25 Signs That The Financial World Is About To Hit The Big Red Panic Button

Most of the worst financial panics in history have happened in the fall.  Just recall what happened in 1929, 1987 and 2008.  Well, September 2011 is about to begin and there are all kinds of signs that the financial world is about to hit the big red panic button.  Wave after wave of bad economic news has come out of the United States recently, and Europe is embroiled in an absolutely unprecedented debt crisis.  At this point there is a very real possibility that the euro may not even survive.  So what is causing all of this?  Well, over the last couple of decades a gigantic debt bubble has fueled a tremendous amount of "fake prosperity" in the western world.  But for a debt bubble to keep going, the total amount of debt has to keep expanding at an ever increasing pace.  Unfortunately for the global economy, sources of credit are starting to dry up.  That is why you hear terms like "credit crisis" and "credit crunch" thrown around so much these days.  Without enough credit to feed the monster, the debt bubble is going to burst.  At this point, virtually the entire global economy runs on credit, so when this debt bubble bursts things could get really, really messy.

Nations and financial institutions would never get into debt trouble if they could always borrow as much money as they wanted at extremely low interest rates.  But what has happened is that lending sources are balking at continuing to lend cheap money to nations and financial institutions that are already up to their eyeballs in debt.

For example, the yield on 2 year Greek bonds is now over 40 percent.  Investors don't trust the Greek government and they are demanding a huge return in order to lend them more money.

Throughout the financial world right now there is a lot of fear.  Lending conditions have gotten very tight.  Financial institutions are not eager to lend money to each other or to anyone else.  This "credit crunch" is going to slow down the economy.  Just remember what happened back in 2008.  When easy credit stops flowing, the dominoes can start falling very quickly.

Sadly, this is a cycle that can feed into itself.  When credit is tight, the economy slows down and more businesses fail.  That causes financial institutions to want to tighten up things even more in order to avoid the "bad credit risks".  Less economic activity means less tax revenue for governments.  Less tax revenue means larger budget deficits and increased borrowing by governments.    But when government debt gets really high that can cause huge economic problems like we are witnessing in Greece right now.  The cycle of tighter credit and a slowing economy can go on and on and on.

I spend a lot of time talking about problems with the U.S. economy, but the truth is that the rest of the world is dealing with massive problems as well right now.  As bad as things are in the U.S., the reality is that Europe looks like it may be "ground zero" for the next great financial crisis.

At this point the EU essentially has three choices.  It can choose much deeper economic integration (which would mean a huge loss of sovereignty), it can choose to keep the status quo going for as long as possible by providing the PIIGS with gigantic bailouts, or it can choose to end of the euro and return to individual national currencies.

Any of those choices would be very messy.  At this point there is not much political will for much deeper economic integration, so the last two alternatives appear increasingly likely.

In any event, global financial markets are paralyzed by fear right now.  Nobody knows what is going to happen next, but many now fear that whatever does come next will not be good.

The following are 25 signs that the financial world is about to hit the big red panic button....

#1 According to a new study just released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.

#2 Will Bank of America be the next Lehman Brothers?  Shares of Bank of America have fallen more than 40% over the past couple of months.  Even though Warren Buffet recently stepped in with 5 billion dollars, the reality is that the problems for Bank of America are far from over.  In fact, one analyst is projecting that Bank of America is going to need to raise 40 or 50 billion dollars in new capital.

#3 European bank stocks have gotten absolutely hammered in recent weeks.

#4 So far, major international banks have announced layoffs of more than 60,000 workers, and more layoff announcements are expected this fall.  A recent article in the New York Times detailed some of the carnage....

A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.

#5 Credit markets are really drying up.  Do you remember what happened in 2008 when that happened?  Many are now warning that we are getting very close to a repeat of that.

#6 The Conference Board has announced that the U.S. Consumer Confidence Index fell from 59.2 in July to 44.5 in August.  That is the lowest reading that we have seen since the last recession ended.

#7 The University of Michigan Consumer Sentiment Index has fallen by almost 20 points over the last three months.  This index is now the lowest it has beenin 30 years.

#8 The Philadelphia Fed's latest survey of regional manufacturing activity was absolutely nightmarish....

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009

#9 According to Bloomberg, since World War II almost every time that the year over year change in real GDP has fallen below 2% the U.S. economy has fallen into a recession....

Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.

#10 Economic sentiment is falling in Europe as well.  The following is from a recent Reuters article....

A monthly European Commission survey showed economic sentiment in the 17 countries using the euro, a good indication of future economic activity, fell to 98.3 in August from a revised 103 in July with optimism declining in all sectors.

#11 The yield on 2 year Greek bonds is now an astronomical 42.47%.

#12 As I wrote about recently, the European Central Bank has stepped into the marketplace and is buying up huge amounts of sovereign debt from troubled nations such as Greece, Portugal, Spain and Italy.  As a result, the ECB is alsomassively overleveraged at this point.

