Many States ready to shut down this week

Indiana is one of five states -- along with Arizona, California, Mississippi and Pennsylvania -- bracing for possible shutdowns this week as time runs out for lawmakers to close billion-dollar gaps in their fiscal 2010 budgets.

Of the 46 states whose fiscal year ends today, 32 did not have budgets passed and approved by their governors as of Monday afternoon, according to the National Conference of State Legislatures.

Although the majority of those are expected to pass eleventh-hour budgets, the fiscal futures of a handful remain uncertain, said Todd Haggerty, an NCSL research analyst.

"It's a lot of states that are coming down to the wire," Haggerty said. "It's far more than we've seen in the past, and it's because of the state of the economy."

Since 2002, only five states have been forced to shut down their governments. Some of the closures were brief: In 2007, Michigan's doors were closed for four hours before lawmakers passed emergency measures that bought them time to close a $1.75-billion deficit.

"What's different now is that the recession has eroded tax revenues across the country," Haggerty said. Collectively, he said, states are wrestling with budget deficits totaling $121 billion.

In California, state finance officials will begin issuing IOUs on Thursday if lawmakers and the governor cannot agree on a way to close a $24-billion shortfall. The IOUs would go to local governments, vendors, taxpayers and college students receiving state financial aid. California has issued such IOUs only one other time -- in 1992 -- since the Great Depression.
Link

Debasing the Currency is Leading to Financial Collapse . . . Just As It Has for Thousands of Years

In a fascinating 22-page study of money and currency, Christopher Weber shows that every government - from Athens, to pre-collapse Rome, to the Islamic countries in the Middle Ages - which stuck to the Greek standard of coins has been stable and prosperous.

Specifically, the Athenian Drachma contained 65.6 grains of silver. Even after Greece declined as a superpower, its currency remained stable.

The Roman Denarius, Byzantine Bezant, and Islamic Dinar all copied the Drachma, using around 65.6 grains of gold or silver in their coins.

For the many centuries the Romans, Byzantines, and Islamic rulers left this precious metal content alone, they had stable and prosperous money supplies and nations.

But after the Romans and Byzantines started to whittle down the precious metal content of their coins - and after the Muslims started issuing paper money - their currency went down the drain, their prosperity plummeted and their empires collapsed.

This may all sound like ancient history, except that Weber points out that:

The US dollar has been depreciating for generations. Seventy years ago it was first devalued from $20.67 a gold ounce to $35. Then 35 years ago the devaluation started gaining strength. The dollar has lost over 90% of its gold value since August 15, 1971.

History is repeating . . . Sound money is again being trashed, which is causing the collapse of the American empire.

Link

Warning: Collapse Imminent

WARNING
The mainstream media and government are communicating that the economy is on a positive track toward recovery while downplaying the likelihood of another economic catastrophe similar or worse than that experienced in the fourth quarter of 2008 and first quarter of 2009. In actuality, there is a significant chance that the U.S. will experience a severe economic collapse, beyond what has already been experienced, either this year or within the next few years. If there is a perceived, sustainable economic rebound before this happens, do not be fooled - the underlying economic problems still exist and will likely eventually surface in economic collapse.

This following analysis further explores this warning by describing:

1. The 4 key reasons an economic collapse is likely imminent
2. Why these 4 reasons make the economy vulnerable
3. Warning signs and triggers to monitor to foresee a collapse before it happens
4. What can result from an economic collapse
5. Ideas for preparation



The 4 Key Reasons an Economic Collapse is Likely Imminent



1. The U.S. has unprecedented, massive amounts of current and coming debt.
2. Foreign countries have experienced their own crises, and they cannot offer added levels of debt funding for the U.S. Even if they could, they are unlikely to do so.
3. Productivity is declining, and everything the government is doing is further hurting productivity.
4. The U.S. is printing unprecedented, massive amounts of money and no longer has an ability to control inflation and deflation.



1. The U.S. has unprecedented, massive amounts of current and coming debt.

1. Over $11.4 trillion in current debt and growing
2. $1.8 trillion deficit in current budget - $9.3 trillion over next decade (likely to be higher)
3. Outstanding future debt of $43 trillion to $102 trillion from entitlements
4. Debt Comparison to U.S. GDP

A. Over $11.4 trillion in current debt and growing


U.S. federal debt is now over $11.4 trillion. As this graph is slightly outdated, you can imagine how far off the graph the line will need to go to chart the increase.

Link

Does USA = ARGENTINA in 2001?

Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity

• Slowed by green parachutes
• Bond market suspends disbelief
• Why China is nervous

We have all heard that the U.S. economy cannot go the way of Argentina in 2001 when foreign investors expressed lost confidence in the government and refused to roll over maturing short-term government bonds. Money fled the country as foreign currency reserves dwindled. A balance of payments crisis facilitated by investor panic led to the very outcome investor’s feared: the world’s largest ever sovereign bond default, a collapsing currency, and hyperinflation.

That can never happen here in the U.S., we are told. The U.S. owes its foreign debts in its own currency. U.S. lenders will never shoot themselves in the foot by allowing a dollar debt and currency crisis to develop because they depend on the U.S. for trade to support their own domestic economies; foreign central banks will continue to step in for the U.S. where the IMF failed Argentina. They will keep buying U.S. debt forever no matter how large U.S. fiscal deficits become or how much bad debt the Federal Reserve takes onto its balance sheet.

But this is no more than an argument that the U.S. is not likely to experience a replica of an Argentina 2001 debt and currency crisis, and of course that is true. But that does not mean that a related, equally unseemly but fundamentally different catastrophic result may follow from similar causes and triggers. Evidence abounds that the U.S. is trapped in a cycle from which a kind of Argentine style default with U.S. characteristics is all but inevitable.

Here we take a deep dive into the macro economics of the Argentine crisis—GDP growth, consumption, investment, inflation, industrial production, unemployment and a dozen other details of the Argentine economy in the period before it collapsed at the end of 2001. We compare the same macro economic measures during the U.S. economic crisis that started in 2008.

A few items, such as currency reserves, stand out in ways that show how different the U.S. situation is now from Argentina’s then, but most of the macro economic comparisons reveal astonishing similarities, especially measures of output and inflation.
More Here

Hyperinflation Nation

U.S. Mass-Layoffs at Record High

Large-scale lay-offs in the U.S. (defined as lay-offs of 50 or greater at one time) hit the highest level since this statistic was created in 1995, according to an article from CNN. This is yet another indication that the U.S. economy is plummeting downward – with absolutely no signs of stability, let alone a “recovery”.



Up to this point, the U.S. government has been very successful in duping market sheep (i.e. the “experts”) through publishing totally fraudulent monthly jobs reports. With the U.S. economy losing roughly 2 million jobs each month (“U.S. economy to lose 20 MILLION jobs this year”see ), the government claimed that less than 400,000 jobs were lost in May.


