Bankruptcy Filing Raises Doubts About a Bond Repayment Pledge

Mark Almond/Birmingham News, via Associated Press

Birmingham, Ala., is in Jefferson County, Alabama's most populous county. The county's debt totals $4.1 billion.

By MARY WILLIAMS WALSH

Published: December 23, 2011 

 

People who own what is considered the safest type of municipal bond may be in for a surprise.
This safe debt, called a general-obligation bond, is said to be the next strongest thing to Treasuries because it is backed by a “full faith and credit” pledge. That means the government that issued it will pay it on time, no matter what.
But now Jefferson County, Ala., has stopped paying such debt, breaking with convention and setting up a fundamental test of what full faith and credit truly means.
“We all want to know, ‘What’s the truth here?’ ” said Richard A. Ciccarone, chief research officer at McDonnell Investment Management. “The way I learned it, full faith and credit was considered all the taxing power of a community, and that means there’s an infinite pledge. When you get into bankruptcy court, truth is something that can be revealed in a new way.”
Jefferson County filed the biggest Chapter 9 bankruptcy in United States history last month, raising new uncertainty about the safest municipal bonds. Court precedent offers few answers. Municipal bankruptcies are rare, and most have involved tiny, special-purpose districts that did not even have general-obligation bonds, having issued revenue bonds, which are considered riskier because they guarantee repayment solely from money generated by a specific project like a toll road.
The few places that have gone bankrupt with general obligations outstanding have sent reassuring signals, making payments even though they were not required to in bankruptcy. Orange County, Calif., the previous Chapter 9 record-holder, took a few extra months to pay some maturing debt, but it compensated investors for the delay by giving them almost a full percentage point more interest than it otherwise owed them.
The small city of Central Falls, R.I., has been duly paying its general-obligation debtholders in Chapter 9 this year, bolstered by a new state law giving those investors priority over everybody else.
Jefferson County, by contrast, is taking advantage of the automatic stay granted in bankruptcy, which bars creditors from demanding payments or grabbing collateral. Officials say they stopped sending cash to the county’s paying agent in November and will not send any money this month, either.
Bankruptcy experts have long known that in theory a municipality could use the stay to revoke its full faith and credit pledge, but they have not watched a big distressed city or county go through with it. “You’ve got a case here where the rubber has hit the road,” said Kenneth N. Klee, a bankruptcy lawyer representing Jefferson County, whose debt grew out of poorly conceived efforts to finance a court-ordered rebuilding of its sewer system.
The county’s nonpayment is not its only surprise. Like many places, it used newfangled instruments to circumvent constitutional limits on how much debt it could legally issue. In Alabama, counties are required to hold a referendum before issuing any general-obligation bonds. So Jefferson County has not issued such bonds since the 1950s. Instead, it issues warrants, which look nearly identical but do not require the referendum.
Official disclosures promote the county’s warrants as “general obligations,” toward which “its full faith and credit have been irrevocably pledged.” Sounds good, but what does it really mean? Conventional wisdom has it that if a government defaults on a general obligation, its creditors can take it to court, where the judge will order it to raise taxes — as much as it takes, no matter how painful.
But that now appears to be a hollow threat in Jefferson County. Counties in Alabama do not have the legal authority to raise taxes. Only the state can do that.

Iran toughens cyber challenge to US, claims superior drones

Iranian Gen. Vahidi 

Iran's Velayati 90 navy drill

Iranian Defense Minister Brig. Gen. Ahmad Vahidi Monday, Dec. 26, replied to Sunday's debkafile report which revealed Tehran's plan to use its big 10-day naval drill east of the Strait of Hormuz to test its vaunted cyber intelligence prowess against US warships. He said Iran has great capabilities in "all fields of national defense, including the use of intelligence drones as well as decoding of such aircraft and countering electronic and covert warfare." The Islamic Republic, he said, could employ aerial drones to counter any potential US-led covert war.
Vahidi's words implied two key points: That Tehran did not expect the US to carry out a lone strike against its nuclear facilities but in conjunction with fellow NATO member and Israel. And two, that the Islamic Republic has convinced itself that by downing the US stealth drone RQ-170, it has acquired all the technology necessary for repelling penetrations and attacks by drones and warplanes with stealth capabilities.
While boasting of its ability to overcome a "US-led covert war" by means of electronic and intelligence means, Iran's defense minister avoided making the same boast about a full-scale war offensive.
This, say debkafile's military sources, is because Tehran has reason to believe that Washington too in another strategic turnaround has stopped thinking in terms of a full-scale war against Iran and switched to a selective approach, as disclosed in an article by Matthew Kroenig he published in the latest issue of the authoritative Foreign Affairs.
According to this approach, the US could disable and demolish Iran's known nuclear facilities by targeting select facilities, such as "the UF6 plant at Isfahan which converts yellowcake into uranium hexafluoride gas; the heavy-water reactor at Arak and various centrifuge-manufacturing sites near Natanz and Tehran, all of which are located above ground and are highly vulnerable to air strikes."
Gen. Vahidi's remarks aimed at warning the United States that Iran is also capable of trouncing covert strikes on those sites. He said that Iran has great capabilities in all fields of defense and will develop and maintain its accomplishments which have been achieved during the most difficult circumstances and under full, comprehensive sanctions."
Sunday, Dec. 24, debkafile reported:  Iran launched its 10-day naval drill "Velayati (Supremacy) 90" east of the strategic Strait of Hormuz Saturday, Dec. 24, to show its muscle - first of all to Washington in view of the Obama administration radically changed stance in favor of an attack to destroy the Islamic Republic's nuclear weapons program.
It is a message that, notwithstanding the proximity of US warships in the area, Tehran can close the Persian Gulf's Strait of Hormuz to the passage of one third of the world's oil consumption; and if attacked, it will not just hit back at  US targets in the region and Israel; Saudi Arabia and Jordan are additionally in its sights.
Israel was informed of the US policy reversal on Iran in the one-on-one talk President Barak Obama held with Israeli Defense Minister Ehud Barak at Gaylord Hotel, Maryland on Dec. 16.
For Prime Minister Binyamin Netanyahu and Barak, the tightening of military coordination on Iran between the US and their government is a signal achievement for which neither has won kudos at home, where a sustained campaign is afoot to end their rule by raising one prickly domestic issue after another.

Philipp Bagus and Alasdair Macleod on Europe, inflation, and gold

In this video Philipp Bagus, Assistant professor of Economics at Madrid’s Universidad Rey Juan Carlos and author of The Tragedy of the Euro and Alasdair Macleod of the GoldMoney Foundation talk about the eurozone facing the problem that is characterised in the “tragedy of the commons” analogy. Bagus explains this phenomenon by way of an example of overfished and over-exploited oceans due to a lack of property rights on oceans. In Europe, governments run larger deficits than their “competitors” in order to externalise the costs to all users of the currency. Knowing these incentives, the Stability and Growth Pact was put in place as per the early 1990s Maastricht Treaty, capping budget deficits at 3% of GDP and the debt to GDP level at 60%. However there was no enforcement of these rules which is why there have already been more than 80 infringements to this stability pact without any repercussions.
They talk about possible solutions to the euro crisis. Bagus points out that there are basically three different ways to go about it. Firstly, governments could make drastic cuts in public spending and privatise public assets in order to balance their budgets. However, there will be – and is – strong political resistance to such proposals. Secondly, the eurozone could disintegrate, driven by a reluctance of German citizens to pay for other countries’ expenditures. And lastly, central banks and governments could decide to print their way out of the crisis, leading to high inflation.
Bagus says that as long as the incentive for running deficits exists there won’t be an increase in countries’ savings rates. Macleod points out that there is great institutional resistance to breaking up the euro. Bagus explains that the official opinion towards the euro is positive in Germany; however the sentiment on the streets looks quiet different. But as long as there is no political party devoted to this issue this mood is not likely to gain traction at least as long as inflation remains moderate.
Amid the ongoing expansion of the money supply and persistent deficits, Bagus can’t see the dollar gaining in value over the medium to long term. He also says that ECB policies are a lot more pragmatic than the ones undertaken by the US Federal Reserve. Talking about sound money, Bagus explains different ways to go about its introduction. One way would be to back all the money in existence by gold, adjusting the price of gold accordingly. Another would be to take away legal tender laws and have competing currencies. However this would require the governments to impose dramatic reforms, which is partly why they will oppose such measures.
This interview was recorded on November 15 2011 in Madrid.

Sir Mervyn King: debt crisis is causing a dangerous 'dependence on central banks'

Sir Mervyn King has used his position as vice-chairman of Europe's "early warning watchdog" to warn that the developing debt crisis is causing a dangerous "dependence on central banks".

Sir Mervyn said the action would help in the short term but called for longer-term solutions, including getting the European Financial Stability Facility (EFSF), the so-called "big bazooka" bail-out fund, up and running. Photo: PA, ALAMY

Just a day after the European Central Bank (ECB) provided a record €489bn (£407bn) of cheap loans to banks, the Governor of the Bank of England said the crisis had been made worse by “negative interlinkages”. He added: “Dependence on central banks has risen and signs are intensifying that stressed financial conditions are passing through to the real economy.” Sir Mervyn was speaking in Berlin following a meeting of the European System Risk Board.

His comments were taken as a view on the ECB’s radical refinancing operation unleashed on Wednesday. The action, which saw 523 banks borrow nearly half a trillion euros, is known as the “Sarko trade” after French leader Nicolas Sarkozy said the liquidity would allow each state to “turn to its banks” for finance. Economists have warned that making banks buy risky sovereign debt will not help the crisis.