#13 Most of the major banks in Europe are also leveraged to the hilt and have tremendous exposure to European sovereign debt.

#14 Political wrangling in Europe is threatening to unravel the Greek bailout package.  In a recent article, Satyajit Das described what has been going on behind the scenes in the EU....

The sticking point is a demand for collateral for the second bailout package. Finland demanded and got Euro 500 million in cash as security against their Euro 1,400 million share of the second bailout package. Hearing of the ill-advised side deal between Greece and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral, arguing that their banks were less exposed to Greece than their counterparts in Germany and France entitling them to special treatment. At least, one German parliamentarian has also asked the logical question, why Germany is not receiving similar collateral.

#15 German Chancellor Angela Merkel is trying to hold the Greek bailout deal together, but a wave of anti-bailout "hysteria" is sweeping Germany, and nowaccording to Ambrose Evans-Pritchard it looks like Merkel may not have enough votes to approve the latest bailout package....

German media reported that the latest tally of votes in the Bundestag shows that 23 members from Mrs Merkel's own coalition plan to vote against the package, including twelve of the 44 members of Bavaria's Social Christians (CSU). This may force the Chancellor to rely on opposition votes, risking a government collapse.

#16 Polish finance minister Jacek Rostowski is warning that the status quo in Europe will lead to "collapse".  According to Rostowski, if the EU does not choose the path of much deeper economic integration the eurozone simply is not going to survive much longer....

"The choice is: much deeper macroeconomic integration in the eurozone or its collapse. There is no third way."

#17 German voters are against the introduction of "Eurobonds" by about a 5 to 1 margin, so deeper economic integration in Europe does not look real promising at this point.

#18 If something goes wrong with the Greek bailout, Greece is financially doomed.  Just consider the following excerpt from a recent article by Puru Saxena....

In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!

#19 The global banking system has a total of 2 trillion dollars of exposure to Greek, Irish, Portuguese, Spanish and Italian debt.  Considering how much the global banking system is leveraged, this amount of exposure could end up wiping out a lot of major financial institutions.

#20 The head of the IMF, Christine Largarde, recently warned that European banks are in need of "urgent recapitalization".

#21 Once the European crisis unravels, things could move very rapidly downhill.  In a recent article, John Mauldin put it this way....

It is only a matter of time until Europe has a true crisis, which will happen faster – BANG! – than any of us can now imagine. Think Lehman on steroids. The U.S. gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the U.S. is at best at stall speed, will tip us into a long and serious recession. Stay tuned.

#22 The U.S. housing market is still a complete and total mess.  According to a recently released report, U.S. home prices fell 5.9% in the second quarter compared to a year earlier.  That was the biggest decline that we have seen since 2009.  But even with lower prices very few people are buying.  According to the National Association of Realtors, sales of previously owned homesdropped 3.5 percent during July.  That was the third decline in the last four months.  Sales of previously owned homes are even lagging behind last year's pathetic pace.

#23 According to John Lohman, the decline in U.S. economic data over the past three months has been absolutely unprecedented.

#24 Morgan Stanley now says that the U.S. and Europe are "hovering dangerously close to a recession" and that there is a good chance we could enter one at some point in the next 6 to 12 months.

#25 Minneapolis Fed President Narayana Kocherlakota says that he is so alarmed about the state of the economy that he may drop his opposition to more monetary easing.  Could more quantitative easing by the Federal Reserve soon be on the way?

Things have not looked this bad for global financial markets since 2008.  Unless someone rides in on a white horse with trillions of dollars (or euros) of easy credit, it looks like we are headed for a massive credit crunch.

What we witnessed back in 2008 was absolutely horrifying.  Very few people want to see a repeat of that.  But as things in the U.S. and Europe continue to unravel, it appears increasingly likely that the next wave of the financial crisis could hit us sooner rather than later.

None of the fundamental problems that caused the crisis of 2008 have been fixed.  The world financial system is still one gigantic mountain of debt, leverage and risk.

Authorities around the globe will certainly do all they can to keep things stable, but in the end it is inevitable that the house of cards is going to come crashing down.

Let us hope for the best, but let us also prepare for the worst.

The Economic Collapse

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Ancient burial box offers biblical clues

TEL AVIV, Israel, Aug. 29 (UPI) -- A 2,000-year-old burial box could reveal the location of the family of Caiaphas, the high priest involved in the crucifixion of Jesus, Israeli researchers say.

Ossuaries -- ancient limestone burial boxes -- are common archaeological finds from the first century B.C. to the first century A.D.

Researchers at Tel Aviv University say the inscription on an ossuary confiscated from antiquities looters three years ago could reveal the home of the family of the biblical figure and high priest Caiaphas prior to their exodus to Galilee after A.D. 70, a TAU release reported Monday.

