May 2009 – Page 2 – Infinite Unknown

China warns the Federal Reserve over printing money

May 26, 2009 by Infinite

The U.S. is totally broke:

Richard Fisher, president of the Dallas Federal Reserve Bank:
The“very big hole” in unfunded pension and health-care liabilities is over $99 trillion.

Of course China is worried about the Fed purchasing Treasuries, because this is creating pure inflation, which destroys the value of China’s investment. Also the Treasury bubble has burst, which is really bad news for anybody investing in Treasuries. This crisis has just started. The worst is yet to come: A hyperinflationary depression, the ‘Greatest Depression’.

China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed’s direct purchase of US Treasury bonds.

Richard Fisher, president of the Dallas Federal Reserve Bank, said: “Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature.”

“I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States,” he told the Wall Street Journal.

His recent trip to the Far East appears to have been a stark reminder that Asia’s “Confucian” culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons.

Porsche $24 Billion of Options Profit in Peril as Volkswagen Fights Merger

May 26, 2009 by Infinite

porsche
Porsche automobiles sit lined up in the Porsche Forum in Stuttgart-Zuffenhausen, Germany on Nov. 25, 2008. Photographer: Hannelore Foerster/Bloomberg News

May 26 (Bloomberg) — Porsche SE, struggling to combine with Volkswagen AG, is in danger of losing some of the 17.3 billion euros ($24.3 billion) in profits recorded from holding VW options because it may not have the money to exercise them.

Porsche bought options and Volkswagen stock for more than three years and controls more than 70 percent of Europe’s biggest automaker. Now, Stuttgart, Germany-based Porsche may be unable to raise the money needed to cash in the options, according to research by Sanford C. Bernstein & Co., Sal. Oppenheim jr. & Cie. and FAIResearch GmbH & Co.

The 78-year-old maker of the 911 sports car piled up more than 9 billion euros in debt and hasn’t been able to raise the financing even after the options contracts surged in value along with the sevenfold gain in VW shares since 2005, according to the analysts. Porsche is attempting to negotiate a merger with Volkswagen and seek an investor to provide cash after its bid last year fell apart when VW’s home state of Lower Saxony vetoed the proposal and its car deliveries fell 27 percent in the six months ended Jan. 31.

Porsche on the financial brink

May 26, 2009 by Infinite

German car maker Porsche is struggling to raise €1.75bn (£1.54bn) to cover debts and unwind derivative positions stemming from its botched attempt to take over vastly-bigger Volkswagen.

Porsche’s shares fell 3.1pc in Frankfurt on Monday after it emerged that the company had obtained a €700bn loan from Volkswagen as long ago as March. A Porsche spokesman said the group is negotiating bridging finance with a variety of banks, including the state lender KfW.

It is understood that Porsche is also in talks with the Bank of Tokyo for a €750m loan, and is seeking help from the regional government of Baden-Wurttemberg.

The crisis is yet another headache for the German authorities as they put together a rescue deal this week for Opel, most likely with Fiat. Separately, the hotel and retail group Arcandor said it faced collapse without a €650m state bail-out. Arcandor’s share price fell 20pc. The company owns the Karstadt department stores, Quelle, and Thomas Cook. It employs 50,000 workers.

Porsche acquired a 51pc share of VW earlier this year after a series of derivatives deals that tripled Porsche’s debt to €9bn.

The takeover bid went badly wrong, forcing Porsche chief Ferdinand Piech to press instead for a merger of the two car makers on increasingly less favourable terms.

California’s day of reckoning is a warning for Europe

May 26, 2009 by Infinite

California ‘IS’ broke and the US ‘IS’ broke too.

California is the salad bowl in which the world serves up its more exotic lifestyle experiments. Mix sunshine with self-indulgence and dress it with surf-wear and you get a glimpse of how we might live in the future – if we could only afford the plastic surgery.

Unfortunately, it appears that even Californians can no longer afford the lifestyle of the Valley Girl.

The Golden State is almost bust, but its inhabitants, even if they believe it, do not want to know and they certainly do not want to pay for it. The state has been running huge budget deficits for years; the till in Sacramento, the state capital, is now empty and the last-ditch attempt by Arnold Schwarzenegger, the Governor, to balance the books with a series of tax increases and budgetary shuffles was roundly rejected by voters in referendums a week ago.

With a $21 billion (£13 billion) deficit and the lowest credit rating of any American state, the choices are few and grim. California cannot hope to borrow such large sums, except at extortionate rates, which leaves the option of massive cuts in public spending – the sacking of thousands of teachers.

California could run out of cash in a few months. Mr Schwarzenegger has already warned that 5,000 state employees face being fired. The state education budget is in line for a $5 billion cut, alongside the end of funding for parks and the closure of at least one state agency.