The fact that the unemployment rate continues soaring higher each month, that “mass lay-offs” are at record levels, and with state governments across the U.S. slashing spending to meet budget shortfalls (i.e slashing jobs) conclusively demonstrates that “official” government reports have absolutely no connection to reality.


Even if this rate of decline is now linear (i.e. falling at the same rate each month), this does not imply “stability”. Jobs are being lost in the U.S. at least as fast as during the Great Depression – if not faster. To suggest that this implies “moderation” is simply stupidity, from people who have absolutely no understanding of basic arithmetic.
Link

China Calling For World Currency. Wheat Production in SERIOUS TROUBLE!

China's central bank has reiterated its call for a new reserve currency to replace the US dollar.

The report from the People's Bank of China (PBOC) said a "super-sovereign" currency should take its place.

Central bank chief Zhou Xiaochuan has loudly led calls for the dollar to be replaced during the financial crisis.

The bank report called for more regulation of the countries that issue currencies that underpin the global financial system.

"An international monetary system dominated by a single sovereign currency has intensified the concentration of risk and the spread of the crisis," the Chinese central bank said.

The dollar fell after the report was released. The US currency dropped 1% against the euro to $1.4088, and declined 0.8% versus the British pound to $1.6848.

SDRs

Mr Zhou caused a stir earlier this year when he said the dollar could eventually be replaced as the world's main reserve currency by the Special Drawing Right (SDR), which was created as a unit of account by the IMF in 1969.

Link

OTTAWA — Scientists in Canada and around the world are racing to find a way to stop a destructive fungus that threatens to wipe out 80 per cent of the world's wheat crop, causing widespread famine and pushing the cost of such staples as bread and pasta through the roof.

Canadian officials say that the airborne fungus, known as Ug99, has so far proved unstoppable, making its way out of eastern Africa and into the Middle East and Central Asia. It is now threatening areas that account for more than one-third of the world's wheat production and scientists in North America say it's only a matter of time before the pest hits the breadbasket regions of North America, Russia and China.
Link

REAL Jobless rate near Depression levels, Hyperinflation Coming: John Williams

(snippet)
If Williams is right, unemployment is over 20%, gross domestic product is shrinking by 8% and consumer prices are jumping by nearly 7%. His forecasts border on apocalyptic. The government is creating so much new money, he says, that the all but inevitable result is hyperinflation, where “your highest denomination, the $100 bill, becomes worth more as toilet paper than money.” Buy physical gold, he advises.

Whether we believe the forecasts or not, the possibility of a Pollyanna Creep has serious implications. Social Security payments are just one benefit adjusted each year for increases in the cost of living. If the figures hadn’t been corrupted, says Williams, checks might be close to double what they are.

Williams has managed to attract plenty of press. A year ago, Harper’s magazine featured a cover drawing of a grinning Uncle Sam fondling numeral-shaped party balloons, with the headline, “Numbers Racket: Why the Economy is Worse Than We Know.” The story centered on Williams’ data. The San Francisco Chronicle followed with “Government Economic Data Misleading, He Says.” Last fall in the London Times: “Forget Short-Sellers and Manipulators, Pollyanna Creep Could Be the Culprit.”

Government statisticians are frustrated. “Economic Data Seems Accurate” doesn’t make for a catchy headline, so the press, they say, are too quick to give credence to conspiracy theories. “We go out of our way to be transparent,” says Thomas Nardone, who during 32 years at the Bureau of Labor Statistics helped implement many of the changes in calculating the unemployment rate. “We’d be remiss if we didn’t make changes,” he says. “I’ve never seen measurement changes that were politically motivated.”

Link Here

Green Shoots? Jobless rate rises, California set for IOU's . Collapse coming?

June 25 (Bloomberg) -- The number of Americans filing claims for unemployment benefits unexpectedly rose last week, a reminder that companies will keep cutting staff even as the economy stabilizes.

Initial jobless claims rose by 15,000 to 627,000 in the week ended June 20, from a revised 612,000 the week before, the Labor Department said today in Washington. A report from the Commerce Department showed gross domestic product shrank at a 5.5 percent annual pace in the first three months of the year.
Link

LOS ANGELES/NEW YORK (Reuters) - California's controller said on Wednesday that he would have to issue IOUs in a week if lawmakers can't quickly solve a $24 billion budget deficit, and the state's treasurer plans to tap a reserve fund to meet debt service costs.
Link

Check your state:
HERE

Here is a document that has NOT been posted on the internet. The derivatives outstanding from the Bank of Switzerland 2008 (all derivatives are located here):

Derivatives HERE

For the RESEARCHERS!
Settlement Bank in Switzerland

Goldman Sachs has manipulated every market since the Great Depression

Taibbi-Goldman-Sachs

READ IT HERE NOW

80% Of the Public could care less about ECONOMICS

VERY informative article A MUST READ!

(snippet)
Time is running out. The public relations campaign being conducted by the Obama administration, Federal Reserve and nation’s largest banks is beginning to fail. The lies, half-truths, and cover-up regarding the solvency of the largest banks in the U.S. will be revealed as reality interrupts their master plan. The politicians and government bureaucrats know that 80% of the population don’t understand or care about economic issues. The plan is insidious, systematic and deceptively simple:
(snippet)
You judge whether these projects will jump start our moribund economy:



* Optima Lake is in line to receive $1.15 million in federal stimulus money to construct a new guardrail for a lake that does not exist. The guardrail is needed for “public safety,” says the Army Corps of Engineers, but there is not much of the public around to protect. Because the lake has never filled with water it is all but useless to potential visitors.

* The repair of 37 rural bridges in Wisconsin that average little more than 500 vehicles apiece each day - with one carrying no more than 10 cars a day. The projects jumped over larger, urban repairs because they were "shovel ready." $840,000 to repair a bridge in Portage County, Wis., that carries 260 vehicles a day largely to a backwater saloon and a country club.


* $3.4 million Florida Department of Transportation project for an "eco-passage" - an underground wildlife road crossing for turtles and other wildlife in Lake Jackson, Fla., along U.S. 27.

* A Bureau of Land Management project to study the impact wind farms have on the sage grouse population in Oregon. The proposal calls for hiring people to tag sage grouse in areas where wind farms may be built, to help determine where turbines could be located.


* $1.5 million in stimulus money for a $5 million new wastewater treatment plant in Perkins, Okla. The stimulus money came with strings that will increase the costs. With a new total cost of $7.2 million, the city will be forced to borrow money and, as a result, utility taxes have increased by 60 percent this year.

* Grants and loans totaling $1.3 million to Solon Township in Leelanau County, Mich., to help pay for construction of a wastewater treatment plant. Local opposition killed the project. The money will now be used for a future treatment plant, for which there is no plan and questionable local support.

