Chalk one up for our wonderful Congress and President! Possibly the most important piece of legislation on the docket and one supported overwhelmingly by the populace just "withered on the vine". Time to pop those champagne corks, ladies and gentlemen of Washington, your need to obfuscate has once again taken precedence over the rights of the American people to understand what is being done with THEIR money!
Of course, we have to allow for the fact that politicians view tax collections as belonging to THEM. They don't! The Federal Reserve (Fed), so expert at creating asset bubbles, then justifying their existence by rushing in to fix those bubbles, remains shielded from any oversight. What's a few trillion among friends?
Political pressure from the Obama administration, along with the Treasury and Fed, led Senate lawmakers to alter a provision pushed by Sen. Bernie Sanders (I., Vt.) that was gaining momentum. It would have largely repealed a 32-year-old law that shields Fed monetary policy from congressional auditors.
Sen. Sanders, after the intense lobbying by the Obama administration and Fed officials, removed language in his amendment to the financial-regulation overhaul that would’ve opened the Fed’s monetary policy deliberations to audits by the congressional Government Accountability Office (GAO). The original Sanders amendment eliminated those restrictions, which were passed by the Senate in 1978. The bill prevented the GAO from reviewing the Fed’s monetary policy actions, discount window lending, open market operations and transactions with foreign central banks or governments.
The watered-down Sanders amendment requires a one-time audit of the Fed’s emergency credit facilities and an inspection of Fed governance, a review of the selection of regional bank directors and the operation of regional banks’ lending facilities. The measure still requires the Fed to publicly identify borrowers from its emergency lending facilities and other special programs by December 1. But, it doesn’t stipulate ongoing disclosure. So what good is it?
The compromise, endorsed by Senate Banking Committee Chairman Christopher Dodd (D., Conn.) and the Treasury, would require the Fed to disclose more details about its lending during the financial crisis. It would also require a one-time audit of those loans and a one-time review of Fed governance. A formal vote was pushed back until next week. Its endorsement by the Treasury is proof the bill has ZERO teeth.
"At a time when our entire financial system almost collapsed, we cannot let the Fed operate in secrecy any longer," Mr. Sanders said. "The American people have a right to know."
Fed Chairman Ben Bernanke, while insisting on a commitment to "openness" at the Fed, said in a letter to Congress the original Sanders measure would "seriously threaten monetary policy independence, increase inflation fears and market interest rates and damage economic stability and job creation." Mr. Bernanke fails to mention in his letter that the Fed itself has caused economic and financial instability and has utterly mismanaged monetary policy and set the level of interest rates to cause the very financial crisis we're in. (Sarcasm intentional!)
A House bill sponsored by Rep. Ron Paul (R., Texas) that passed in December, contains a proposal similar to the original Sanders measure. If the Senate bill were to pass, it would need to be reconciled in a conference committee. Given the "compromise" bill, the reconciliation process cannot possibly lead to any legislation that would be effective.
Before the last-minute compromise, the Fed's foes appeared to be winning and got a major boost when Senate Majority Leader Harry Reid (D., Nev.) said he would side with Mr. Sanders.
At least half a dozen Obama administration officials joined the high-pressure campaign, including Treasury Secretary Timothy Geithner and Rahm Emanuel, the White House chief of staff. Administration aides credited Mr. Dodd with pushing back against the original amendment and developing an acceptable alternative.
The corrupt wheels of Washington continue to turn. The fact is that an audit of the Fed is not opposed because it could interfere with the great job they do. Rather, it is a desperate attempt to hide their utter incompetence and mismanagement, along with their surreptitious market operations designed to interfere with a free market to serve their political masters.
Marko's Take
Our latest You Tube video titled "Social In-Security: The Problem" is now posted and can be accessed by clicking here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI. We will post "Social In-Security: The Solution" subsequently. Stay tuned for a 7 step plan on how to fix this mess.
Friday, May 7, 2010
Thursday, May 6, 2010
Euro-Zone Budget Deficits Go Parabolic
While the topic du jour, every jour, has been Greece and its whopping budget deficit, fiscal problems within the Euro-Zone hardly end there.
Athens' budget deficit, which ran at 13.6% of Gross Domestic Product (GDP) in 2009, is not the highest in the bloc. Ireland had the biggest fiscal deficit in the European Union last year – larger than both Greece and the UK - according to revised figures published recently by Eurostat, the European Commission’s official statistics office.
The deficit was revised up from 11.8% to 14.3% of GDP after Eurostat ruled that the Irish government’s €4 billion of aid to Anglo Irish Bank must be treated as part of current spending.
Ireland has raised approximately 60% of the €20 billion it needs this year to finance the deficit. Its repayment schedules are manageable with around €1 billion of redemptions due this year, €4 billion next year and €6 billion in both 2012 and 2013.