Former Senior Interrogator in Iraq Dissects Cheney’s Lies and Distortions

May 26, 2009 by Infinite

By Matthew Alexander: Led the interrogations that found Zarqawi; author of “How to Break a Terrorist”

As a senior interrogator in Iraq (and a former criminal investigator), there was a lesson I learned that served me well: there’s more to be learned from what someone doesn’t say than from what they do say. Let me dissect former Vice President Dick Cheney’s speech on National Security using this model and my interrogation skills.

First, VP Cheney said, “This recruitment-tool theory has become something of a mantra lately… it excuses the violent and blames America for the evil that others do.” He further stated, “It is much closer to the truth that terrorists hate this country precisely because of the values we profess and seek to live by, not by some alleged failure to do so.” That is simply untrue. Anyone who served in Iraq, and veterans on both sides of the aisle have made this argument, knows that the foreign fighters did not come to Iraq en masse until after the revelations of torture and abuse at Abu Ghraib and Guantanamo Bay. I heard this from captured foreign fighters day in and day out when I was supervising interrogations in Iraq. What the former vice president didn’t say is the fact that the dislike of our policies in the Middle East were not enough to make thousands of Muslim men pick up arms against us before these revelations. Torture and abuse became Al Qaida’s number one recruiting tool and cost us American lives.

Secondly, the former vice president, in saying that waterboarding is not torture, never mentions the fact that it was the United States and its Allies, during the Tokyo Trials, that helped convict a Japanese soldier for war crimes for waterboarding one of Jimmie Doolittle’s Raiders. Have our morals and values changed in fifty years? He also did not mention that George Washington and Abraham Lincoln both prohibited their troops from torturing prisoners of war. Washington specifically used the term “injure” — no mention of severe mental or physical pain.

Thirdly, the former vice president never mentioned the Senate testimony of Ali Soufan, the FBI interrogator who successfully interrogated Abu Zubaydah and learned the identity of Jose Padilla, the dirty bomber, and the fact that Khalid Sheikh Mohammad (KSM) was the mastermind behind 9/11. We’ll never know what more we could have discovered from Abu Zubaydah had not CIA contractors taken over the interrogations and used waterboarding and other harsh techniques. Also, glaringly absent from the former vice president’s speech was any mention of the fact that the former administration never brought Osama bin Laden to justice and that our best chance to locate him would have been through KSM or Abu Zubaydah had they not been waterboarded.

EVIDENCE OF GOVERNMENT MANIPULATION OF THE STOCK MARKET (Fox Business News)

May 26, 2009 by Infinite

Everybody knows seems to know that the stock market is manipulated. The government, the Federal Reserve and the banksters are ruled by the elite. Corruption and criminals rule.

Flashback:
– Former Assistant Secretary of Housing: The U.S. is the Global Leader in Illegal Money Laundering
– Former Assistant Secretary of the Treasury Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression

With 2 minutes 30 seconds remaining in the video, Dan Shaffer, President of Shaffer Asset Management, gives shocking evidence of direct government intervention in the stock market:

“Something strange happened during the last 7 or 8 weeks. Doreen you probably can concur on this — there was a power underneath the market that kept holding it up and trading the futures. I watch the futures every day and every tick, and a tremendous amount of volume came in a several points during the last few weeks, when the market was just about ready to break, and it shot right up again. Usually toward the end of the day – it happened a week ago Friday, at 7 minutes to 4 o’clock, almost 100,000 S&P futures contracts were traded, and then in the last 5 minutes, up to 4 o’clock, another 100,000 contracts were traded, and lifted the Dow from being down 18 to up over 44 or 50 points in 7 minutes. That is 10 to 20 billion dollars to be able to move the market in such a way. Who has that kind of money to move this market?

On top of that, the market has rallied up during the stress test uncertainty and moved the bank stocks up, and the bank stocks issued secondaries – they issues stock – they raised capital into this rally. It was perfect text book setup of controlling the markets – now that the stock has been issued…” [interrupted by Richard Suttmeier].

Source: myprops

The perfect commercial real estate storm: NO NEW LEASE ON TRILLIONS IN DEBT

May 25, 2009 by Infinite

TRILLIONS IN COMMERCIAL REAL ESTATE LOANS ARE COMING DUE

General Growth Properties
KEY ASSET: South Street Seaport

A trillion-dollar storm is gathering over the commercial real estate landscape that’s threatening to add further pain to an already bruised US economy.

At the center of the worries is some $3.5 trillion in debt backed by everything from strip malls to offices and apartments across the nation — the lion’s share of which is badly underwater because this recession followed a five-year commercial property boom fueled by easy money and loose underwriting standards.

