Gerald Celente´s forecast for 2012

Future Money Trends 2012 view

FutureMoneyTrends.com is focused on the macro-economics picture, our goal is to invest our time knowing about future trends. By looking at demographics, spending habits, technology, natural resources, and the global economy, we believe that we can accurately predict the future. Timing, however, is usually in a range and specifics are increasingly difficult as central planners are always getting in the way of the natural forces of an economy.

In fact, we have argued for years that the people who call our economy a free market are either uneducated about economics or purposely trying to attack any chances we may have in the future of ever having a free market. Now when we say uneducated about economics, PLEASE don't think that we are referring to people who lack a degree in economics, it is just the opposite, to understand that we DON'T have a free market is to simply look at the everyday actions of our central bank and federal government. Once you see how manipulated our economy is, it only requires common sense to understand that we don't have anything even close to a free market, which is the biggest problem with our college professors who teach a progressive style of Keynesian economics. Once you accept this as economics, it limits your ability to use common sense and see what is actually going on in the world around you.

Once indoctrinated in Keynesian economics, plunder becomes good will, manipulation becomes stability, and the distribution of wealth becomes what's best for all.

So, knowing that all of our predictions can be over ridden by a single central planner, please note that we have done our best to not only predict the result of natural economic forces, but how our 'august' central planners in both the banking world and federal government will react to those forces.

Remember, just because we are predicting it, doesn't mean we like it, it just is what it is. We have broken our predictions into 4 categories: the markets, political, economic, and the big wild card.

Markets Category

PREDICTION #1


Bank of America (BAC) is likely the next Lehman Brothers. As our good friend Any Hoffman of Miles Franklin recently put it, "SAY GOODBYE BANK OF AMERICA." Jim Cramer on Jan. 6, 2011, gave his top 10 reasons to buy BAC, we knew then that it was truly over for them. Jim Cramer of course told his viewers to buy the dip on Bear Sterns and that it was just silly to even think about selling them. A few days later, Bear Sterns filed for bankruptcy.

Now in short, BAC practically under gun point from the Treasury Department took over Merrill Lynch, they also were happy to take over the ultimate piece of trash, sub-prime Countrywide Mortgage. As BAC suffers from a relentless housing collapse that has put some borrowers in foreclosure for over 2 years, the largest mortgage holder in the U.S. doesn't have a chance. Especially if rates were to ever rise, which we actually don't see happening in 2012, but just in case anyone had some hope for BAC, there really isn't a reason.


When you look at the selling pressure, it is clear that someone is doing everything they can to keep this monster from collapsing, but we believe 2012 will be BAC's last full year in business.

We should note that our chief strategist is one of the few men in the world that is on record for calling the collapse of Countrywide Mortgage, Lehman Brothers, AIG, and Washington Mutual.


PREDICTION #2


GOLD will be the investment of the year. Between the Euro crisis, U.S. debt ceiling, new quantitative easing (printing money), municipal defaults, and inevitable downgrades for all government debt,gold is going to be a HUGE winner. FutureMoneyTrends.com is predicting extreme volatility for the yellow metal, with a range as low as $1,250 and a potential high of $2,850, maybe even $3,000 gold. The reason for the downside volatility is because once again, the gold markets are heavily manipulated, in fact, the gold market is without a doubt the most manipulated market in the history of mankind. There is a reason central banks are HUGE buyers of gold, more than doubling their purchases from 2010 to 2011, gold in this decade will be restored as money. The 40 year fiat currency experiment is going to end terribly (perhaps in 2012), however, we are not going to even attempt to put a date on this.

Our staff purchases physical gold for savings and wealth protection, and mining shares for profit.

PREDICTION #3


Mining shares will bottom in 2012. For the past 12 years, mining shares have for the most part been ignored in the gold bull market. Not even coming close to keeping up in pace with the physical metals that many of them have not only proven they have in the ground, but are currently producing. If you look at most mining shares, they are down at least 30% in the past 6 months. A recent report shows that as a sector, they are priced as if gold was at $400 per ounce. FutureMoneyTrends.com believes that the biggest gains will ultimately come from the companies that are currently in the exploration phase, yet ran by good management, and are in mining friendly regions like Mexico. It's no secret that we are extremely bullish about the Sonora Resources (SURE), they have a joint venture with First Majestic, their CEO already helped build a billion dollar silver company, and of course they are moving their projects forward with new drilling, 43-101 reports, and plans for near term production.

FutureMoneyTrends.com staff plans to purchase thousands if not millions of mining shares in the first quarter of 2012.

PREDICTION #4


Major Dollar rally in the first half of 2012. Now we don't think it will hold for the year, but between the Euro and global tensions in the middle east, it is very possible that the dollar index is around 90 by the summer of 2012.

A Euro crisis would be the PERFECT time for the FED to announce more QE, as the markets would have no choice but to ignore the inflation since the dollar would be seen as a safe haven. However, this would be one of those rare times where gold and the dollar rally together. We don't see a dollar rally holding up though as in the last half of 2012, the U.S. debt crisis will be front and center.
PREDICTION #5


The Dow and the S&P both close lower for the year. Even though historically they close positive on election years, we believe when it is all said and done, the markets will be lower than where they close on December 31, 2011. The average investor is being stomped out of the market, the blue chips have been taken over by high frequency trading and other computers taking fast profits. The experiment of the 401k that began in the 1980's simply doesn't have the generational support of buying that will be needed for the next 11 years as the market remains in a bear market. Once the baby boomers became official day traders, they went through the tech crash, 9/11, and of course 2008. The S&P is about where it was in 1998, the generation that is graduating now is going to see high unemployment, and with the federal government involved in all aspects of business now, it is doubtful most investors will have a positive experience investing in large companies.

