some peo­ple would see Bit­coin as being just like gov­ern­ment cur­rency, but bet­ter, because it’s sup­pos­edly inflation-proof.

That’s the idea, any­way, but in my view, it’s still not money — no more than unbacked gov­ern­ment promises are. You can only use them among oth­ers will­ing to pio­neer this cyber-frontier, so I really was quite sur­prised to see them catch on as well as they have. I’ve seen esti­mates that the mar­ket value of Bit­coins in cir­cu­la­tion rose to about $130 mil­lion before they crashed last weekend.

Doug: Again, it’s quite encour­ag­ing to see that so many peo­ple are so dis­gusted with gov­ern­ment cur­ren­cies, and the total lack of pri­vacy in bank­ing. That’s why Bit­coin could catch on at all. But let’s go back to basics, and see if Bit­coin qual­i­fies as money. Money is a medium of exchange and a store of value. Bit­coin may work as a medium of exchange some­times, but not a very good one, because it’s prov­ing so unsta­ble. It has fluc­tu­ated so much in value over its short life that it is totally unsuit­able as a store of value. Over 2,300 years ago, Aris­to­tle iden­ti­fied the five essen­tial attrib­utes that are nec­es­sary for a good money…

L: It has to be durable, divis­i­ble, con­ve­nient, con­sis­tent, and have value in itself. But don’t for­get your own adden­dum of “can’t be cre­ated out of thin air infinitely.”

Doug: Right. Let’s see how Bit­coin stacks up. First, is it durable? As noth­ing more than ones and zeros on a com­puter net­work, it might seem that the answer is no — it’s cer­tainly not as sub­stan­tial as gold. But a Bit­coin is arguably a lot more durable than a piece of government-issued paper than can be lost, burned, or even fall apart in your jeans pocket if you for­get to take it out before doing the laun­dry. More­over, since the Inter­net was designed to be mul­ti­ply redun­dant, and even able to with­stand nuclear attack, it’s arguable the Bits won’t just disappear.

L: We should point out that the recent prob­lem with a bunch of user­names and accounts being exposed was not a fail­ure of the Bit­coin sys­tem itself, but appar­ently of the phys­i­cal secu­rity of an inter­me­di­ary busi­ness that inter­faces between the pub­lic and Bit­coin. There’s another attack put together by hack­ers, not try­ing to crack the integrity of the Bit­coins them­selves, but to get arti­fi­cially paid by the Bit­coin sys­tem for doing com­pu­ta­tional work. Some­one has also released a virus aimed at steal­ing users’ Bit­coin account information.

Doug: Yes, these are all seri­ous attacks, and there are likely to be oth­ers. But it remains to be seen if Bit­coin will sur­vive the crash in value last week­end — Bit­coins had been trad­ing as high as $30 each and dropped to $0.01 at one point. Since Bit­coins rest on noth­ing but con­fi­dence, it’s going to be hard to restore that con­fi­dence now that it’s lost. But it’s inter­est­ing that the Bit­coins them­selves have proven quite resis­tant to tam­per­ing. In short, they’ve shown sig­nif­i­cant dura­bil­ity. So they pass that criterion.

L: Okay. Divisible?

Doug: No prob­lem there; they’re elec­tronic ledger entries, so they can be divided and sub­di­vided as many times as you like.

L: What about con­ve­nience? You can’t spend Bit­coins at a gas sta­tion or a vil­lage in Africa.

Doug: Don’t be so sure. More and more peo­ple are on the Inter­net these days. We’ve both seen vil­lagers in Africa with smart phones. It won’t be long before most every­body has one. Any­one with Inter­net access can arguably deal in Bit­coins, so they could poten­tially be very con­ve­nient to use. That’s a lot more peo­ple than the num­ber who will take, say, Russ­ian rubles, Zam­bian kwacha, or Viet­namese dong.