But European markets were buoyed by the liquidity injection. In France the CAC rose 1.36pc and German DAX ended the day 1.05pc higher. In London, the FTSE 100 climbed 1.25pc.

Sir Mervyn said the action would help in the short term but called for longer-term solutions, including getting the European Financial Stability Facility (EFSF), the so-called “big bazooka” bail-out fund, up and running.

By Louise Armitstead, Chief business correspondent

10:24PM GMT 22 Dec 2011

BofA mulls more asset sales to boost capital

By Rick Rothacker

Mon Dec 26, 2011 8:39am EST

(Reuters) - Bank of America Corp (BAC.N) is lagging behind its major U.S. competitors in complying with new capital rules, leading the bank to consider even more asset sales, sources said.

The bank's management is focused on not being an outlier compared to its peers and believes it has "viable alternatives" to increase its capital levels, a person familiar with the situation told Reuters.

The bank, for example, could consider selling its Indian back-office processing operation, as other banks have, sources said. The bank has also said it is looking to shed real estate holdings and private-equity investments.

But after about $50 billion of asset sales since January 2010, which include sales such as most of its shares in China Construction Bank Corp (0939.HK) (601939.SS), the bank may not have many big-ticket items left.

With one analyst saying the bank may need $45 billion of additional capital by 2019, it may have to start cutting deeper into its franchise. That would mean shedding more significant businesses, such as parts of the investment bank or the Merrill Lynch brokerage. The bank can also improve its capital measures by retaining profits and running off risky loans, but those steps will take time.

The bank declined to comment on specific asset sales.

The question of how much capital the second-biggest U.S. bank will eventually need to raise is a key concern that is rattling investors. Bank of America, which had to be bailed out by the U.S. government during the financial crisis of 2008, has remained one of the weakest in the industry.

For the last two years, Chief Executive Officer Brian Moynihan has worked to gradually streamline the company and build capital, but investors have been disappointed with the speed of a turnaround.

While the bank, like other financial firms, has suffered from a sluggish economy and concerns about the European debt crisis, it has also incurred self-inflicted wounds, including a now-canceled plan to charge customers a $5-per-month debit card fee.

Bank of America's shares are down 58 percent this year and closed below $5 on Monday for the first time since March 2009.

Capital Account: Max Keiser, America runs the "Special Olympics for Financial Fraud" (12/23/11)

Japan to borrow $1.9 Trillion in 2012, total debt heads to 1 Quadrillion Yen

TOKYO (Commodity Online): Amidst this financial crisis, triggered by money printing excesses, the Japanese government has decided to bury itself further in debt.

As per official data, Japan will issue bonds totalling 149.7 Trillion Yen ($1.9 Trillion) in 2012. The Ministry of Finance has decided to inflate the original monthly auctions of 10 year and 20 year bonds by another 100 billion Yen of bonds.

Japan's total debt is expected to hit a record 1 quadrillion Yen in 2011-2012 and the current debt to GDP ration is over 200% on a gross basis.

SilverDoctors: Silver COT Report 12/23/11

SilverDoctors: Silver COT Report 12/23/11: The total commercial net short position decreased by 5,480 contracts to 14,825 contracts in the week ending 12/20/11.   This is the smallest...

SilverDoctors: Alasdair Macleod: "The Dollar is on a Hyperinflati...

SilverDoctors: Alasdair Macleod: "The Dollar is on a Hyperinflati...: Gold bug and Gold Money contributor Alasdair Macleod discusses inflation vs. deflation, and why the dollar price of gold is on a hyperinflat...

Why silver is real money!

By David Morgan
In days gone by Silver was not an investment it was money, in fact silver passed through more hands in everyday commerce than any other real money including gold. I state real money to distinguish silver money from modern paper money, which has flooded the world “money” supply the past three decades.

Silver held absolutely no value as an investment when it circulated as money, it served its function perfectly, unit of account, means of payment, and most importantly as a store of value. In 1993 the United States had been off the silver standard for almost thirty years and people forgot how an honest monetary system worked.

You see the need for financial planning and making assumptions on the inflation rate and future economic conditions are for the most part unnecessary when honest money rules the day. Why? Because the common man knows how much saving they will need in the future.

The monetary value is the same in ten, twenty, thirty, fifty or hundred years when the monetary system is honest. In actual fact the prices of things generally move down slightly due to stable money and the ability of people to improve products and services and the natural competitive nature of the free market.

Silver Update 12/24/11 Holiday Deals

Paul Brodsky - Gold Could See Five Digits in 2012

JIM Willie/Gold and Silver mini Raid/

Harvey Organ's:

Good evening Ladies and Gentlemen:

Today's commentary will be a little short as I want all of you to concentrate on the Jim Willie article written this morning.

How Gold, Silver And Platinum Will Respond To ECB's Money Printing

Today, about 490 billion euros ($637 billion) worth of ultra-low interest "loans" will be delivered to European banks. This cash has been provided courtesy of the ECB, which denies that it will ever engage in printing money, like the Americans, Britons and Japanese have now done for many years. The "loans" are for a 3-year period. In return for the cash, the ECB accepts various forms of "collateral," which includes the debt of insolvent southern European sovereigns. This is the largest uptake of cash in the history of the European Union, including the cash given out by the ECB after the collapse of Lehman Brothers.

This is merely the first of a series of so-called long-term refinancing operations (LTRO) the ECB is going to undertake. These are unlimited tenders of cash. The banks call the shots. Any amount they ask for will be given to them, subject only to the availability of collateral. The next tender is scheduled for February 28, 2012, and many are predicting that it will generate an equal or greater demand for cash among euro-banks. The stated intent is to provide liquidity to banks at a time of great stress for the eurozone. The unstated expectation is that part of the cash will be used to shore up balance sheets, and another to replace or buy more bonds from troubled sovereigns of the eurozone, including, particularly, Italy and Spain.

The maturity time for the "loans" is long enough to cover banks until the maturity of many of the sovereign bonds banks might purchase. A bank can now borrow from the ECB at 1% per year for 3 years, invest in a 3-year Italian bond paying 6% plus, and pocket 5% each year in pure profit. That is an enticing proposition. But, the end game is much more lucrative than that. Today's cash delivery is only the first of many 3-year LTRO events that will happen every two months this year. The next one is scheduled for February 28, 2012. The income achieved from buying sovereign debt can, therefore, be leveraged each time a new LTRO takes place, until it reaches an astronomical level of profit. Remember, sovereign debt collateral, at the ECB, is in so-called "category I," and is the subject of a tiny 1.5% haircut

The tiny haircut means that a eurozone bank can post $1 billion in Italian bonds with the ECB on December 21, 2011. On December 22, it can take back $985 million and use that cash to buy more Italian bonds. On February 28, 2012, it will be able to take the newly purchased bonds back to the ECB, take out another 3-year loan, and walk away with $970 million in euros the very next day. It can use that money to buy more Italian bond. Every two months, it will be able to do this again and again, until such time as the ECB decides to stop the LTRO offerings. It is unlikely that the ECB will stop doing LTROs until sovereigns have sold all the bonds they would have liked to sell directly to the ECB if that institution were not prohibited from buying them directly.



Gold prices will eventually respond directly to monetary liquidity increases, no matter how much central bank price suppression intervention there may be right now. With huge euro injections, alongside significant quantitative easing in the UK and the USA, gold will rise stronger than ever, at least over the next three years. Silver, which responds both to monetary liquidity and to commercial demand, is going to rise even faster, especially as commercial demand increases in Europe, and those that "feed" Europe, like China. Platinum responds to monetary liquidity, commercial demand, and, particularly, auto and truck sales. Of all the precious metals, platinum has been the most deeply abused by Wall Street groupthink, which assumed the complete death of European auto sales. It may, therefore, rise most quickly, once reality catches up, especially considering the 27% drop in S. African production in October.

Capital Account: Jeffrey Tucker on how the Government is throwing us back into the Stone Age

Rating Action: Moody's downgrades Slovenia's credit ratings to A1, negative outlook

Global Credit Research - 22 Dec 2011

Frankfurt am Main, December 22, 2011 -- Moody's Investors Service has today downgraded Slovenia's local- and foreign-currency government bond ratings by one notch to A1 from Aa3 with a negative outlook. Today's rating action concludes Moody's review for downgrade of Slovenia's sovereign debt ratings, which was initiated on 23 September 2011.

The main drivers that prompted the downgrade are:

(1) Risks and uncertainties for the Slovenian government's balance sheet stemming from the potential need for further support to banks due to increasing pressure on asset quality, capitalisation and funding among the largest banks in the system.

(2) Increasing medium-term risks to economic growth for the small and very open Slovenian economy resulting from the need for ongoing deleveraging and fiscal restriction in the euro area. This is likely to add to the challenges of placing the country's public debt ratios on a downward trajectory.

(3) Heightened risks posed by the sustained deterioration in government funding conditions due to the euro area sovereign debt crisis.

Should I buy gold or sell gold? Definitely buy!

By Jeff Clark
It wasn't a fun week for gold. By the close on Friday, the metal was down 6.7% (based on London PM fix prices), the biggest weekly decline since September. It got downright irritating when the mainstream media seemingly rejoiced at gold's decline. Economist Nouriel Roubini poked fun at Gold bugs in a Tweet. Über investor Dennis Gartman said he sold his holdings. CNBC ran an article proclaiming gold was no longer a safe-haven asset (talk about an overreaction).