* Road signs costing $300 each, being placed at construction sites to alert motorists that the project is being paid for by the stimulus money. Transportation Department spokesman Jill Zuckman said each state decides whether to use stimulus money for signs, and the cost would vary in each state.


* A $3 million project to repair taxiways at Hanscom Field, Mass., which Coburn said is for corporate jets. Richard Walsh, a spokesman for the independent state agency that runs the airport, Massport, said only 18 percent of the traffic at the airport is for corporate jets. Most of the use, 70 percent cent, is for flight students, he said.

* Montana's state-run liquor warehouse, to receive $2.2 million in stimulus cash to install skylights. The project is part of the $27.7 million the state has been awarded for energy programs.
FULL ARTICLE HERE

Ron Paul: Obama's plan is for TOTAL COLLAPSE

Ron Paul, the popular Republican Congressman from Texas, is ripping into the president and Congress for what he sees as their “goal” with round after round of stimulus: complete economic collapse.

“From their spending habits, an economic collapse seems to be the goal of Congress and this administration,” he said in his June 22, 2009, weekly address.

He added that Democrats who voted for the president’s war funding request, which gave an additional $106 billion to military operations in Afghanistan and Iraq — among other, unrelated items — were actually voting in favor of the wars, not just authorization of the president’s agenda.

He called it an affront to everyone who believed a vote for Obama was a vote for a peace candidate.

The president’s insistence on including an additional $108 billion in asset exchange with the International Monetary Fund is merely “buying global oppression,” he said.

Link

No Bullets No Gold

6/22/2009
by John Rubino


Facts have a different feel when they’re personal. And speaking personally, evidence that Americans are seriously spooked is starting to pile up. In the past few months:

• While researching a magazine article on offshore investing I interviewed Erika Nolan, executive director of the Sovereign Society, a Florida-based consultancy. She noted that her client base is changing: “Historically, offshore solutions have been reserved for very high net worth individuals. But starting in about 2001 we started to see people in the ‘mid-tier millionaire’ stream -- $1 million to $30 million net worth -- saying ‘I’ve worked really hard, I don’t want to have my assets at risk.’ Most recently we’ve been seeing a big demand from Americans saying ‘I just want to put $100,000 or $500,000 offshore. I’m reporting it; it has nothing to do with taxes.’ It’s just asset safety at this point.”

• My father-in-law decided he wanted some gold, so I called a local coin store and asked Kevin, the shop’s owner, to find us some Krugerrands. He predicted a few weeks for delivery, which seemed reasonable given the chatter about tight supplies, so I placed an order and wrote a big check. That was three months ago, and the coins still aren’t in. I called Kevin the other day and found him both busy and frustrated. “I could make a million dollars this year if I could only get inventory,” he said. “This would be a career year.” He apologized for the long wait and said there were now only a few people ahead of us on the list.

• I checked in with a friend, a business owner and semi-professional poker player just back from a Seattle gambling trip. But instead of talking poker or kids we toured his stash of freeze-dried food and his growing arsenal that includes a Dirty Harry-style 44 magnum pistol and a very cool black pump-action shotgun. This guy is well-educated, well-traveled, and well-off, and he’s preparing to blow away looters from his bedroom window.

• My 11-year-old son Alex and I stopped by a local gun store. This is going to be a “skills acquisition” summer in which we learn to ride horses, handle guns, and change a bike flat (and when I finally learn to Salsa) so we had some general questions for Charles, the gun shop owner, about gun safety classes and which rifle is the best starter model. Charles said our selection was limited: It seems that there’s a run on ammo, and he can’t guarantee anything more than low-velocity 22 caliber bullets. When we got home I did a quick Google search for “bullet shortage” and sure enough, that market looks just like those for gold and silver coins, with demand swamping supply, long waiting lists, and panicky hoarding.

It’s no secret, of course, that small-denomination bullion is hard to come by and gun sales are way up, but finding out first-hand that this stuff is unavailable brings home the reality of the situation, which is that the social mood is growing darker. On the surface everything looks normal; no one is protesting in the streets, the trash is getting picked up, and elections are as orderly as ever. But the market is quietly reallocating resources as individuals insure against a systemic breakdown. Hope those Krugerrands come soon.

Link

California collapsing. US Economy Next

California Collapsing

by Martin D. Weiss, Ph.D. 06-22-09

Washington and Wall Street seem to be treating California as if it were a sideshow in the financial circus of these turbulent times.

It’s not.

California is home to the largest manufacturing belt in the United States and to Silicon Valley, the nation’s largest high-tech center.

California is America’s most populous state with 38 million people. Its GDP of $1.8 trillion is the largest in the U.S. Its economy is bigger than those of Russia, Brazil, Canada, or India.

And it’s collapsing.

Major California counties are ground zero in the continuing mortgage meltdown:

Los Angeles County with 5.32 percent of mortgages 90 days past due … Monterrey County, 8.02 percent … Imperial, 8.13 … San Bernadino, 8.66 … Madeira, 9.21 … San Joaquin, 9.53 … Riverside, 10.2 … Merced, 10.57 … and more!

California’s inventory of foreclosed homes is skyrocketing. Home prices are plunging. And the impact of surging unemployment is just beginning to show up in the data …

Worst Unemployment in 64 Years

The state’s unemployment rate has surged to 11.5 percent, the worst since World War II.


Last month, California lost 68,900 jobs. And since July 2007, it has lost 859,000 jobs, including 739,500 just in the past 12 months.

Even if the economy recovers, an unlikely scenario in my view, economists agree that California will continue to be slammed by layoffs, at least through the end of this year and probably well into 2010.

And even assuming a national recovery, UCLA’s Anderson Forecast projects an average unemployment rate of 12.1 percent from this fall through next spring.
What about without a national recovery? California’s jobless could go beyond 15 percent.

Worse, if you include part-time workers seeking full-time work plus workers who have given up looking entirely, it could reach 25 percent, exceeding the worst national unemployment levels of the Great Depression.


“Our wallet is empty.
Our bank is closed. And
our credit is dried up.”

These are not the words of a Dr. Doom in New York or a forlorn banker in Georgia. They represent the confession of Governor Arnold Schwarzenegger before a rare joint session of the California legislature … and with no exaggeration!

The state faces a stunning $24.3 billion budget deficit, even assuming no significant deterioration in the economy from this point onward. And the state has lost virtually all hope of President Obama declaring, “California is too big to fail.”

California State Treasurer Bill Lockyer tried to make that argument to Washington, and did so with great vigor. But he was rejected. After the long line-up of failed companies with hat in hand in recent months — on the steps of Congress or the White House lawn — some folks in government finally appear to have learned how to just say “no.”

“You’re on your own,” is the message from the president to the governor. “Beyond your share of the stimulus package, that’s it! No more!”

