Monday, September 20, 2010

Inside story: the Bush gang and Barrick Gold Corporation

by Anton Chaitkin

Barrick Gold, caught scrambling for loot amid the corpses in Zaire, is a corporate front for the George Bush-allied covert political apparatus. The Canada-based Barrick is Bush's only known current business enterprise. The company, which Bush now personally leads, was created by Bush's political partners--British elite narcotics financiers, and arms traffickers and money launderers.
Using the influence of this political faction, Barrick acquired important interests, first in the United States, then in Canada and South America. In South America, as Barrick boasts in its 1995 annual report, the company has an aggressive, long-term approach, with mines and projects established in strategic locations in Argentina, Chile, Peru, Bolivia, and Brazil. ``Almost two-thirds of the exploration and development drilling budget will be spent in South America, where the company has decided to focus its efforts,'' the annual report states. In addition, with its intended conquests in Indonesia and Africa, the firm now says it aims to move from third to first among the world's largest gold mining companies.
We present here the results of {EIR'}s investigation of the Bush company, centering on the following principal figures:

George Herbert Walker Bush:
whose father was a partner in the powerful London-controlled private banking firm Brown Brothers Harriman. Relevant to the Barrick story, Bush was U.S. vice president and chief of covert operations in the Reagan-Bush (1981-89) administration, and U.S. President (1989-93). As a former President and power broker, Bush is Barrick Gold Corp.'s chief lobbyist, a stockholder in Barrick, and honorary senior adviser to Barrick's international advisory board.

Adnan Khashoggi:
a Bush-allied Saudi billionaire and arms trafficker, founder of the Barrick Gold Corp.; famous for his illegal weapons sales to Iran. (more)

US Pensions Are Massively Underfunded, And Have Ridiculously Rosy Assumptions

A piece in the WSJ on the rosy forecasts that US pension funds are making is getting a lot of buzz.

Here's the key stat:

The country's 15 biggest public pension systems have an average expected return of 7.8%, and only a handful recently have changed or are reconsidering those return assumptions, according to a survey of those funds by The Wall Street Journal.

Given how low rates are, and how dicey the economic outlook is, this seems insane.

But it's all about extending and pretending.

After all, reducing expectations is very costly:

The Colorado Public Employees Retirement Association showed in its 2009 financial report the impact of reducing the rate. Using a 8% expected return rate, the plan faced a $23.4 billion deficit, based on market values, at the end of 2009. If the rate was cut to 6.5%, the shortfall would jump to $34 billion.

Meanwhile, Kid Dynamite makes a great observation:

One thing that still makes no sense to me, and perhaps a reader can help me out with this, is how pension funds can be buying long term corporate bonds (I mean REALLY long term, I'll get to that in a second) with returns below their annualized bogey. Last month Norfolk Southern issued "century bonds," due in 100 years. Their yield was around 6%. Last week, Rabobank did the same thing, issuing 100 year bonds with a yield of around 5.8%. The WSJ says "Life insurers and pension funds tend to be the main buyers for such lengthy bonds because they need to match their long-term liabilities with assets of a similar duration."

Now, correct me if I'm wrong, but if you're making a super long term investment with a 6% return, your long term return assumptions probably shouldn't be in the vicinity of 8%, right? What do you do to recoup the difference - make up for it in volume?

Technically Precious With Merv

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The Chances of a Double Dip

By Gary Shilling

Investor attitudes have reversed abruptly in recent months. As late as last March, most translated the year-long robust rise in stocks, foreign currencies, commodities and the weakness in Treasury bonds that had commenced a year earlier into robust economic growth - the "V" recovery.

As a result, investors early this year believed that rapid job creation and the restoration of consumer confidence would spur retail spending. They also saw the housing sector's evidence of stabilization giving way to revival, and strong export growth also propelling the economy. Capital spending, led by high tech, was another area of strength, many believed. (more)

Rob McEwen on CNBC re: Gold

Stephen Foley: Wall Street's habit of 'window dressing' isn't illegal – it's just wrong

US Outlook: Even regulators have taken to using the phrase "window dressing" to describe Wall Street banks' habit of reducing their short-term borrowings for a few days around the end of each quarter, in order to make themselves look less risky than they really are.

