Wednesday, May 19, 2010

Jay Taylor: Turning Hard Times Into Good Times

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French Pension-Reform Plan Stirs Union Ire

The French government said it plans to increase the retirement age, setting up a battle with unions who want the French to continue retiring earlier than most other Europeans.

The government said it plans to introduce a bill to raise the retirement age from the current minimum of 60—though it didn't say to what age—and create a new tax on high earners, to try to fix the nation's debt-choked pension system.

Unions have scheduled a nationwide demonstration on May 27 to protest the proposed overhaul. (more)

Top Holders of US Debt

Dow Theorist Richard Russell: Sell Everything, You Won't Recognize America By The End Of The Year


Richard Russell, the famous writer of the Dow Theory Letters, has a chilling line in today's note:

Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him.

That's pretty intense! (more)

Global investors flock to US debt at record speed

The net increase was almost a $100bn rise on February – when foreign purchases of long-term securities stood at $47.1bn – and was a new record, according to US ­Treasury figures.

The marked increase in securities purchases – which saw China become a net-buyer of US assets for the first time in six months – is evidence that the rest of the world ­continues to view the US as a relative safe haven.

New data from the US Treasury show that private purchasers led the increase, buying $125bn of US bonds and other assets in March, while foreign governments bought $32.7bn worth.(more)

Conspiracy of Banks Rigging States Came With Crash

A telephone call between a financial adviser in Beverly Hills and a trader in New York was all it took to fleece taxpayers on a water-and-sewer financing deal in West Virginia. The secret conversation was part of a conspiracy stretching across the U.S. by Wall Street banks in the $2.8 trillion municipal bond market.

The call came less than two hours before bids were due for contracts to manage $90 million raised with the sale of West Virginia bonds. On one end of the line was Steven Goldberg, a trader with Financial Security Assurance Holdings Ltd. On the other was Zevi Wolmark, of advisory firm CDR Financial Products Inc. Goldberg arranged to pay a kickback to CDR to land the deal, according to government records filed in connection with a U.S. Justice Department indictment of CDR and Wolmark. (more)

Govt Can Seize Your Property, Sell for Personal Gain

In America, we're supposed to be innocent until proven guilty.

Life, liberty and property can't be taken from you unless you're convicted of a crime.

Your life and liberty may still be safe, but have you ever gone to a government surplus auction? Consumer reporters like me tell people, correctly, that they are great places to find bargains. People can buy bikes for $10, cars for $500.

But where did the government get that stuff? (more)

Warren Buffet Does Heavy Selling; 13-F Filings Reveal

Billionaire investor Warren Buffet did some heavy selling during the first quarter of 2010. According to the most recent 13-f filing, Mr. Buffett liquidated his entire position health insurers United Health (UNH) and WellPoint (WPT). He dumped his holdings in financial companies Travelers (TRV) and Sun Trust Banks (STI).

Buffet also trimmed his holdings in 8 stocks while increasing positions in 3.

Positions were reduced in Conoco Phillips (COP), Carmax (CMX), Costco (COST), Johnson & Johnson (JNJ), Gannett (GCI), M&T Bank (MTB), Moodys (MCO) as well as Procter & Gamble (PG).

Buffett reported an increase in holdings in Becton Dickinson (BDX), Iron Mountain (IRM), and Republic Services (RSG).

The total value of Berkshire’s portfolio dropped $7 billion to $50.9 billion from $57.9 billion in the previous quarter.

Five Facts You Need to Know About the Financial System

Let’s connect the dots on the ENTIRE financial system right now.

Fact #1: Banks are Insolvent.

The only reason they’re still in business is because they are permitted to value their balance sheet at whatever price they choose. I could privately value my car at $500 TRILLION, but that doesn’t mean I’ll get that price for it when it comes time to sell.

Ditto for the banks and their garbage saturated balance sheets.

Fact #2: Countries are Insolvent

Europe, a union of broke countries, recently announced it is bailing itself out. This is a bit like your bankrupt friend announcing he is gifting himself $1 million: it DOESN’T SOLVE ANYTHING. As I’ve stated time and again, you CANNOT solve a debt problem by issuing more debt. (more)

Ex-Bundesbank Chief Says Greece Will Never Repay Debt, Says Bailout All About "Rescuing Banks And Rich Greeks"

Finally someone speaks the truth. In an interview with Spiegel Magazine, former Bundesbank chief Karl Otto Pohl, says it how it is: "Without a "haircut," a partial debt waiver, [Greece] cannot and will not ever [repay its debt]. So why not immediately? That would have been one alternative. The European Union should have declared half a year ago -- or even earlier -- that Greek debt needed restructuring." As for the reason for the bailout, Pohl's observation will not be a surprise to our readers "It was about protecting German banks, but especially the French banks, from debt write offs." Is there any hope for Europe now? It appears no, as the right decision was to let Greece go bankrupt: "Investors would quickly have seen that Greece could get a handle on its debt problems. And for that reason, trust would quickly have been restored. But that moment has passed. Now we have this mess." Amusingly, when asked if banks used "speculators" as a straw man to break all EU Rules and especially the Lisbon treaty:"Of course that's possible. In fact, it's even plausible." We can't wait until the German population realizes just how massively it has been scammed. Last week's Nordrhein-Westphalia Merkel loss will seem like a walk in the park once the mobilized German society decides to fix things on its own. Oh, and look for the EU and the euro to be a thing of the past. (more)

Ask Dr. Copper.

Today’s a good day for a checkup from “Dr. Copper.” The useful metal has “a Ph.D. in economics,” the kitschy saying goes. If the world starts using less -- in their homes, their electronics, etc. -- a fall in copper demand should precede a global slowdown. It’s used in damn near everything, after all. So if prices are down, that has to mean something… right?

Yesterday, the copper spot price fell below its 200-day moving average. We don’t like to give the charts much attention, but this is one of those breakdowns of support that gets a lot of people excited. At barely $3 today, it’s also 60 cents off its year-to-date high. Agora Financial

In other words, copper just slipped into a bear market. If his Ph.D. still carries any clout, the world might follow suit.

Chart of the Day