Result: The inevitability of massive state cutbacks, including large numbers of state jobs getting axed — all while the California jobless rate is already 11.5 percent.

How many state jobs are in jeopardy? Right now, Schwarzenegger is proposing laying off 5,000 state employees, as well as slashing education and social welfare programs. But the Anderson Forecast projects that Schwarzenegger’s budget cuts will eventually result in 64,000 job cuts from state government plus countless private-sector and local government jobs.

Massive Downgrades Coming

California’s credit rating is already the lowest among all U.S. states.

But with Moody’s, S&P, and Fitch still greatly influenced by massive conflicts of interest, it’s not nearly low enough.

And sure enough, on Friday, Moody’s tacitly admitted as much, announcing that it may have to cut California’s rating by several notches in one fell swoop!

Standard & Poor’s put California on watch for a possible downgrade a few days earlier. Fitch did the same May 29.

The big problem: Once downgraded, California’s rating is likely to fall below the minimal level legally required for most money market funds, forcing these funds to dump California paper posthaste.

Moody’s wrote:
“If the Legislature does not take action quickly, the state’s cash situation will deteriorate to the point where the controller will have to delay most non-priority payments in July. … Lack of action could result in a multi-notch downgrade.”

But lack of action is precisely what Sacramento is now becoming most famous for. In fact, in their latest scuffle, Democrats proposed a budget that would raise $2 billion from cigarette taxes and oil companies. But the governor promptly vetoed the plan. So now Sacramento is in a new, escalating battle over the deficit just weeks before the state is expected to run out of cash to meet payroll and other bills.

State officials continue to insist that a state default is unthinkable … much like GM executives said their bankruptcy could never happen.

In my view, there is a very HIGH probability that California will default.
It’s obvious its debt merits a junk bond rating from every Wall Street rating agency.

And it’s equally obvious that the ratings agencies are artificially inflating the rating, stalling downgrades, and grossly understating the risk to investors.

My recommendations:

1. If you wait for Moody’s or S&P to act, it could be too late. Even if you can’t get what you might consider a good price, sell all California paper now!

2. Seriously consider dumping all tax-exempt bonds. I know the income is better than equivalent Treasuries. But if California defaults, it could set off a chain reaction of bond price plunges and defaults throughout the municipal bond market.

3. Don’t underestimate the impact California’s depression is having — and will continue to have — on the rest of the U.S. economy. At $1.8 trillion, the state’s GDP is so large, any further deterioration could wipe out every so-called “green shoot” in the national economy seen to date.

4. Stay safe, with a big portion of your nest egg in cash, tucked away in short-term Treasury bills … and with a very modest portion in gold, as an insurance policy against a dollar decline.

Good luck and God bless!
Martin

Link

Executives Selling shares frantically. The Public will be the bag holders AGAIN!

June 22 (Bloomberg) -- Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.

Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.

“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.”

Link

Bank Holiday Coming? Prepare?

From Harry Schultz:
Dear Bob:
Bob Chapman’s Int’l Forecaster newsletter revealed (5/20) this startling intelligence (from within US State Dept & embassies):

”Some US embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of US cash to purchase currencies from those govts, quietly. But not £’s. Inside the State Dept there is a sense of sadness & foreboding that ‘something’ is about to happen, unknown re a date—just that within 180 days, but could be 120-150 days.”

Bob quotes another source that “Panasonic has told their people to be back in Japan by Sept 09.”

Harry Schultz, dean of newsletter writers, has quoted the Chapman letter of May 30 regarding US embassies being sent large amounts of cash with which to buy local *currencies, to last them a year. Here is Harry’s remarkable take on the situation:

“My HSL suspicion is that the elite plan another FDR style “bank holiday” of indefinite length, perhaps very soon, to let the insiders sort-out the bank mess which is getting more out of their control every day.*Insiders want/need to impose new bank rules. Widespread nationalization could result, already under way. It could also lead to a formal US$ devaluation, as FDR did by revaluing gold (& then confiscating it). But devalue against what? The euro? Doubtful. Gold? Maybe. Or vs. the IMF basket of currencies (which seems more likely)—& much in the news recently. Any kind of bank holiday will push the US$ lower, which may be a bonus benefit to their ongoing scenario of letting the $ fall. Such a fall would get the devaluation they want without having to declare it. In sum, the insiders want more bank & system control, fewer banks & a lower US$. A bank holiday would suit all their needs.

Obviously, U can’t open safeboxes if the banks are closed, so plan accordingly. All this is speculation, but we have to go with what we’ve got, scraps of info that point to certain possibilities. In any case such a closure will, IMO, come sooner or later, as the worst of the embedded derivatives are still to be faced. We are years away from solving them because the controllers don’t want to; their fingerprints are all over them. ***

PS: during the FDR bank holiday, thousands of banks never reopened; it was a face-saving way of shutting them down. I would guess the same would occur today; thousands have little or no net value, loaded with debt, bad mortgages.

••• *PPS: A Bob Chapman subscriber reported overhearing 2 FEMA jacketed men talking to a police chief in Calif. They wanted to federalize the police across the US. They (govt) would be closing banks in late Aug, early Sept & that it will get ugly.” Prepare for worst case, as any good Boy or Girl Scout would do. J”

IMMINENT COORDINATED RUN OF THE BANKS IN IRAN?
Link

Follow the Twitter of the Iranian Conflict:
HERE

With gas prices rising, smart consumers are turning to the internet to purchase everyday items like toiletries, prescription drugs & beauty products from online stores like Buy.com and Drugstore.com.  Right now there is a $10 Drugstore.com coupon from Mr. Cheap Stuff that includes free shipping on orders over $25."

Hey New York your next after California

For now, folks living in New York can watch the soap opera playing out in California from a comfortable, continent-sized distance.

But after that drama plays out, New York is next.

Smart Money: Right now, at least 47 states are facing significant shortfalls in their 2009 and/or 2010 budgets, according to the Center on Budget and Policy Priorities, a think tank in Washington, D.C. And many of those states are looking to tax hikes to help fill the gaps.

“Pretty much everyone is doing poorly,” says Kim Rueben, senior research associate at the Tax Policy Center. “It’s just a question of who’s hurting more than others.”

The top honor goes to California, which is projecting that it will fall about $25 billion short come fiscal 2010. Taking second place is New York with a projected $17.6 billion deficit for fiscal 2010, according to the National Conference of State Legislatures, a bipartisan policy research organization in Washington, D.C.

This can't be a surprise to anyone. New York is like California. It's highly exposed to some of the worst areas of the economy. It's got a huge government apparatus, and its political system is something of a joke (see: The New York State Senate). Thank god for New Yorkers that there isn't a referendum system here, or the state would've gone bust years ago.

New York should be hoping for a California bailout, since that's their fate, too.

