Thursday, December 08, 2011
This week Max Keiser and co-host, Stacy Herbert, discuss Hank 'Baldface' Paulson, liquidity shortfalls and Joe Pot of Marmite. In the second half of the show, Max talks to Rick Ackerman about Goldman's death dive and MF Global's crimes against markets. Source
On the Thursday, November 8 edition of the Alex Jones Show, Alex welcomes back trends forecaster and author Gerald Celente who will talk about the former boss of MF Global, John Corzine, taking the Fifth as Congress fumbles its way through an investigation of the failed company. Celente lost money in the six figure range after MF Global grabbed cash from supposedly segregated customer accounts. Source
Britain’s biggest retailer said it was taking the risk of a eurozone break-up “seriously” and had taken steps to reduce its exposure to such an event. Tesco is shifting its currency exposure, holding cash and refusing to sign long-term supply contracts in the face of the eurozone crisis.
Laurie McIlwee, Tesco’s finance director, said of a possible break-up: “Of course we’ve looked at it. Any business has got to take disruption in the eurozone seriously”.
Tesco’s finance chief said the retailer did not have any businesses directly in the eurozone core but that “currency management has been appropriately derisked”. He did not elaborate but the retailer is thought likely to have cut its euro holdings and moved cash into safer currencies such as the dollar or sterling, as well as better managing its exposure to eurozone suppliers.
Mr McIlwee also said he had made sure Tesco has “no refinancing risk until February 2014” and had already raised debt to pay off a £1.5bn bond due next year in the event that the credit markets seize up. “That’s not a shock you want,” he said of the threat of paying the bond back from cash flows. “We’ve already raised money to pay it [the bond] off and put the cash in the bank.”
Holding cash in the bank after raising capital in the debt markets is inefficient and underlines how seriously the retailer is taking the euro situation.
On supply contracts Mr McIlwee said of the current situation: “We wouldn’t go long on any contracts with any supplier – everything in the market is much more short-term. You wouldn’t know if they had the liquidity and they wouldn’t know if you had it.”
The warning on the euro came as Tesco updated the market on sales numbers for the 13 weeks to November 26, with trading buoyed by its international business.
Group sales rose 7.2pc, but in the UK – where the retailer takes around £1 in every £10 spent in shops and makes around 75pc of its profit – like-for-like sales excluding VAT and petrol fell 0.9pc.
Mr McIlwee said the fall in like-for-like sales in the UK was wholly a reflection of the retailer’s Big Price Drop campaign which saw prices cut on 3,000 products.
He added that Tesco was one of “a very short list” of retailers to see higher volumes as he defended the campaign: “It’s not a promotion... it’s a medium term strategy. It’s lasting impact should be judged after months not weeks,” he said. “We’re very determined on this. It will be successful.”
Tesco cut prices on products in the face of stiff competition for shoppers. Many consumers hit by the slowing UK economy, job losses, government austerity measures and high fuel prices have been turning to budget supermarkets such as Lidl and Aldi.
The retailer’s businesses outside the UK delivered strong growth in the period, with like-for-like sales at its Fresh and Easy stores in the US rising 11.9pc. Mr McIlwee said that while that performance was positive, “it needs to be closer to 20pc”.
In Asia the disruption in Thailand caused by the flooding interrupted what the company called “an otherwise strong sales trend”. Sales at stores open for a year or more rose 0.9pc but the company took a £50m hit in lost sales and damages from the natural disaster.
The group also saw improved trading in Europe, boosted by stronger sales in Poland and Slovakia. Overall like-for-like sales growth strengthened to 0.9pc, from 0.1pc in the second quarter. Trading in Ireland remained difficult with like-for-likes slightly below last year. Source
The leaders of the EU prepare for a summit this week as the Eurozone continues to spin out of control. But how did the collapse begin, and who will profit from it? Find out more in this week's GRTV Feature Interview with F. William Engdahl. Source
Black is former federal regulator and author of "The Best Way to Rob a Bank is to Own One." He holds a joint appointment to the departments of Law and Economics at the University of Missouri - Kansas City, and was featured in the Michael Moore documentary: "Capitalism: A Love Story."