European Commission's spring forecasts put the UK budget deficit THIS year at 12% of GDP – the highest projected within the European Union and worse than Treasury estimates. The deficit, if realized, would put Britain at the highest deficit of the 27 EU nations.
The country's budget shortfall was the third largest in the EU last year, but will overtake both Greece and Ireland this year, according to the forecasts. Greece's measures to tackle its public finances problems are projected to reduce its deficit to 9.3% of GDP in the coming year.
The commission's forecasts are for a worse deficit than predicted by Alistair Darling at his March budget. In 2010-11, the commission puts the deficit at 11.5% of GDP, compared with Darling's forecast for an 11.1% budget gap.
Even Germany, easily the healthiest economy in Europe, is finding itself struggling. Germany's budget deficit will soar well above 4% of GDP in 2010, breaching European Union rules, Finance Minister Peer Steinbrueck was quoted as saying on Wednesday.
Under the EU's Stability and Growth Pact, Euro-Zone members are required to maintain public deficits below 3% of GDP and public debt at less than 60% of GDP.
This sharp increase in deficit spending stems mainly from the stimulus package enacted by Chancellor Angela Merkel. At €50 billion, it is the largest since 1945.
Unfortunately, budgets are far easier to expand than contract. Politicians have a vested interest in their own re-election and nothing works better than promising something today while postponing the cost for future years. Austerity measures are never embraced by the domestic populations - keeping even the honest politicians from imposing these fixes. The recent riots and violence in Greece is proof that an entitled populace is loathe to take responsibility.
Marko's Take
Our latest You Tube video entitled "Social In-Security: The Problem" is now posted. You can access it by clicking here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI.
Athens' budget deficit, which ran at 13.6% of Gross Domestic Product (GDP) in 2009, is not the highest in the bloc. Ireland had the biggest fiscal deficit in the European Union last year – larger than both Greece and the UK - according to revised figures published recently by Eurostat, the European Commission’s official statistics office.
The deficit was revised up from 11.8% to 14.3% of GDP after Eurostat ruled that the Irish government’s €4 billion of aid to Anglo Irish Bank must be treated as part of current spending.
Ireland has raised approximately 60% of the €20 billion it needs this year to finance the deficit. Its repayment schedules are manageable with around €1 billion of redemptions due this year, €4 billion next year and €6 billion in both 2012 and 2013.
European Commission's spring forecasts put the UK budget deficit THIS year at 12% of GDP – the highest projected within the European Union and worse than Treasury estimates. The deficit, if realized, would put Britain at the highest deficit of the 27 EU nations.
The country's budget shortfall was the third largest in the EU last year, but will overtake both Greece and Ireland this year, according to the forecasts. Greece's measures to tackle its public finances problems are projected to reduce its deficit to 9.3% of GDP in the coming year.
The commission's forecasts are for a worse deficit than predicted by Alistair Darling at his March budget. In 2010-11, the commission puts the deficit at 11.5% of GDP, compared with Darling's forecast for an 11.1% budget gap.
Even Germany, easily the healthiest economy in Europe, is finding itself struggling. Germany's budget deficit will soar well above 4% of GDP in 2010, breaching European Union rules, Finance Minister Peer Steinbrueck was quoted as saying on Wednesday.
Under the EU's Stability and Growth Pact, Euro-Zone members are required to maintain public deficits below 3% of GDP and public debt at less than 60% of GDP.
This sharp increase in deficit spending stems mainly from the stimulus package enacted by Chancellor Angela Merkel. At €50 billion, it is the largest since 1945.
Unfortunately, budgets are far easier to expand than contract. Politicians have a vested interest in their own re-election and nothing works better than promising something today while postponing the cost for future years. Austerity measures are never embraced by the domestic populations - keeping even the honest politicians from imposing these fixes. The recent riots and violence in Greece is proof that an entitled populace is loathe to take responsibility.
Marko's Take
Our latest You Tube video entitled "Social In-Security: The Problem" is now posted. You can access it by clicking here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI.
Wednesday, May 5, 2010
Excellent Entry Point For Gold?
I believe it is! While the stock markets and GOLD market have been rocked by the situation in Greece, which this morning turned into riots, behind the scenes, the precious metals market has demonstrated a certain resiliency that is only demonstrable by looking at some relative analysis.
In order for GOLD, and the underlying precious metals miners, to really take off, as we have been predicting, they must both divorce themselves from the stock market AND the dollar. That has already begun.
The dollar index, or DXY, as it is often referred to, bottomed in December, 2009 at a reading of 74. The index is computed by comparing the U.S. Dollar to a basket of 10 currencies. Unfortunately, the computation of the index is highly skewed towards the EURO, which represents nearly 60% of the weighting, followed by the YEN and POUND.
The EURO has been incredibly weak and speculation has begun that it will lose its regional reserve-currency status. As the DXY is relative, the weakness in the EURO shows up as STRENGTH in the DOLLAR. So, the DXY is a rather poorly constructed gauge.