And Bit­coins are cer­tainly con­sis­tent; each one has iden­ti­cal properties.

L: Do they have value in themselves?

Doug: There’s the rub; I don’t see that they do. Bit­coins are just an elec­tronic abstrac­tion. They can’t be used for any­thing else, nor are they made of some­thing that can be used for any­thing else. They are like one of those knots in a string that dis­ap­pear if you pull hard enough on the ends of the string. They are not backed by any­thing at all. Like gov­ern­ment fiat cur­ren­cies, they are a con game, func­tion­ing only as long as peo­ple have con­fi­dence in them, regard­less of whether that con­fi­dence is well placed or not.

I’ve always said that the dol­lar is an “I owe you noth­ing,” and that the euro is a “Who owes you noth­ing.” With Bit­coins — which no indi­vid­ual can be held account­able for and which have no value in them­selves — I’d have to say they are a “No one owes you any­thing.” It was inevitable, there­fore, that the scheme would col­lapse… at least in its present form.

Their main value seems to have been as a spec­u­la­tive medium. Worse, actu­ally, in that they are — or were — based on find­ing a “greater fool” to pass them on to, for some­thing of value. The bub­ble in Bit­coins is, how­ever, just one of many to come as peo­ple try to get out of paper cur­ren­cies in the years to come. With the bub­ble that arose in tulip bulbs in 17th cen­tury Hol­land, you might at least have wound up with a flower. This time, peo­ple just got stung. The mes­sage is clear: Get used to bub­bles, as gov­ern­ments print up more and more fiat money.

Bit­coin reminds me of the so-called “barter cur­ren­cies” peo­ple tried to start in the U.S. some time ago, sup­pos­edly trad­ing units of “barter.” Peo­ple traded chits, where a bar­ber might charge ten for a hair­cut, and a lawyer 100 for an hour of coun­sel. But they were just another paper cur­rency, based on con­fi­dence. And, when you’re deal­ing with total strangers, con­fi­dence is hard to come by…

L: Sounds like a con­tra­dic­tion; the whole con­cept of barter is trad­ing in goods and ser­vices directly, not via media of exchange.

Doug: Well, barter chits were sup­posed to encour­age trade among those who used them. And they were also a tax dodge, since no offi­cial money changed hands. That was a major incen­tive for using them. But they all dried up and blew away, and the peo­ple who wound up hold­ing them had noth­ing. Sort of like when the Argen­tine peso col­lapsed ten years ago. The provinces decided to set up their own cur­ren­cies, but they weren’t backed by any­thing either, and they all dried up and blew away as well, leav­ing those who held them hold­ing an empty bag.

So, way before the dol­lar value of Bit­coins stepped off a cliff last week­end, I was telling peo­ple who asked me that I didn’t use them and didn’t plan to use them.

Frankly, I can’t see why any­one would, when there’s already an elec­tronic dig­i­tal cur­rency like Bit­coin but backed with gold: Gold­Money. I should dis­close that I’m a small investor in the com­pany. But I have to say that I really do like Gold­Money. It does every­thing Bit­coin does — or did — but is backed by some­thing of real value: gold. That means it’s not just an abstrac­tion, but an actual store of wealth. The ulti­mate proof of that is that you can take deliv­ery of your gold if you want to. With Bit­coin, there’s noth­ing to take deliv­ery of. I don’t under­stand why any­one would use Bit­coin when they can use Gold­Money, which does all the same things but has real backing.

L: Nei­ther do I. I was quite sur­prised to see that the idea had actu­ally caught on. I loathe the gov­ern­ment cur­rency monop­oly as much as any­one, but I wasn’t even tempted to try Bit­coin out, because it wasn’t backed by any­thing. Maybe it’s sim­ply Bitcoin’s case for being inflation-proof. This gets to your adden­dum to Aristotle’s five qual­i­ties: Peo­ple clearly placed great value on Bitcoin’s promise to limit cir­cu­la­tion to a finite num­ber. The per­cep­tion among peo­ple who’ve for­got­ten what money really is — which is most peo­ple — is that money is only a medium of exchange. In this case, the meme that “it’s bet­ter than gov­ern­ment paper” cre­ated enough per­cep­tion of value to keep the things in cir­cu­la­tion — or did until last week­end. Bit­coin looks more like “Bit the Dust” now. But in spite of its prob­lems, do you still seem pleased with the whole Bit­coin experiment.