You can read more from the think tank here.
Link

Mainstream News not carrying this story anymore

The Japanese Bond Smugglers Are Missing

At least the Japanese press is sitll interested in story of the two Japanese men caugh with some $134.5 billion in (presumably fake) US bearer bonds.

We can't read Japanese, and Google Translate isn't particularly helpful, but a reader informs us that the gist of this story is that a newspaper sent a reporter to Como, Italy and found that the men had been released, with their whereabouts unknown.

Now, the easiest, most-benign explanation for this whole thing is that it's just a counterfeiting scheme. Fine, but then why do you let them go without tracking their whereabouts.

Link

Leap/2020 Report

(snippet)
At this stage of the global systemic crisis’ process of development, contrary to the dominant political and media stance today, the LEAP/E2020 team does not foresee any economic upsurge after summer 2009 (nor in the following 12 months) (1). On the contrary, because the origins of the crisis remain unaddressed, we estimate that the summer 2009 will be marked by the converging of three very destructive « rogue waves » (2), illustrating the aggravation of the crisis and entailing major upheaval by September/October 2009. As always since this crisis started, each region of the world will be affected neither at the same moment, nor in the same way (3). However, according to our researchers, all of them will be concerned by a significant deterioration in their situation by the end of summer 2009 (4).

LEAP/E2020 believes that, instead of « green shoots » (those which international media, experts and the politicians who listen to them (5) kept perceiving in every statistical chart (6) in the past two months), what will appear on the horizon is a group of three destructive waves of the social and economic fabric expected to converge in the course of summer 2009, illustrating the aggravation of the crisis and entailing major changes by the end of summer 2009… more specifically, debt default events in the US and UK, both countries at the centre of the global system in crisis. These waves appear as follows:

1. Wave of massive unemployment: Three different dates of impact according to the countries in America, Europe, Asia, the Middle East and Africa
2. Wave of serial corporate bankruptcies: companies, banks, housing, states, counties, towns
3. Wave of terminal crisis for the US Dollar, US T-Bond and GBP, and the return of inflation
Link

Bigger Debts for Americans on its way with new borrowing program

Obama’s Mortgage Refinancing Program May Be Expanded (Update1)

By Dawn Kopecki and Jody Shenn

June 19 (Bloomberg) -- Fannie Mae and Freddie Mac may get permission to begin refinancing mortgages with loan-to-value ratios above 105 percent as the Obama administration seeks to boost participation in its anti-foreclosure programs.

“We’re actively considering how to structure a program that makes sense over 105 percent,” Federal Housing Finance Agency Director James Lockhart said yesterday. He said a ratio of 125 percent “is a number” that’s on the table, though “not necessarily the number we’re going to end up with.”

President Barack Obama’s Home Affordable program announced Feb. 18, sought to help as many as 5 million Americans who may owe more on their mortgages than their homes are worth. Fannie Mae and Freddie Mac have refinanced 80,000 loans under that program, Lockhart told a National Association of Real Estate Editors Association conference in Washington yesterday. He didn’t say when the loan-to-value ratio could be raised.

“While this will help some borrowers with higher interest rate loans, you really need to get mortgage rates down below 5 percent to have a huge impact on refinancing,” Scott Buchta, a strategist at Guggenheim Capital Markets LLC in Chicago, said.

Home Affordable has been “seeing a slowdown” as mortgage rates increase, Lockhart said. The average rate on a typical 30- year fixed loan was 5.38 percent in the week ended yesterday, according to Freddie Mac. The rate is up from a record low of 4.78 percent at the end of April.

More

2 Years Left left for easing of Credit Crisis

Rally of 1931 to haunt the markets this year, SEC hasnt really stopped anything, Fed must find a way to hide toxic assets, bear market not reversible, Currencies deprecate against gold, funding new health insurance initiatives not easy in times of debts, Monetary policy to become inflationary
The next major move in the stock market will be down. We are seeing the last vestiges of a rally similar to what we saw in 1931. The rally we expected at 6600 up to 8500 will end as soon as all the financial institutions that need to sell what stock is necessary to bolster their balance sheets. Our guess is the rally has been aided in a big way by short covering and the participation of the US government. Those who believe the SEC has stopped naked short selling are sadly mistaken. Markets weaken during the summer as volume dries up during the vacation season. In addition, second quarter earnings will be very disappointing, especially in the financial segment. Unemployment continues to worsen and capacity utilization is at its lowest level in years. Banks continue to cut credit lines and not lend nearly as much as they did before. Citigroup’s earnings should turn down again. They won’t have another $2.7 billion gain or another $400 million mark-to-market fictitious gain. Absent those gains they would have lost $2.8 billion.

The credit crisis certainly isn’t over after 23 months. The credit markets are still very tight and the residential and commercial real estate markets are still in a state of collapse. In the midst of this ongoing fiasco the Fed is monetizing $2.2 trillion in treasuries, Agencies and CDOs, collateralized debt obligation, otherwise known as toxic junk. Our fiscal deficit for this year ended 9/30/09 will be between $2 and $2.5 trillion, followed by more than $2 trillion in 2010.

Times are tough, everywhere and export nations are determined to keep their products cheaply devaluing their currencies.

More

Record Lows Coming for Stock Market

NEoWave Institute's Glenn Neely is forecasting the largest vertical drop of the decade for the S&P 500. Neely predicts the stock market will decline 50% in the next 6 months.

The March-June rally is now ending, allowing the bear market to resume. During the next six months, the S&P will decline 50% or more, breaking well below 500!

Aliso Viejo, CA (PRWEB) June 16, 2009 -- Glenn Neely, founder of NEoWave Institute and prominent Elliott Wave analyst, today announces a startling prediction: The S&P 500 is forming a major top in June, which will be followed by a large decline, eventually pushing the stock market to record lows for the decade.

"Technically speaking, according to NEoWave a correction began at last October's low; the March-June rally is the final leg of that correction," Neely explains. "The March-June rally is now ending, allowing the bear market to resume. During the next six months, the S&P will decline 50% or more, breaking well below 500!" Currently, the S&P is hovering around 917.

Glenn Neely is providing this information not as a specific trade recommendation but as a general public service announcement. A prominent Elliott Wave analyst, Neely was recently recognized in Timer Digest's May issue as the #1 stock market timer for the past 12 months.

Link

Record Low Income Tax Collections States in BIG Trouble
Here

How long do we have?

This talk was presented at

The New Emergency Conference in Dublin, on June 11, 2009

Good morning. The title of this talk is a bit of a mouthful, but what I want to say can be summed up in simpler words: we all have to prepare for life without much money, where imported goods are scarce, and where people have to provide for their own needs, and those of their immediate neighbours. I will take as my point of departure the unfolding collapse of the global economy, and discuss what might come next. It started with the collapse of the financial markets last year, and is now resulting in unprecedented decreases in the volumes of international trade. These developments are also starting to affect the political stability of various countries around the world. A few governments have already collapsed, others may be on their way, and before too long we may find our maps redrawn in dramatic ways.

