Lindsey Williams on Gold seek radio

QE3 'Certainly a Possibility': Boston Fed President

Another round of quantitative easing by the Federal Reserve is "certainly a possibility" if there is a "bad economic shock," Boston Fed President Eric Rosengren told CNBC Wednesday.





Eric Rosengren
"It depends on what you think is the likelihood of what a bad economic shock is," he said. "So if you think there’s a shock from Europe, or you think that some of the fiscal discussion is gonna break down, those might be the types of incidents…[that] might affect how likely you think it is that we’ll have additional quantitative easing ."

Deflation would be another condition "under which it would make sense to have additional quantitative easing," he added.

Rosengren was interviewed after speaking at the Boston Fed's annual conference. He said it is "critical that we focus on strengthening the financial architecture" of U.S. banks "so that the struggles of one institution or group of them no longer poses risks to the broader global economy."

To CNBC he said most U.S. banks don't have huge direct exposure to the troubles in Europe. But "if a serious problem erupted in Europe, we would not be immune," he said, and that might be something the Fed would "have to react to."

CNBC

Chinese banks leave footprint in Europe

Several times a year, a group of Chinese banking managers fly to Frankfurt to study at Goethe University’s business school.

The intensive training course is packed with lessons ranging from Europe’s economic situation to its banking systems and regulations. The program at the university’s China Executive Education Center even includes time with officials at Germany’s central bank, the European Central Bank and the Frankfurt Stock Exchange.

“China is opening up to the world,” said Reinhard Schmidt, a professor with the program whose students include managers from China Development Bank. “Having the experience of how things are done in Europe is a valuable lesson for them because they want to imitate quite a lot of this.”

Hitting the classroom isn’t the only way Chinese banks, among the world’s largest, are getting a European education. They have opened subsidiaries across the continent, bought minority stakes in financial companies, and were even reportedly looking at takeover targets in Germany.

The banks’ interest in Europe reflects a growing trend in which Chinese companies are, in the words of one think tank, “buying up Europe.” Chinese interests have snapped up assets such as Swedish car maker Volvo and German electronics retailer Medion AG. Europe’s economic crisis has given China a unique opportunity to move on well-known brands and cutting-edge technologies at bargain prices, as it aims to diversify beyond U.S. assets.

“A kind of ‘scramble for Europe’ is now taking place,” the European Council on Foreign Relations wrote in a report last summer.

Chinese banks are expanding in Europe to provide financing to increasingly international Chinese companies, as well as to boost their own knowledge of the banking sector. They have become shareholders in European financial companies such as Munich Re. But experts believe they won’t snap up a major European bank even as share prices for France’s Société Générale, Switzerland’s UBS and Germany’s Deutsche Bank are plunging amid the debt crisis.

“[Chinese banks] are shopping, looking and sniffing” in countries such as Italy, said François Godement, a senior policy fellow at the European Council on Foreign Relations. But he doubts they will take over a prominent bank.

Part of their hesitation may involve past mistakes: Chinese banks went on a shopping spree a few years ago, buying stakes in Western financial rivals such as Fortis and Morgan Stanley only to see those investments plunge during the 2008 financial crisis in the United States.

As European leaders prepare to recapitalize the continent’s banks, takeover targets that look cheap now could result in nasty surprises down the road, analysts say. “There will be a lot of cheap banks – cheap only on first sight,” said Konrad Becker, a banking sector analyst at Merck Finck & Co. in Germany.

There is also the question of whether Europeans would welcome the Chinese as suitors for their struggling banks; nationalistic sentiments could put pressure on politicians to avoid such deals. “National sentiments are very strong,” Mr. Becker noted. “Given the current situation, if a Chinese bank, a more or less state-owned bank, would buy a significant [European] bank ... this could be a problem.”

The Globe

Senior N. Korean naval commander visits Russia

Commander of N. Korea’s East Sea Fleet, Rear Admiral Kim Min-Sik, will start on Thursday an official visit to Russia’s Pacific Fleet.

“The visit will continue until October 27…and will include tours of the Admiral Tributs missile destroyer and the Varshavyanka diesel-powered submarine,” a Pacific Fleet spokesman said.

Kim Min-Sik will also meet with senior Pacific Fleet officials and visit the Russian military contingent on the Kamchatka peninsula.