Doug: I like the fact it’s untrace­able and secret. I like the idea that it was try­ing to be an alter­na­tive to the dol­lar; it’s great to see peo­ple try­ing to get out of the U.S. dol­lar. The dol­lar is a state monop­oly of the worst kind. It’s not only the world’s reserve cur­rency for cen­tral banks, but it’s become the world’s de facto inter­na­tional cur­rency. If you’re Cana­dian or Asian or African or South Amer­i­can and travel abroad, you pretty much need U.S. dol­lars as soon as you leave the bor­ders of your coun­try. Even the euro isn’t much good out­side of the euro­zone. That some­thing like Bit­coin can gain any trac­tion at all is a real — if early — chal­lenge to the supremacy of the U.S. dol­lar. This is quite sig­nif­i­cant. That was prob­a­bly one thing on Sen­a­tor Charles Schumer’s warped lit­tle mind when he referred Bit­coin to the Jus­tice Depart­ment for inves­ti­ga­tion recently. Schumer is always on the wrong side of absolutely everything.

The U.S. dol­lar has actu­ally become a major weapon in the hands of the U.S. gov­ern­ment now. All bank trans­ac­tions go through the U.S. SWIFT sys­tem. Even the Chi­nese and Rus­sians, who have no love for the U.S. gov­ern­ment, have to use dol­lars for inter­na­tional trade. They don’t like it. Mus­lims all around the world are com­ing to feel that they are ene­mies of the United States, so they don’t want to use the dol­lar either. And the more reg­u­la­tions the U.S. puts in place about how money is trans­ferred and used — like FATCA — the harder peo­ple will look for alter­na­tives. The U.S. gov­ern­ment is treat­ing everyone’s dol­lars as its per­sonal prop­erty. They’re becom­ing des­per­ate, and des­per­ate gov­ern­ments are espe­cially dan­ger­ous. This one is start­ing to thrash around like a large, stu­pid dinosaur in its death throes — stay out of its way.

Mohamed Mohatir in Malaysia, fol­low­ing the dic­tates of the Koran, which I under­stand states that only gold and sil­ver should be used as money (the dinar and dirham), actu­ally made moves towards estab­lish­ing a new gold stan­dard. He tried to get other Islamic gov­ern­ments to buy into it, and cut the dol­lar out of their inter­na­tional trade. But most of those gov­ern­ments — then as now, although things may be chang­ing — are both U.S. stooges and klep­toc­ra­cies, so they weren’t inter­ested in hon­est money.

There’s huge and grow­ing appetite around the world for alter­na­tives to the dol­lar. Bit­coin is a beta ver­sion of what’s com­ing in the post-dollar world. Gold­Money, how­ever, is already a proven ver­sion 2.0.

L: So … Invest­ment implications?

READ ON... at Howestreet.com

A First Step To Sound Money

Here’s a hypothetical situation. Suppose you had $1.5 million. At today’s gold price that would buy approximately 1,000 ounces of gold. Suppose now that President Obama, the Congress, and the Federal Reserve began managing the American economy in such a way that by the end of President Obama’s second term, the dollar was back to where it was when President George W. Bush began his first term. Were that to happen, your $1.5 million could purchase 5,660 ounces of gold.

So, do you think you should have to pay taxes on the increase in the value of your money?