This is one of the reasons FutureMoneyTrends.com staff has almost no exposure to companies listed on the NYSE.
Political Category

Why do we make political predictions? Because even though the two wings of the big government party are ultimately going to give us the same things on the issues that matter, gridlock and blank checks have proven to greatly effect the markets.


PREDICTION #6


If Ron Paul is not the Republican nominee, President Obama will win the 2012 Presidential election with less than 45% of the vote. Due to the growing libertarian movement, which we consider ourselves part of, it will be impossible for any Keynesian republican candidate to win. As our favorite guy Ron Paul is waking up millions of people to what is the core disease of our economy and way of life, there simply is no going back for those that are awakened. FutureMoneyTrends.com finds it highly unlikely that Ron Paul supporters (including ourselves) could ever support any candidate that will simply continue the borrow, spend, tax, and manipulate policies. We have simply peaked in Government, the debt is heading to $20 trillion, and if the choice is between a big government democrat and a big government republican, then core constitutional supporters, Ron Paul voters, and other free market advocates will simply stay home or vote for a 3rd party.

One thing this election will lack is the 'yes we can' euphoria we saw in 2008, if we are right and Obama wins, he will win with less than 45% of the vote, probably somewhere between 39-45% of the popular vote. With the rest going to the republican and 3rd party candidates. No doubt, Obama will win by default, no pun intended.


PREDICTION #7


The republican party will gain control of the Senate in the November 2012 election. Without a doubt, this will be one of our most confident predictions we can make this year, we are 99.99% certain that this will happen. Out of the 33 seats that are up for election, 22 are democrat, and 6 democrats are retiring. The current count is 53/47, we believe the new republican majority will have at least a 51/49 edge. The states that will absolutely change hands from democrat to republican are Montana, Nebraska, North Dakota, and Virginia. It is possible though that Florida, Ohio, and New Mexico also change hands bringing the new republican majority count to 54/46.

PREDICTION #8




Ron Paul will be on your 2012 presidential ballet, but more than likely not as a republican. In the past week, every right wing radio talk show host has come out against Ron Paul, a full blown smear campaign is already in the works. The governor of Iowa has even stated that if Ron Paul wins the caucus, it doesn't count. FutureMoneyTrends.com believes that after either winning Iowa or coming in a close 2nd, Ron Paul will be forced to eventually leave the republican party. If the hate for the only constitutional advocate is this high before the voting has begun, we can only imagine what will happen once Paul has a victory in Iowa and comes in a close second in New Hampshire.

IF Ron Paul is the Republican nominee, there will be so much momentum that the walls of the establishment will come tumbling down. The second American Revolution and restoration of our constitution will be unstoppable. However, if Ron Paul is forced to run as a third party, we believe his message will help the cause of liberty, but he will not be able to win the election. This is why the establishment is doing everything they can to stop Ron Paul in Iowa.



Economic Category

PREDICTION #9


The federal reserve (FED) will begin a new round of quantitative easing in the first half of 2012. This is pure and simple, the federal government is SUCKING so much capital out of the global economy that there simply isn't enough real lenders, the FED will have to once again step in and start printing to purchase U.S. treasuries.

PREDICTION #10


The U.S. will see at least 1 major city file for bankruptcy, if we had to bet on it, we would put Detroit, Michigan, on the top of our list. Detroit is the perfect example of everything that is wrong with our current economic environment with fat pensions and high pay for their public sector and destructive laws for the private sector. Even though the state has guaranteed Detroit bonds and taken over the public school system, Detroit (union mecca) is destined to fail with its unfunded pension obligations that will go even deeper into the red as more jobs are lost due to the U.S. depression.

PREDICTION #11


The U.S. will enter an official double dip depression in the final quarter of 2012, after the November elections. The demographics are ugly for the U.S., they look just like Japan going into the 1990's. We should note that Japan has been in and out of a depression for the past 21 years. FutureMoneyTrends.combelieves that the effects of government spending in our economy has peaked, especially since it is now politically impossible to call for another massive stimulus bill. The natural forces of the baby boomer generation peaking in spending and the bursting of the credit bubble will cause significant deflationary forces into our overall economy. Now we do believe that any deflation will be met by central planner inflation early in the decade, later in the decade we will have to deal with peak resources. We have already shown that there is a good case for peak oil, what we haven't talked about much is that many other commodities have also shown to be peaking in production, or at the very least being much more expensive to produce.

Our economy right now is extremely dysfunctional and manipulated. The fact that Ben Bernanke has more to do with the current price of the Dow Jones than earnings do, should let you know exactly where we are in our economic cycle.

WILD CARD CATEGORY

PREDICTION #12


The reaction of a WAR with Iran. IF the U.S. bombs Iran, oil will be at $120 the first day, and will near $200 by the end of the first week of the war. Without getting into the politics, we are going to leave this prediction with just our oil calls, too many roads to go down when discussing why or why not the U.S. may indeed want a war with Iran.