Nonetheless, the DXY currently stands at about 84 - a roughly 15% increase in the last 4 months. GOLD's most recent interim top of $1,200 per ounce coincided with the bottom in the DXY.
However, GOLD, which bottomed in February at around $1,050 per ounce, has since climbed in a stair-step fashion reaching nearly $1,200 a couple of days ago, despite the ongoing strength in the DOLLAR.
So, we now have a clear and consistent pattern of a rising DOLLAR and rising GOLD.
As to the stock market, a better way to measure relative strength is to review the ratio of precious metals miners to the Standard & Poors 500 (SPX). The preferred index of miners is the "HUI", or the "Gold Bugs Index".
The ratio created by dividing the HUI by the SPX is an excellent measure of the relative strength of miners to the overall stock market. This ratio also peaked in December, 2009 at a reading of about 0.45. It then fell to a low of about 0.33 in late March.
Since then, the HUI/SPX ratio has risen to 0.38 and has broken above its 200 day moving average. Yesterday's onslaught only brought it down slightly. It has also completed what appears to be a "head and shoulders" bottom - a pretty reliable chart formation often signalling a low of major importance.
Like any chart pattern, an H and S top or bottom is only a method for improving the odds and far from "inflammable", as Archie Bunker might say. Nevertheless, it, in conjunction with the strength of GOLD relative to the DXY, suggests that a major shift is taking place in the underlying technicals of this market.
Add to that, the excellent fundamentals of record revenues and earnings being reported by the miners, and you have all you need to see the precious metals market embark on the hyperbolic growth phase we have repeatedly called for.
The couple-day meltdown is extremely common for this phase of a mania. Everytime it looks like GOLD is taking off and investor sentiment gets too bullish or confident, an extreme shock keeps everyone on their toes. It's also the reason I have consistently warned about the dangers of overtrading a market like this. Even "per"fessionals learn the folly in trying to time every turn. It's a great way to NOT make money even in a rising trend.
Thus, we are now set up for what I believe ought to be an excellent entry point. In no way do I believe that the last couple of days negated the bullish prospects.
Marko's Take
Our newest YouTube video entitled "Social In-Security: The Problem" will be available sometime today. You can access it by clicking http://www.youtube.com/markostaketv. I would also like to thank Bill Murphy's excellent LeMetropoleCafe newsletter. For all you GOLD-philes, it remains the best value for a newsletter out there. You can access it by clicking here http://www.lemetropolecafe.com/.
In order for GOLD, and the underlying precious metals miners, to really take off, as we have been predicting, they must both divorce themselves from the stock market AND the dollar. That has already begun.
The dollar index, or DXY, as it is often referred to, bottomed in December, 2009 at a reading of 74. The index is computed by comparing the U.S. Dollar to a basket of 10 currencies. Unfortunately, the computation of the index is highly skewed towards the EURO, which represents nearly 60% of the weighting, followed by the YEN and POUND.
The EURO has been incredibly weak and speculation has begun that it will lose its regional reserve-currency status. As the DXY is relative, the weakness in the EURO shows up as STRENGTH in the DOLLAR. So, the DXY is a rather poorly constructed gauge.
Nonetheless, the DXY currently stands at about 84 - a roughly 15% increase in the last 4 months. GOLD's most recent interim top of $1,200 per ounce coincided with the bottom in the DXY.
However, GOLD, which bottomed in February at around $1,050 per ounce, has since climbed in a stair-step fashion reaching nearly $1,200 a couple of days ago, despite the ongoing strength in the DOLLAR.
So, we now have a clear and consistent pattern of a rising DOLLAR and rising GOLD.
As to the stock market, a better way to measure relative strength is to review the ratio of precious metals miners to the Standard & Poors 500 (SPX). The preferred index of miners is the "HUI", or the "Gold Bugs Index".
The ratio created by dividing the HUI by the SPX is an excellent measure of the relative strength of miners to the overall stock market. This ratio also peaked in December, 2009 at a reading of about 0.45. It then fell to a low of about 0.33 in late March.
Since then, the HUI/SPX ratio has risen to 0.38 and has broken above its 200 day moving average. Yesterday's onslaught only brought it down slightly. It has also completed what appears to be a "head and shoulders" bottom - a pretty reliable chart formation often signalling a low of major importance.
Like any chart pattern, an H and S top or bottom is only a method for improving the odds and far from "inflammable", as Archie Bunker might say. Nevertheless, it, in conjunction with the strength of GOLD relative to the DXY, suggests that a major shift is taking place in the underlying technicals of this market.
Add to that, the excellent fundamentals of record revenues and earnings being reported by the miners, and you have all you need to see the precious metals market embark on the hyperbolic growth phase we have repeatedly called for.