Window dressing is too benign a term. What banks, led by Lehman Brothers, but also including Bank of America and Citigroup, have been doing is much worse than simply dressing up their finest wares in the shop-front window. It is more like finding an Oscar de la Renta dress in the window of a Wal-Mart. It is misleading, and often deliberately so.

Thanks to an examiner's report commissioned by the bankruptcy courts, we know that Lehman even had a name for the accounting trick: Repo 105. At the end of each quarter before its collapse in 2008, Lehman was able to make its balance sheet look $50bn (£32bn) lighter than it really was, deceiving worried investors who were pressing it to reduce its leverage. (more)

Chart of the Day

Surge in Housing Supply Will Drive Down Prices

Home ownership has become an albatross. Prices are falling, demand is weak, foreclosures have skyrocketed, and inventory is backed up to the moon. If there's an upside, it's hard to see.

Everyone who bought a house in the last 6 or 7 years knows that he was fleeced by bankers who were pushing "fishwrap" mortgage paper to line their own pockets. Prices did not reflect the underlying supply/demand fundamentals as much as they exposed the massive mortgage laundering operation that was taking place in the shadow banking system. Hedge fund sharpies and other speculators walked away with billions while credulous homeowners were lashed to an anvil and tossed in the East River.

Now there are signs that the Fed teamed-up with the banks to get another pound of homeowners' flesh by keeping inventory off the market while they were exchanging $1.25 trillion in reserves for the banks non performing loans and mortgage-backed securities. Here's how it works: While the Fed was executing its "quantitative easing" (QE) program, the banks began to stockpile foreclosed homes to reduce supply and, thus, stabilize prices. It was all a hoax to conceal the transfer of reserves for garbage assets. Now that the banks are loaded with fresh reserves, they don't need to play-along anymore, which is why they've started dumping their massive backlog on the market. As inventory floods the market, housing prices will tumble and homeowners will take another pounding. Here's an excerpt from an article in the Wall Street Journal that helps to explain what's going on: (more)

Homeowners’ Rebellion: Could 62 Million Homes Be Foreclosure-Proof?

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut makes it impossible for banks to establish their ownership of property titles—and therefore to foreclose on mortgaged properties. The logical result could be 62 million homes that are foreclosure-proof.

Mortgages bundled into securities were a favorite investment of speculators at the height of the financial bubble leading up to the crash of 2008. The securities changed hands frequently, and the companies profiting from mortgage payments were often not the same parties that negotiated the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing properties to change hands without the necessity of recording each transfer. (more)

Fort Knox is EMPTY - Gata on FOX

US Economic Calendar

DateTime (ET)StatisticForActualBriefing ForecastMarket ExpectsPriorRevised From
Sep 2010:00 AMNAHB Market IndexSep-131413-
Sep 218:30 AMHousing StartsAug-540K550K546K-
Sep 218:30 AMBuilding PermitsAug-550K560K559K-
Sep 212:15 PMFOMC Rate Decision9/21-0.25%0.25%0.25%-
Sep 2210:30 AMCrude Inventories09/18-NANA-2.49M-
Sep 238:30 AMInitial Claims09/18-440K450K450K-
Sep 238:30 AMContinuing Claims09/11-4450K4450K4485K-
Sep 2310:00 AMExisting Home SalesAug-3.80M4.04M3.83M-
Sep 2310:00 AMLeading IndicatorsAug-0.1%0.1%0.1%-
Sep 248:30 AMDurable OrdersAug--2.0%-1.3%0.4%-
Sep 248:30 AMDurable Orders -ex TransportationAug-0.5%0.7%-3.7%-
Sep 2410:00 AMNew Home SalesAug-270K290K276K-