Excerpted from "Wall Street: The Great Jobs Killer" delivered Nov. 29, 2011 to a standing room only audience at the University of Missouri - Kansas City. Sponsored by the Jobs Now! Coalition, United Autoworkers Local 249, Occupy Kansas City, the UMKC College Democrats, the UMKC Economics Club, and the Institute for Labor Studies. Source
The words of Irish poet William Butler Yeats in his poem, The Second Coming, have an eerie resonance for American politics today. "Things fall apart; the center cannot hold... The best lack all conviction, while the worst are full of passionate intensity. Surely some revelation is at hand." In an environment of unprecedented political gridlock in Washington and broad-based dissatisfaction with the leading candidates of both parties, 2012 may finally be the year when an independent candidate becomes president of the United States. – Lynn Forester de Rothschild / Huffington Post
Dominant Social Theme: The heck with this two-party stuff. Let's simply elect the best technocrat.
Free-Market Analysis: What an editorial at Huffington Post by Lynn Forester de Rothschild! In it, she makes the point that "some revelation is at hand" – and mostly likely it has to do with the reality of a genuine third-party challenge to put a candidate in the White House.
Is Ms. Rothschild suggesting Congressman Ron Paul is about to win the US presidency? (Not sure about this.) A close reading of the article, however, reveals something that may be even more radical. Ms. Rothschild is arguing for, wait for it ... "direct democracy." That is, electing candidates directly, by majority vote, at the federal level, presumably without the fuss of the current two-party system.
We've written about the dominant social theme of direct democracy before. The governor of New York, Michael Bloomberg – an elitist worker-bee if there ever was one – is a big supporter of an element of direct democracy, which includes the elimination of the two-party system.
But what is it REALLY? Well ... it is basically a full implementation of the USSR's communist system that died 20 years ago! The idea is that a technocracy of the elite can present candidates who are the most "competent" at administration. The corollary to this, of course, is that one must accept EVERY FACET of the CURRENT system to accept that one is voting purely for competence.
In other words, if people do not like the current corporatist/authoritarian/totalitarian/militarized state that is being constructed around them, they're simply plumb out of luck. That's because the candidates on this "best of all worlds" won't be running on how to CHANGE what's going on – only on how to administer it BETTER.
And who is Ms. Lynn Forester de Rothschild? The bio tells us that she is "CEO of EL Rothschild, LLC and the co-Chair of the 'Better Values, Better Markets' Task Force at the Henry Jackson Society in London." You can "follow her on Facebook, Twitter, and at LdeReport.com," we learn.
The views Ms. Rothschild expresses are inevitable, in our opinion. We've continually catalogued them and here they are once more – reinforced by an individual whose family is, in our estimation, the most powerful in the world.
Yes, it is likely the Rothschilds and other great banking families control tens or even hundreds of trillions via central banks around the world. It is likely the Rothschilds, among others, who are driving pell-mell toward what we consider the most horrible future of all – a one-world (new) order administered by central banking technocrats.
We've written literally thousands of speculative articles about this, by now. And we've also pointed out that modern history seems to have resolved itself around one question: whether the Internet Reformation itself (which is waking people up to what's going on) will cause enough people to resist those who are using the chaos and depression of the current world situation to campaign for more and more government and an ever-more centralized global economy, etc.
It's the "people versus the elites," as it always is. And the elites, as they always do, are attempting to provide tools that seemingly empower middle classes but actually only build up bigger and bigger government. Elites LOVE big government because they rule the world via mercantilism. No government, no government levers.
Without the mechanism of mercantilism, the rule of the many by the few becomes a lot more difficult. Enter many of the elite dominant social themes that we have been discussing in these modest pages throughout the past year. Ms. Rothschild, herself, touches on "transparency," on "direct democracy" and, of course, on "better values" (see bio, above). (For some of our articles just Google "transparency" or "direct democracy" and "Daily Bell.")