While the worry may have been real, let's focus on facts. Have the reasons for gold's bull market changed in any material way such that we should consider exiting? Instead of me providing an answer, ask yourself some basic questions: Is the current support for the US dollar an honest indication of its health? Are the sovereign debt problems in Europe solved? How will the US repay its $15 trillion debt load without some level of currency dilution? Is there likely to be more money printing in the future, or less? Are real interest rates positive yet? Has gold really lost its safe haven status as a result of one bad week?

And one more: What is the mainstream media's record on forecasting precious metals prices?

Our take won't surprise you: not one fact relating to the trend for gold changed last week. We remain strongly bullish.

So why did gold, silver, and related stocks fall so hard?

The reasons outlined in this month's BIG GOLD are still in play (the MF Global fallout, a rising dollar, year-end tax-loss selling, and the need for cash and liquidity to meet margin calls or redemption requests). Last Wednesday's 3.5% fall took on a life of its own, selling begetting selling, fear adding to fear (especially the case with gold stocks). None of these reasons, however, have anything to do with the fundamental factors that ultimately drive this market. Once those issues shift, then we'll talk about exiting.

Jim Sinclair - The Gold Panic & What to Expect in 2012

SilverDoctors: HSBC Adjusts 1.2 Million Ounces of Silver into Eli...

SilverDoctors: HSBC Adjusts 1.2 Million Ounces of Silver into Eli...: HSBC adjusted 1.2 million ounces of silver into eligible vaults on Wednesday- COMPLETELY UNACCOUNTED FOR! COMEX WAREHOUSE SILVER INVENTORY...

SilverDoctors: Roberts Seeks Additional Answers on Gensler's Role...

SilverDoctors: Roberts Seeks Additional Answers on Gensler's Role...: U.S. Senator Pat Roberts (R-Kan.) today sent a letter to Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), seeki...

SilverDoctors: Ned Naylor-Leyland's 2012 Gold Outlook

SilverDoctors: Ned Naylor-Leyland's 2012 Gold Outlook: *MUST WATCH CNBC allowed Ned Naylor-Leyland to discuss his outlook on gold for 2012 in their latest Commodities Corner update. Naylor-Ley...

http://www.cheviot.co.uk/media/press/outlook-gold-2012

If A Global Recession Is Not Looming, Then Why Are Bailouts Flying Around As If The End Of The World Is Coming?

I have learned that watching what people do is much more important than listening to what they say.  Back in 2008, financial authorities in the United States insisted that everything was gone to be okay.  But we all know now that was a lie.  Well, right now financial authorities in the U.S. and Europe are once again trying to assure us that everything is under control and that we are not headed for a global recession.  Unfortunately, their actions are telling a very different story.  All over the world, bailouts are flying around as if the end of the world is coming.  Governments and central banks are stepping in with gigantic mountains of money to prop up bond yields, major banks and even stock markets.  What we have seen over the past few months has been absolutely unprecedented.  So why are such desperate measures being taken if everything is going to be just fine?  Unfortunately, debt problems are never solved with more debt, so these bailouts really aren't solving anything.  We are still headed for a massive amount of financial pain.  It would just be nice if the authorities would quit lying to us and would actually admit how bad things really are.
Today it was announced that the European Central Bank has agreed to make $638 billion in 3 year loans to 523 different banks.  Never before (not even during the last financial crisis) has the ECB loaned so much cheap money to European banks at one time.
This move by the ECB made headlines all over the globe.  CNBC is calling them "ultra-long and ultra-cheap loans".
European authorities are hoping that European banks will use this money to make loans to businesses and to buy up the debt of troubled European governments.
But as we have seen in the United States, bailout money does not always get spent the way that the authorities intend for it to be spent.
The truth is that the banks could end up just sitting on the money.  That is what happened with a lot of bailout money in the United States during the last financial crisis.

Iran starts building a nuclear weapon: US and Israel tighten cooperation

Iran has embarked on "activities related to possible weaponization," said American sources Thursday, Dec. 22, thereby accounting for the dramatic reversal of the Obama administration's wait-and-see attitude on attacking Iran. The change  was articulated this week by US Defense Secretary Leon Panetta and Chairman of the Joint US Chiefs of Staff Gen. Martin Dempsey.
debkafile's Washington sources report that the Islamic Republic crossed the red line President Barack Obama had set for the United States, i.e., when Tehran begins using the technologies and fissile materials (enriched uranium) it has amassed for assembling a bomb or missile warheads.  This marks the moment that Iran goes nuclear and only a short time remains before it has an operational nuclear weapon.
Washington has always claimed that when the order to build a weapon was given in Tehran, the United States would know about it within a short time.
The US stealth drone RQ-170 was sent into Iranian airspace for the first time to find evidence to support this suspicion. On Dec. 4 the Iranians downed the unmanned reconnaissance craft by intelligence or cyber means not yet fully clarified. The US - and most probably Israel too - then turned to other intelligence resources to find out what Iran was up to. According to debkafile's military and intelligence sources, they found evidence that Iran has in fact begun putting together components of a nuclear bomb or warhead.

Capital Account: If Santa Claus is Chinese, what can the US expect for Christmas this Year?

The Bearish Gold Predictions Forget One Important Market Reality

by Jim Sinclair:

Dear Extended Family,

There is a certain extremely important market reality that must be kept in mind as you listen to all the bearish gold predictions.

What is good for the dollar is bad for gold.

This is wrong because it depend what dollar related factors are giving a positive dollar price action.

If the good for the dollar was strong US economic activity, sound balance sheets in the US financial industry and a US consumer ready and credit able to expand, the answer would be yes if these activities were for the long term

That strong dollar would not be good for gold.

However there is only one dollar positive out there. That is the largest currency market on the planet is the dollar vs. euro market in which the so called vigilantes (International Investment Banks) are shorting the euro to infinity. That downward pressure on the euro creates a mirror image of dollar strength but give that strength no greater legs than the euro problem posses.

Banks on 2012 Gold Price?

By: Ian Campbell

So, do you want to know what some big banks think the price of physical gold will be in 2012? Here are three views that all were expressed in yesterday's early hours: (1) Barclays Capital - U.S.$2,000 average, (2) Goldman Sachs - U.S.$1,810 average, and (3) UBS - U.S.$2,050 average.

As you know if you read these e-mails, I believe that any forecast of the physical gold price is a forecast on the world macro-economic and political condition at a given point in time. Accordingly, as I reflect on the current gold price and these three 2012 price estimates - which for all intents and purposes are broadly in the same 'ballpark' - I have reached the following views with respect to them:

Silver Update 12/20/11 Viewer Comments

Sprott's Call for Silver Producers to Hold Back Metal Strikes Chord

The Gold Report and Eric Sprott

On November 30, Eric Sprott, chairman of Sprott Inc. and one of the largest holders of physical silver and silver equities globally, issued a call to action to 17 of the world's largest silver producers to limit the sale of the metal until prices increase. In this Gold Report exclusive, we asked the activist investor and insiders what impact such a declaration could make in one of the most volatile subsets of the resource sector.



In an open letter to silver producers at the end of November, Sprott Inc. Chairman Eric Sprott cited an overleveraged banking system, weakening dollar and increasing demand as reasons to hold profits in silver rather than selling all production and putting the proceeds in the bank. "Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals," Sprott said.

Interviewed mid-December Sprott, who is a major investor in physical and silver equities, explained why he wrote his letter. "I have always liked silver because I look at the physical supply and demand metrics and they scream that silver should be higher. But the price is being kept down by paper silver traders who are abusing the market."

As proof, Sprott pointed to the day last April when silver hit $50 an ounce (oz) and then immediately dropped $6/oz in 13 minutes when almost none of the markets were open. "A billion ounces of paper silver traded that day. The mining industry only produces about 700 million ounces (Moz) a year. The major financial institutions, which had been shorting silver for a long time, refused to let silver break $50/oz so they manipulated the market to keep a lid on it," Sprott charged.

"That is why I think the physical silver producers, the miners, need to be more active participants in the market," Sprott explained. "When silver is produced for less than $15/oz and sold for $30/oz, theoretically the producer is making $15/oz. I believe it is irresponsible for companies to leave that money in the bank where it is vulnerable. It is too risky. Producers have to find something to invest in and the obvious choices are gold and silver. It seems very logical to me that silver producers should invest in silver as a monetary metal."

"I'm not trying to create a Hunt Brothers type situation," he said, referring to when Nelson and William Hunt tried to corner the silver market in the late 1970s by buying as much as a third of the world's supply, driving the price up to almost $50/oz before the market crashed on Silver Thursday. "I'm just trying to create a fair playing field. Producers should take their future into their own hands," he said.

To those who compare his call for silver producers to act in concert to the methods of an oil cartel, Sprott said he agreed with the business model. "OPEC [Organization of the Petroleum Exporting Countries] was right that the price of oil was ridiculously cheap. Coming together to control supply was probably one of the more responsible things oil producers did. They were being disadvantaged and they took appropriate action. I think that's what the silver industry should do," he said.

Paper and Physical Gold Price Divergence, COMEX On The March To Irrelevance

By: Jim_Willie_CB

Divergence between paper gold and physical gold price is happening, the process begun. Actual physical shortages have kept the price up. The naked shorting of futures has kept the paper price down. The fraud cases and lawsuits, with no hint of prosecution, provide the levered force to create much wider divergence, as traders and entire firms depart the tainted crime scene that is the COMEX. Trust has vanished along with private accounts. At the center of the backdrop for the divergence, apart from the criminal events, is the economic deterioration and asset market downdraft. It leads to margin calls, loan payment obligations, fading investor confidence, negative sentiment, and a desire to avoid loss. Hence the huge liquidity concerns, selling of good assets that command a strong price, and central bank encouragement of gold sales even with lease. These forces conspire to push down the gold futures price from the discovery process, called the paper gold price. These forces, although real, are exaggerated by the Syndicate to explain all. On the other side is the desperation among central bankers to cover debt securities up for sale or rollover funding. They resort to utter hyper inflation by monetizing the many types of government bonds. They are obligated to aid their banker cohorts, and thus purchase truckloads of badly impaired sovereign bonds and other collateralized bonds. Over time these sovereign bonds have proved toxic.