While most ancient ossuaries are either unmarked or mention only the name of the deceased, the inscription on this one is extraordinary, in that the deceased is named within the context of three generations and a potential location, says Yuval Goren of TAU's Department of Archaeology, who was called on to authenticate it.

The full inscription reads: "Miriam daughter of Yeshua son of Caiaphas, priest of Maaziah from Beth Imri."

The Maaziah refers to an order of high priests during the second temple period of Jewish history, Goren said. The ossuary is thought to come from a burial site in the Valley of Elah, southwest of Jerusalem, the legendary location of the battle between David and Goliath.

Beit Imri was probably located on the slopes of Mount Hebron, the researchers said.


Read more: http://www.upi.com/Science_News/2011/08/29/Ancient-burial-box-offers-biblical-clues/UPI-19721314667743/#ixzz1WWjHoBEE


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Iran to dispatch submarine, warship to Red Sea again

Tehran's Russian-provided submarines have caused concern in the United States, which considers them a threat to the strategic balance in the volatile Persian Gulf region.Admiral Habibollah Sayari said the dispatch of the 15th fleet is for patrolling in high seas and displaying Iran's navy capabilities of the Islamic Republic, the news network Press TV reported.

Without giving further details on the exact date, Sayari added that the dispatch would also be a symbolic move to convey the message of peace and friendship to all countries.

In June, Iranian submarines and war ships were dispatched to the Gulf of Aden and Red Sea to collect data and identify other countries' warships.

Iran in 2008 started the production of new submarines and delivered four new types to the navy in August 2010.

Russia provided Iran in 1996 with diesel-electric submarines which at that time made it the only state in the Persian Gulf with submarines.

The submarines have caused concern in the United States, which considers them a threat to the strategic balance in the volatile Persian Gulf region.

Iran claims to have become self-sufficient in manufacturing all types of military vessels but insists it would use its military strength only for safeguarding peace and security in the Persian Gulf and the Gulf of Oman.

Haaretz

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US Federal Reserve debates 'substantial' QE3, minutes show

The most potent tool, a third round of asset purchases that markets have dubbed QE3, was raised as a possibility by some officials, according to Federal Open Market Committee meeting minutes, released with the customary three-week lag today.

"A few members felt that recent economic developments justified a more substantial move," the minutes showed. But they settled on making a conditional commitment to keep short-term interest rates near zero until mid-2013, one of the Fed's few remaining easing options now that rates are at a record low.

Fed officials met a few days after data showed the economy barely grew in the first half and the unemployment rate remained above 9 per cent in July, sparking recession fears.

An August 9 statement following the FOMC meeting showed three out of 10 voters were against the easing option the majority eventually settled on.

What was not known -- and was revealed in the minutes today -- was that there was another minority wanting to ease even further.

"Some participants noted that additional asset purchases could be used to provide more accommodation by lowering longer-term interest rates," the minutes revealed, without elaborating on how many people were in favour of QE3, nor under what conditions the program would be implemented.

Some officials suggested that extending the average duration of the Fed's existing portfolio by selling bonds with short maturities and buying those with longer maturities could have a similar effect as buying new securities outright.

Only a few participants at the FOMC meeting thought that lowering the interest rate banks get for reserves they keep with the Fed -- now 0.25 per cent -- would help the economy, suggesting the tool is unlikely to be used. A minority of Fed officials thought none of the tools would likely do much to boost the economy.

"While all felt that monetary policy could not completely address the various strains on the economy, most members thought that it could contribute importantly to better outcomes," the minutes said, in a sentence that some analysts viewed as a sign that more easing is forthcoming after the September 20-21 FOMC meeting.

"There is a somewhat better-than-even chance the Fed takes action at the next meeting to increase the average maturity of assets on their balance sheet," said Michael Feroli, economist at JP Morgan Chase.

In his most recent speech, Mr Bernanke said on Friday that the Fed still has options to support the economy. But he didn't provide details or commit to use any new tool, saying only that the Fed will meet for two days in September -- instead of one as originally planned -- to allow for a fuller discussion of the central bank's possible responses to the weak economy.

Fed officials were downbeat on the economy, the minutes showed. The central bank's staff reduced its growth forecasts for the second half of 2011 and for 2012 "notably". Unemployment is seen staying high until the end of next year.

Officials also expressed doubts about the underlying strength of the US economy more than two and a half years after the recession ended.

"Many participants also saw an increase in the downside risks to economic growth," the minutes revealed.

There have been mixed signals on the economy since Fed officials last met. While consumer spending rose robustly in July, signalling some momentum for the economy in the third quarter, recent surveys have suggested a sharp slowdown in manufacturing.
WSJ

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Risk of Double Dip in Europe Increases: S&P

High unemployment and the recent decline in stock markets pose a risk to spending, rating agency Standard & Poor's wrote on Tuesday in a report headlined 'Slowing Growth in Europe Increases the Risk of a Double Dip.'