The idea, of course, is to ensure that any discussion of the FAILURES of government ends up providing an anodyne – that is a solution that INCLUDES MORE government. In other words, government is a terrible problem and the only solution is to increase it and make it better and more responsive – and larger and larger.
The absurd end result of such a point of view is an all-encompassing government stretching around the world with ever-vaster resources. The additional resources will be needed to police government itself. In other words, as the corruption grows, so the resources of government must grow. Here's some more from the article:
For the first time in our nation's history, popular dissatisfaction with both parties is reinforced by the existence of serious bipartisan organizations that will facilitate the effort of a non-aligned national figure to become president. Because of these two factors, the opportunity to mobilize what Tom Friedman calls "the radical center" has never been greater. Indeed, "some revelation is at hand."
The extent of voter dismay in America is astounding. According to an October 2011 Pew Research poll, only 11% of us are content with the federal government. In a 1958 National Election Study, 73% of Americans said that they "always" or "mostly" trusted the government to do the right thing. In contrast, in a New York Times/CBS poll taken in late October, only 10% of those polled expressed the same faith ... Both parties have lost support because of the gridlock caused by ideological divisions ...
The message is clear: as politicians become more partisan and less effective at governing, the electorate is ready for a radical restructure of our election system itself. Voters are refusing to be held hostage to the self-interests of either party. Thankfully, in true American fashion, our civic society has built the tools to meet the challenge; for the first time in our history, the means exist to level the electoral playing field for an independent candidate.
A not-for-profit organization, called Americans Elect is establishing ballot access in all 50 states for the candidates for president and vice president in 2012 who will be nominated directly by the people in an online nominating process. The sophisticated website of Americans Elect allows registered voters a revolutionary new way to nominate a bipartisan ticket to occupy the White House. To date, the website has over 300,000 delegates, more than 50 times the number that participate in both the Democratic and Republican Party conventions (in full disclosure, I sit on the Leadership Board for Americans Elect).
Perhaps she is kidding? Perhaps it is all a bad joke? Not at all. She writes of a similar movement, as well, called "No Labels." This is, we learn, "a political organization of Republicans, Democrats and Independents working on the grassroots level to support bipartisan and pragmatic politicians and policies. The group has 180,000 members and on December 13th is holding an open meeting at the Capital to unveil a comprehensive congressional action plan."
And here is another eloquent (and in our view blood-curdling) statement she makes toward the end of the article. "Howard Schultz, the CEO of Starbucks, is leading a movement of business leaders and political donors to end the hyper-partisanship in Washington that could be the bedrock of financing for a viable independent, bipartisan ticket for 2012. Simply, both the political environment and the tools are in place for a total disintermediation of our political duopoly."
Oh, good. The two-party system was horrible enough. In its place, we shall substitute the worst of all worlds – a one-party system. Yet, Ms. Rothschild seems a true believer.
Toward the very end of the article she sums up her points with eloquent intensity: "If activated, the 'radical center' is bigger and stronger than all the vested interests and the extremists in the political parties, in the media, in the streets and in the guts of Washington. All that is needed is for them to mobilize with 'passionate intensity.'" Hm-mm. Say, isn't she talking about OWS? Or are we too paranoid?
Sure, there are many in the wide-world of blogging who consider our modest and uncontroversial website a disseminator of nothing more than conspiratorial notions dressed up as free-marketing thinking. And yet ... we make no apologies.
We believe our paradigm is the correct one and purely from an investing point of view those who use it have known about the potential for serious and serial failures in many if not most of the power elites' fear-based promotions literally years before they took place.
The lies of global warming, the failure of the EU, the endless unraveling of the Chinese economy, the demise of the moral justifications for central bank ... we predicted each possibility months or years before there were any real-world clues that they were actually going to take place.
And by following the elites' propaganda, we started writing about "transparency" and "direct democracy" long ago. We warned that, faced with information about government corruption and mendacity, the elites would have to do something to ensure the continuation of the meme and the march toward world government.