The admiral’s visit is a follow-up to the visit of Russia's Eastern Military District Commander Admiral Konstantin Sidenko to Pyongyang in August. The sides agreed at the time to expand military ties, hold joint military exercises and exchange friendly visits of warships.

The Russian military has recently said Russia and North Korea could hold joint naval drills in the Yellow Sea in 2012 with the focus on sea rescue and humanitarian missions.

RIA Novosti

East Midlands Airport uses hologram assistant

A hologram is being used to advise passengers of the security process at East Midlands Airport.

The virtual assistant will tell travellers about current liquid restrictions and the screening process.

It is a holographic projection of senior terminal services assistant Heather Hodson and part of a £200,000 refurbishment of the security area.

The airport said the technology had previously been used by musicians such as Madonna and the Black Eyed Peas.

"In addition to structural changes, we are also mindful that passengers are not always aware of the current security requirements, and to help prepare our passengers in advance we need to introduce new ways of communicating important messages.

"The new hologram attracts attention, is customer friendly and provides passengers with simple, informative messages which we hope will take us one step closer to improving our customers' overall journey through our airport."

BBC

Citigroup settles charges of misleading investors

They never sleeps....

Citigroup is paying $285m (£180m) to settle civil fraud charges from the Securities and Exchange Commission.

The SEC said that Citigroup misled investors when it invited them to invest in a product based on US mortgage debt.

It said that Citigroup did not inform investors that it was betting on the value of the investment falling or that it had chosen the assets itself.

Citigroup settled without admitting or denying the charges.

Credit Suisse was also involved in the transaction and has paid $2.5m to settle the case, also without admitting or denying the charges.

The SEC said that Citigroup built a collateralised debt obligation, or CDO, made up of about $1bn of home loans in 2007.

It alleges that Citigroup sold the CDO to investors, but took a short position itself, betting that the value of the assets would fall.

"The securities laws demand that investors receive more care and candour than Citigroup provided to these CDO investors," said Robert Khuzami from the SEC.

"Investors were not informed that Citigroup had decided to bet against them and had helped choose the assets that would determine who won or lost."

The CDO defaulted within months, leaving the approximately 15 investors facing losses while Citigroup made $160m in fees and trading profits.

BBC

Countless times over the last several months unusual storms have been occurring across the World and the United States. While no single storm can be placed on Climate Change or Global Warming, it is apparent that the overall climate on Earth is changing quite drastically. Stronger than average earthquakes are occurring literally every day and scores of volcanoes are stewing waiting to blow its top. Combine all this with a quieter than average sun with the occasional strong solar flare, the effects it is having on our local weather is astonishing. To say that I know what is going to happen would be incorrect but what I can confidently say is that extremes in weather will be quite common for the foreseeable future.

I am on record of the planet beginning to cool and should continue to cool significantly over the next several decades. This is using past signals to shape the future not some radical thought that is being stated just to be difficult. A few areas of focus is what could be a record setting cold profile in the Pacific. Latest chart out of the Coupled Forecast System (CFS) is predicting an earth shattering cold Nina. I am dubbing this the “Super Nina”. Pro-Global Warming experts dubbed the “Super Nino” phenomenon and how record warm waters were going to be occurring now, which is the exact opposite, so I see no problem calling this a “Super Nina”.
Nina Forecasted To Be Record Levels by Mid Winter; Courtesy of The Climate Prediction Center

Now before the reader just blindly follows the sheep, I am suspect of this getting this low; however, whenwatching the trends each month over the last several months, this forecast has been trending colder and colder. The bottom drops out over the next couple of weeks and crashing to a record low of -2.8 Kelvin (roughly 5 degrees Farenheit) by the middle of winter. As is accustomed to the CFS, it has a tendency to go to the extreme before correcting back to a more plausible solution but with the bizarre weather happening all across the globe it has me scratching my head on where to go with this. Parlaying this into weather close to home in the Ohio Valley, how often do we get three cut-off lows that deepen in the eastern half of the United States in late summer through mid fall? This is very unusual and why the upcoming evolution of weather patterns are expected to be unusual as well.
Weather Tech

Financial Survival with Bob Chapman 19 oct.