Downside risks "are significant" and the rating agency will "closely monitor" trends in consumer demand in the coming quarters, Jean-Michel Six, Standard & Poor's chief economist for Europe, said in the report.

"We continue to believe that a genuine double dip will be avoided because we see several sources of continuing growth over the next 18 months, including still buoyant demand from emerging markets and an ongoing recovery, albeit sluggish, in corporate capital spending," Six added.

Consumer demand could modestly support growth in the coming months, with relatively low-leveraged households in parts of the euro zone likely to spend, the report said, but added that the outlook was cloudy.

"Overall, we believe that the second-quarter weakening in most European countries casts new concerns about the medium-term growth outlook over the next 18 months through 2012," the report said. "After hitting a trough in the middle of 2009, Europe's economies have been struggling to recover the ground lost in the first phase of the crisis."

Growth will remain unevenly distributed among European countries, with only Germany having come back to its pre-crisis growth level at the end of the second quarter this year, the S&P report showed.

Strong demand from emerging markets will be one driver of growth for European economies, with imports from developing nations reaching historical highs in the first quarter of this year, the report said.

Central banks in emerging markets may halt their tightening measures on the back of the slide in commodity prices, boosting growth further, it added.
CNBC

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Bird flu fear as mutant strain hits China and Vietnam

Avian flu shows signs of a resurgence, while a mutant strain - able to sidestep vaccines - could be spreading in Asia, the United Nations has warned.

The variant appeared in Vietnam and China and its risk to humans cannot be predicted, veterinary officials said.

Virus circulation in Vietnam threatens Thailand, Malaysia and Cambodia, where eight people have died after becoming infected this year, they warned.

The World Health Organization says bird flu has killed 331 people since 2003.

It has also killed or provoked the culling of more than 400m domestic poultry worldwide and caused an estimated $20bn (£12.2bn) of economic damage.Wild birds

The virus had been eliminated from most of the 63 countries infected at its 2006 peak, which saw 4,000 outbreaks across the globe, but remains endemic in Bangladesh, China, Egypt, India, Indonesia and Vietnam.

And the number of cases has been rising again since 2008, apparently because of migratory bird movements, said the UN's Food and Agriculture Organization (FAO) chief veterinary officer, Juan Lubroth.

"Wild birds may introduce the virus, but people's actions in poultry production and marketing spread it," he said.

Avian flu has in the past two years appeared in poultry or wild birds in countries that had been virus-free for several years: Israel and the Palestinian Territories, Bulgaria, Romania, Nepal and Mongolia are among those recently affected.

Mr Lubroth said the new strain had infected most parts of northern and central Vietnam and could also pose a risk to Japan and the Korean peninsula.

South Korea began culling hundreds of thousands of chickens and ducks in December last year after confirming its first cases since 2008.

The FAO is calling for countries to adopt "heightened readiness and surveillance" against a resurgence of the virus.

BBC




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Liberty Dollars may be subject to seizure

Liberty Dollars held by collectors may be subject to seizure as contraband by federal law enforcement, officials with the U.S. Attorney’s Office and Secret Service said Aug. 24.

Statements by officials for those two federal law enforcement agencies seem to reverse the position taken in comments released from the United States Attorney’s Office in Charlotte, N.C., and published in Coin World in April, that mere possession of Liberty Dollars did not constitute a violation of any federal statute.
That position has apparently changed, although officials of the U.S. Secret Service — which would be the federal agency likely charged with executing any possible seizures — would not provide any definitive comments concerning under what circumstances Liberty Dollars would be seized.

The revised stance is tied to the Liberty Dollar being determined in a federal court to violate federal counterfeiting statutes. Liberty Dollars, metallic medallic pieces, were privately promoted as a form of currency that could be used in commerce as an alternative to Federal Reserve notes.

U.S. Attorney’s Office

Jill Rose, chief of the criminal division for the U.S. Attorney’s Office in Charlotte, N.C., told Coin World Aug. 24 that the Liberty Dollar medallions are confiscable as contraband regardless if they are being exhibited for educational purposes only.

Rose served as lead prosecutor in the Bernard von NotHaus case. Von NotHaus, creator of the Liberty Dollars, was convicted in federal court in March on multiple charges involving the alternative currency.
Rose said because von NotHaus’ conviction included violations of Sections 485 and 486 of Title 18 of the United States Code, the Liberty Dollar medallions were determined to be counterfeits, contraband and subject to seizure.

The Liberty Dollar represented “a pyramid scheme imbedded with fraud” that had nothing to do with barter or trade, according to Rose.

“Barter is an equal and knowing exchange,” which the Liberty Dollar was proven in court not to be, Rose said.