Since reducing government is anathema to them, they will have to come up with another solution. We predicted that instead of reducing government, the elites would try to use the Internet (humankind's most powerful modern tool) to promote government transparency and direct democracy. Hey, that's "hot."
The upcoming Pecora-style Hearings that we have been writing about recently (should they occur), will be positioned as a government clean-up of corruption that may extend to Fedgov itself. Meanwhile, the memes of direct democracy will be promoted through a variety of suddenly emergent think tanks, groups, educational and political facilities, etc. Occupy Wall Street is likely one faux-facility intended for this promotion.
Kudos, by the way, to Robert Wenzel for picking up on this article by Lynn Forester de Rothschild as soon as it came out. We're pleased to see that Wenzel, like some other acute libertarian viewers of the modern scene, seems to be using the tools of directed history to analyze what is ACTUALLY happening to our world.
Conclusion: We have no idea whether Ms. Rothschild's perspective on direct democracy and government transparency will win the proverbial day or if the Internet Reformation itself will undermine it. But we do know that if one tracks the unfolding memes – like breadcrumbs – the trail is very plain to see. No, not conspiracy. Reality. Source
Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks And Everyone Else
Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone ElseSubmitted by Tyler Durden
In an oddly prescient turn of events, yesterday we penned a post titled "Has The Imploding European Shadow Banking System Forced The Bundesbank To Prepare For Plan B?" in which we explained how it was not only the repo market, but the far broader and massively unregulated shadow banking system in Europe that was becoming thoroughly unhinged, and was manifesting itself in a complete "lock up in interbank liquidity" and which, we speculated, is pressuring the Bundesbank, which is well aware of what is going on behind the scenes, to slowly back away from what will soon be an "apocalyptic" event (not our words... read on). Why was this prescient? Because today, Reuters' Christopher Elias has written the logical follow up analysis to our post, in which he explains in layman's terms not only how but why the lock up has occurred and will get far more acute, but also why the MF Global bankruptcy, much more than merely a one-off instance of "repo-to-maturity" of sovereign bonds gone horribly wrong is a symptom of two things: i) the lax London-based unregulated and unsupervised system which has allowed such unprecedented, leveraged monsters as AIG, Lehman and now as it turns out MF Global, to flourish until they end up imploding and threatening the world's entire financial system, and ii) an implicit construct embedded within the shadow banking model which permitted the heaping of leverage upon leverage upon leverage, probably more so than any structured finance product in the past (up to and including synthetic CDO cubeds), and certainly on par with the AIG cataclysm which saw $2.7 trillion of CDS notional sold with virtually zero margin. Simply said: when one truly digs in, MF Global exposes the 2011 equivalent of the 2008 AIG: virtually unlimited leverage via the shadow banking system, in which there are practically no hard assets backing the infinite layers of debt created above, and which when finally unwound, will create a cataclysmic collapse of all financial institutions, where every bank is daisy-chained to each other courtesy of multiple layers of "hypothecation, and re-hypothecation." In fact, it is a link so sinister it touches every corner of modern finance up to and including such supposedly "stable" institutions as Jefferies, which as it turns out has spent weeks defending itself, however against all the wrong things, and Canadian banks, which as it also turns out, defended themselves against Zero Hedge allegations they may well be the next shoes to drop, as being strong and vibrant (and in fact just announced soaring profits and bonuses), yet which have all the same if not far greater risk factors as MF Global. Yet nobody has called them out on it. Until now.... Full story/source
As Kirill Ilinsky, managing partner at London-based Fusion Asset Management explained to RT: “Every stage of the financial crisis is on a bigger scale and is considerably more difficult to get out of. Every time you put in more money, the efficiency of putting in money is going down. Money disappears from problematic areas into areas which are not affected.
“It’s going into emerging markets, increasing labor costs there, increasing inflation, making emerging markets less competitive and less able to pull developed countries from the crisis. So the more money politicians put in the system, they effectively are killing the centers which are supposed to drag the whole economic system out of the crisis,” he said.