Link

Railroad Traffic is Indication of Depressed Economy

Note: the graph indicated, show gas price rising this year. It is risen 50 days in a row, the longest streak in records dating to 1996.
By Tom Dyson

In 2005, I wandered into the Simpson Yard in Jacksonville and struck up a conversation with the duty manager. The Simpson Yard belongs to the Norfolk and Southern Railroad. It's their major freight yard in Jacksonville.

"We're slammed," he told me. "We are turning business away we are so busy."

Railroad activity is one of my favorite economic indicators. Railroads haul the most important commodities and goods around the country, like coal, autos, chemicals, lumber, and container boxes. When railroad activity booms, you can bet the economy is booming, too. When the railroads are having problems, it's a safe bet the economy is shrinking.

Last week, I took my son to watch freight trains at a spot train watchers call the Folkston Funnel. Things have changed since 2005...

Jacksonville is the only major city in Florida that does not depend on tourists. It's an industrial town and a major seaport. It's also a major railroad center. Goods leave Jacksonville on mainline "trunk" routes heading south, north, west, and to the Midwest. In other words, Jacksonville is a fantastic place to judge railroad activity.

CSX is the third-largest railroad in America, and it's headquartered in Jacksonville. Two of CSX's busiest routes converge at Folkston, Georgia, about 20 miles north of Jacksonville. And the "Folkston Funnel" is one of the best spots east of the Mississippi River for watching freight trains.

"It's quiet at the moment," said a man with a camera and a notepad. "They've pulled 12 trains a day from the schedule."

"They've closed the yard to the south of here too," he said. "They're using it to store rolling stock, but no trains depart from there anymore."

Right now in America, there are half a million freight cars rusting away on rural sidetracks and in shuttered freight yards. The situation is so bad, some small communities have staged protests to make the railroads remove abandoned freight cars from their neighborhoods. The wagon strings cut towns in half and look ugly. (The Indy Star ran a story about this Here.)

It's the same with locomotives. A new railroad locomotive costs over $2 million. According to Progressive Railroading, the U.S. railroad industry has over 5,000 locomotives "mothballed" and out of service... around 25% of America's total locomotive fleet.

Each week, the Association of American Railroads counts the number of railcars loaded by the railroads. The number of railcars loaded has fallen all year, including double-digit declines in April and May. Loadings so far in 2009 are down about 20% from the same period last year.


The message from the rails is this: The economy is getting worse, and there's no boom in sight. That's in direct conflict with the economic recovery they're talking about on Wall Street.

Judging by the rail pulse, the economy is weak. I don't trust the current move up in the stock market. My guess is it's a giant bear market rally.

Good investing,

Tom

The END of the US Dollar is NEAR

June 16 (Bloomberg) -- Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar. The Russian leader reiterated his intention to push for the creation of a “supranational currency” to challenge the U.S. dollar and encouraged China and the other Shanghai group members to use each other’s currencies for trade.

Technical Analyst predicts Depression 2

(Snippet)
NEW YORK (Reuters) - Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.

Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.

Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.

(snippet)
The economy "is obviously heading toward a depression," despite the government's efforts to dodge one, said Prechter.

Federal Reserve Chairman Ben Bernanke has not averted a re-run of the 1930s Great Depression, even though investors are becoming firmly convinced that the Fed has avoided disaster and that the economy has hit bottom.

"It's the next leg down (in stocks) that will make it clear that these things are not true," Prechter said.

Link

U.S. Rejects California Aid Request

Tuesday, June 16, 2009

by CalculatedRisk on 6/16/2009 10:15:00 AM

From the WaPo: Calif. Aid Request Spurned By U.S

The Obama administration has turned back pleas for emergency aid from one of the biggest remaining threats to the economy -- the state of California.

Top state officials have gone hat in hand to the administration, armed with dire warnings of a fast-approaching "fiscal meltdown" caused by a budget shortfall. Concern has grown inside the White House in recent weeks as California's fiscal condition has worsened, leading to high-level administration meetings. But federal officials are worried that a bailout of California would set off a cascade of demands from other states.
...
The administration is worried that California will enact massive cuts to close its deficit, estimated at $24 billion for the fiscal year that begins July 1, aggravating the state's recession and further dragging down the national economy.

After a series of meetings, Treasury Secretary Timothy F. Geithner, top White House economists Lawrence Summers and Christina Romer, and other senior officials have decided that California could hold on a little longer and should get its budget in order rather than rely on a federal bailout.
...
The state entered the downturn burdened with an inflexible budgeting apparatus, constrained by a state ballot initiative approved by voters in 1978 that severely limited property taxes in California. The signature example of "ballot box budgeting" left the Golden State inordinately reliant on the personal income tax, which accounts for half of revenue to Sacramento.

California's budget is also heavily dependent on taxes paid on capital gains and stock options, which have been clobbered during the meltdown of financial markets. State budget analysts made their annual estimate of revenue a month before the crisis spiked in the fall and have been backpedaling ever since.

"Those revenue projections turned out to be wildly optimistic, but nobody was predicting the October collapse of the financial markets," said Michael Cohen, deputy analyst in the Legislative Analyst's Office.


California enjoyed the housing bubble, but is now being hit hard by the housing bust with house prices falling sharply and double digit unemployment. And it doesn't help that the state system of government is completely dysfunctional.
Link

The American Empire is Bankrupt

Posted on Jun 14, 2009
Wikimedia Commons

By Chris Hedges

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America’s imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.

I called Hudson, who has an article in Monday’s Financial Times called “The Yekaterinburg Turning Point: De-Dollarization and the Ending of America’s Financial-Military Hegemony.” “Yekaterinburg,” Hudson writes, “may become known not only as the death place of the czars but of the American empire as well.” His article is worth reading, along with John Lanchester’s disturbing exposé of the world’s banking system, titled “It’s Finished,” which appeared in the May 28 issue of the London Review of Books.