U.S. Secret Service

Also on Aug. 24, in addition to speaking with Rose, Coin World talked separately with Glen Kessler, assistant special agent in charge in North Carolina for the U.S. Secret Service.

Kessler could not provide a blanket position the Secret Service would take toward those owning Liberty Dollars, whether one piece or significantly more.

He said if a Secret Service agent witnessed something considered to be contraband, such as Liberty Dollars, they would be duty-bound to confiscate it.

Kessler subsequently conferred with his Secret Service superiors as to the agency’s specific position on the Liberty Dollar and potential confiscation.

Kessler informed Coin World the morning of Aug. 25 that because the publication has a worldwide audience, he had to defer additional comments to the U.S. Secret Service Office of Public Affairs.
George Ogilvie, the public affairs officer for the U.S. Secret Service in Washington, D.C., said Aug. 25 the bureau had no comment on Liberty Dollars and indicated that Coin World would have to call back in a few weeks.

Asked what would be different in a few weeks as to under what circumstances seizure of Liberty Dollars would be enforced, Ogilvie responded, “We don’t have anything to say.”

Soon after von NotHaus’ March 18 conviction, Coin World obtained and published comments from the U.S. Attorney’s Office in Charlotte stating that while mere possession of Liberty Dollar medallions was not a violation of federal statutes, actual use or intent to use them in the manner for which von NotHaus was convicted would be considered a violation.

Millions of Liberty Dollars in copper, silver and gold versions are in the hands of collectors and supporters of the Liberty Dollar medallions who have been concerned the medallions could be confiscated by federal authorities.

And that possibility is now apparently real.

Exhibit banned by ANA

The reversal of opinion surfaced after a Michigan collector sought to display his award-winning Liberty Dollar exhibit at the American Numismatic Association World’s Fair of Money in Rosemont, Ill. Aug. 16 to 20. ANA officials denied the collector the opportunity amid fears the exhibit’s contents would be seized off the convention bourse floor by federal authorities. The collector had exhibited the collection in various venues previously.

The collector, James Zylstra, had originally hoped his 11th time since 2009 in setting up the competitive numismatic exhibit of medallions would be during the ANA World’s Fair of Money in Rosemont. Leading up to the convention, as late as immediately prior to the Aug. 16 official opening, ANA exhibit judges and ANA legal counsel A. Ronald Sirna Jr. sought a written declaration from the Department of Justice that Liberty Dollars could be exhibited for educational purposes without fear of confiscation. No such declaration was forthcoming.

ANA officials also spoke with officials of the United States Mint. The U.S. Mint’s legal counsel, Daniel P. Shaver, referred ANA officials to the U.S. Secret Service.

As a result of not receiving a written declaration on federal agency letterhead permitting their display, ANA officials denied Zylstra the opportunity to exhibit the Liberty Dollars at the ANA convention over concerns the medallic contents of the exhibit could be seized.

Zylstra told Coin World he was disappointed by the ANA’s decision. Although Zylstra said he is concerned with what action federal officials might take involving his collection of Liberty Dollars, he said he is planning to display his award-winning exhibit of Liberty Dollars at the fall Michigan State Numismatic Society Convention in November in Dearborn where he has exhibited before and won recognition for the Liberty Dollars exhibit.

But Zylstra may need the same written declaration as the ANA sought before he can exhibit the Liberty Dollars there, as Sirna is also legal counsel for MSNS.

Sirna could not be reached Aug. 25 for additional comment.

CSNS convention exhibit

Zylstra last mounted his exhibit of Liberty Dollar medallions, paper warehouse receipts and promotional materials in April 2011 during the Central States Numismatic Society Convention in Rosemont, Ill., at the same Donald Stephens Convention Center where the ANA World’s Fair of Money was just held.

The 2011 CSNS convention was held a month after von NotHaus’ conviction and the determination of the Liberty Dollar’s status.

Contacted Aug. 25 by Coin World concerning the issues of displaying Liberty Dollars, CSNS legal counsel Steven Bieda said he would bring both the subject of permitting exhibits of Liberty Dollars and also of permitting dealers to sell the pieces on the CSNS convention bourse floor before CSNS officials for review and recommendations, including a review of exhibit bylaws to protect the organizations, as both issues will be recurring topics.

“I am not the exhibits chair, nor have I been asked for an opinion on displaying ‘liberty dollars’ from our exhibits chair,” said Bieda, who studied and enjoyed Zylstra’s exhibit at the CSNS convention. “However, if I were asked, I would not have any problem allowing such an exhibit, especially as one of the stated goals of the exhibits is to foster numismatic knowledge and education.”

Bieda said he has not seen any indication from federal authorities that they plan a concerted move to confiscate privately held Liberty Dollars.