If the idea strikes you as crazy, let us refer you to the legislation introduced today at the Senate by James DeMint, Rand Paul, and Michael Lee. It’s called the Sound Money Promotion Act, and The New York Sun is happy to lay claim to being the first newspaper to endorse it. The measure, as it is characterized in a press release posted by Senator DeMint, would remove the tax burden on gold and silver coins that have been declared legal tender by either the federal government or state governments.

On its face it might seem an odd bill. But looks at the hypothetical situation above from the opposite end of the telescope, so to speak. It seeks to block tax authorities from treating gold and silver coins as though they were mere commodities and start treating them, at least in tax law, as though they were what the Founders of America thought they were, which is money. Gold and silver coins are already treated this way, as legal tender, inside the state of Utah, whence Senator Lee was elected.

This is because Utah was the first state in our modern time to exercise its constitutional power to make gold and silver coins legal tender. It did so earlier this year, ahead of as many as a dozen states that are at various stages of looking in to the question of how to protect themselves against the collapse of the United States dollars that are being issued by the Federal Reserve. They are all being energized by the fact that the value of the dollar has collapsed to barely a fifth of what it was, if that, at the start of the 21st century.

One of the states considering making gold and silver coins legal tender is South Carolina. That was remarked on by Mr. DeMint, one of its senators at Washington, in introducing the bill. He attributed the dollar’s collapse in recent years to “the government’s reckless over-spending, continued bailouts, and the Federal Reserve’s easy money policy” and said that in addition to fiscal discipline the country would need “monetary discipline to restrain further destructive monetizing of our debt.” The legislation, he said, “would encourage wider adoption of sound money measures.”

The press release introduced by Senators DeMint, Lee, and Paul noted that Standard & Poor’s has recently downgraded America’s outlook to “negative” from “stable,” meaning, the senators asserted, “there is a one in three chance of an actual credit downgrade in the next two years.” They asserted that the Federal Reserve is now buying 70% of U.S. Treasuries, set to surpass the holdings of both Communist China and Japan combined.

How far the three senators will get with the Sound Money Protection Act is hard to say. Its implication — a recognition of gold and silver as the true constitutional money — is, in the current context, radical. But it's no more radical than the Founders, who, when they twice used the word “dollars” in the Constitution, were referring to a coin containing 371 ¼ grains of silver. They codified that as the definition of the dollar in the Coinage Act of 1792. They also referenced gold in the 1792 Act, with a value of 15 times that of silver. We are in a time when understanding the concept of constitutional money will point the way to the policies needed to steer our country out of its current difficulties.

Will Greek Austerity Measures Work?

Today the Greek Parliament, flying in the face of violent and deadly protests, voted to adopt austerity measures designed to reduce Greece's mountainous debt and settle very shaky nerves in the euro zone.

Even if this plan is passed, though, will the euro - and the EU - be on the path to recovery?

It's hard to say, but I believe that the austerity plan - while not perfect - takes sufficient aim at Greece's bloated public sector.

Greece is notorious for being a state consumed by the public sector, which amounts for about 40% of its GDP. The average retirement age in Greece's public sector is 61, well below what it should probably be. The austerity plan should help with these matters.

What is not being addressed, however, is corruption. Corruption is widespread in the Greek public sector, causing hundreds of millions of euros to be paid out each year in under-the-table bribes for basic public services. In fact, corruption may be one of the key reasons why the Greek economy is so weak - systemic reasons aside.

Corruption has to be addresed by the Greek government in order for any austerity plan to be successful. Pay cuts, salary freezes, and layoffs may work to a degree, but corruption and grafts have to be squashed as a part of any package dealing with the public sector.

It's too early to say if these plans will work or not. Besides, even if they do, you still have a dire situation in Italy, Portugal, Spain, and Ireland that has to be handled. But, the markets will probably view this as a positive development, and in the short term, things could be worse.

Protest Violence Before Key Greek Austerity Vote

Greek police clashed with protesters trying to block the way into parliament on Wednesday as signs grew that the government would succeed in passing a sweeping austerity plan demanded by international creditors.