The couple-day meltdown is extremely common for this phase of a mania. Everytime it looks like GOLD is taking off and investor sentiment gets too bullish or confident, an extreme shock keeps everyone on their toes. It's also the reason I have consistently warned about the dangers of overtrading a market like this. Even "per"fessionals learn the folly in trying to time every turn. It's a great way to NOT make money even in a rising trend.
Thus, we are now set up for what I believe ought to be an excellent entry point. In no way do I believe that the last couple of days negated the bullish prospects.
Marko's Take
Our newest YouTube video entitled "Social In-Security: The Problem" will be available sometime today. You can access it by clicking http://www.youtube.com/markostaketv. I would also like to thank Bill Murphy's excellent LeMetropoleCafe newsletter. For all you GOLD-philes, it remains the best value for a newsletter out there. You can access it by clicking here http://www.lemetropolecafe.com/.
Tuesday, May 4, 2010
Government Sachs In The Cross-Hairs: What The Scandal Is All About
Goldman Sachs (GS), aka "Government Sachs" has been exposed for being what readers of Marko's Take, as well as anyone with a brain, already knew: the most corrupt and greedy institution on planet Earth! (But Marko... how do you REALLY feel?)
With so many allegations and opinions flying about, it's easy to get confused as to exactly what prompted the SEC complaint and how it relates to the Obama Administration's formerly cozy relationship with Government Sachs.
Goldman was accused of fraud by the Securities and Exchange Commission (SEC) in a lawsuit filed April 16. The SEC claims Goldman duped investors in a Collateralized Debt Obligation (CDO) called Abacus 2007-AC1, by failing to disclose that it was created with the help of hedge-fund firm Paulson & Co., which made a profit of about $1 billion when the investment collapsed in value. John Paulson became an overnight celebrity within the investment community by virtue of his huge score shorting the real estate market.
The CDO is a bet against the value of mortgages and the housing market overall. The securities themselves were allegedly created specifically to give hedge fund manager John Paulson a means to profit from the real estate meltdown. Goldman, for its part, put its own clients into these CDO's, which defaulted in droves.
Paulson and Goldman got rich as America and the world got poor.
Warren Buffett, the richest man in America, and the most hypocritical man in America, sees ABSOLUTELY NOTHING WRONG! Why should he? His investment in Goldman, made at terms not available to anyone BUT him, is in the money. What him worry? (But Marko... how do you REALLY feel?).
Goldman's defense filing included copies of six lawsuits, as well as a "demand letter" from the Louisiana Municipal Police Employees Retirement System, that the company's board launch an internal probe of "officers and directors responsible for the Abacus 2007-AC1 incident."
In addition, Goldman clients are up in arms, believing not only that they had been misled, but that GS used its trading operation to benefit itself at their expense. Goldman, trade against its clients for its own profit? You're kidding, right? NOT! (But Marko... how do you REALLY feel?).
Prosecutors have demanded trading records as part of a probe that has ensnared several hedge-fund managers, including Galleon Group founder Raj Rajaratnam.
The U.S. Attorney's office in Manhattan has alleged Mr. Rajaratnam was at the center of a massive insider-trading ring that generated millions of dollars in improper trades. Mr. Rajaratnam has denied wrongdoing.
The SEC move came as President Barack Obama is making a final push for financial reform in the Senate next week. “Wall Street titans still recklessly speculate with borrowed money,” he told supporters. “We cannot delay action any longer.”
And this explains the sudden ploy by President Obama to throw his cronies at "Government Sachs" under the bus. It's 2010, and the elections are coming up. How better to show the American people that you have their interests at heart? He's gotten what he can out of Goldman. They're no longer useful. No honor among thieves!
Suddenly, the market impression of GS has taken an extreme turn for the worse. Not only has its stock plunged, but now market fears that the cumulative effects of the SEC and the private lawsuits will imperil Goldman's excellent credit-worthiness.
The cost of insuring Goldman Sachs’ debt against default has risen to about the level of Morgan Stanley and Citigroup, two less profitable rivals, as Goldman’s regulatory woes take a toll on investors’ confidence and its standing on Wall Street.
Credit Default Swaps (CDSs) leapt to 160 basis points yesterday, a real market sign that this is no slap on the wrist, but a real threat to the most corrupt institution in the world. Couldn't happen to a better bunch of guys! And that's how I REALLY feel!
Marko's Take
Our newest video entitled "Social In-Security: The Problem" will be uploaded in the next 24 hours. You can access all our videos by clicking here: http://www.youtube.com/markostaketv.
With so many allegations and opinions flying about, it's easy to get confused as to exactly what prompted the SEC complaint and how it relates to the Obama Administration's formerly cozy relationship with Government Sachs.
Goldman was accused of fraud by the Securities and Exchange Commission (SEC) in a lawsuit filed April 16. The SEC claims Goldman duped investors in a Collateralized Debt Obligation (CDO) called Abacus 2007-AC1, by failing to disclose that it was created with the help of hedge-fund firm Paulson & Co., which made a profit of about $1 billion when the investment collapsed in value. John Paulson became an overnight celebrity within the investment community by virtue of his huge score shorting the real estate market.