“I note that the pieces are being sold and traded on on-line auction sites such as eBay, and have personally seen these pieces sold at local coin shows and coin shops, all without any apparent legal consequence,” Bieda said. “Thus, it would be my recommendation that should an exhibitor want to place an exhibit involving these pieces, and assuming that all the other relevant exhibitor criteria is satisfied, that they be allowed to do so.

“In any event, the hosting numismatic association would not be responsible should the federal government or any other legal authority take legal action or move to confiscate that or any other exhibit. That risk is entirely on the exhibitor.”

Zylstra earned a third-place award in the medals category for his Liberty Dollar exhibit at the 2011 CSNS convention. Zylstra has also won awards for the exhibit displayed at a Florida United Numismatists convention, and earned a first place when the exhibit was placed on display in Fort Worth, Texas, in March 2010 during the ANA National Money Show.

As Bieda noted, Liberty Dollars are actively traded in the collector marketplace.

Coin World has not been able to determine whether ANA officials or officials at other conventions and shows would ban the sale of Liberty Dollars on the bourse floor.

As of Aug. 25, no movement by federal officials has been seen toward the confiscation of Liberty Dollars offered for sale online, including through auction sites such as eBay.

Liberty Dollar introduction

Zylstra first learned of Liberty Dollars in November 2008 when a business card was placed on the windshield of his car in a shopping center parking lot while he was wintering in Clearwater, Fla.

Zylstra said he was intrigued by the premise of Liberty Dollars, but wanted to create a balanced exhibit offering different points of view.

Zylstra’s “Bonafide or Bogus?” exhibit comprises approximately 20 Liberty Dollar medallions in copper, silver and gold versions in different diameters, weights and face values, as representative examples, although many more multiple designs and varieties were produced than are represented in the exhibit.

Also included in the exhibit were full-color paper warehouse receipts that were backed by precious metals, along with Liberty Dollar promotional materials and historical information.

Zylstra said he includes in his exhibit information explaining von NotHaus’ bartering philosophy and why von NotHaus believes the Liberty Dollar is important; explores the legal ramifications from the side of the federal government, including providing a chronology of legal developments; and examines the Liberty Dollar from the view of consumers who appreciate being able to hold a piece of silver in their hands.
Zylstra said he obtained most of his Liberty Dollars from a Liberty Dollar regional currency officer in Michigan and another in New York who were part of von NotHaus’ Liberty Dollar distribution network.

Bernard von NotHaus

Following a six-day trial, on March 18, a federal jury in Statesville, N.C., convicted von NotHaus — founder of NORFED (National Organization for the Repeal of the Federal Reserve and the Internal Revenue Code), its subsequent Liberty Services, and monetary architect of the Liberty Dollar — of conspiracy against the United States; making coins resembling and similar to U.S. coins; of issuing, passing, selling and possessing Liberty Dollar coins; and of issuing and passing Liberty Dollar coins intended for use as current money.

Von NotHaus is free on bond pending sentencing.

NORFED and Liberty Services promoted Liberty Dollars as an alternative currency for use in commerce, and reported that it’s successfully used in transactions in various locales. Liberty Dollars were sometimes touted by the program’s adherents as “private voluntary barter currency.”

Not barter

On April 12, Ron Whitney, executive director for the International Reciprocal Trade Association (www.irta.com), based in Portsmouth, Va., issued a statement denouncing the Liberty Dollars as not being part of the modern trade and barter industry.

The extensive statement emphasized the outcome of the von NotHaus trial did not set a federal government precedent against private barter currencies.

“Mr. von NotHaus was convicted of the charges of counterfeiting and making and selling currency, barter had nothing to do with the case,” Whitney said. “The modern trade and barter industry was recognized by the U.S. government as a legal alternative form of commerce by the Tax Equity and Fiscal Responsibility Act (TEFRA), passed in 1982 whereby barter exchanges were deemed third party record keepers and required to comply with IRS 1099B reporting laws.”

Whitney explained that “barter sales conducted through barter exchanges are taxable sales reported annually to the IRS.”

“The Liberty Dollar’s verdict is completely separate from the legally recognized modern trade and barter industry and in our view it does not represent an effort on the government’s part to declare valid TEFRA compliant barter transactions as illegal activity,” Whitney said.
Coin World

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Double-dip fears across the West as confidence crumbles

The US Conference Board's index of consumer sentiment in August plunged to the lowest level since the depths of the slump in 2009, falling to 44.5 from 59.2 in July. Future expectations fell even harder.

The drop was far steeper than expected and follows grim warnings over the weekend from Christine Lagarde, new chief of the International Monetary Fund, that the global crisis is entering "a dangerous new phase" .

The fund has slashed its growth forecast for America and Europe, according to a leaked draft of its World Economic Outlook. It has called on both the US Federal Reserve and the European Central Bank to stand ready for "further easing of monetary policy" - implying a fresh blast of quantitative easing (QE) by the Fed.