With Greece risking bankruptcy if the measures are blocked, parliament was expected to vote in the afternoon on the mix of spending cuts, tax increases and privatizations to be implemented as conditions for a massive bailout by the European Union and the International Monetary Fund.

After the start of a 48-hour general strike and violent clashes on Tuesday that transformed the central Syntagma Square into a battle zone, fresh protests were planned on Wednesday and thousands had gathered in front of parliament by midday.

Late on Tuesday, the government of Prime Minister George Papandreou received a boost when one of three rebel deputies from his PASOK party backtracked on his previous opposition and said he would vote for the package.

"I have made the decision to vote for the plan because national interests are more important than our own dignity," the deputy, Thomas Robopoulos, told Reuters.

A parliamentary official said the vote would probably take place between 2 and 5 p.m. (1100-1400 GMT).

One communist deputy was pelted with yoghurt as she made her way into parliament and three people were treated for minor injuries as protesters clashed with police during an attempt to bar the way into the chamber.

The communist-affiliated PAME labor group held a rally in the morning and several other meetings were expected during the day, culminating in a major demonstration by public service union ADEDY and private sector union GSEE at 7 p.m. (1600 GMT).

Greece's central bank governor, George Provopoulos, warned that a "no" vote would be catastrophic for Greece.

"For parliament to vote against this package would be a crime - the country would be voting for its suicide," he told the Financial Times.

The measures demanded by international lenders as the price for continuing to support Athens have caused bitter resentment among Greeks coping with the deepest recession since the 1970s and now facing years of grim austerity.

Another PASOK rebel, Panagiotis Kouroublis, said he still objected to the plan but declined to say whether he would vote against it. "I will speak to the Parliament later and you will hear what I have to say," he told Alter TV. "Nothing is more important than my dignity and my love for my country."

SLIM GOVERNMENT MAJORITY

Papandreou's Socialists hold a narrow majority with 155 seats in the 300-member legislature and with Robopoulos, the most prominent of a handful of potential rebels, backtracking on his opposition, chances of the vote going through improved.

In a sign of growing optimism on financial markets about the outcome, Greek bank stocks opened up 3 percent on Wednesday, while Greek bond yields fell.

However even with approval on Wednesday, there will still be a risk of lawmakers rejecting detailed austerity bills in votes on Thursday on the implementation of different elements of the plan, such as tax rises and the sale of state assets.

The EU and the IMF have said the entire plan must be passed this week for Greece to obtain the next, 12 billion euro ($17.3 billion) tranche of emergency loans under the bailout.

Greek officials have said the country needs the money by mid-July to continue paying its debts.

Despite heavy international pressure, the center-right opposition declared ihttp://www.blogger.com/img/blank.gift would vote against the package but close attention was being paid to a splinter group of conservative deputies led by former foreign minister Dora Bakoyanis.

Bakoyanis, who broke party ranks to vote in favor of Greece's first EU/IMF bailout last year, said on Wednesday she would abstain from voting this time. The other four deputies in her group would vote according to their consciences.

"The government cannot govern and apply the program and the political opposition is lying, this is the problem. It does not dare to tell people that there are no magic solutions, that sacrifices are necessary," Bakoyanis said.

View original source: Reuters.com

China's premiere arrives in the UK (25-Jun-11)(GLOBAL FOCUS series - UK)

China's premiere arrives in the UK (25-Jun-11)(GLOBAL FOCUS series - UK)

Good discussion about the Greece Economic crisis and Chinas interest in maintaining european economic stability

Max Keiser with Gerald Celente on The IMF (24-Jun-11)(1-2 UNDERSTANDING NWO ECONOMICS series

Max Keiser hosts a discussion with Gerald Celente about The IMF - his tv show "on the edge"

Peter Schiff on Fox Business - Possibility of QE3 6-22-11

Schiff contends QE3 will happen, though Bernanke will call it something else.