The compelling need to stimulate economies, to redeem toxic bonds, and to recapitalize and nationalize the big banks adds to the monetary inflation outcome. Therefore, two sides are in opposition in a battle to the death of one or the other. No middle ground can be achieved, not any longer. It is the quintessential battle between monetary hyper inflation and restoring bank system integrity to avert collapse. The insolvency has recently met illiquidity. The battle features strong forces on each side. The divergence between physical and paper gold price is widening.

The incurable speculator junkies committed to the addictive leveraged game rigged by the Forces of Evil seem stuck at the casino tables, where fingers are lost, finally entire hands and arms. If their practice was to purchase physical, they could benefit from the paper price swoon, and join the Forces of Good team, rather than fighting the evil side on their dominated turf. To be sure, many aware analysts in the news maintain a small gold position in COMEX that is rolled over constantly. Many have physical positions but keep with the paper trades as a hobby, better described as an addition to the juice. Leverage cuts both ways. Their continued activity has left them exposed to theft, while knowing the criminality was widespread within the arena. So many players and firms are departing the arena altogether like Ann Barnhardt of BCM Capital. The divergence between physical and paper gold price is widening.

ECB Stealth QE Euro 489 Billion Money Printing to Prevent Eurozone Banking System Collapse

By: Nadeem_Walayat

The ECB's first ever long term Refinancing Operation (LTRO) that had been estimated to provide upto Euro 350 billion to Europe's bankrupt banks in the form of cheap 1% 3 year loans, instead a huge Euro 489 billion was borrowed by 523 banks in a rush to grab cheap money that amounts to QE in all but name regardless of ECB propaganda.

The ECB's stealth QE objective was first to prevent the insolvent euro-zone banks from collapsing over the next few weeks as they were unable to refinance their short-term maturing debts as well as a run on the banks in progress in the euro-zone, and secondly (directly related) to encourage the banks to buy sovereign debt of bankrupting euro-zone countries because the ECB is not allowed to buy sovereign debts. Today's actions of giving cheap money to the banks (1% per year interest rate) achieves both objectives as the banks took the money to use it to cover short-term maturing debt as well as buy a load of PIIGS debt, and thus are buying time (a couple of months at best) and so greatly diminishes the risks for what was looking like a near imminent collapse of the euro-zone (regardless of whether the trigger was a bankrupt Sovereign or large bank as both ).

Let me again explain more precisely what happened today: The ECB is not allowed to buy PIIGS government bonds, so ECB lends banks Euro 489 billion at 1% that put up PIIGS debt as collateral (which means they cannot sell it), so that they hopefully go and buy more PIIGS debt that pay 5%+, this is exactly the same objective of UK and US Q.E. to monetize their own debt. Though it has the same flaws in that they cannot tell the banks what to do with the money (but governments do bully their banks) so probably less than 1/3rd will be used to buy non german sovereign debt.

SilverDoctors: QE Under Disguise

SilverDoctors: QE Under Disguise:  How long does a long-term refinancing operation (LTRO) have to be to become quantitative easing (QE)?

Nomi Prins: How Many Regulators Does it Take to Screw Investors Out of $1.2 Billion?

SilverDoctors: US Debt to GDP Passes 100%

SilverDoctors: US Debt to GDP Passes 100%: Is it a mere coincidence that the official public US debt to GDP has passed 100% on one of the Illuminati's favorite 'holy' days of the year...

COMEX: The March to Irrelevance

COMEX: The March to Irrelevance

Divergence between paper gold and physical gold price is happening, the process begun. Actual physical shortages have kept the price up. The naked shorting of futures has kept the paper price down. The fraud cases and lawsuits, with no hint of prosecution, provide the levered force to create much wider divergence, as traders and entire firms depart the tainted crime scene that is the COMEX. Trust has vanished along with private accounts. At the center of the backdrop for the divergence, apart from the criminal events, is the economic deterioration and asset market downdraft. It leads to margin calls, loan payment obligations, fading investor confidence, negative sentiment, and a desire to avoid loss. Hence the huge liquidity concerns, selling of good assets that command a strong price, and central bank encouragement of gold sales even with lease. These forces conspire to push down the gold futures price from the discovery process, called the paper gold price. These forces, although real, are exaggerated by the Syndicate to explain all. On the other side is the desperation among central bankers to cover debt securities up for sale or rollover funding. They resort to utter hyper inflation by monetizing the many types of government bonds. They are obligated to aid their banker cohorts, and thus purchase truckloads of badly impaired sovereign bonds and other collateralized bonds. Over time these sovereign bonds have proved toxic. The compelling need to stimulate economies, to redeem toxic bonds, and to recapitalize and nationalize the big banks adds to the monetary inflation outcome. Therefore, two sides are in opposition in a battle to the death of one or the other. No middle ground can be achieved, not any longer. It is the quintessential battle between monetary hyper inflation and restoring bank system integrity to avert collapse. The insolvency has recently met illiquidity. The battle features strong forces on each side. The divergence between physical and paper gold price is widening.

The incurable speculator junkies committed to the addictive leveraged game rigged by the Forces of Evil seem stuck at the casino tables, where fingers are lost, finally entire hands and arms. If their practice was to purchase physical, they could benefit from the paper price swoon, and join the Forces of Good team, rather than fighting the evil side on their dominated turf. To be sure, many aware analysts in the news maintain a small gold position in COMEX that is rolled over constantly. Many have physical positions but keep with the paper trades as a hobby, better described as an addition to the juice. Leverage cuts both ways. Their continued activity has left them exposed to theft, while knowing the criminality was widespread within the arena. So many players and firms are departing the arena altogether like Ann Barnhardt of BCM Capital. The divergence between physical and paper gold price is widening.

London Trader - There are Tremendous Silver Shortages

Over 20 million oz of silver does not exist in SLV vaults, trader reveals manipulation tactics

NEW YORK (Commodity Online): That Silver is the most manipulated commodity in the world is an argument few precious metals traders could honestly contradict. And SLV, the Ishares Silver Trust ETF, is in deep trouble for not backing up its shares with physical silver...one trader reveals.

SILVER MINING / Making Doré Bars - Discovery Channel

Are You Ready for "Peak Silver"?

-- Tim Begany

We've all heard of peak oil -- the notion that, because there's a finite oil supply, production will one day begin to progressively diminish until there's no oil left. Well, a similar thing may be happening with silver, one of the world's most desired precious metals. That's why we at StreetAuthority think silver may be one of world's most coveted investments in the coming months and years.

Investors have been flocking to this metal for safety, just like gold. But that's not the only thing behind the high demand, which has been so great some experts say supplies could actually run out completely in only nine years. Industry has been gobbling silver up, too. Think about it. Silver is a crucial component in so many items considered essential to modern life. It's in our flat panel TVs. It's in our iPhones. It's also in solar panels, the use of which has climbed by more than seven-fold in the past decade. All told, demand for silver in consumer electronics has more than doubled in the past 12 years. Total industrial demand is forecasted to rise to 666 million troy ounces per year by 2015, nearly a 40% jump from today's level of industrial use.
Whether peak silver will actually come to pass is anyone's guess. It's just too difficult to predict these sorts of events with any kind of accuracy. But one thing seems certain: at this point, there isn't enough silver to go around, and it doesn't look like there's going to be any time soon. The chart below provides an excellent illustration of this.

As the chart shows, total demand for silver -- the amount demanded by investors and industry -- has long outstripped what mining companies have been able to produce. This year, the estimated shortfall is about 120 million ounces, the difference between the 900 million ounces demanded and the 780 million ounces the mining industry will be able to supply. In other words, according to the chart, silver has been scarce for more than a decade, even though miners ramped up production 30% during that time.
Sounds pretty dire, doesn't it? We could be facing an ongoing silver shortage or maybe even a peak-silver situation that plays out within a decade. It all depends on how you look at it. For investors, it could mean a long and profitable bull market in silver, since shortages typically mean higher prices in the long-term.

Simple Math and $100,000 Gold

If I need to SHOCK you into attention, I will.
Given that I know gold is going, MUCH, MUCH higher, it doesn’t matter what number I put in the title.  At current prices, PHYSICAL precious metals are the bargain of a lifetime, far more so than when gold was $250/ounce a decade ago, and silver just $4/ounce.  The explosion of global MONEY PRINTING since 2000 will be remembered as the most insane financial experiment of all time, which unfortunately is just getting started.  That $100,000/ounce gold projection is NOT a joke, as you will see at the end of this RANT.
Before I get started, I want to darken the mood a bit, as the world is a bit too giddy about the hype of the abbreviation du jour, the LTRO funding facility that emerged out of Central Bank ether to yet again enslave – er, save Europe with another massive dose of crack – er, free bank loans.
Beware the Coming Bailouts of Europe
I see no difference between the LTRO bailout and the November 30^th Fed “swap facility,” only this time the ECB, which just two weeks ago said it wouldn’t print money, is the bank showering the world with paper.  THAT’S how bad things are, and wouldn’t you know it, the LTRO emerged, yet again, just as Bank of America was about to break down through $5.00/share, creating a landslide of margin-based selling that could have kick-started the END GAME.  Not to mention, right before the New Year, to ensure TBTF firms aren’t scrutinized for awarding gargantuan, taxpayer-funded bonuses to executives before the system collapses in the first half of 2012.
In my view, this ominous, apocalyptic cloud formation is more appropriate to the current financial situation than the horns and whistles of this morning’s BLATANT bank bailout, and accompanying stock market orgy, which will likely have the same decreasing HALF-LIFE of all previous salvation attempts.