 

Church bombings are declaration of war, say Nigerian Christians

Christian leaders in Nigeria have accused Muslims of making a "declaration of war" after a series of fatal attacks, raising fears of sectarian conflict.

Islamist militants targeted churches in a series of explosions on Christmas Day, leaving more than 40 people dead and dozens wounded. On Tuesday a Christian couple and their one-year-old baby were shot dead.

Stirring tensions further, on the same day unknown attackers lobbed a crude homemade bomb into an Islamic school in Delta state, wounding seven people including six children in an Arabic class.

Nigeria is largely divided into a Muslim north and Christian south, although members of the two faiths live everywhere across the country, do business together and intermarry.

With the shadowy Islamist sect Boko Haram stepping up deadly attacks in recent months, Christian leaders have warned that they will take action to protect themselves.

At a meeting with the president, Goodluck Jonathan, on Wednesday, Ayo Oritsejafor, head of the Christian Association of Nigeria (CAN), an umbrella group for all denominations, said Christians had become victims of "Islamic jihad".

"It is considered as a declaration of war on Christians and Nigeria as an entity," Oritsejafor said. He did not want to encourage acts of revenge, he said, but "Christians should protect themselves … in any way they can".

Oritsejafor criticised Muslim leaders and the government for failing to intervene. "CAN has found the responses of … Islamic bodies on this matter to be unacceptable and an abdication of their responsibilities. The Christian community is fast losing confidence in the government's ability to protect our rights," he said.

"The consensus is that the Christian community nationwide will be left with no other option than to respond appropriately if there are any further attacks on our members, churches and property."

Jonathan, a Christian, promised to do more to combat the threat of Islamists and hinted at a reshuffle in his security services.

"We will restructure … and make sure we get a team that will meet with the challenge we are facing today," he said. "I will plead with religious leaders, both Muslim and Christian leaders, to work together."

On Tuesday, Nigeria's main Muslim cleric, the sultan of Sokoto, denounced the Christmas Day attacks and called for calm. "I want to assure all Nigerians that there is no conflict between Muslims and Christians, between Islam and Christianity," he said.

But tensions are running high in the nation's so-called middle belt, where north and south meet. On Tuesday night in a village near the city of Jos, in Plateau state, a Christian couple and their one-year-old child were murdered in an attack blamed on Muslim herdsmen.

Last week Boko Haram was involved in heavy gun battles with government forces in the north-eastern city of Damaturu. The clashes displaced 90,000 people and the entire district of Pompomari emptied as residents fled, an official said.

Boko Haram, dubbed the Nigerian Taliban, is seeking to implement strict sharia law across Nigeria. The group has caused bloodshed two Christmases in a row and is responsible for at least 504 killings this year alone, according to a count by the Associated Press.

Boko Haram claimed three bomb attacks on churches this Christmas, including one that killed 27 worshippers in a Catholic church near the capital, Abuja, and one in Jos. Abu Qaqa, a spokesman for the group, was quoted in the local press on Wednesday as saying the bombs were revenge for attacks in Jos by Christian youths on Muslims during an Islamic holiday in August.

In Jos, Reuters reported, local Muslims are wary of a possible Christian backlash. "We are just beginning to live in peace, so we hope our Christian brothers can help us keep that peace," said Mohammed Kabir, who like many Nigerian Muslims resents being associated with violent extremism. "Boko Haram is not all Islam."

Last year the late Libyan leader Muammar Gaddafi proposed that Nigeria be divided into two countries to avoid religious conflict. The idea was dismissed with contempt at the time: all northern states have substantial Christian minorities and up to half of Nigeria's south-western Yoruba ethnic group are thought to be Muslim.

But now Gaddafi's radical solution resonates with some Christians. Papa Jimba, 46, leader of the Christian community in a Jos neighborhood, told Reuters: "Let us divide Nigeria. The Muslims go to their side and the Christians stay on our side. Then peace can come back. I'm even praying for that."

The Rev Philip Mwelbish, head of CAN for Plateau state, said: "People thought Gaddafi was mad, but I've started to see the sense in what he said. If we can't exist together with our Muslim brothers, then they can build their houses over there, and we build ours here.

"We have a proverb in Nigeria: if you push a goat to the wall, he will bite you. They've pushed us to the wall."


The Guardian

London burn...UK riots

Iran raises anti-US threat level. Israel's C-of-S warns of potential for regional war

Thursday afternoon, Dec. 29, Tehran raised the pitch of its threats to the United States when Dep. Chief of the Revolutionary Guards Gen. Hossein Salami declared: "The United States is in no position to tell Tehran what to do in the Strait of Hormuz," adding, "Any threat will be responded [to] by threat… We will not relinquish our strategic moves in Iran's vital interests are undermined by any means."

The Iranian general spoke after the USS John C. Stennis aircraft carrier and its strike group passed through the Strait of Hormuz to the Sea of Oman and into the area where the big Iranian naval war game Veleyati 90 is taking place.
At around the same time, Israel's chief of staff Lt. Gen. Benny Gantz spoke of "the rising potential for a multi-arena event," i.e. a comprehensive armed conflict. Facing in several directions as we are "between terrorist organizations and Iran's progress toward a nuclear weapon… we can't afford to stay on the defensive and must come up with offensive measures," he said.