The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System

Most people have no idea that Wall Street has become a gigantic financial casino.  The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end.  The word "derivatives" sounds complicated and technical, but understanding them is really not that hard.  A derivative is essentially a fancy way of saying that a bet has been made.  Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before.  Estimates of the national value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion.  Keep in mind that the GDP of the entire world is only somewhere in the neighborhood of $65 trillion.  The danger to the global financial system posed by derivatives is so great that Warren Buffet once called them "financial weapons of mass destruction".  For now, the financial powers that be are trying to keep the casino rolling, but it is inevitable that at some point this entire mess is going to come crashing down.  When it does, we are going to be facing a derivatives crisis that really could destroy the entire global financial system.

Most people don't talk much about derivatives because they simply do not understand them.

Perhaps a couple of definitions would be helpful.

The following is how a recent Bloomberg article defined derivatives....

Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates.

The key word there is "speculation".  Today the folks down on Wall Street are speculating on just about anything that you can imagine.

The following is how Investopedia defines derivatives....

A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.

A derivative has no underlying value of its own.  A derivative is essentially a side bet.  Usually these side bets are highly leveraged.

At this point, making side bets has totally gotten out of control in the financial world.  Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it.  This system is almost entirely unregulated and it is totally dominated by the big international banks.

Over the past couple of decades, the derivatives market has multiplied in size.  Everything is going to be fine as long as the system stays in balance.  But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix.

The amount of money that we are talking about is absolutely staggering. Graham Summers of Phoenix Capital Research estimates that the notional value of the global derivatives market is $1.4 quadrillion, and in an article for Seeking Alpha he tried to put that number into perspective....

If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.

The notional value of the derivative market is roughly $1.4 QUADRILLION.

I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.

$1.4 Quadrillion is roughly:

-40 TIMES THE WORLD’S STOCK MARKET.

-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.

-23 TIMES WORLD GDP.

It is hard to fathom how much money a quadrillion is.

If you started counting right now at one dollar per second, it would take 32 million years to count to one quadrillion dollars.

Yes, the boys and girls down on Wall Street have gotten completely and totally out of control.

In an excellent article that he did on derivatives, Webster Tarpley described the pivotal role that derivatives now play in the global financial system....

Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.

Most people do not realize this, but derivatives were at the center of the financial crisis of 2008.

They will almost certainly be at the center of the next financial crisis as well.

For many, alarm bells went off the other day when it was revealed that Bank of America has moved a big chunk of derivatives from its failing Merrill Lynch investment banking unit to its depository arm.

So what does that mean?

An article posted on The Daily Bail the other day explained that it means that U.S. taxpayers could end up holding the bag....

This means that the investment bank's European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn't get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to "give relief" to the bank holding company, which is under heavy pressure.

This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input.

So did you hear about this on the news?

Probably not.

Today, the notional value of all the derivatives held by Bank of America comes to approximately $75 trillion.

JPMorgan Chase is holding derivatives with a notional value of about $79 trillion.

It is hard to even conceive of such figures.

Right now, the banks with the most exposure to derivatives are JPMorgan Chase, Bank of America, Goldman Sachs, Citigroup, Wells Fargo and HSBC Bank USA.

Morgan Stanley also has tremendous exposure to derivatives.

You may have noticed that these are some of the "too big to fail" banks.

The biggest U.S. banks continue to grow and they continue to get even more power.

Back in 2002, the top 10 U.S. banks controlled 55 percent of all U.S. banking assets.  Today, the top 10 U.S. banks control 77 percent of all U.S. banking assets.

These banks have gotten so big and so powerful that if they collapsed our entire financial system would implode.

You would have thought that we would have learned our lesson back in 2008 and would have done something about this, but instead we have allowed the "too big to bail" banks to become bigger than ever.

And they pretty much do whatever they want.

A while back, the New York Times published an article entitled "A Secretive Banking Elite Rules Trading in Derivatives".  That article exposed the steel-fisted control that the "too big to fail" banks exert over the trading of derivatives.  Just consider the following excerpt from the article....

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

So what institutions are represented at these meetings?

Well, according to the New York Times, the following banks are involved: JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup.

Why do those same five names seem to keep popping up time after time?

Sadly, these five banks keep pouring money into the campaigns of politicians that supported the bailouts in 2008 and that they know will bail them out again when the next financial crisis strikes.

Those that defend the wild derivatives trading that is going on today claim that Wall Street has accounted for all of the risks and they assume that the issuing banks will always be able to cover all of the derivative contracts that they write.