But bailout or no bailout, fixing the ailing world economy can only be a very long process, the economist said.
“If we look back at how the post-war debt was watered down and how it was dealt with, it took 10+ years. It’s a very slow process; there is a huge amount of debt. And the United Kingdom is probably the worst country in terms of total public and state debt, which is now around 450 per cent of GDP – worse than Italy and worse that the United States, although those are the most publicly known issues. There is also hidden debt, which is coming from pension liabilities. We don’t talk much about it, but actually it is a huge amount. There is no easy way. We over-consumed, we borrowed this debt, and we need to pay it back,” he said.
In the case of the eurozone and saving the euro, the big obstacle is that Germany and France, the two countries responsible for hammering out a solution for the crisis, have conflicting approaches due to different political considerations.
“Merkel sees it as a marathon. And really these sorts of problems, which have been accumulated over 30 to 40 years of debt expansion and uncontrolled spending, if you like, cannot be sorted out in three months. For Sarkozy, however, it’s about the April elections. So it’s either happening in the next two months very publicly and politically, or he has problems in his own country,” Ilinsky said. Source
The holiday season has seen an increase in people going shopping, but are people aware of the happenings around them? In a recent study viewers of Fox news were less informed than the people who didn't watch the news. Should people pay less attention on shopping and more on current events? Chris Chambers, journalism professor at Georgetown University, helps us analyze what's going on. Source
In the early morning hours of 7 December 2011, San Francisco police raided Occupy SF's Justin Herman Plaza occupation, arresting dozens of peaceful protesters. Please be at our rally at noon on this day, and attend our General Assembly at 6:00pm.
This is a message to the Police, to the military, to the TSA, to Homeland Security and to members of every other enforcement arm of the government. Source
Born in 1932, Mr. Salinas-Price became a follower of Austrian economics at a young age and is the author of three books and of numerous articles, both in Spanish and in English, on the use of silver as legal tender in parallel with paper money.
Mr. Salinas-Price serves as President of the Asociación Cívica Mexicana Pro Plata A.C. (Mexican Civic Association for Silver), which promotes the use of silver as legal tender in México. Mr. Salinas-Price is an outspoken proponent of sound financial and monetary policies in the country of México.
Hera Research Newsletter (HRN): Thank you for joining us today. Would you tell our readers about your efforts to make silver coins legal tender in México?
Hugo Salinas-Price: México is the first and only country where we have a Congress that is conscious of an alternative to paper money and that is favorable to it. México is the only country where this type of reform is being contemplated at the national level. The rest of the world is stagnating completely in the morass of un-backed paper money without considering any alternative.
HRN: Why do you think that’s the case?
Hugo Salinas-Price: We had, not too long ago, the experience of severe inflation in México. I used to graph the inflation but to keep that graph on the same scale I’d have to have a roll of paper hundreds of yards high. That’s what’s facing the United States right now. The U.S. is doing the same thing that México did, even worse.
HRN: Can you comment on the Utah Legal Tender Act?
Hugo Salinas-Price: The Utah Legal Tender Act was heralded with optimism and any effort to recognize gold and silver as money is praiseworthy, but it falls short because simply making gold and silver coins legal tender gives them no stable value that will be recognized by everybody.
HRN: Do you mean the value of the coins fluctuates, like a commodity, with metals prices?
Hugo Salinas-Price: Yes. In order for something to work on a large scale, it has to be very simple. In 1979 the President of México, José López Portillo y Pacheco, had a one ounce silver coin declared legal tender and asked the central bank to assign it a monetary value. The trouble was that the value was not stable. One day the value was X then, the next day, it was X minus a few pesos and the day after that it was X plus a couple of pesos. This created a great deal of confusion and the law was allowed to lapse. The mistake was that the monetary value wasn’t stable.
HRN: And that’s an issue for the Utah Legal Tender Act?
Hugo Salinas-Price: Yes. It’s almost as if gold and silver were not monetized.
HRN: So, people who buy gold or silver coins are merely speculating on metals prices?