The CDO is a bet against the value of mortgages and the housing market overall. The securities themselves were allegedly created specifically to give hedge fund manager John Paulson a means to profit from the real estate meltdown. Goldman, for its part, put its own clients into these CDO's, which defaulted in droves.
Paulson and Goldman got rich as America and the world got poor.
Warren Buffett, the richest man in America, and the most hypocritical man in America, sees ABSOLUTELY NOTHING WRONG! Why should he? His investment in Goldman, made at terms not available to anyone BUT him, is in the money. What him worry? (But Marko... how do you REALLY feel?).
Goldman's defense filing included copies of six lawsuits, as well as a "demand letter" from the Louisiana Municipal Police Employees Retirement System, that the company's board launch an internal probe of "officers and directors responsible for the Abacus 2007-AC1 incident."
In addition, Goldman clients are up in arms, believing not only that they had been misled, but that GS used its trading operation to benefit itself at their expense. Goldman, trade against its clients for its own profit? You're kidding, right? NOT! (But Marko... how do you REALLY feel?).
Prosecutors have demanded trading records as part of a probe that has ensnared several hedge-fund managers, including Galleon Group founder Raj Rajaratnam.
The U.S. Attorney's office in Manhattan has alleged Mr. Rajaratnam was at the center of a massive insider-trading ring that generated millions of dollars in improper trades. Mr. Rajaratnam has denied wrongdoing.
The SEC move came as President Barack Obama is making a final push for financial reform in the Senate next week. “Wall Street titans still recklessly speculate with borrowed money,” he told supporters. “We cannot delay action any longer.”
And this explains the sudden ploy by President Obama to throw his cronies at "Government Sachs" under the bus. It's 2010, and the elections are coming up. How better to show the American people that you have their interests at heart? He's gotten what he can out of Goldman. They're no longer useful. No honor among thieves!
Suddenly, the market impression of GS has taken an extreme turn for the worse. Not only has its stock plunged, but now market fears that the cumulative effects of the SEC and the private lawsuits will imperil Goldman's excellent credit-worthiness.
The cost of insuring Goldman Sachs’ debt against default has risen to about the level of Morgan Stanley and Citigroup, two less profitable rivals, as Goldman’s regulatory woes take a toll on investors’ confidence and its standing on Wall Street.
Credit Default Swaps (CDSs) leapt to 160 basis points yesterday, a real market sign that this is no slap on the wrist, but a real threat to the most corrupt institution in the world. Couldn't happen to a better bunch of guys! And that's how I REALLY feel!
Marko's Take
Our newest video entitled "Social In-Security: The Problem" will be uploaded in the next 24 hours. You can access all our videos by clicking here: http://www.youtube.com/markostaketv.
Monday, May 3, 2010
Asian Inflation Contagion?
While reported inflation figures in the United States and Europe remain tame, they are exploding in Asia. As we've discussed in prior blogs, China appears to be in the midst of a property bubble amid booming economic growth.
South Korea and Indonesia reported higher-than-expected inflation this morning, one day after China raised banking reserve requirements in an attempt to cool its overheating economy. In a sign that inflation is firmly taking root, core prices, which exclude volatile food and energy, are ticking up.
Australia, like China, is experiencing a rapid increase in property prices.
Australia reported today that housing prices rose 4.8% in the 1st quarter from the end of 2009 and are up 20% in its 8 large cities from the year earlier. The news, which heightened concerns that a bubble has formed there, may forsage a rise in interest rates when the Reserve Bank of Australia meets tomorrow.
Australian propety prices are vaulting upward with a 27.7% annual increase in Melbourne, 21% in Sydney and 15% in Perth.
Asia's economies are running at breakneck speed. Other indicators released today included positive readings in purchasing managers' indexes in Taiwan, Australia, South Korea and India. Retail sales in Hong Kong were strong.
South Korea's consumer price index rose 2.6% in April from a year earlier and 0.5% from the previous month. Core prices rose 1.5% in April from the previous year and 0.2% from March.
Indonesia said consumer prices there rose 3.9% from the year earlier period, while core inflation rose 3.7%. Thailand reported consumer prices rose 3% in April. Core inflation rose a modest 0.5% from the year before.
Countries experiencing double-digit annualized inflation include India, Turkey and Iceland.
One of the highest inflation readings is being experienced in Vietnam, with inflation exploding at an annual rate of 25% in April. The only exception in the region is Japan, which continues to be mired in deflation.
So, while the West has not YET seen the full impact of the un-precedented stimulus spending in prices, it will undoubtedly follow in Asia's footsteps, especially in light of the extended period of negative "real" interest rates (interest rates minus inflation).