But that is a faulty assumption.  Just look at AIG back in 2008.  When the housing market collapsed AIG was on the wrong end of a massive number of derivative contracts and it would have gone "bust" without gigantic bailouts from the federal government.  If the bailouts of AIG had not happened, Goldman Sachs and a whole lot of other people would have been left standing there with a whole bunch of worthless paper.

It is inevitable that the same thing is going to happen again.  Except next time it may be on a much grander scale.

When "the house" goes "bust", everybody loses.  The governments of the world could step in and try to bail everyone out, but the reality is that when the derivatives market comes totally crashing down there won't be any government on earth with enough money to put it back together again.

A horrible derivatives crisis is coming.

It is only a matter of time.

Stay alert for any mention of the word "derivatives" or the term "derivatives crisis" in the news.  When the derivatives crisis arrives, things will start falling apart very rapidly.

Economic Collapse

Global debt clock.... look at this

Here is the link

http://www.economist.com/content/global_debt_clock

Athens night clashes

The New Reality For U.S. Cities: No Money For Street Lights, Roving Packs Of Wild Dogs And Open-Air Drug Markets

If you want to know what the early stages of an economic collapse look like, just walk around some of the downtown areas of our major cities.  Today, nearly all large U.S. cities are either flat broke or they are on the way to being flat broke.  Yes, New York City and Washington D.C. (and a few others) are still doing fairly well, but for most U.S. cities economic reality is catching up with them very quickly.  Right now, there are a number of major cities that are so broke that they cannot keep the street lights operating.  Down in St. Louis, parents in some areas are carrying golf clubs with them as they walk their kids to school in order to fend off roving packs of wild dogs.  In other major U.S. cities, open-air drug markets conduct business without fear.  All over the United States, cities that used to be clean and prosperous and full of hope are now being transformed into post-industrial wastelands.  We are certainly not in "Mad Max" territory yet, but it doesn't take too much imagination to see where all of this is headed.

I have previously written about how Detroit is literally coming apart at the seams.  Well, now in many areas of the city they can't even keep the street lights on anymore.  There simply is not enough money, and even if there was, thieves are stealing the copper wiring out of the street lights faster than the city can repair them.

At this point, there are some neighborhoods in Detroit where up to 50 percent of the street lights are not functioning.

The following is from a recent article in The Detroit News about this crisis....

The war to keep the lights on in Detroit is a serious one. Thieves, antiquated equipment and a lack of funding have made it impossible for city officials to catch up to the problem.

City officials estimate 15-20 percent of the 88,000 lights in the Motor City are not working, and they acknowledge that figure could be as high as 50 percent in some neighborhoods.

But it is not just Detroit that is having a major problem.  Over in Highland Park, Michigan the majority of the street lights have been repossessed because the city was not keeping up with the electricity bill.

So what are residents of Highland Park supposed to do?

Are they supposed to lock themselves in their own homes at night?

In Fresno, California the theft of copper wire from street lights has become a total nightmare.  At this point, the loss of copper wire and the cost of repairing the street lights is costing Fresno about $50,000 a month.  So far, approximately2,500 street lights have been stripped of their wiring.

Down in St. Louis they are having a different problem.  In some of the worst areas of the city, roving packs of wild dogs are a serious threat to children that are walking to school.

A recent report by the local CBS affiliate in St. Louis described the situation this way....

...Lewis Reed is sounding the alarm. "I’ve witnessed packs of dogs, 10 and 15 dogs running together, and I’ve seen all these dogs I’m talking about they don’t have collars, they don’t have tags, these are truly wild dogs," he said.

Reed says stray dogs are terrorizing the north side. "It’s obscene that parents have to walk their kids to school, in some parts of the city, with a golf club to fend off wild dogs."

Can you imagine that?

They say that they are going to try to put more money into animal control efforts if they can find it.  But like most major U.S. cities, St. Louis is a financial basket case.

Moving west a bit, Las Vegas is a different kind of a problem.  It was once a mighty symbol of American luxury and decadence, but now it is a microcosm of everything that has gone wrong with our economy.

The following description of the decline of Las Vegas comes from a recent article in The Telegraph....

