Tuesday, October 6, 2009

TARP: Taxpayers on the hook for $200 billion

Taxpayers stand to lose between $100 billion and $200 billion on TARP -- Treasury's $700 billion financial market bailout.

While that's nothing to sneeze at, many experts say that the Troubled Asset Relief Program helped rescue the economy from a second Great Depression.

But there are others who argue that the billions of dollars that taxpayers shelled out simply delayed an inevitable epic collapse of the financial sector. (more)

Jim Rogers Audio Interview On King World News

Jim Rogers did a comprehensive audio interview for King World News. Basically all of his views are presented in this longer interview. He shares his view on commodities and looming shortages. Why leaving the US and relocating to Asia and learning Mandarin is probably the smartest thing you can do and his thoughts on what’s going on in the world right now. Great food for thought for the weekend. click here for audio

Iran conflict could send oil to high: Raymond James

Oil prices may surge to a record if conflict over Iran's uranium enrichment leads the oil producer to slash exports or block the Strait of Hormuz, Raymond James analysts said in a Monday research note.

The note says that the risks of a military strike against Iran's nuclear facilities are rising, which could potentially cut off the OPEC nation's 2-million-barrels-a-day of exports.

It could also lead to a blockage of 20 percent of global oil supplies which are transported through the Gulf's Strait of Hormuz, the note said.

While the threat of a disruption due to the standoff between the West and Tehran over its nuclear program has pushed up oil prices from time to time over recent years, oil markets have remained calm amid rising tensions during the past month. (more)

Fractional Reserve Lending Constitutes Fraud

I was asked to reply to Karl Denninger's Rebuttal To Mish On Fractional Reserve Lending.

Here goes: Denninger does not phrase my arguments correctly on points 2-5, however he thinks they are immaterial so the points are somewhat moot. The crux of the matter is not whether assets are backed by collateral as Denninger suggests, but rather whether the same money has been lent out multiple times.

Let's follow through with a real life example.

Fannie Mae makes a loan of $1,000,000. Let's be more than reasonably fair and assume Fannie Mae issued bonds for the entire amount, not borrowing a single cent into existence. So far there is no fraud. (more)

Roubini Sees Stock Declines as Soros Warns on Economy

New York University Professor Nouriel Roubini said stock markets may drop and billionaire George Soros warned the “bankrupt” U.S. banking system will hamper its economy, highlighting doubts about the sustainability of the global recovery.

“Markets have gone up too much, too soon, too fast,” Roubini, who accurately predicted the financial crisis, said in an interview in Istanbul on Oct. 3. U.S. stocks may suffer a “major decline” after climbing to the highest levels in almost a year two weeks ago, according to technical analyst Robert Prechter, founder of Elliott Wave International Inc.

Stocks have surged around the world in the past six months as evidence mounts that the economy is emerging from its deepest recession since the 1930s. The Standard & Poor’s 500 Index has soared 51 percent from a 12-year low in March while Europe’s Dow Jones Stoxx 600 is up 48 percent. The euphoria contrasts with warnings from policy makers and investors like Soros, who said today that the U.S. economic recovery will be “very slow.” (more)

Faber: Stocks Have Peaked for 2009

Stock prices have peaked for 2009 and may drop by as much as 20 percent as investors buy cheap dollars, says investment guru Marc Faber, author of the Gloom, Boom & Doom Report.

The dollar, says Faber, is oversold, and investors will ditch equities and snap up greenbacks.

“I wouldn’t be surprised if we’d seen the peak of the market for this year because the economic news isn’t going to improve very much,” Faber told Bloomberg.

“The correction in the market has been overdue for quite some time.”

While officials have been saying recently that the United States is emerging from its recession, credit markets still remain tight and unemployment figures are still high. (more)

Arab plot To Drop Dollar

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars. (more)

U.S. Financial System Systemic Failure Approaches

Debate stirs on whether the financial structure of the USEconomy is broken irreparably. Debate stirs on whether actions taken in the last year or two have put the nation on a path that can even achieve stability, let alone recovery. Debate stirs on whether a pernicious and not so secret syndicate has taken control of the USGovt financial ministries, let alone be removed. Debate stirs on whether lack of US Federal Reserve audits and disclosure of their accounting is integral to sustaining the syndicate control as well as its probable egregious fraud. Debate stirs whether the nationalizations have actually enabled adoption of wrecked assets, have concealed executive ransacking, and have buried massive counterfeit of bonds. (more)

Entering the Greatest Depression in History

War Is Peace, Freedom Is Slavery, Ignorance Is Strength, and Debt Is Recovery

In light of the ever-present and unyieldingly persistent exclamations of “an end” to the recession, a “solution” to the crisis, and a “recovery” of the economy; we must remember that we are being told this by the very same people and institutions which told us, in years past, that there was “nothing to worry about,” that “the fundamentals are fine,” and that there was “no danger” of an economic crisis.

Why do we continue to believe the same people that have, in both statements and choices, been nothing but wrong? Who should we believe and turn to for more accurate information and analysis? Perhaps a useful source would be those at the epicenter of the crisis, in the heart of the shadowy world of central banking, at the global banking regulator, and the “most prestigious financial institution in the world,” which accurately predicted the crisis thus far: The Bank for International Settlements (BIS). This would be a good place to start. (more)

Ron Paul on Fox News – “We MUST go back to the gold standard”

Peter Schiff - STOP Borrowing from China!!!

Live Longer In a Depression

Last today, cheer up… this economic malaise we’re suffering will probably make you live longer. “According to a pair of researchers from the University of Michigan, a depression does more for longevity than diet or exercise,” reports Bill Bonner in his latest Daily Reckoning missive. We promise this is not a cruel joke.

“Life expectancy during the worst years of the Great Depression increased from 57.1 years in 1929 to 63.3 years in 1933, says the report by Jose A. Tapia Granados and Ana Diez Roux. It didn't matter whether you were a man or a woman, black or white. And it didn't matter if you were in the U.S. during the Great Depression or in Spain, Japan or Sweden during their economic downturns. The results were the same.

“As CNN reports, ‘By contrast, life expectancy declined during the boom years. For most age groups, mortality tended to peak during years of strong economic expansion (such as 1923, 1926, 1929 and 1936-1937).’

“Conventional wisdom holds that recessions are times of stress. People do not eat as well. They skip medical checkups. They should drop dead earlier. Instead, they live longer. Perhaps it is because the economy slows down, allowing people to live at a more comfortable pace. Maybe the unemployed get more sleep. We don't know. But if you want to live an extra six years, nothing works like a slump.”

from Agora Financial