The minutes of the Fed's meeting in early August show that a number of committee members called for more "substantial" stimulus, suggesting that they pushed for further bond purchases or 'QE3'.


The Fed's so-called "Gang of Three" hardliners has already shrunk to two. Minneapolis Fed Narayana Kocherlakota said on Monday that deflationary pressures are building again. "Increasing policy accommodation might well be appropriate," he said.

In Europe the picture is as bad if not worse. The eurozone is already on the cusp of recession even before austerity bites in Italy and France, and bites harder in Spain, Portugal, Greece, and Ireland.

The European Commission's economic sentiment index (ESI) dropped below the contraction line in August. "A loose monetary policy seems to be the only medicine left to prevent a painful fall back into recession," said Peter Vanden Houte from ING.

Jose Vinals, the IMF's head of capital markets, rebuked Europe's leaders for failing to beef up bank defences and allowing the debt crisis to fester. "You cannot afford to have a world economy where these important decisions are postponed because you're really playing with fire," he said.

Charles Dumas from Lombard Street Research said a recession is inevitable on both sides of the Atlantic next year, blaming "fiscal deflation" without offsetting monetary stimulus - either because the central banks have used up their ammunition, or refuse to act.

Mr Dumas said the ECB has been too tight and blundered by raising rates in July to counter an oil spike just as the economy was sputtering. Unit labour costs are falling and the M3 money supply is stagnant.

Jean-Claude Trichet, the ECB's president, signalled this week that rate rises are off the table but he has little scope for outright stimulus. The ECB is acutely vulnerable after German President Christian Wulff accused the bank of going "far beyond" its mandate and engaging in "legally questionable" purchases of Spanish and Italian bonds.

The unspoken contract of EMU is that it should never lead to inflation in Germany or threaten German control over the project, yet this contract is now being tested. Any suspicion that the ECB is loosening policy to nurse southern Europe through its debt crisis will trigger a political backlash in Berlin, though with Germany itself now flirting with recession as exports buckle this may help paper over EMU divisions for a while.

Hans-Olaf Henkel, former head of Germany's industry federation (BDI), wrote in the Financial Times that his support for the euro had been "the biggest professional mistake I have ever made". He described EMU as an unworkable experiment that is turning Europe's nations against each other.

He called for a 'Plan C' under which Germany, The Netherlands, Austria, and Finland break away and form their own currency, leaving the South with a weaker euro and a chance to restore growth. Some Northern banks would have to be nationalised for a while to prevent losses on Southern debt causing a financial crisis.

Stephen Jen from SLJ Macro Partners said the next phases of the eurozone crisis is likely to come when the debtor states conclude that it is no longer worth putting up with the pain of EU-imposed austerity. "I think this will happen in weeks rather than months."

The Telegraph


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Global Recession Likely, Depression Possible: Economist

Global recession in 2012 is "65 to 75 percent certain" and could deteriorate into a lengthy depression, Roger Nightingale, economist and strategist at RDN Associates, told CNBC.

The peak rate of growth for the world's economy occurred more than 12 months ago and "it carries on going down," Nightingale said. "We are probably going into negative territory around spring of next year; it is not for certain, but that is the most likely scenario. I would say the recession is 65 percent, 75 percent certain.”

The economist warned that should recession kick in, the global economy might be too weak to generate any GDP growth for years, or even decades.

“When the downturn ends, and when the upturn begins, will it be powerful enough to take us into some sort of growth again? Or are we going to find ourselves in a protracted depression-type scenario?" he wondered.

“Seven years would be a very short depression; depressions last a lot longer than that. I would be extremely pleased if it were to only last seven years. In Japan’s case, it lasted 20 years,” he said.

Nightingale added that the US economy has “some big pluses”, but was uncertain it was strong enough to steer the world out of a recession.

“America is very competitive at the moment, and she has a lot of advantages in finance, agriculture and many other areas. There are some big pluses in the American situation, and they are causing some growth. Whether they are going to be big enough to keep the thing going, and to bail out the rest of the world, is another issue,” he said.

But Nightingale said that Europe is in, “absolutely desperate trouble”. He warned that BRIC nations China and India might be heading in a “somewhat similar way”.

The strategist also raised concerns about the German 'strong man of Europe', saying its industrial production figures would plummet with Japan’s recovery from the tsunami.

“Germany is the major beneficiary of the Japanese tsunami, and as the Japanese come back on stream and production increases again, they will take their markets back from the Germans," Nightingale said.

"Watch out very carefully for industrial production numbers falling quite significantly, perhaps from autumn of this year through to spring of next year,” he added.
CNBC

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The Great Housing Depression of 2008-2020?

The stock market, as measured by the S&P 500, rose almost 3% yesterday, perhaps pleasantly surprised that the Northeast doesn't resemble the Gulf Coast -- Katrina-cable-TV hype notwithstanding.