But Las Vegas’s days as a boom town are long gone. At 14 percent, unemployment is the highest in America (the national average is 9.1 per cent). House prices have fallen 58.1 per cent since their 2006 high – the biggest losses of anywhere in America, while according to the website RealtyTrac, which specialises in foreclosed properties, Las Vegas is the nation’s foreclosure capital. Some 70 per cent of homes in Las Vegas are thought to be 'under water’, or in negative equity, meaning their value is worth less than the amount owed on the mortgage, while foreclosure notices have been served on one in 16 properties. A survey last year by the local Las Vegas Review-Journal and Channel 8 News Now found that 34 per cent of locals would leave Las Vegas if they could find a job elsewhere, or if they weren’t underwater on their home loan.

Last year, I wrote a piece entitled "The Death of Las Vegas".  Since then, things have gotten even worse for the city in many ways.

Today, there are hundreds of people living in the tunnels underneath the streets of Las Vegas.  You can see CNN video of some of these people right here.

But at least the "tunnel people" have a "roof" over their heads.

Over in "Lost Angeles", homelessness is absolutely exploding and there are thousands of people living in the streets.

The following is from a recent article by Nick Allen....

In Skid Row, a grimy pocket of downtown Los Angeles, the prostrate forms of homeless people lie strewn across the pavements.

The lucky ones have tents for shelter but others make do with a sliver of cardboard for a bed and a supermarket trolley to carry their rags.

At the last police count 1,662 people live on these streets, twice as many as a year ago.

And now amid the drug addicts and the drunks there are families who not so long ago had homes and ordinary suburban lives.

Wait, wasn't the economy supposed to be getting better?

So why has the number of people living on Skid Row doubled over the past year?

Los Angeles, like much of California, is rapidly falling apart.  Decades of very foolish policies have turned the "California Dream" into the "California Nightmare".

Unemployment is rampant, crime is seemingly everywhere and the gangs appear to be getting bolder by the day.  For example, 21 machine guns were recently stolen right out of an LAPD training facility.

But there are cities in California that are in even worse shape than Los Angeles is.  If you go east of Los Angeles about 100 miles, you will come to the city of San Bernardino.  34.6 percent of the residents of San Bernardino are currently living below the poverty line.  Among major U.S. cities, only Detroit has a worse poverty rate.

Heading back to the east coast, the city of Camden, New Jersey is representative of the post-industrial hellholes that you will find all over the mid-Atlantic region and up into New England.

In an extraordinary article entitled "City of Ruins", Chris Hedges did an amazing job of documenting how bad things have gotten in Camden.  Today it is estimated that the actual rate of unemployment in Camden is somewhere around 30 or 40 percent.  For most young people in Camden, there are very few legitimate opportunities for a better life, so many of them have resorted to selling drugs or selling their bodies in a desperate attempt to survive.

The following is a brief excerpt from "City of Ruins"....

There are perhaps a hundred open-air drug markets, most run by gangs like the Bloods, the Latin Kings, Los Nietos and MS-13. Knots of young men in black leather jackets and baggy sweatshirts sell weed and crack to clients, many of whom drive in from the suburbs. The drug trade is one of the city's few thriving businesses. A weapon, police say, is never more than a few feet away, usually stashed behind a trash can, in the grass or on a porch.

The era of "American exceptionalism" is over.  We have rejected the things that made us great.  We have forsaken the truth and now we are paying the price.

At this point, we are rapidly becoming a joke to the rest of the world.

You know that things are bad when headlines such as this start showing up in major international publications: "America Must Manage Its Decline".

Is that what we are going to tell our kids and our grandkids?

Are we going to tell them that we must "manage" our decline?

Most Americans also realize that something is fundamentally wrong.  According to a recent Time Magazine poll, 81 percent of the American people believe that the country is on the wrong track.

So why don't our cities just spend more money and fix all of these problems?

Well, it is because most of them are drowning in a sea of red ink.  Instead of spending more money, most of them are desperately searching for more places to cut.  If you can believe it, 72 percent of all U.S. cities are laying workers off this year.

The federal government has been pumping massive amounts of money into state and local governments in recent years, but that can't last much longer.  As I wrote about yesterday, the federal government is in debt up to its eyeballs.  In fact, the national debt has become so large that it threatens to collapse our entire financial system.

Sadly, the cold, hard truth is that we are now going to pay the price for decades of financial foolishness.

We thought that it would be our children and our grandchildren that would pay the price for our financial recklessness, but the reality is that we are going to pay the price too.

America is in a serious state of decline and things are going to get a lot worse in the years to come.

Take advantage of the relative prosperity that we are enjoying now to prepare for the lean years which are ahead.

Economic Collapse