With the backdrop of rising world inflation this can only be a major positive factor for GOLD. We continue to maintain our position that the hyperbolic growth phase for GOLD has begun and leaves plenty of time for investors to get on board.
Marko's Take
Please visit us on YouTube at http://www.youtube.com/markostaketv. Our newest video blog on Social Security, titled "Social In-Security: The Problem" will be loaded shortly. That will be followed by "Social In-Security: The Solution".
South Korea and Indonesia reported higher-than-expected inflation this morning, one day after China raised banking reserve requirements in an attempt to cool its overheating economy. In a sign that inflation is firmly taking root, core prices, which exclude volatile food and energy, are ticking up.
Australia, like China, is experiencing a rapid increase in property prices.
Australia reported today that housing prices rose 4.8% in the 1st quarter from the end of 2009 and are up 20% in its 8 large cities from the year earlier. The news, which heightened concerns that a bubble has formed there, may forsage a rise in interest rates when the Reserve Bank of Australia meets tomorrow.
Australian propety prices are vaulting upward with a 27.7% annual increase in Melbourne, 21% in Sydney and 15% in Perth.
Asia's economies are running at breakneck speed. Other indicators released today included positive readings in purchasing managers' indexes in Taiwan, Australia, South Korea and India. Retail sales in Hong Kong were strong.
South Korea's consumer price index rose 2.6% in April from a year earlier and 0.5% from the previous month. Core prices rose 1.5% in April from the previous year and 0.2% from March.
Indonesia said consumer prices there rose 3.9% from the year earlier period, while core inflation rose 3.7%. Thailand reported consumer prices rose 3% in April. Core inflation rose a modest 0.5% from the year before.
Countries experiencing double-digit annualized inflation include India, Turkey and Iceland.
One of the highest inflation readings is being experienced in Vietnam, with inflation exploding at an annual rate of 25% in April. The only exception in the region is Japan, which continues to be mired in deflation.
So, while the West has not YET seen the full impact of the un-precedented stimulus spending in prices, it will undoubtedly follow in Asia's footsteps, especially in light of the extended period of negative "real" interest rates (interest rates minus inflation).
With the backdrop of rising world inflation this can only be a major positive factor for GOLD. We continue to maintain our position that the hyperbolic growth phase for GOLD has begun and leaves plenty of time for investors to get on board.
Marko's Take
Please visit us on YouTube at http://www.youtube.com/markostaketv. Our newest video blog on Social Security, titled "Social In-Security: The Problem" will be loaded shortly. That will be followed by "Social In-Security: The Solution".
Sunday, May 2, 2010
Greece Austerity Deal Fuels Civil Unrest
It was bound to happen. As details of a widely anticipated plan to impose severe austerity measures were agreed to in exchange for a massive bailout by the European Union (EU) and the International Monetary Fund (IMF), violent protests broke out in Greece.
The entirety of the three-year IMF-EU package is expected to be announced in Brussels after an emergency Euro-Zone finance ministers' meeting. The aggregate amount is thought to be in the range of the previously reported figures of 120 billion Euros or $160 billion.
It remains unclear whether Sunday's meeting in Brussels will be enough to give final approval for Athens to start receiving the money or whether a summit of Euro-Zone heads of government will be required. In addition, stiff domestic disapproval in Germany and Greece remains a major stumbling block to any deal.
Under the austerity plan, annual holiday bonuses will be limited to 1,000 Euros ($1,330) per year for civil servants and completely eliminated for those with gross monthly salaries over 3,000 Euros ($3,995). Pensioners' bonuses will also be capped at 800 Euros and canceled for those paid more than 2,500 Euros ($3,330). Salary cuts will not extend to the private sector.
Taxes would also be increased, including further hikes on fuel, alcohol and tobacco. The top bracket of sales tax rises from 21% to 23%.
Finance Minister Papaconstantinou said his country's debt would reach 140 % of GDP in 2013 and start falling from 2014, while economic output is projected to contract by 4% in 2010 and by 2.6% in 2011 before it starts recovering slowly beginning in 2012.
MAY DAY protests in Greece turned violent yesterday as youths in gas masks and hoods set fire to vehicles, smashed shop fronts and threw Molotov cocktails and rocks at police in an explosion of fury over austerity measures they claim will hurt only the poor.
The violence came as negotiations were concluding between the socialist government of George Papandreou, the IMF and the EU over the rescue package.
Even greater social unrest is anticipated as resentment simmers among poorer families who are being told to tighten their belts when wealthy Greeks can protect their fortunes by moving their money abroad, some of it into property bargains in London.
Resentment among Greeks as being lazy and corrupt has hardened into outrage at Germany, whose leaders complain that the Mediterranean country should never have been allowed into Europe. Greeks were particularly angered by German suggestions that they sell their islands to pay off the debt.