“This means the end of the dollar,” Hudson told me. “It means China, Russia, India, Pakistan, Iran are forming an official financial and military area to get America out of Eurasia.
More

It's a 1930's Depression Scenario

by bobswern


Mon Jun 15, 2009 at 02:15:49 AM PDT

It's as if a surreal, perfect storm of bad judgement with regard to our economy has enveloped Washington over the past few days. Reaffirming this, over the last 72 hours, the headlines have been popping up in the financial news websites, then disappearing, only to reappear again this morning--all at once. A clear picture of both what's about to be announced this week and next in Washington, as well as what's unfolding, worldwide, is quickly coming into view. And, many respected economic pundits, from Nobel laureate Paul Krugman, in today's NY Times (See: "Stay The Course"), to noted Nouriel Roubini minion Edward Harrison (See: "Is 2009 tracking a 1930 Great Depression scenario?") last night at Naked Capitalism, to Barry Eichengreen and Kevin O'Rourke at Europe's Centre for Economic Policy Research (CEPR) (See: "A Tale of Two Depressions") are virtually and concurrently reaching similar conclusions, and they're all pretty damn scary.
bobswern's diary :: ::
Here in the U.S., as Paul Krugman reminds us today, we're talking capitulation to the status quo, all dressed-up in spin about yet-to-be-legislated, "better regulatory oversight"--and we're becoming all too familiar with that semi-spineless end result demonstrated by our legislative branch in D.C.. As Krugman points out in this morning's "Stay The Course," 'It's 1930, all over again.'
(BTW, I don't know if it's just me, but I really don't think I've sensed Krugman being more upset than he is this morning.)


New York Times
Op-Ed Columnist
Stay the Course
By PAUL KRUGMAN
Published: June 14, 2009 Print Edition: June 15, 2009
The debate over economic policy has taken a predictable yet ominous turn: the crisis seems to be easing, and a chorus of critics is already demanding that the Federal Reserve and the Obama administration abandon their rescue efforts. For those who know their history, it's déjà vu all over again -- literally.
Krugman reminds us that "...for the third time in history a major economy has found itself in a liquidity trap." He points out the traditional solutions, such as interest rate cuts, have reached their limit. So, the natural thing to do is to seek out and implement unconventional measures.


Yet such unconventional measures make the conventionally minded uncomfortable, and they keep pushing for a return to normalcy. In previous liquidity-trap episodes, policy makers gave in to these pressures far too soon, plunging the economy back into crisis. And if the critics have their way, we'll do the same thing this time.
We then get a two-sentence history lesson from him, reminding us of how the economy grew rapidly from 1933 to 1937, hand-in-hand with FDR's New Deal policies. But, as Krugman reminds us, unemployment was still very severe. (A clear reference to what's occurring and projected, now and over the next couple of years, respectively.)

Krugman reminds us of the mistakes our government made at the time, when they "stopped worrying about depression and started worrying about inflation." F.D.R. sought to balance our budget, and the Fed turned the screws on monetary policy. But, the economy experienced a double-dip Depression at the time as a result. Full recovery wasn't attained until World War II.

Krugman then points out similar events relating to Japan in the 1990's, where they saw a partial recovery, but the leadership there made the same mistake of shifting their focus to mounting deficits, increased taxes and spending cuts; and, once again, Japan slipped back into a recession.

He points out that the exact same thing is happening now in the U.S.

Link

The Proof is in the GRAPHS:
HERE

The Federal Reserve will finish what they started.
WASHINGTON -- The Obama administration wants to overhaul the country's financial rule book by giving the Federal Reserve increased powers but, bowing to critics in Congress, is backing away from proposals to consolidate various regulatory agencies.

The administration's overhaul plan would make the Fed a systemic risk regulator to oversee large institutions whose failure could threaten the stability of the entire system. It also will create a council of regulators with broad coordination responsibility across the financial system, administration officials said.

Cities Collapsing one by one in the U.S.

Note: Inflation described and how it works on VERY INFORMATIVE 10 minute video above.

(snippet)
And though the stadium is very nice, we came off thinking that in a sense the HBO show The Wire, actually makes Baltimore seem better than it really is. Because if you watched The Wire, you might conclude that all the messed up parts were confined to some section of the city, rather than the whole thing itself. But it's really all pretty miserable. We regret not putting it on our list of depressing cities.

Even downtown by day is pretty sad, given the prominence of once-glorious money manager Legg Mason (LM). And then at night it's just kind of miserable.

Anyway, we're not the only ones with no interest in The Charm City.

peHUB posts a copy of a letter to the editor from New Enterprise Ventures, a VC firm that's moving out of Baltimore. This part is particularly rich:

Our decision was a result of the high level of crime in our neighborhood. Over the last several years, many of our cars have been broken into resulting in very expensive repairs, our employees have been robbed at gun point, drug needles and used condoms have been left on our front stoop, and psychotic homeless people have menaced our employees and threatened to kill them. We have voiced our frustrations to the local community leaders and police, but the environment has only worsened. The recent local beatings by roving teenagers during the day in this neighborhood, the raucous club in the basement of the Belvedere, and other gang violence throughout the city reinforces the appropriateness of New Enterprise Associates’ decision to move in order to protect its employees.

Yeesh!

All joking aside, it really is tragic, since on the surface there's no reason the city needed to be that bad. It's got a beautiful spot on the water, in what should be a successful Eastern Seaboard state. And unlike Detroit, it wasn't married to a single industry that got absolutely gutted over the past several years. Why do we keep losing our cities? It's an embarrassment.

Link

Greater Depression Coming: Doug Casey

(Snippet)
Doug Casey: Insofar as there are any green shoots, they are weeds. No, everything the government is doing is not only the wrong thing, it is the exact opposite of the right thing. The way to solve the problems that have been exposed at this point is for the government to not do anything; in fact, to entirely get out of the money game, to stop regulating, and vastly reduce their taxes. Of course, they're doing just the opposite.

The government is in essence the biggest single problem that we have, by an order of magnitude. The unfortunate thing is, everybody is looking to the government as providing a solution when it is actually the problem. It is completely perverse. It is one of the reasons why I call what we are going into not just a depression. This is going to be the Greater Depression - much more serious and different from what we had in the 1930s.

Daily Bell: Do you agree that the regulatory apparatus could be blamed for the current difficulties, or should it be Wall Street, or is it central banking that was the primary culprit?

Doug Casey: The ultimate cause of our problems is the inflation of the currency caused by central banks. Unfortunately, it is the investment bankers and the brokers that are going to be blamed for it, but they are just the immediate cause, not the ultimate cause. Everything they have done, which was incredibly stupid, has only been possible because of the structure of our current system. Normal humans are to blame for doing natural things. The problem lies in the government and how it has structured the system.
Link

Global downturn worse than expected

Last summer, one of the world's more respected economic commentators predicted that the global downturn would be much worse than anyone had reason to believe.

"I've been observing economies around the world for 40 years," said Martin Wolf, the chief economic commentator of the Financial Times. "In all that time, I cannot remember such a combination of economic challenges: the world's balance is shifting."

He analysed how the financial crisis in London and Wall Street could spread to the fast-growing nations of the developing world.

One year on, Martin Wolf returns to the airwaves and, in the company of some of the world's most important financial minds, examines the state of the global financial markets and what shocks to the system may be yet to come.
Link

Proof: Silver is MONEY

Comment: This person went in to a grocery store and purchased over $19 of goods using Silver Coins, the wave of the future.