Earlier Thursday, Dec. 29, DEBKAfile reported that an Iranian plan to mine the Strait of Hormuz had put US and NATO forces in the Persian Gulf on the alert.

US and NATO task forces in the Persian Gulf have been placed on alert after US intelligence warned that Iran's Revolutionary Guards are preparing Iranian marine commandos to sow mines in the strategic Strait of Hormuz.

The new deployment, DEBKAfile's military sources report, consists of USS Combined Task Force 52 (CTF 52), which is trained and equipped for dismantling marine mines and NATO Maritime Mine Counter measures Group 2 (SNMCMG2). The American group is led by theUSS Arden mine countermeasures ship; NATO's by the British HMS Pembroke minesweeper. Other vessels in the task forces are the Hunt-class destroyer HMS Middleton and the French mine warfare ships FS Croix du Sud and FS Var.
Also on the ready are several US Expeditionary Combat Readiness units of the US Fifth Fleet Bahrain command. Seventeen of these special marine units are attached to the Fifth Fleet as America's answer to the Iranian Navy's fast assault boats and marine units.

US military sources told DEBKAfile Wednesday, Dec. 28, that United States has the countermeasures for sweeping the waterway of mines and making it safe for marine passage after no more than a 24-48 hour interruption.

At the same time, leading military and naval officials in Washington take Tehran's threats seriously. They don't buy the proposition advanced by various American pundits and analysts that Iran would never close the Strait of Hormuz, though which one third of the world's oil passes, because it would then bottle up its own energy exports. Those officials, according to our sources, believe that Tehran hopes the mines in the waterway will blow up passing oil tankers and other shipping. It doesn't have to be sealed hermetically to endanger international shipping; just a few mines here and there and an explosion would be enough to deter shippers and crews from risking their vessels.

As Adm. Habibollah Sayari commander of the Iranian Navy put it Wednesday, Dec. 28: "Shutting the strait for Iran's armed forces is really easy – or as we say in Iran, easier than drinking a glass of water." He went on to say: "But today, we don't need [to shut] the strait because we have the Sea of Oman under control and can control transit."

DEBKAfile's Middle East marine sources said the Iranian admiral's boast about the Sea of Oman was just hot air. For the big Iranian Velayati 90 sea exercise which began Saturday, America has deployed in that sea two large air and sea strike groups led by the USS John C. Stennis aircraft carrier and the USS Bataan aircraft amphibious ship.

And they are highly visible: Thursday morning, Dec. 29, Iranian Navy's Deputy Commander Rear Adm. Mahmoud Mousavi reported an Iranian Navy aircraft had shot footage and images of a US carrier spotted in an area where the Velayat 90 war games were being conducted – most probably the Stennis. Its presence, he said, demonstrated that Iran's naval forces were "precisely monitoring all moves by extra-regional powers" in the region.

Clearly, the US navy is very much on the spot in the Sea of Oman and other areas of the Iranian war game.

Middle East sources warn however that the repeated threats to close the Strait of Hormuz coming from Tehran this week and the framework of its naval exercise clearly point to the manner in which Iran intends to hit back for the tough new sanctions which the West plans to approve next month. The new round is expected to shear off 80 percent of the Islamic Republic's revenues.
The European Union's 27 member-states meet in January to approve an embargo on Iranian oil, with effect on 25 percent of Iran's energy exports. Next month, too, President Barack Obama plans to sign into law an amendment authorizing severe penalties for foreign banks trading with Iran's central bank, CBI, including the loss of links with American banks and financial institutions.

Tehran is expected to strike back hard by sowing mines in Hormuz and in the waters opposite the oil fields and terminals of fellow Persian Gulf oil producers, including Saudi Arabia.

It would not be the first time. In 1987 and 1988, sea mines were sown in the Persian Gulf for which Iran never took responsibility. It was generally seen as Tehran's payback for US and Gulf Emirates' backing for Iraq in its long war with the Islamic Republic. A number of oil tankers and American warships were struck by mines, including the USS Samuel B. Roberts. Such disasters can be averted today by means of the sophisticated countermeasures now in US hands.

Defkafiles

Hackers could shut down train lines

Hackers who have shut down websites by overwhelming them with Web traffic could use the same approach to shut down the computers that control train switching systems, a security expert said at a hacking conference in Berlin.

Stefan Katzenbeisser, professor at Technische Universität Darmstadt in Germany, said switching systems were at risk of "denial of service" attacks, which could cause long disruptions to rail services.

"Trains could not crash, but service could be disrupted for quite some time," Katzenbeisser told Reuters on the sidelines of the convention.

"Denial of service" campaigns are one of the simplest forms of cyber attack: hackers recruit large numbers of computers to overwhelm the targeted system with Internet traffic.

Hackers have used the approach to attack sites of government agencies around the world and sites of businesses.

Train switching systems, which enable trains to be guided from one track to another at a railway junction, have historically been separate from the online world, but communication between trains and switches is handled increasingly using wireless technology.

Katzenbeisser said GSM-R, a mobile technology used for trains, is more secure than the usual GSM, used in phones, against which security experts showed a new attack at the convention.

"Probably we will be safe on that side in coming years. The main problem I see is a process of changing ... keys. This will be a big issue in the future, how to manage these keys safely," Katzenbeisser said.

The software encryption 'keys', which are needed for securing the communication between trains and switching systems, are downloaded to physical media like USB sticks and then sent around for installing -- raising the risk of them ending up in the wrong hands.