US MORTGAGE MEMO: NY Fed Buys $7.55B MBS In Week Ended 12.14

By Isobel Kennedy:
NEW YORK (MNI) - The New York Federal Reserve said its gross purchases of agency mortgage backed securities in the week ended December 14 totalled $7.95 billion and, after adjusting for its dollar roll activity, its net purchases totalled $7.55 billion.
The largest purchases in the latest week were in Fannie Mae and Freddie Mac 30-year "to-be-announced" TBA securities with 4.00% coupons for January delivery. Those buys totalled $3.15 billion.
The next largest purchase was $2.60 billion Fannie Mae and Freddie Mac 30-year TBAs with 3.500% coupon for January delivery.

Risk on Trade/stock market rallies/Gold and silver rise/LTRO in full swing

Harvey Organ's:
Tuesday, December 20, 2011

Good evening Ladies and Gentlemen:

Today the risk trade was on and as such the stock markets around the globe rallied big time on no news whatsoever.  Gold finished the comex session at $1615.60 up $21.38 on the day.  Silver rebounded 73 cents to $29.50.  We are not finished yet with all of our gold and silver bashing by our illustrious bankers.

Let us head over to the comex and see how trading fared, with inventory movements and delivery notices and amount of precious metals standing for delivery.

The total gold comex OI fell by 3217 contracts yesterday from 427,087 to 423,870 as we had a little mini raid by the bankers.  The front delivery month of December continues to baffle many analysts.  The Dec month saw its OI rise again from 361 to 387 for a gain of 26 contracts despite 15 deliveries yesterday.
Thus we gained 41 contracts or 4100 oz of gold oz standing and lost nothing to cash settlements. The next big delivery month for gold is February and here the OI dropped by 4610 contracts to 248,902.  The estimated volume today was 101,511 which is on the low side.  The confirmed volume yesterday registered 127,111.

The total silver comex OI rose by 1160 contracts to 102,054 despite the mini raid.  It seems that the silver long holders are more resolute in their conviction.  The front delivery month of December saw its OI fall from 231 to 74 for a loss of 157 contracts.  We had 119 delivery notices so again we had cash settlements to the tune of 38 contracts or 190,000 oz of silver.  The next big delivery month is March and here the OI rose from 55,356 to 56,532.  The estimated volume was a very very anemic 22,775.  The confirmed volume yesterday on the mini raid came it at 52,161.

Analysis: BOE MPC Sticks To The Speed Limit On QE

LONDON (MNI) - The minutes of the December Monetary Policy Committee meeting showed that the MPC was united in sticking to its current pace of asset purchases, respecting a speed limit imposed by markets.
Analysts believe the MPC could step up the pace of quantitative easing a little, and the minutes support that view, but the committee cannot put its foot down hard on the policy accelerator. Sanctioning a three month round of Stg75 billion in QE in February is reckoned to be as fast as the BOE could go, and even that might prove uncomfortably fast.
The problem the MPC faces is it does not have complete freedom of choice over the size and pace of its quantitative easing policy, as it is curtailed by market participants' propensity to sell it gilts.

E-Mail Clues in Tracking MF Global Client Funds

 

Alex Wong/Getty Images: Jon S. Corzine, former chief of MF Global, testifying before a House financial services subcommittee about the firm’s collapse.

By BEN PROTESS and AZAM AHMED

Federal authorities investigating the collapse of MF Global have uncovered e-mails that detail the transfers of money in the firm’s last days, including transfers that contained customer money, according to people close to the investigation.
One e-mail chain refers to the transfer of roughly $200 million that MF Global owed JPMorgan Chase on Oct. 28 — the firm’s last business day before it filed for bankruptcy. In that chain, a senior official in the firm’s Chicago office was told to make the transfer, said the people close to the investigation who requested anonymity because the inquiry was still open.

That official, Edith O’Brien, a treasurer at MF Global, is considered a “person of interest” in the investigation, said two of the people, who added that authorities expected to interview her in the coming days. It was not clear who had directed Ms. O’Brien, whose job was to oversee the customer money, to make the Oct. 28 transfer. The roughly $200 million that JPMorgan Chase received is said to be entirely customer money.

Top US general: Iran's dangerous game could draw Mid East and US into conflict

Defense Secretary Leon Panetta told CBS that Iran could build a nuclear bomb in a year or less, Gen. Martin Dempsey, Chairman of the Joint US Chiefs of Staff issued a warning: "Iran is playing a dangerous game that could ensnare the Middle East, the Middle East and others into conflict and a renewed arms race." During a stop in Afghanistan, the general spoke to CNN of concerns about Iran's ambitions from Iraq to Afghanistan, Kuwait and Saudi Arabia.
He was described as quietly leading the ongoing military planning for an attack against Iran's nuclear weapons if the president gives the order to do so. "We are examining a range of options," said the US general. "Don't push it," he warned Iran.
debkafile's military and Washington sources say it should be noted that in the space of 24 hours, America's two top security figures have referred to war with Iran as a realistic and imminent possibility. This is a big step from the customary US references to a military option as being on the table as a last resort for halting Iran's march toward a nuclear bomb still calculated to be some years in the distant future.

Capital Account: Steve Keen on the Hidden Pitfalls of Financial Sector Debt (12/20/11)

ECB to Lend Greater-Than-Forecast $645 Billion as Banks Line Up for Funds

Barclays estimates today’s operation will inject 193 billion euros of new money into the system, with 296 billion euros accounted for by maturing loans. The ECB also lent banks $33 billion for 14 days in a regular dollar offering, up from $5.1 billion a week ago, and 29.7 billion euros for 98 days.

Countdown to the End

By Greg Hunter’s USAWatchdog.com 
Today marks the official one year countdown to the end of the Mayan calendar.  365 days from today will be December 21, 2012.  Some say it marks the end of the world, but others say it is really the end of an era.  An Associated Press (AP) report, yesterday, about Mexican tourism said, “It’s selling the date, the Winter Solstice in the coming year, as a time of renewal. Many archeologists argue that the 2012 reference on a 1,300-year-old stone tablet only marks the end of a cycle in the Mayan calendar.  “The world will not end. It is an era,” said Yeanet Zaldo, a tourism spokeswoman for the Caribbean state of Quintana Roo, home to Cancun. “For us, it is a message of hope.” (Click here for the complete AP story.) 
I don’t know exactly what’s going to happen in 2012, but I am betting a dramatic change is coming. For most, life will be much harder and people will be much poorer.  You’ve heard of peak oil?  Well, peak credit is also topping out, and it looks like everything will hit the fan next year.  Charles Hugh Smith has a similar 2012 economic outlook, and wrote an in-depth post yesterday where the title describes the entire story: “2011: The Last (Debt-Consumerist) Christmas In America.”  Mr. Smith said, “A funny thing happens when you depend on expanding debt to fund your consumption: eventually the cost of servicing your rising debt reaches the limit of your income, and you can’t borrow any more, unless interest rates decline so you can leverage your income into higher debt. . . .Lowering interest rates extends the era of debt-based consumption, but it only puts off the inevitable crash when the ability to borrow runs out. Eventually the cost of servicing this lower-interest debt absorbs all your disposable income, and the borrowing skids to an abrupt stop.”  (Click here to read the most excellent post from Charles Hugh Smith.) 
Of course, when the borrowing stops, the money printing will begin.  I think we are somewhere between borrowing and money printing with the emphasis on the printing part.  $12 trillion are held outside the U.S. in liquid dollar assets.  In the end, the world will face a currency crisis as dollar holders rush to cash out of an increasingly debased buck.  Is 2012 the year?  We will see.

Gold 'does not offer comfort in liquidity crunch', European banks could not refuse ECB's 'free money' offer

Silver bullion fell to $29.29 per ounce – having briefly passing the $30 mark – as the Euro fell against the Dollar following news that European banks borrowed a total of €489 billion at the ECB's 3-Year Longer Term Refinancing Operation, which settled Wednesday morning.
The LTRO – through which the ECB offered to lend to banks for three years against collateral that includes distressed Eurozone government debt – saw 523 bidders.
The ECB offered the loans at a rate of 1%.
"It was obviously an offer the banks could not refuse," says Laurent Fransolet, head of fixed income strategy at Barclays Capital in London.

Banks gorge on ECB loans, market cheer short-lived

Euro coins are seen in this photo illustration taken in Rome, December 9, 2011.

Credit: Reuters/Tony Gentile

FRANKFURT | Wed Dec 21, 2011 1:35pm EST

(Reuters) - Banks gobbled up nearly 490 billion euros in three-year cut-price loans from the European Central Bank on Wednesday, easing immediate fears of a credit crunch but leaving unresolved how much will flow to needy euro zone economies.
Following a string of failed attempts by euro zone leaders to thwart market attacks on the bloc's weaker members, hopes of crisis relief before the year-end had been pinned on a massive uptake of the ECB's ultra-long and ultra-cheap loans.
The near half a trillion euro take-up of ECB funds represented the most the bank has ever pumped into the financial system and exceeded almost all forecasts. A total of 523 banks borrowed with demand way above the 310 billion euros expected by traders polled by Reuters,
"The take-up was massive ... much higher than the expected 300 billion euros. Liquidity on the banking system has now increased considerably," said Annalisa Piazza at Newedge Strategy.
The funding should bolster banks' finances, ease the threat of a credit crunch and may tempt them to buy Italian and Spanish bonds, thereby easing the currency area's sovereign debt crisis.