German Chancellor Angela Merkel insisted on making the International Monetary Fund (IMF) part of any rescue and made German aid contingent on bolder austerity steps from Athens, delaying the rescue and underscoring deep divisions in the bloc.
The time remaining to complete the rescue is running out. Greece has nearly $10 billion in debt due by May 19, or risks default. While a solution is getting closer to being achieved, it is in no way a done deal. And, even if a deal is consummated, there is no way to be certain whether it will prove to be nothing more than a temporary fix.
Marko's Take
Please visit on YouTube at http://www.youtube/markostaketv. Our newest video, entitled "Social In-Security: The Problem will be posted shortly.
The entirety of the three-year IMF-EU package is expected to be announced in Brussels after an emergency Euro-Zone finance ministers' meeting. The aggregate amount is thought to be in the range of the previously reported figures of 120 billion Euros or $160 billion.
It remains unclear whether Sunday's meeting in Brussels will be enough to give final approval for Athens to start receiving the money or whether a summit of Euro-Zone heads of government will be required. In addition, stiff domestic disapproval in Germany and Greece remains a major stumbling block to any deal.
Under the austerity plan, annual holiday bonuses will be limited to 1,000 Euros ($1,330) per year for civil servants and completely eliminated for those with gross monthly salaries over 3,000 Euros ($3,995). Pensioners' bonuses will also be capped at 800 Euros and canceled for those paid more than 2,500 Euros ($3,330). Salary cuts will not extend to the private sector.
Taxes would also be increased, including further hikes on fuel, alcohol and tobacco. The top bracket of sales tax rises from 21% to 23%.
Finance Minister Papaconstantinou said his country's debt would reach 140 % of GDP in 2013 and start falling from 2014, while economic output is projected to contract by 4% in 2010 and by 2.6% in 2011 before it starts recovering slowly beginning in 2012.
MAY DAY protests in Greece turned violent yesterday as youths in gas masks and hoods set fire to vehicles, smashed shop fronts and threw Molotov cocktails and rocks at police in an explosion of fury over austerity measures they claim will hurt only the poor.
The violence came as negotiations were concluding between the socialist government of George Papandreou, the IMF and the EU over the rescue package.
Even greater social unrest is anticipated as resentment simmers among poorer families who are being told to tighten their belts when wealthy Greeks can protect their fortunes by moving their money abroad, some of it into property bargains in London.
Resentment among Greeks as being lazy and corrupt has hardened into outrage at Germany, whose leaders complain that the Mediterranean country should never have been allowed into Europe. Greeks were particularly angered by German suggestions that they sell their islands to pay off the debt.
German Chancellor Angela Merkel insisted on making the International Monetary Fund (IMF) part of any rescue and made German aid contingent on bolder austerity steps from Athens, delaying the rescue and underscoring deep divisions in the bloc.
The time remaining to complete the rescue is running out. Greece has nearly $10 billion in debt due by May 19, or risks default. While a solution is getting closer to being achieved, it is in no way a done deal. And, even if a deal is consummated, there is no way to be certain whether it will prove to be nothing more than a temporary fix.
Marko's Take
Please visit on YouTube at http://www.youtube/markostaketv. Our newest video, entitled "Social In-Security: The Problem will be posted shortly.
Saturday, May 1, 2010
First Quarter GDP Shows Recovery... But How Real Is It?
Yesterday, the preliminary estimate of 1st quarter Gross Domestic Product (GDP) was released, indicating an annualized growth rate of 3.2% - down from the 5.6% annualized rate for the 4th quarter of 2009. Within minutes, officials of the Obama Administration were all over the media declaring the recession over and trumpeting the efficacy of their various stimulus plans. Strangely, after blaming the weather for the lack of job growth in recent months, they failed to credit the weather for the excellent economic news.
As with any government economic report, the headline number is a facade to the real story underneath. Worry not. Marko's Take, along with our staff of experts, is here to dissect the report and reveal the truth as to what's really taking place.
Spending by consumers rose at a 3.6% rate, more than double the 4th quarter pace and faster than any quarter in the past three years. But half the quarter's growth came from firms rebuilding inventories.
Consumer spending, which accounts for about 70% of the demand in the economy, remains the key. Consumer confidence has improved quite a bit from the bottom of the financial crisis, but remains depressed. The University of Michigan's Consumer Sentiment Index, released Friday, dropped slightly to 72.2 in April from 73.6 in March — and was well below the pre-recession levels, which exceeded 90.
Friday's data showed reported inflation remains tame, even as the economy climbs out of recession. The Federal Reserve's preferred gauge, the price index for Personal Consumption Expenditures, or the PCE deflator, excluding food and energy, rose an annualized 0.6% in the 1st quarter, compared with the 4th quarter's 1.8%. The Labor Department's employment cost index, the broadest measure of wages and benefits, rose 0.6% in the first quarter from the fourth, and was 1.7% higher than a year earlier.