Stuff

Pastor Lindsey Williams the next step is dollar devaluation

Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002
Deflation: Making Sure “It” Doesn’t Happen Here
Quotes from speech;

However, a deflationary recession may differ in one respect from “normal” recessions in which the inflation rate is at least modestly positive: Deflation of sufficient magnitude may result in the nominal interest rate declining to zero or very close to zero. Once the nominal interest rate is at zero, no further downward adjustment in the rate can occur, since lenders generally will not accept a negative nominal interest rate when it is possible instead to hold cash. At this point, the nominal interest rate is said to have hit the “zero bound.”

1. I’ll lower interest rates to zero.
The Fed should and does use its regulatory and supervisory powers to ensure that the financial system will remain resilient if financial conditions change rapidly. And at times of extreme threat to financial stability, the Federal Reserve stands ready to use the discount window and other tools to protect the financial system, as it did during the 1987 stock market crash and the September 11, 2001, terrorist attacks.

2. I’ll buy the securities from the banks to expand feds balance sheets.
Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

3. I’ll increase the money supply
A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years). The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities up to two years from maturity at prices consistent with the targeted yields. If this program were successful, not only would yields on medium-term Treasury securities fall, but (because of links operating through expectations of future interest rates) yields on longer-term public and private debt (such as mortgages) would likely fall as well.

4. I’ll buy our country’s debt

5. I’ll devalue the dollar 40% like FDR did.

America’s central bank, the Federal Reserve engaged in a bailout of European banks while we CELEBRATED CHRISTMAS.

Italy seeks boost to bail-out fund

The Italian prime minister used his end of year press conference to warn that indebted countries will be "in difficulty" unless the European Financial Stability Facility (EFSF) is boosted with "significantly greater" firepower.

Italy raised €7bn (£5.9bn) in the first big test of the bond markets since the ECB opened its doors with €489bn of cheap loans in an attempt to inject liquidity into Europe's arid banking system. Rome paid 5.62pc to sell €2.5bn three-year debt – a much lower yield compared to the record high of 7.89pc paid a month ago. It paid 6.98pc to shift its 10-year bonds, compared with 7.56pc in November.

The total amount raised in the auction fell short of the €8.5bn target and the cost was still deemed to be unsustainable. The yield on Italian 10-year bonds closed at 7.06pc – stubbornly above the 7pc level seen as signifying the need for a bail-out.

The auction doused the optimism that followed Wednesday's auction of Italian six-month bills when the borrowing costs were halved from a month ago. Analysts said the auctions showed the ECB's action had eased pressure on shorter-term debt, but investors were still wary of longer-dated bonds.

Kathleen Brooks at Forex said the auction "reminds us that stresses remain, and although today's debt was always going to be a hard sell as it comes at the end of the year, Italy has a mountain to climb next year, as it tries to sell €400bn of debt – half of which needs to be sold to merely re-finance its original debts".


Meanwhile, the price of gold fell to its lowest level in six months as analysts warned that banks were being forced to sell the safe-haven asset in the search for liquidity.

Tobias Merath, an analyst at Credit Suisse, told reporters: "Gold is not a safe-haven asset against a liquidity crisis. Banks need to sell assets to raise cash and avoid bankruptcy." The euro fell to a 15-month low against the dollar as traders sought to sell the currency before the end of the year. The yield on UK gilts – the new safe haven – were pushed to fresh lows. But European stock markets rose marginally - the Stoxx Europe 600 closed up 0.9pc - buoyed by better than expected economic data in America.

Mr Monti said that the auctions had gone "rather well, but the financial turbulence absolutely isn't over". He said that to properly calm shattered markets "most of the work needs to be done in Europe".

The technocrat prime minister said securing the €33bn "Save Italy" austerity package was his first priority. The second would be a "Grow Italy" package that would attempt to overhaul and restart the economy. Mr Monti said the plans, which would include a shake-up of the welfare system and the jobs market, will be unveiled at a meeting of European finance ministers on January 23.

The scale of his task was underlined yesterday as fresh data showed Italian business morale fell in December to its lowest level for two years. National statistics office ISTAT said a fall in orders, higher inventories and a deteriorating production outlook had hit confidence.

Meanwhile, Italian producer prices rose 0.1pc month-on-month in November, and 4.2pc year-on-year.

The Telegraph

Iran-U.S. brinkmanship over Strait of Hormuz nears breaking point

TEHRAN — A showdown between Iran and the United States over Tehran’s threats to close the strategic Strait of Hormuz to oil tankers worsened Thursday with warships from each side giving weight to an increasingly bellicose exchange of words.

Iran’s Revolutionary Guards rejected a warning that the U.S. military would “not tolerate” such a closure, saying they would act decisively “to protect our vital interests.”

The tough language came as two U.S. warships entered a zone where the Iranian navy’s ships and aircraft were in the middle of 10 days of war games designed as a show of military might.

But a U.S. navy spokeswoman said later that the aircraft carrier USS John C. Stennis and the guided-missile cruiser USS Mobile Bay had transited without incident on Tuesday, in pre-planned, routine operation.

“Our interaction with the regular Iranian Navy continues to be within the standards of maritime practice, well-known, routine and professional,” Fifth Fleet spokeswoman Lieutenant Rebecca Rebarich said on Thursday.