Exclusive: Italian banks tap 116 billion euros of ECB loans

A women walk past a Unicredit bank in Rome November 14, 2011.

Credit: Reuters/Stefano Rellandini

By Stefano Bernabei and Luca Trogni

ROME/MILAN | Wed Dec 21, 2011 1:39pm EST

(Reuters) - More than a dozen Italian banks, including top lenders UniCredit (CRDI.MI) and Intesa Sanpaolo (ISP.MI), tapped 116 billion euros ($143.52 billion) of new three-year loans offered by the European Central Bank, nearly a quarter of the total, three sources with direct knowledge of the matter told Reuters.
The ECB's first ever offer of three-year loans on Wednesday drew demand for a massive 489 billion euros from 523 banks, raising hopes a credit crunch can be avoided and that the money could be used to buy Italian and Spanish bonds.
"It's a 116 billion euros," one senior banking source told Reuters. Two other sources confirmed that amount.
The Italian figure includes 40.4 billion euros of state-backed bank bonds which were used as collateral for the loans. But banks could also offer other types of collateral for the ECB loans, such as government bonds for example.
A document from Italy's stock exchange Borsa Italiana showed 14 banks had listed state-guaranteed bank bonds on the MOT regulated bond market, a pre-requisite for those bonds to be accepted as collateral for the ECB new loans.
The biggest amount, 12 billion euros, of state-backed bonds was taken up by Intesa Sanpaolo (ISP.MI), which confirmed it had used them as collateral for the loans, and said that these would help it complete pre-funding for its wholesale medium and long term maturities for 2012.
The stock exchange document showed Banca Monte dei Paschi di Siena (BMPS.MI) has listed bonds for 10 billion euros, while UniCredit has floated 7.5 billion euros of bonds.
Among the other 14 banks are Banco Popolare (BAPO.MI) with bonds worth 3 billion euros, Banca Popolare di Sondrio (BPSI.MI), Banca Etruria (PEL.MI), Banca Popolare dell'Emilia Romagna (EMII.MI) and Credito Emiliano (EMBI.MI).

Gold the protector as democracies move towards totalitarianism Gold, and perhaps silver, are still in a bull market phase which is likely to continue as governments print money, spin figures, manipulate markets and erode basic liberties.

Author: Lawrence Williams

Let's look at the realities. Governments can release trillions of dollars into the markets to try, mostly unsuccessfully so far, to stimulate growth, mitigate unemployment and keep the general population's ‘feel-good' factor short of being suicidal. In this context it is hardly beyond likelihood that the relatively tiny sums (in comparison with all the money being printed under quantitative easing programmes) needed to keep stock markets appearing at least reasonably healthy - on the grounds that a healthy stock market gives the impression that the economy in general remains sound - may be being deployed. Likewise dollar, or other currency, strength - or weakness - is indeed often manipulated by governments as perhaps can be the price of gold (effectively a currency in its own right) where a rising gold price is a flag that all is not well with the mighty dollar or, indeed, with the global economy in general.

Overall, the writer views gold at the moment in a positive light and as remaining in a bull market phase as the global economy continues to collapse around us. The Eurozone crisis is not played out yet and debt levels within and outside the common currency area, and in the USA, continue to cause major concerns and it is difficult to see any certain way out of the current crisis. Maybe we will muddle through, but living standards are set to fall - drastically in some areas. Gold, and by association silver, have tended to stand the test of time as offering at least some wealth protection. History, which does tend to repeat itself over and over, is on their side.

Organisations such as GATA have been suggesting that gold and silver prices are manipulated by governments and banks - and the way the silver price was hit back in May does certainly suggest that the huge fall in a matter of minutes at a time virtually no-one would have been at work has to be suspicious to say the least. If gold and silver might be subject to external manipulation then it is not beyond the bounds of possibility that stock markets can be too with concerted buying or selling at key moments. Certainly inflation figures are massaged to protect confidence and the suspicion is that many other government statistics are too.

This is, of course, pure conjecture, but with so-called democracies seemingly moving ever further into totalitarian territory as basic liberties are taken away from us, in the name of counter-terrorism or economic necessity, it is difficult to judge to what purpose some of the huge, and ever-growing, debt may be being applied.

Likewise, the long-held GATA view that the gold price has been suppressed, if that has been happening, is also clearly unable to keep the price down, although GATA would argue that without suppression the price would be far higher.

The writer reiterates his view that all the drivers which have been responsible for gold hitting its highs are still intact and there is likely further upside ahead.

Silver is still suffering even more than gold from the even bigger fallout (in percentage terms) in May, and then again in September, which dented investor confidence - and with signs that the global economy is not pulling out of recession, and that any future growth will be strictly limited for years to come as austerity programmes make their impact, silver's industrial demand element may hold back rises. However, overall, we would still expect it to track gold and the thinness of the market could lead to some considerable volatility.

But bear in mind also that dollar strength is relative - and illusory. It is just doing better on the way down than many other recession hit currencies - notably the Euro. It will inevitably be hit by rising inflation from the printing of all that additional money from QE and other stimulus programmes.

This Is How Much Money The Eurozone And Its Banks Need To Stay Afloat Next Year

As 2011 draws to a close, everyone's wondering if the eurozone will be able to make it through 2012 in one piece.

Downside risks menace from two sides.

On one hand, banks have to raise their ratios of core assets to liabilities in order to meet new banking regulations set forward by the European Banking Authority. That threatens to tighten credit and lending even further.

On the other, the cost of funding sovereign debt—the yield on sovereign bonds—has been elevated all year, despite some easing recently.

BofA/Countrywide To Pay $335 Million For Predatory Lending Practices Against African American And Latino Borrowers

Here is what the Department of Justice found at Countrywide: From 2004 to 2008, the height of the housing bubble, Countrywide purposely charged over 200,000 black and Latino qualified borrowers more for their mortgage loans than similarly qualified white borrowers.

The short story is that Countrywide steered those black and Latino borrowers toward riskier sub-prime loans, even when they qualified for prime loans, or simply charged them higher rates. These borrowers paid an average of tens of thousands of dollars more than they should have, that includes costs up front and throughout their mortgage.

Countrywide also illegally required spouses to surrender their claim to a mortgage as a condition of approval. So: in order for a man to qualify for a mortgage (for example) his wife would have to sign away her right to that mortgage.

Reasons why silver, gold, platinum looks bullish in 2012: BofAML

Why gold looks bullish for 2012
Gold may be bullish in 2012 as Central banks by and large are expected to maintain loose monetary policies, with scope for more aggressive balance sheet use in the US and Europe; negative real rates are positive for gold and they should persist through 2012 in the US. Investors will likely remain net gold buyers. Reserve diversification into gold is set to continue, for instance by central banks. Gold demand from countries like China looks set to increase.

Why Silver looks bullish for 2012
BofAML also forecast $37/oz for silver in 2013 while $30/oz for the moment. There is a good upside potential in 2012 silver prices because of continued interest in the metal. Silver fundamentals have been improving in recent years for a host of reasons, including increased demand from emerging markets, somewhat reduced drag from the photography sector and higher usage from new applications. This suggests that gradual increases of silver quotations were justified.

European credit crunch: Another excuse for silver downdraft?

By Dr Jeffrey Lewis
It's clear that Europe's debt problems can now be wrapped up into the term credit crunch. In light of operations by the Federal Reserve, the amount of money available for credit appears to be shrinking, while risk premiums demanded by banks are thickening.

It remains to be seen whether a drop in the monetary base from $2.7 trillion to just under $2.5 trillion will warrant a future round of quantitative easing. Assuming the Fed holds up with its promises to Europe, the central bank could easily inflate the US dollar by export, allowing for far more liquidity than might be politically possible in the United States.

Silver Update 12/20/11 Pension Bomb

James Turk - Gold Set to Close Higher for 11th Straight Year

Pierre Lassonde - This Gold Bull Market is Far From Over

US military 'ready to engage in a conflict with Iran'

Tensions have been growing in the region following international condemnation over Tehran's growing nuclear ambitions.

Last month, Britain's ambassador to Iran was expelled from the country following attacks on the British Embassy. The US is also involved in a standoff over a downed spy drone, which President Mahmoud Ahmadinejad has refused to return despite America's requests.

General Martin Dempsey, chairman of the US joint chiefs of staff, said that the US military had reached a point where they were ready to execute force against Iran if necessary.

SilverDoctors: Why Gold Has Lost its Luster- Daily Dose of MSM Pr...

SilverDoctors: Why Gold Has Lost its Luster- Daily Dose of MSM Pr...: CNN Money's Nin-Hai Tseng (previously a reporter covering development and land-use policy... obviously an expert on gold! ) today released a...

SilverDoctors: COMEX Silver Inventory Update 12/20/11

SilverDoctors: COMEX Silver Inventory Update 12/20/11: Frantic inventory volatility continued in COMEX silver warehouses Monday, with three large movements to report. While total COMEX (mainly ...