True Unemployment rate is OVER 20%

If the theory has a chief architect, it is John Williams, a semi-retired grandfather of five living in Oakland, Calif. The son of a chainsaw importer, Williams sold the family business in the 1970s and began consulting for corporations, recalculating government economic data to arrive at what he says were more reliable measures, and with them, truer forecasts. Today Williams runs Shadow Government Statistics (ShadowStats.com) from his home. For $175 a year subscribers get economic data and analysis adjusted to back out the accumulated effects of what Williams has dubbed the Pollyanna Creep -- Pollyanna being the orphan protagonist of the 1913 children’s book who learns to play the “glad game” to find cheery perspectives on life’s sorrows. In other words, he provides figures he feels are properly miserable, to offset government ones he says are too prettied-up.

If Williams is right, unemployment is over 20%, gross domestic product is shrinking by 8% and consumer prices are jumping by nearly 7%. His forecasts border on apocalyptic. The government is creating so much new money, he says, that the all but inevitable result is hyperinflation, where “your highest denomination, the $100 bill, becomes worth more as toilet paper than money.” Buy physical gold, he advises.

Whether we believe the forecasts or not, the possibility of a Pollyanna Creep has serious implications. Social Security payments are just one benefit adjusted each year for increases in the cost of living. If the figures hadn’t been corrupted, says Williams, checks might be close to double what they are.

Williams has managed to attract plenty of press. A year ago, Harper’s magazine featured a cover drawing of a grinning Uncle Sam fondling numeral-shaped party balloons, with the headline, “Numbers Racket: Why the Economy is Worse Than We Know.” The story centered on Williams’ data. The San Francisco Chronicle followed with “Government Economic Data Misleading, He Says.” Last fall in the London Times: “Forget Short-Sellers and Manipulators, Pollyanna Creep Could Be the Culprit.”
Link

The Fed opened Multiple Accounts to TRADE?

Props to Zerohedge for having the nads to run this unconfirmed: Here

Which is why we were greatly troubled when we learned recently on good authority that Federal representatives may have opened multiple undisclosed-type accounts with none other than State Street Global Advisors over the past few months. All of these accounts are allegedly handled by one single trader, who is cocooned and isolated from interaction with other partners.

Zero Hedge can, as of yet, not vouch for this being 100% factual and is asking readers who may have additional knowledge of the situtation to please come forward and share their views (tips@zerohedge.com). If, indeed, the Federal Reserve or other derivatives of the administration, are now directly involved in trading, managing repo terms, stock lending, collateral distribution and other liquidity-crucial aspects of what was once an efficient market, then indeed this rally could be written off not merely as the biggest short covering rally of all time, but one that has been explicitly orchestrated by those who should be most impartial to an efficiently working market.

Uh, there's a bit more than just "writing off this rally" there.

If this is true and especially if The Fed is involved, there is a major problem with the law.

See, The Federal Reserve is explicitly not permitted to buy anything that doesn't have the full faith and credit of The US Federal Government behind it. It is that fact (found in Sections 13 and 14 of The Act) that has led me to repeatedly rant about The Fed's purchase of Fannie and Freddie paper - distinctly outrageous acts, given the plain language of the law. (Note that purchase of Ginnie Mae securities, which are fully guaranteed with full faith and credit, would be fine. Note also that Ginnie Mae didn't get in trouble fiscally either. Hmmmm....)

The Fed's charter and statement of operation is that liquidity operations are to be performed through the NY Fed dealing desk. That transparency is important. It is why I was able to detect the liquidity drain on September 24th and sound the alarm - even though it went unheeded - three days before the equity market collapsed.
If The Fed is dealing through one "special trader" at State Street, then all such transparency of action and intent is GONE.

Link

OBAMA : 600 Billion in taxes and 400 Billion in Tax Cuts

June 12 (Bloomberg) -- Health-care overhaul legislation being drafted by House Democrats will include $600 billion in tax increases and $400 billion in cuts to Medicare and Medicaid, Ways and Means Committee Chairman Charles Rangel said.

Democrats will work on the bill’s details next week as they struggle through “what kind of heartburn” it will cause to agree on how to pay for revamping the health-care system, Rangel, a New York Democrat, said today. He also said the measure’s cost will reach beyond the $634 billion President Barack Obama proposed in his budget request to Congress as a down payment for the policy changes.

Asked whether the cost of a health-care overhaul would be more than $1 trillion, Rangel said, “the answer is yes.”

House Democrats plan to release their legislation next week. Obama has made a health-care overhaul a top domestic priority and is working with Congress to get legislation to his desk by October.

Democrats in the House and Senate are working on legislation that would require all Americans to have health insurance, prohibit insurers from refusing to cover pre-existing conditions and place other restrictions on the industry.

The legislation would establish online exchanges for individuals to purchase insurance and would require employers to provide health benefits to workers or pay a penalty. Some Democrats also are backing creation of a government-run program to expand coverage to the uninsured. The issue is the subject of bipartisan negotiations with Republican opponents.

Taxes Explained:
Here

Global Economy is set to shrink this year more than previously expected

By Annys Shin
Washington Post Staff Writer
Friday, June 12, 2009

The global economy is set to shrink this year more than previously expected, according to a forecast issued yesterday by the World Bank.

*
Spike in Interest Rates Could Choke Recovery
*
Recent Fixed-Rate Mortgage, 10-Year Treasury Yields
*
World Bank Predicts Deeper Economic Contraction

The bank predicted that the economy will contract at an annualized rate of 3 percent, far worse than the previous estimate of 1.7 percent issued in March. The forecast, which was prepared ahead of this weekend's meeting in Italy of the finance ministers from the eight leading industrialized countries, reflects a widespread view among economists that while the global recession is easing, it remains severe.

Worldwide economic conditions have changed somewhat since the G-8 finance ministers last met in February, with tentative signs of improvement in several member countries.

In the United States, for instance, last week's employment report showed that employers shed fewer jobs in May than anticipated, suggesting job cuts are slowing. Japanese officials yesterday said their economy shrank in the first three months of the year at a fierce pace, but slower than the government had estimated. The IMF said Monday that the decline in the Euro economies, which went into recession in 2008, would moderate in coming months. The agency added that recovery is possible next year.
ad_icon

Although the downturn appears to be losing steam in some developed nations, World Bank President Robert B. Zoellick stressed yesterday that the outlook for developing countries is grimmer.

"Even if the developed world starts on a path to recovery, for many [developing]
countries . . . it will take longer," Zoellick said during a conference call with reporters.

Developing nations have been hard-hit by a steep drop in demand for exports, the flight of foreign investment and a decline in remittances. They don't have as much financial wherewithal as developed nations, or the ability to borrow as much money to fund stimulus spending. Falling revenue has made it harder for them to service their debt.

World Bank officials have already noticed more borrowers in Africa are behind in payments, while demand for grants and loans has increased.
link