Q3 is all but certain, and also going to fail too... Peter Schiff.

Why the Misery Index Is Higher Than the Feds Let On

The Dow Jones Industrial Average continues its hiatus from doom and gloom yesterday – up more than 100 points so far today on what would be its fourth consecutive winning session.

A four-day winning streak may not seem like much, but as The Daily Reckoning faithful will recall, the Dow has fallen for six straight weeks. Perhaps the Blue Chips will fall for a seventh straight week, but so far the Dow is solidly in the black.

Sure, the reasons for lightening up on stocks remain just as compelling today as they did last week (and the five weeks before that), but that doesn’t mean the stock market has to fall every day.

Greece is still racing towards an inevitable default, America’s governmental finances – from Washington to Sacramento – are still sickly and the US economy’s performance still continues to disappoint.

So, yeah, stocks might drop again tomorrow…http://www.blogger.com/img/blank.gif

But there is “a time for everything,” as the writer of Ecclesiastes observed about three millennia ago…and the Byrds re-iterated about three decades ago. And this week – so far – is simply not the time for selling.

Ample time remains for selling stocks, of course,…and also for buying them. But when it comes to buying, you know our view: Stick with the companies that provide indispensable goods and services. Stick with the companies that provide the world’s “must haves,” rather than the world’s “like to haves.”

Read more: Economic News and Ideas on Debt, the Market, Gold, Oil, and Investing. http://dailyreckoning.com/

Shekel Drops to Week-Low as Fischer Bids for IMF Job; Bonds Fall

The shekel fell to the lowest level in more than a week amid concern about Israel’s ability to maintain economic stability as central bank governor Stanley Fischer bid for the International Monetary fund’s top job.

The country recovered from the global recession faster than many other developed economies during Fischer’s tenure, with growth of 4.7 percent in the first quarter of 2011 and 7.6 percent in the fourth quarter of 2010. The economy is likely to expand 5.2 percent this year and 4.2 percent in 2012, the central bank said in a June 1 forecast.

“The possibility of Fischer leaving the country is creating uncertainty about the economy, which is a concern for investors because there is no adequate replacement,” Rony Gitlin, head of spot trading at Bank Leumi Le-Israel Ltd. in Tel Aviv, said by telephone. “There are bets on whether Fischer will succeed in the candidacy, but he wouldn’t bid for the post if he wasn’t sure he will succeed. He must know something we don’t.”

The shekel weakened as much as 0.9 percent to 3.4386 per dollar, the lowest since June 2, and was down 0.8 percent at 3.4348 at 11:53 a.m. in Tel Aviv.

Fischer, 67, is betting his experience and a shortage of candidates will prompt IMF members to waive an age requirement that would exclude him from the position, a person familiar with the situation said yesterday. French Finance Minister Christine Lagarde and Mexican central bank chief Agustin Carstens also are running.

Greece Dispute

“At the end of the day, the country’s economy doesn’t depend on any one person,” Sagi Stein, chief executive officer of Migdal Mutual Funds, said in a telephone interview yesterday. “I don’t believe it would harm the economy” if Fischer left, he said.

The shekel also is weakening because a dispute about Greece’s financing needs is increasing demand for the relative safety of the dollar, Leumi’s Gitlin said.

European Central Bank President Jean-Claude Trichet and German Finance Minister Wolfgang Schaeuble are at odds over investors’ role in the second Greek rescue in 14 months. Unless a deal can be struck to guarantee Greece’s financing needs for the next 12 months, the International Monetary Fund has threatened to withhold its share of what remains of Greece’s original 110 billion-euro ($158 billion) bailout.

The yield on Israel’s 5 percent Mimshal Shiklit bond due January 2020 rose five basis points, or 0.05 percentage point, to 5.15 percent, the highest since May 24.

To contact the reporter on this story: Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net