2011: The Last (Debt-Consumerist) Christmas in America By Charles Hugh Smith

December 20, 2011    


The end of debt-based affluence: welcome to The Last Christmas in America (TLCIA). Almost 35 years ago, as unemployment rose toward 10%, the January 1975 cover of Ramparts magazine blared: The End of Affluence: The Last Christmas in America. (TLCIA)
The article wasn't referring to the religious celebration; it was referring to the postwar concept of Christmas as the frenzied, exhausting year-end pinnacle of our one true secular faith, Consumption, a final orgy of buying and binging.
It is instructive to recall how the Federal government responded to unemployment, high inflation and rising budget deficits in the early 1970s: it began fudging numbers, manipulating data to mask the politically inconvenient realities of rising inflation, unemployment and deficits by playing switcheroo with Social Security Trust Funds, inflation data, etc.--games it continues to play in 2011 to cloak reality from the media-numbed public.
The market was not so easily fooled. The Bear market, reflecting the "real" recession, lasted 16 years, from 1967 to 1982. Now statistics are echoing that last great recession: rising prices for essentials, systemically high unemployment and stagnant wages while the corporate media and the organs of statistical manipulation (a.k.a. the sprawling, putrid public-private cesspool of the Ministry of Propaganda) trumpet "the return of growth" and skyrocketing corporate profits.
(Today's propaganda: housing starts blip up due to statistical noise, and though starts are less than half pre-recession levels, this is heralded as "evidence" that "strong growth is back.")
The difference between the postwar boom of 1946 and the boom that followed 1982 is the last boom was based on the explosive expansion of debt. People didn't save and invest in productive assets; they went into debt to consume more and to become a "bigger" persona via the miracle of credit.
I often use this chart to make this point: if credit had expanded along with GDP, then we'd be considerably less indebted. Instead, it required a vast expansion of debt--some $30 trillion more than the rise in GDP--to fuel the 1982-2000 boom.

Will the Europeans have to sell their gold? Commentary: Pressure on gold is bullish in the long term

By Brett Arends, MarketWatch

LONDON (MarketWatch) — If the Italians can’t persuade the bond markets to keep them in business, they have another card up their sleeve.

Few people realize it, but Italy holds the world’s fourth biggest stockpile of gold, at 2,452 tonnes. That’s even more than France, and more than twice as much as China.

Only the U.S., Germany and the International Monetary Fund hold more.

The question here is whether some of the troubled European countries — such as Italy and France — are going to have to start selling off the national gold pile to meet their bills.

Reuters

Gold bullion from the American Precious Metals Exchange

Some wonder if they already have.

Italy’s gold has a street value of about $123 billion — easily enough to cover this year’s $80 billion budget shortfall. Portugal’s $19 billion in bullion more than covers its $13 billion deficit. France has $122 billion worth of bullion, enough to make a massive dent in its $150 billion deficit.

More Deficits, More Debt

December 19, 2011 – In the first two months of the current fiscal year that began on October 1st, the US national debt has grown $320 billion.  That is $21 billion more than the same 2-month period last year, which illustrates that the growth of the national debt continues to accelerate. The reason of course is the federal government’s huge operating deficit, which is not getting any smaller.  This point is illustrated in the following chart.

Hyperinflation is always the outcome of unchecked government spending. The spending leads to ever greater deficits, which requires the government to borrow ever greater amounts of money. Eventually a point is reached when the government needs to borrow more money than lenders have the capacity – or willingness – to lend.  Thereafter the government can take either of two alternative paths.

SLV Short Position Update Theodore Butler | December 19, 2011 - 8:02am

The essence of my criticism of SLV shorting involves two things. An allegation of fraud and misrepresentation to SLV shareholders because metal can’t possibly back the shorted shares and that the short position is manipulative to the price of silver. That’s because the short sellers are shorting SLV shares because they won’t or can’t buy the physical silver as that would cause the price of silver to rise. Even though it was higher earlier in the year, the 25.2 million share short position in SLV is still outrageously excessive by any reasonable standard. I believe that BlackRock, the SLV sponsor, is negligent in not protecting the interests of shareholders and is violating its fiduciary responsibility for allowing such an excessive short position to exist. (Yes, I will be sending this to BlackRock’s chairman and president).

The issue of short selling in silver can be confusing, so let me try to make it clearer. In derivatives, like COMEX silver futures or options contracts, shorting is required. There must be a long and a short in order to create a contract. If there were no shorting, there would be no market; period. I’m not opposed to shorting in futures in general. My allegation of manipulation in COMEX silver revolves around the unusual concentration on the short side by a few commercial players, most notably JPMorgan. Concentration is the point in futures, not the act of shorting.

For U.S., European Economies - the $2 Trillion Solution

By Joseph Lazzaro:
December 20, 2011 3:19 PM ESTA Solution for Each Side of the Atlantic
In other words, we're looking at a "$2 trillion solution" -- $1 trillion on this side of the Atlantic, $1 trillion on the other side of the Atlantic, in Europe.
In Europe, Eurozone leaders have made progress addressing the large debt of its southern European countries, particularly Greece and Italy. They've increased the lending capacity of the European Financial Stability Facility (EFSF) to €440 billion or $575 billion, including allowing the facility to buy sovereign bonds on the primary or secondary markets.
However, even when combined with Italy's €30 billion or $39 billion in probable spending cuts and increased taxes, Italy may still end up using a considerable portion of the EFSF's resources.

Fed Loads Up Balance Sheets, Begins Europe Bailout On Same Week It Promises Not To: Data

By Eleazar David Meléndez: Subscribe to Eleazar's RSS feed
December 20, 2011 2:17 PM EST
In spite of spending most of the last week reassuring the public that it would not use its resources to bail out European banks and having decided against engaging on another round of balance sheet expansion, data shows the U.S. Federal Reserve engaged in precisely those two actions that week.
On Tuesday, the top decision-making body of the U.S. Federal Reserve held a monthly meeting in which -- according to a statement released that day -- it ultimately decided against the new round of monetary easing that many market observers had anticipated. On Wednesday, Fed Chairman Ben Bernanke met with Republican lawmakers, telling them behind closed doors that no bailout of Europe was forthcoming.
On Thursday, however, data released by that central banking entity showed that, in spite of public pronouncements and private promises to the contrary, the U.S. central bank tacitly did those very things last week.
A particularly troublesome datapoint further suggests the Fed quietly bailed out a major financial institution midweek, something at least one bank strategist has already surmised.

The world's premier mining and mining investment website Gold to remain volatile in the battle between QE and austerity - GOLD ANALYSIS | Mineweb

Gold to remain volatile in the battle between QE and austerity
The irony is that, at least for now, the run of events is moving away from gold enthusiasts' worst fears, undermining the price of the precious metal.
Author: James Saft (Reuters)
Posted: Tuesday , 20 Dec 2011

(Reuters) -

- What kind of investor is rewarded, when they get what they ask for, with losses? A gold buyer, it seems.
The price of gold has fallen to $1600 per oz, a loss of about 15 percent from its August peak, as austerity has become almost the default setting for fiscal policy and as central banks, notably the European Central Bank, have declined to take forceful steps to stimulate.
While there are many variations, the essence of the argument for gold is that it provides insurance against the bad faith of others, principally in the form of deliberate debasement of a currency. Gold has been described as an anti-currency, because, unlike dollars or yen, it cannot simply be summoned into being, as currency is during quantitative easing. Gold is also, the theory goes, protection against profligacy by governments, which again ultimately may bring on inflation or otherwise devalue a currency.

Permanent Crisis: The First 5 Years

Cheer up! This permanent state of emergency is doing a wonderful nothing to unwind the bubble...
So 2012 will mark the fifth anniversary of the global financial crisis. There's little reason to think it's reached its end yet. Merry Christmas.
Banking and household leverage in the rich West has barely ticked lower from the credit bubble's historic peak of 2007. Financial leverage has only been reduced by a fraction, while governments have been stuffed like a French goose with that new debt spurned by the private sector since 2008.
So why this slow, seemingly permanent pain? Because interest rates are still set at zero, with no uptick in sight - an emergency measure that's now etched in stone. "There is a lot of financial stress out there," the UK insolvency specialist Begbies Traynor moaned last week. "[But] if it wasn't for low interest rates the number of insolvencies would have been twice what they are." Twice as many debtors would have enjoyed a write-down, in short. But do you really think their creditors sleep any better knowing what's keeping debtors in debt?

Fed Releases The New Bank Rules Everyone's Been Freaking Out About

If You Know This Gold-Euro Connection you wont panic every time price falls

Gold and Silver will counteract this currency devaluation. Thus gold and silver are the hedges against what is coming.  However, on the road to currency oblivion, inevitably we will see pullbacks in gold. These pullbacks will be because of two reasons: One is speculators—who are obviously riding the precious metals bandwagon—who will periodically get spooked and decide to cash out their winnings.  The second reason for these jolting pullbacks in precious metals will be because large institutions will need to cover their capital requirements, in the face of the collapse in the currencies.  Such as what is happening now.When this happens, you have to remember two things: One, it is momentary, and two, it is a time to buy.

Now investing in gold a better choice

By Nancy Sylverstein
You've probably seen the signs by now, since they're pretty much everywhere you turn. People are buying Gold in record numbers and it really shows no sign of stopping. From television commercials to pawn shops, the number of buyers for gold has triggered a modern gold rush.

Gold below $1600 spurs record buying National Bank of Dubai

DUBAI (Commodity Online): After Gold prices crashed below $1600/oz last Wednesday, the National Bank of Dubai (NBD) recorded its second-best sales day on Thursday, says Gerhard Schubert who heads the precious metals section.  “I was resigned to the fact that the physical buying in our market (Dubai and UAE in the wider sense) had finished for the year, and then came Thursday, 15th December. We saw excellent buying from customers which reminded us very strongly of the heydays in August/September”, Schubert said in a weekly report.

London Trader - We are Witnessing a Historic Bottom in Gold

SilverDoctors: BOA $150 Billion Underwater if Mortgages Were Mark...