So as traders picked their way across tree limbs and flooded roads on their way to work Monday, perhaps they overlooked a commonplace sight that was even more prevalent than clogged waterways: for-sale signs on lawns, sometimes with the nauseating come-on "auction today."

We're in the middle of a real-estate depression, folks, and it's not getting any better. Perhaps it's good news that the financial markets have gotten used to the bad news out of the housing market, because the bad news keeps coming strong.

But if the housing-market woes are an indication of the direction of the economy, we're in sorry shape. And as with a number of questions I've explored recently, it comes down to this: what, if anything, is the Obama administration going to do about it?

Yesterday, it was reported that foreclosures comprised 31% of housing sales in the second quarter, less than the 37% recorded at the peak two years ago, but still six times what you see in a healthy housing market, according to foreclosure-tracking firm RealtyTrac. The silver lining, if you can call it that, is that the percentage declined a bit from the previous quarter.

But, meanwhile, another bad housing number got worse. The percentage of "short sales" -- homes sold for less than what's owed on them -- climbed to 12% in the second quarter. And Bloomberg reported the other day that a third of the country's 800,000 foreclosed properties are owned by Fannie Mae, Freddie Mac and the Federal Housing Administration. In other words, Uncle Sam is now the biggest owner of misery-bedecked real state in the nation.

All these numbers have a kind of numbing effect on people. It's a bit like what motorists were seeing in upstate New York yesterday, as hundreds of miles of the New York State Thruway were closed because of not-quite-Hurricane Irene. You curse, and then you get out a map and plot out a detour, and then pull out your map again when the detour is blocked by downed power lines and flooding.

Forces greater than oneself are like that. But the housing crisis isn't exactly a force of nature, and that's what's frustrating about the Great Housing Depression of 2008-20??. It's understandable for you or I to be numbed by these horrendous housing numbers. But sometimes it seems as if Timothy Geithner and his colleagues in the Obama administration are like motorists driving around the fallen tree limbs but seem helpless to do anything about it.

The sorry fact is that record-low interest rates just aren't sufficient, in themselves, to bring people into the market. The horrid numbers we are seeing are evidence enough of that. So what's the answer? Well, one idea that seems reasonable enough is to extend to under-water property owners the same largesse that two consecutive administrations have bestowed upon the big banks. There's a plan reportedly under consideration that would push Fannie Mae and Freddie Mac to loosen their refinancing guidelines. That way, homeowners would be able to refinance even if their homes wouldn't otherwise qualify.

Oh, yes, I realize that a lot of people say that such an idea would screw mortgage-security bondholders and would be "unfair" to homeowners who were able to refinance without help, it is argued. I think that's baloney. A small-fry bailout -- imagine that, non-billionaires and non-bankers being bailed out! -- would not be unfair to a soul. It would pump dollars directly into the economy and serve a broader public purpose: to keep properties from going into foreclosure, or having to be sold short. That would inure to the benefit of everybody, including homeowners who didn't need government help to refinance and might be feeling a tad resentful.

They shouldn't be. We're in the middle of a Great Real Estate Depression, and that homeowner who managed to refinance through normal means may want to sell his house next month or next year. Right now he's facing the prospect of taking a shellacking. That's why the refinancing plan being weighed by the Obama administration not only makes sense, but is fair for everybody -- the direct beneficiaries, their neighbors, and for Fannie, Freddie and their bondholders. It's fair because something other than pushing rates lower needs to be done to revive the housing market. A refinancing-bailout would derail a vicious circle that is plaguing U.S. real estate.

Foreclosures and short sales are pulling prices down at markets throughout the country. That hurts both sellers and homeowners seeking to refinance. That's because a homeowner needs to get his or her property appraised in order to refinance, and lenders won't allow refinancing if the appraisal doesn't support it. That screws buyers who bought their properties during the housing mania. Since they can't refinance, they may just walk away from their houses. More foreclosures. More price declines. That's where the small-homeowner bailout comes in, putting an end to this vicious circle.

Will Obama do it? Or will he or Geithner find an excuse not to engage in this sensible action? I'm not holding my breath. I think that they're reasonably happy that the market seems to be holding up for the time being, and that we're all numb to the bad news from the housing market. Obama is not going to jeopardize his Wall Street contributions by taking such a dramatic action. He'll recognize, like the smart Chicago pol that he is, that people dissatisfied with his policies haven't much choice next year. So the Great Housing Depression of 2008-20?? will continue -- unless Obama thinks that feeling of overwhelming numbness might derail his chances for reelection. Not likely, but we have a right to hope.


Read more: http://www.thestreet.com/story/11233611/1/great-housing-depression-of-2008-20.html#ixzz1WcDmQvjC

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Bob Chapman on radio liberty

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