The transit area was in waters east of the Strait of Hormuz, a choke point at the entrance to the Gulf through which more than a third of the world’s tanker-borne oil passes.

Iranian Vice President Mohammad Reza Rahimi warned this week that “not a drop of oil will pass through the Strait of Hormuz” if the West followed through with planned additional sanctions against Iran over its nuclear programme.

The navy commander, Admiral Habibollah Sayari, backed that up by saying it would be “really easy” to close the strait.

An Iranian Army soldier stands guard on a military speed boat during the "Velayat-90" navy exercises in the Strait of Hormuz in southern Iran on December 28, 2011 as Iran started 10 days of naval drills from December 24, covering east of Strait of Hormuz and the Gulf of Oman to the Gulf of Aden. The Strait of Hormuz, which Iran has threatened to block if the West applies sanctions on its oil exports, is a strategically important waterway through which 40 percent of the world's seaborne oil transits

A U.S. Defence Department spokesman riposted Wednesday that “interference with the transit… of vessels through the Strait of Hormuz will not be tolerated.”

But Brigadier General Hossein Salami, the deputy commander of Iran’s powerful Revolutionary Guards, told Fars news agency on Thursday that “our response to threats is threats.”

“We have no doubt about our being able to carry out defensive strategies to protect our vital interests — we will act more decisively than ever,” he was quoted as saying.

“The Americans are not qualified to give us permission” to carry out military strategy, he said.

Admiral Sayari said the U.S. aircraft carrier was monitored by Iranian forces as it passed from the Strait of Hormuz to the Gulf of Oman, state television reported.

It broadcast footage of an aircraft carrier being shadowed by an Iranian plane.

An Iranian navy spokesman, Commodore Mahmoud Mousavi, told the official IRNA news agency the US carrier went “inside the manoeuvre zone” where Iranian ships were conducting their exercises.

He added that the Iranian navy was “prepared, in accordance with international law, to confront offenders who do not respect our security perimeters during the manoeuvres.”

U.S. officials had said on Wednesday that the Stennis and its carrier strike group were moving through the Strait of Hormuz.

Pentagon press secretary George Little said this was “a pre-planned, routine transit” to the Arabian Sea to provide air power for the war in Afghanistan.

Iran's Navy Commander Habibulah Sayari: “Closing the Strait of Hormuz for Iran’s armed forces is really easy … or as Iranians say it will be easier than drinking a glass of water.”

The United States maintains a navy presence in the Gulf in large part to ensure oil traffic there is unhindered. Its Fifth Fleet is based in Bahrain.

Iran, which is already subject to several rounds of sanctions over its nuclear programme, has repeatedly said it could target the Strait of Hormuz if attacked or its economy is strangled.

Such a move could cause havoc on world oil markets, disrupting the fragile global economy, although analysts say the Islamic republic is unlikely to take such drastic steps as it relies on the route for its own oil exports.

Iran’s naval manoeuvres included the laying of mines and the use of aerial drones, according to Iranian media. Missiles and torpedoes were to be test-fired in the coming days.

Earlier this month, Iranian officials said a Revolutionary Guards cyber-warfare unit had hacked the controls of a U.S. bat-winged RQ-170 Sentinel reconnaissance drone and brought it down safely.

Analysts and oil market traders are watching the developing situation in and around the Strait of Hormuz carefully, fearing that a spark could ignite open confrontation between the long-time foes.

The United States had proposed a military hotline between Tehran and Washington to defuse any “miscalculations” between their navies, but Iran in September rejected that offer.

National Post

40 Hard Questions That The all People Should Be Asking Right Now

If you spend much time watching the mainstream news, then you know how incredibly vapid it can be.  It is amazing how they can spend so much time saying next to nothing.  There seems to be a huge reluctance to tackle the tough issues and the hard questions.  Perhaps I should be thankful for this, because if the mainstream media was doing their job properly, there would not be a need for the alternative media.  Once upon a time, the mainstream media had a virtual monopoly on the dissemination of news in the United States, but that has changed.  Thankfully, the Internet in the United States is free and open (at least for now) and people that are hungry for the truth can go searching for it.  Today, an increasing number of Americans want to understand why our economy is dying and why our national debt is skyrocketing.  An increasing number of Americans are deeply frustrated with what is going on in Washington D.C. and they are alarmed that we seem to get closer to becoming a totalitarian police state with each passing year.  People want real answers about our foreign policy, about our corrupt politicians, about our corrupt financial system, about our shocking moral decline and about the increasing instability that we are seeing all over the world, and they are not getting those answers from the mainstream media.

If the mainstream media will not do it, then those of us in the alternative media will be glad to tackle the tough issues.  The following are 40 hard questions that the American people should be asking right now....

#1 If Iran tries to shut down the Strait of Hormuz, what will that do to the price of oil and what will that do to the global economy?

#2 If Iran tries to shut down the Strait of Hormuz, will the United States respond by launching a military strike on Iran?

#3 Why is the Federal Reserve bailing out Europe?  And why are so few members of Congress objecting to this?

#4 The U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created,  the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was created and Federal Reserve Chairman Ben Bernanke has a track record of incompetence that is absolutelymind blowing.  So what possible justification is there for allowing the Federal Reserve to continue to issue our currency and run our economy?