Hugo Salinas-Price: In México the majority of people are poor and cannot afford to speculate. If they buy a coin for 500 pesos and it goes down to 480 pesos and they’ve lost 20 pesos, that’s a lot to them. That is why there is relatively little silver in the savings of the Mexican people. People are afraid of speculating. They can’t afford to speculate.HRN: Precious metals prices seem to be extremely volatile.
Hugo Salinas-Price: Of course, volatility is constantly reported. They never talk about the fact that silver has gone up seven times in the last twelve years because of inflation. Volatility in gold and silver is artificially induced precisely to scare off savers. It’s really very cruel, but that’s central banking for you.
HRN: Are you saying that central banks actively discourage people from exiting fiat currencies?
Hugo Salinas-Price: Of course.
HRN: Can monetizing silver work?
Hugo Salinas-Price: Unless the value of a legal tender coin is stable it cannot be used as money. It has to be given a firm value. What we are proposing is that the quote from the central bank be a stable quote. The value of the new one ounce silver Libertad coin will remain fixed unless the price of silver rises to a point where the value should be increased. The Utah Legal Tender Act does not address this. It has to be done at the federal level, not at the state level.
HRN: But what will happen if the price of silver falls?
Hugo Salinas-Price: Nothing will happen. If the silver coin is valued at 500 pesos and the price of silver falls, it’s still worth 500 pesos.
HRN: Won’t that encourage speculation?
Hugo Salinas-Price: A speculator might sell his silver coins if the price of silver falls and perhaps invest in silver bullion, but speculators are a small number of people. The majority of people would keep the coins because they are better than a 500 peso paper note.
HRN: So, people would hoard silver coins?
Hugo Salinas-Price: That’s right. They would have savings. That’s the important thing. We need people to get off the drug habit of constant spending. People have to save again.
HRN: You want to encourage saving?
Hugo Salinas-Price: Absolutely. What we want is to create a refuge where those who can save—the middle class—can do so in a medium that will retain its purchasing power. There is no safe harbor for the middle class today. The middle class is being financially raped and decimated.
HRN: Do you believe the same thing is happening in the U.S.?
Hugo Salinas-Price: Yes. The U.S. needs a law like this too.
HRN: Is saving the foundation of small businesses, jobs and of the middle class?
Hugo Salinas-Price: Of course. The withering away of the middle class is a terrible situation for the economy.
HRN: What is the current status of the Mexican legal tender legislation?
Hugo Salinas-Price: In México we have a Congress that is quite well aware of the importance of this legislation and it has broad support both in the Senate and in the Chamber of Deputies, which is like the House of Representatives in the U.S. The idea is well understood and approved, but there is a problem.
HRN: What is the obstacle?
Hugo Salinas-Price: Under our party system, members of Congress rely on the guidance of the party leaders. If they fall into disfavor with their party leader, they will be denied the benefits that the party leader is authorized by law to distribute. The three most important party leaders are under great pressure from the central bank, Banco de México, to prevent party members from voting in favor of this measure.
HRN: Banco de México is blocking the legislation?Hugo Salinas-Price: If it wasn’t for the central bank, this measure would have passed a long time ago. The party leaders are afraid to jeopardize their careers by becoming enemies of the central bank.
HRN: What do you think might change the situation?
Hugo Salinas-Price: The Congressional Finance Committee will hold a hearing this month, before the Congress goes into recess, to hear the objections of the central bank. It is possible they may decide that the objections are not materially important and they may approve the bill. In that case, the bill will be sent to the house for a vote. The party leaders will be able to vote for the bill if the Committee approves the law.
HRN: Do you think it will pass if the Finance Committee approves it?
Hugo Salinas-Price: We would be hesitant to submit the bill to a vote without assurances from the party leaders that they will give it a green light.
HRN: If México passes this law, do you think other countries in Latin America will follow México’s example?
Hugo Salinas-Price: Yes. I think they would and they would do it soon after.
HRN: Thank you for being so generous with your time.
Hugo Salinas-Price: I hope what I’ve said will be of some use. Source