Long-time readers know that we are not only highly skeptical of any economic new emanating from Washington, but that we can see right through the BS. Fortunately, we have the brilliant Dr. Williams and his fantastic site ShadowStats (http://www.shadowstats.com/) to assist us in this endeavor.
According to ShadowStats, the Alternate-GDP estimate for first-quarter 2010 was an approximate annual CONTRACTION of 1.5%. This reflects the bottom-bouncing at low levels of activity seen for much of the last year in key underlying economic series, not an economic recovery.
More disturbing is the analysis performed by Dr. Williams on the Money Supply. With just more than two weeks of reporting on April money supply, weekly contractions in M2 (institutional money funds and large time deposits) suggest that the pace of decline in the broader M3 is accelerating, with the nominal year-to-year change reflecting a record annual decline of roughly 4.8% in April, versus a decline of roughly 3.7% in March, if weekly reporting showed no further changes for the balance April.
According to Dr. Williams, real year-to-year change appears likely to deteriorate from a 5.8% contraction in March to an unprecedented reading of a 7% annual decline. Contracting annual growth in broad money supply nearly always precedes decelerating economic activity.
The contraction is money supply aggregates also signals systemic difficulties in the banking system. A properly functioning U.S. banking system would be lending increasing amounts of money, not contributing to a slow downward spiral in consumer and business credit outstanding and a pending renewed decline in economic activity.
The best way to really gauge what's going on is to pay attention to what you see anecdotally. Are you having trouble keeping up? Are your friends and family struggling? Are you paying more for food and gas and critical goods? These are better indicators than what Washington reports. Ultimately, if the "good" news is helping you, that what "good" is it?
Marko's Take
The California Wildlife Center is having a 5K walk on Sunday, May 2nd in Malibu. I'll be there, with my fellow "whacko-tarians". For more information on this wonderful organization and cause, please click here http://www.californiawildlifecenter.org/.
As with any government economic report, the headline number is a facade to the real story underneath. Worry not. Marko's Take, along with our staff of experts, is here to dissect the report and reveal the truth as to what's really taking place.
Spending by consumers rose at a 3.6% rate, more than double the 4th quarter pace and faster than any quarter in the past three years. But half the quarter's growth came from firms rebuilding inventories.
Consumer spending, which accounts for about 70% of the demand in the economy, remains the key. Consumer confidence has improved quite a bit from the bottom of the financial crisis, but remains depressed. The University of Michigan's Consumer Sentiment Index, released Friday, dropped slightly to 72.2 in April from 73.6 in March — and was well below the pre-recession levels, which exceeded 90.
Friday's data showed reported inflation remains tame, even as the economy climbs out of recession. The Federal Reserve's preferred gauge, the price index for Personal Consumption Expenditures, or the PCE deflator, excluding food and energy, rose an annualized 0.6% in the 1st quarter, compared with the 4th quarter's 1.8%. The Labor Department's employment cost index, the broadest measure of wages and benefits, rose 0.6% in the first quarter from the fourth, and was 1.7% higher than a year earlier.
Long-time readers know that we are not only highly skeptical of any economic new emanating from Washington, but that we can see right through the BS. Fortunately, we have the brilliant Dr. Williams and his fantastic site ShadowStats (http://www.shadowstats.com/) to assist us in this endeavor.
According to ShadowStats, the Alternate-GDP estimate for first-quarter 2010 was an approximate annual CONTRACTION of 1.5%. This reflects the bottom-bouncing at low levels of activity seen for much of the last year in key underlying economic series, not an economic recovery.
More disturbing is the analysis performed by Dr. Williams on the Money Supply. With just more than two weeks of reporting on April money supply, weekly contractions in M2 (institutional money funds and large time deposits) suggest that the pace of decline in the broader M3 is accelerating, with the nominal year-to-year change reflecting a record annual decline of roughly 4.8% in April, versus a decline of roughly 3.7% in March, if weekly reporting showed no further changes for the balance April.
According to Dr. Williams, real year-to-year change appears likely to deteriorate from a 5.8% contraction in March to an unprecedented reading of a 7% annual decline. Contracting annual growth in broad money supply nearly always precedes decelerating economic activity.
The contraction is money supply aggregates also signals systemic difficulties in the banking system. A properly functioning U.S. banking system would be lending increasing amounts of money, not contributing to a slow downward spiral in consumer and business credit outstanding and a pending renewed decline in economic activity.
The best way to really gauge what's going on is to pay attention to what you see anecdotally. Are you having trouble keeping up? Are your friends and family struggling? Are you paying more for food and gas and critical goods? These are better indicators than what Washington reports. Ultimately, if the "good" news is helping you, that what "good" is it?
Marko's Take
The California Wildlife Center is having a 5K walk on Sunday, May 2nd in Malibu. I'll be there, with my fellow "whacko-tarians". For more information on this wonderful organization and cause, please click here http://www.californiawildlifecenter.org/.
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