#5 Why does the euro keep dropping like a rock?  Is this a sign that Europe is heading for a major recession?

#6 Why are European banks parking record-setting amounts of cash at the European Central Bank?  Is this evidence that banks don't want to lend to one another and that we are on the verge of a massive credit crunch?

#7 If the European financial system is going to be just fine, then why is the UK government preparing feverishly for the collapse of the euro?

#8 What did the head of the IMF mean when she recently said that we could soon see conditions "reminiscent of the 1930s depression"?

#9 How in the world can Mitt Romney say with a straight face that the individual health insurance mandate that he signed into law as governor of Massachusetts was based on "conservative principles"?  Wouldn't that make the individual mandate in Obamacare "conservative" as well?

#10 If the one thing that almost everyone in the Republican Party seems to agree on is that Obamacare is bad, then why is the candidate that created the plan that much of Obamacare was based upon leading in so many of the polls?

#11 What did Mitt Romney mean when he stated that he wants “to eliminate some of the differences, repeal the bad, and keep the good” in Obamacare?

#12 If no Republican candidate is able to accumulate at least 50 percent of the delegates by the time the Republican convention rolls around, will that mean that the Republicans will have a brokered convention that will enable the Republican establishment to pick whoever they want as the nominee?

#13 Why are middle class families being taxed into oblivion while the big oil companies receive about $4.4 billion in specialized tax breaks a year from the federal government?

#14 Why have we allowed the "too big to fail" banks to become even larger?

#15 Why has the United States had a negative trade balance every single year since 1976?

#16 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of all jobs in the United States are manufacturing jobs.  How in the world could we allow that to happen?

#17 If the United States has lost an average of 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001, then why don't our politicians do something about it?

#18 If you can believe it, more than 56,000 manufacturing facilities in the United States have permanently closed down since 2001.  So exactly what does that say about our economy?

#19 Why was the new Martin Luther King, Jr. Memorial on the National Mallmade in China?  Wasn't there anyone in America that could make it?

#20 If low income jobs now account for 41 percent of all jobs in the United States, then how are we going to continue to have a vibrant middle class?

#21 Why do the poor just keep getting poorer in the United States today?

#22 How can the Obama administration be talking about an "economic recovery" when 48 percent of all Americans are either considered to be "low income" or are living in poverty?

#23 Why has the number of new cars sold in the U.S. declined by about 50 percent since 1985?

#24 How can we say that we have a successful national energy policy when the average American household will spend a whopping $4,155 on gasoline by the end of this year?

#25 Why does it take gigantic mountains of money to get a college education in America today?  According to the Student Loan Debt Clock, total student loan debt in the United States will surpass the 1 trillion dollar mark in early 2012.  Isn't there something very wrong about that?

#26 Why do about a third of all U.S. states allow borrowers who don’t pay their bills to be put in jail?

#27 If it costs tens of billions of dollars to take care of all of the illegal immigrants that are already in this country, why did the Obama administration go around Congress and grant "backdoor amnesty" to the vast majority of them?  Won't that just encourage millions more to come in illegally?

#28 Why are gun sales setting new all-time records in America right now?

#29 Why are very elderly women being strip-searched by TSA agents at U.S. airports?  Does that really keep us any safer?

#30 The last words of Steve Jobs were "Oh wow. Oh wow. Oh wow."  What did he mean by that?

#31 How in the world did scientists in Europe decide that it was a good idea for them to create a new "killer bird flu" that is very easy to pass from human to human?

#32 If our founding fathers intended to set up a limited central government, then why does the federal government just continue to get bigger and bigger?

#33 Are we on the verge of an absolutely devastating retirement crisis?  On January 1st, 2011 the very first of the Baby Boomers started to reach the age of 65.  Now more than 10,000 Baby Boomers will be turning 65 every single day for the next two decades.  So where in the world are we going to get all the money we need to pay them the retirement benefits that we have promised them?

#34 If the federal government stopped all borrowing today and began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the U.S. national debt.  So does anyone out there actually still believe that the U.S. national debt will be paid off someday?

#35 If the U.S. economy is getting better, then why are an all-time record 46 million Americans now on food stamps?

#36 How can we say that we have the greatest economy on earth when we have a child poverty rate that is more than twice as high as France and one out of every four American children is on food stamps?

#37 Since 1964, the reelection rate for members of the U.S. House of Representatives has never fallen below 85 percent.  So are the American people really that stupid that they would keep sending the exact sameCongress critters back to Washington D.C. over and over and over?

#38 What does it say about our society that nearly one-third of all Americans are arrested by the time they reach the age of 23?

#39 Why do so many of our politicians think that it is a good idea to allow the U.S. military to arrest American citizens on American soil and indefinitely detain them without a trial?

#40 A new bill being considered by the U.S. House of Representatives would give the U.S. government power to shut down any website that is determined to "engage in, enable or facilitate" copyright infringement.  Many believe that the language of the new law is so vague that it would allow the government to permanently shut down any website that even links very briefly to "infringing material".  Prominent websites such as Facebook, Twitter and YouTube would be constantly in danger of being given a "death penalty".  The American people need to ask their members of Congress this question: Do you plan to vote forSOPA (The Stop Online Piracy Act)?  If the answer is yes, that is a clear indication that you should never cast a single vote for that member of Congress ever again.