SilverDoctors: BOA $150 Billion Underwater if Mortgages Were Mark...: AGXIIK provides a summary of Bank of America's finances as its stock makes a $4 handle. Estimated real value of mortgages marked to marke...

SilverDoctors: US Sells $30 Billion in 4-Week Bills at 0.000%

SilverDoctors: US Sells $30 Billion in 4-Week Bills at 0.000%: The rush for the perceived safety of T-bonds pushed the 4-week yield today to ZERO. This is the first time since post Lehman in 2008 that y...

Fitch: EFSF And France Joined At The AAA Downgrade Hip

Kerr Says Euro Woes May Prompt Return of Gold Standard

This Is The Chart That Really Makes The Germans Furious

Silver Industrial use investment demand to push prices higher

Silver: Industrial use, investment demand to push prices higher: “Silver is hardly just ornamental,” says Hanlon. “It has existing and growing new uses that suggest prices can strengthen over the next few years.” As demand for silver continues to expand, investors will want to consider silver as long-term investment, he says. Investment options include bars, ranging from one ounce to 1,000 ounces, along with one-ounce silver coins from U.S. and foreign government and private mints. “And like any investment, you should research who you purchase from,” Hanlon advises."

ECB's Stability Review: Seven Charts Of The Sovereign SNAFU

Moody's On Systematic Bank Downgrades

Panetta: Iran is just months away from a nuke - a red line for US and Israel : Pelley then asked: If the Israelis decide to launch a military strike to prevent that weapon from being built, what sort of complications does that raise for you? Panetta: We share the same common concern. The United States does not want Iran to develop a nuclear weapon. That's a red line for us and that's a red line, obviously, for the Israelis. If we have to do it we will deal with it. Asked if "it" included military steps, the US defense secretary replied: There are no options off the table. A nuclear weapon in Iran is unacceptable.

Capital Account: Mish on Malfunctioning Bureaucrats, Gold's Recent Decline and Chinese Chicken Feet!

Sweden Cuts Interest Rate to Prevent Euro Fallout

ECB Chief Warns of Debt Contagion Spread

We’ve Reached the End Game For Central Bank Intervention

We’ve reached the end game for Central Bank intervention: When confronted with excessive debt, you can either “take the hit” or you can try to inflate the debt away.  In 2008, the Central Banks, lead by the US Federal Reserve, decided not to “take the hit.” They’ve since spent trillions of Dollars propping up the financial system. By doing this, they’ve essentially attempted to fight a debt problem by issuing more debt.  The end result is similar to what happens when you try to cure a heroine addict by giving him more heroine: each new “hit” has less and less effect.

Tsunami intact: gold to rise to $3,000+ by mid-year - Goldrunner

The latest technical chart analysis shows that the previously predicted gold price target of $3,000+ by mid-year remains intact despite the recent price setbacks: Everybody is waiting with bated breath for the Fed to announce the next round of QE while looking at the false pricing index rise for the Dollar.  The fact is that the Fed just announced the printing of $600 Billion of new Dollars that are yet to be factored into the $Gold price.  That $600 Billion amount is equal to the total amount of the last course of QE that jettisoned the price of gold in Dollars much higher, and we still expect the Fed to announce a round of QE on top of that so the US Government can pay its bills.

Beware the Coming Bailouts of Europe By Ron Paul: The real cause of economic depression is loose monetary policy: the creation of money and credit out of thin air and the monetization of government debt by a central bank. This inflationary monetary policy is the cause of every boom and bust, yet it is precisely what political and economic elites both in Europe and the United States are prescribing as a resolution for the present crisis. The drastic next step being discussed is a multi-trillion dollar bailout of Europe by the European Central Bank, aided by the IMF and the Federal Reserve.

By: Ron Paul | Mon, Dec 19, 2011

The economic establishment in this country has come to the conclusion that it is not a matter of "if" the United States must intervene in the bailout of the euro, but simply a question of "when" and "how". Newspaper articles and editorials are full of assertions that the breakup of the euro would result in a worldwide depression, and that economic assistance to Europe is the only way to stave off this calamity. These assertions are yet again more scare-mongering, just as we witnessed during the depths of the 2008 financial crisis. After just a decade of the euro, people have forgotten that Europe functioned for centuries without a common currency.

The real cause of economic depression is loose monetary policy: the creation of money and credit out of thin air and the monetization of government debt by a central bank. This inflationary monetary policy is the cause of every boom and bust, yet it is precisely what political and economic elites both in Europe and the United States are prescribing as a resolution for the present crisis. The drastic next step being discussed is a multi-trillion dollar bailout of Europe by the European Central Bank, aided by the IMF and the Federal Reserve.

John Williams - Gold to Prevail as System Falls into Disorder : The earlier all-time high of $850.00 of January 21, 1980 would be $2,472 per troy ounce, based on November 2011 CPI-U-adjusted dollars, $8,702 per troy ounce based on SGS-Alternate-CPI-adjusted dollars. In like manner, the all-time high price for silver in January 1980 of $49.45 per troy ounce, although approached earlier this year, still has not been hit since 1980, including in terms of inflation-adjusted dollars. Based on November 2011 CPI-U inflation, the 1980 silver price peak would be $144 per troy ounce and would be $506 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars.”

Silver Update 12/19/11 S.P.A.R.C.

Lamestream Media Discover Ron Paul: Ron Paul simply didn’t exist. Maybe the mainstream media were trying to relegate him to oblivion because his anti-Fed and anti-war viewpoints were inconvenient. But even people who weren’t supporters of Ron Paul were outraged: a democracy that wants to be vibrant needs adequate news coverage of major political players. And their outrage lit up the blogosphere, social media, and other outlets

The Wall Street Journal, NPR, The New York Times, and other mainstream media have engaged in an obvious and silly boycott of presidential candidate Ron Paul. Report after report about the Republican primary excluded him, though occasionally they’d mention his name—to be fair and balanced. For example, the media coverage on October 11 ahead of the GOP debate that evening looked like this:

The Wall Street Journal’s front-page article, “Debates Take Candidates for a Bumpy Ride,” didn’t mention Ron Paul.
The New York Times’ front-page article, “Five Things to Watch for in the G.O.P. Debate,” mentioned Ron Paul's name at the bottom, in a parenthetical remark that acknowledged his presence.
NPR's four-and-a-half minute report covered Sarah Palin's and Chris Christie's exit from the race; Herman Cain's from-the-outside strategy; Mitt Romney's 25% ceiling and his “Mormon problem”; and Rick Perry’s lousy performance during debates. But no mention of Ron Paul.

Bank of America Lists The "Other" Risks For 2012

Submitted by Tyler Durden on 12/19/2011 22:12 -0500

While not quite a "jarring" as the Saxo Bank "outrageous predictions", Bank of America has also put together yet another list of "other" risks for 2012, which as BofA's Martin Mauro says, "have persisted or become worse over the course of the year, but have escaped market attention due to the spotlight on Europe." The risks are as follows: i) Hard landing in China; ii) Currency wars (competitive currency devaluation); iii) Middle East oil supply shock and iv) Municipal default fears. The only thing we would add is that these are not really risks, as the are all developing processes in some stage of deterioration. And, as usually happens, they will likely all strike at the same time, just when the world is most vulnerable, likely minutes after Greece announces it has left the Eurozone, and the Euro is in legal and structural limbo. But luckily we have at least a few weeks to months before that happens. So here is Bank of America's predictive prowess in all its rhetorical glory.

Welcome To The Third World, Part 4: Boomers Reap What They’ve Sown

by John Rubino on December 19, 2011

In retrospect it seems so obvious. If Boomers had been paying attention, instead of buying 4,000 square foot houses, new cars and big screen TVs, we’d have reacted to rising indebtedness by living small and saving big from the 1980s onward. Instead of voting for whoever promised the most free stuff, we’d have demanded balanced budgets and hard choices.

But we didn’t. We became “consumers” rather than builders. Our savings rate was near-zero for much of this time, and our debt ballooned during what should have been our prime saving years. So what’s coming isn’t a natural disaster. It’s the result of choices made by intelligent, well-educated people who should have known better.

Oblivious Because of Mainstream Media: There is no wonder so many are in the dark and completely unprepared for the next crash. The front page of USA TODAY, last week, touted a headline that read: “Are We There Yet?” The article said, “The economic signs are encouraging, but we’re a long way from a comeback.” It covered recent upticks in auto and home sales. It also said the unemployment rate recently fell to “8.6%.” The USA TODAY story went on to say, “Although the decline was partly due to a 315,000 drop in the labor force as discouraged job seekers simply gave up, employment is up an average 321,000 a month since August, according to the Labor Department’s household survey. Most encouraging: Much of the hiring appears to be by small businesses, which typically fuel job growth in a recovery.” Wow, the fact that 315,000 people “simply gave up” seemed completely glossed over. Why did more than 300,000 people give up? Maybe it’s because there are precious few jobs. And what about the 400,000 people every week filing unemployment claims? Never let the facts get in the way of positive spin to please the advertisers. The USA TODAY story closes with a business professor who said, “I have a lot of confidence in the future.”

December 19, 2011, at 4:56 pm
By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

I think most people are simply oblivious to the enormous dangers the world economy faces. Oh, I think we will all get through Christmas and New Years without a meltdown, but all bets are off in 2012. A new acquaintance of mine told me last Friday, “Isn’t the economy getting better?” I just looked at her and shook my head in the negative. Then she said, “I guess if it was getting bad, the media wouldn’t tell us the truth.” I shook my head in the affirmative. My new friend is 75 years old and gets a Social Security check every month. She’s pretty sharp, but I don’t blame her for being misinformed. She gets her news the old fashioned way—from the mainstream media (MSM).