The Economic Collapse

Spain's economy worsening, says central bank

The central bank said early indicators show that Spanish tourism, exports, spending and investment have been hit, which is likely to have led to a contraction in GDP in the fourth quarter.

In its December bulletin the bank said: "After the stagnation the Spanish economy showed in the third quarter, the available economic information, still incomplete, indicates activity contracted in the final months of the year."

Mr Rajoy, who was elected in a landslide election victory in November, has said he will today unveil economic measures that will last until a full budget can be presented to parliament in the first quarter of the year.

Spain, which has the eurozone's third-biggest budget deficit, is already struggling under tough austerity measures and the highest unemployment rate for 15 years.

Spain's new financial minister Luis de Guindos has already warned the economy would "surely see a downturn" in the final quarter of this year. He said the first quarter of 2012 would also be tough, leading to fears of another recession – defined as two successive quarterly contractions – in Spain.

The Bank of Spain said its indicators showed a "marked weakening" of household consumption and investment in the last quarter. The construction industry, which has been at the forefront of the downturn after Spain's property bubble burst, is still on a "path of contraction", the Bank added.

Exports had slowed to almost half the pace registered in the third quarter, and tourist numbers also fell.

Slow economic growth will raise concerns that Spain will not be able to meet its target to cut the budget deficit to from 9.2pc of GDP last year to 3pc by 2013.

Mr Rajoy has promised to cut Spain's deficit by €16.5bn in 2012 through a series of tough spending cuts as well as banking and labour reforms.

Some of the details of his plans will be laid out today following Mr Rajoy's second cabinet meeting.

The Telegraph

Eurozone credit crunch fears on M3 money contraction

Data released by the European Central Bank shows that M3 money figures tracked by experts as a leading indicator for the economy have turned negative since August, signalling almost certain recession over coming months for the region as a whole.

"The message of these numbers is that the eurozone faces a bleak 2012, with inflation falling rapidly," said Tim Congdon from International Monetary Research. "There is a desperate need to restore growth to the banking system and boost the quantity of money."

Credit to households and business is still growing at 1pc on an annual basis, but on a month-to-month basis it has been flat for months and is now shrinking. It is broadly the same picture for the "broad" M3 money supply, which includes cash and a wide range of accounts and forms a key pillar of the ECB’s monetary policy.

Simon Ward from Henderson Global Investors said the ECB’s "narrow" M1 money figures - tracked for clues on shorter-term spending patterns - show a drastic divergence between the North and South of the eurozone. "Parts of the core may avoid recession but there is no light at the end of the tunnel for the periphery. Real M1 deposits in Greece and Portugal have been falling at an annual rate of roughly 20pc over the last six months," he said.

The overall picture for both the money supply and private credit is as contractionary as in late 2008 after the Lehman crisis. ECB president Mario Draghi has reversed gears dramatically since taking charge in October, cutting interest rates twice to 1pc and providing €489bn in credit to banks for three years to prop up EMU debt markets.

The Telegraph

Japan and India sign new $15bn currency swap agreement

India and Japan have signed a $15bn (£9.7bn) currency swap agreement as the two nations seek to boost financial co-operation.

It will see them swap currencies for US dollars and tap into each other's foreign exchange reserves to ease any liquidity problems.

The pact is expected to boost the Indian rupee which has been Asia worst performing currency this year.

The Japanese yen has also been volatile in wake of an uncertain global outlook.

"Amid global economic uncertainties, ensuring the stability of the financial markets is all the more important for the stable economic development of the two countries," Japanese prime minister Yoshihiko Noda and Indian prime minister Manmohan Singh said in a joint statement after their meeting in New Delhi.

It seems clear that India can benefit from an additional cushion against capital outflows”Alicia Garcia-HerreroBBVA bank

The deal comes at a time when there have been growing concerns about foreign institutional investors (FIIs) pulling out of the Indian market.

Investors have been concerned that the ongoing economic problems in the eurozone and the US may hurt demand for Indian exports and slow its growth.

Fears of a slowdown in the Indian economy saw FII's withdraw almost 32,000m rupees ($600m; £390m) from the Indian securities market in November alone.

The huge capital outflows has hurt the Indian currency which has hit an all time low against the US dollar in recent weeks.

There have also been fears of the impact of these withdrawals on the overall Indian economy.

Analysts said though the Indian foreign exchange reserves were healthy, the deal will help allay any fears of a potential problem in the short-term.

"If we add to this the still huge uncertainty on the resolution of the European debt crisis, it seems clear that India can benefit from an additional cushion against capital outflows," said Alicia Garcia-Herrero, chief economist for emerging markets at BBVA bank.

The Japanese prime minister also promised to provide financial assistance for infrastructure development in India.

Mr Noda said that Japan will invest $4.5bn to help build the industrial corridor between New Delhi and Mumbai, a project that is expected to boost India's growth further.

The corridor, which is expected to cost $100bn, includes plans for nine mega industrial zones, a high speed freight line, three ports, six airports and a six-lane intersection-free expressway connecting India's political and financial capitals.

Analysts said Japanese businesses were likely to benefit from the project.

"One big objective of the industrial corridor is to create a manufacturing base for Japanese companies to export to Europe and Africa," said Robinder Sachdev of think tank Imagindia.

Mr Noda also said that Japan would provide an extra $1.7bn in funding for other projects including the expansion of Delhi's metro railway network.

BBC