Now the owners of the less-than-full malls, apartment complexes and office buildings are succumbing to the worst economic collapse since the Great Depression — because they can’t refinance the debt.

The commercial debt securitization market is dead.

Top billionaire club in bid to curb overpopulation

May 25, 2009 by Infinite

The elitists are discussing the most effective ways to kill you.

America’s richest people meet to discuss ways of tackling a ‘disastrous’ environmental, social and industrial threat

SOME of America’s leading billionaires have met secretly to consider how their wealth could be used to slow the growth of the world’s population and speed up improvements in health and education.

The philanthropists who attended a summit convened on the initiative of Bill Gates, the Microsoft co-founder, discussed joining forces to overcome political and religious obstacles to change.

Described as the Good Club by one insider it included David Rockefeller Jr, the patriarch of America’s wealthiest dynasty, Warren Buffett and George Soros, the financiers, Michael Bloomberg, the mayor of New York, and the media moguls Ted Turner and Oprah Winfrey.

Related article: Ted Turner Repeats Call For Population Curb

These members, along with Gates, have given away more than £45 billion since 1996 to causes ranging from health programmes in developing countries to ghetto schools nearer to home.

Red alert across Asia: North Korea tests nuclear bomb in underground bunker

June 29, 2009May 25, 2009 by Infinite

North Korea triggered a red alert across Asia this morning, after it carried out a nuclear weapon test and fired a short-range missile.

North Korean leader Kim Jong Il’s decision to renew nuclear tests has caused international condemnation Photo: AFP/Getty Images

Tremors from a 4.7 magnitude artificial earthquake were detected just before ten o’clock local time, after North Korea detonated a bomb in a bunker six miles underground.

The rogue state, which had previously tested a nuclear weapon in October 2006, boasted that its latest test was more powerful “in terms of its explosive power” and more technologically-advanced.

“We successfully conducted another underground nuclear test on May 25 as part of measures aimed at strengthening our self-defence nuclear deterrent in every way,” said the state-run North Korean news wire.

The test will “contribute to safeguarding our sovereignty and socialism and guaranteeing peace and safety on the Korean peninsula and the surrounding region,” it added.

Top billionaires hold secret meeting

May 25, 2009 by Infinite

Bill Gates, George Soros, Oprah Winfrey, Warren Buffett, Ted Turner among philanthropists at gathering in New York

In a quiet meeting closed to the news media and the public, Bill Gates, David Rockefeller Sr., Oprah Winfrey and other leading philanthropists met in New York this month to discuss ways to promote efforts to solve growing social problems in America and abroad.

Together, the philanthropists in the room have committed a total of more than $72.5 billion to charitable causes since 1996, according to Chronicle of Philanthropy tallies.

The unusual event was held May 5 at Rockefeller University and was organized by the Bill & Melinda Gates Foundation. Among the high-profile participants were Ted Turner, Warren E. Buffett, George Soros and New York City Mayor Michael R. Bloomberg. (All of those philanthropists have appeared at one time on The Chronicle’s ranking of America’s most-generous donors.)

Several of the people at the meeting confirmed their involvement, but declined to tell The Chronicle about what was discussed or why they gathered almost in secret.

According to a person familiar with the meeting, the wealthy philanthropists gathered to trade ideas about how to raise the level of philanthropy in the world.

Red Bull Cola banned for containing cocaine

May 25, 2009 by Infinite

red-bull-cocaine

Authorities in the German states of Hesse and North-Rhine Westphalia have ordered retailers to stop selling Red Bull Cola after they found traces of cocaine in the fizzy drink.

The consumer ministries in the two states confirmed on Friday they had ordered retailers to pull the drink off their shelves after a food safety institute in North-Rhine Westphalia found cocaine in samples of the beverage.

“The institute examined Red Bull Cola in an elaborate chemical process and found traces of cocaine,” Bernhard Kühnle, head of the food safety department at the federal ministry for consumer protection said.

Authorities said the cocaine levels do not pose a health threat but are not permitted in foodstuffs.

The Frankfurter Neuen Presse reported that the investigation was prompted by the use of a de-cocainized extract of coca leaf in the drink. That means the drink cannot be classified as a foodstuff but as a narcotic and needs a special license, authorities said.

Obushma-Biney in the Home of the Frightened

June 29, 2009May 24, 2009 by Infinite

By Willem Buiter:

Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.

The spinelessness and moral cowardice of the Obama administration know no bounds. The Bush-Cheney team ordered the torture and abuse of prisoners in Guantánamo Bay Naval Base and assorted other locations abroad – offshore detention without trial as well as torture by US officials or persons acting under their instructions being permitted by Article VIII of the United States Constitution, as confirmed in the XXVIIIth Amendment to the US Constitution.

Candidate Obama declares he abhors torture and deplores what went on in Gitmo and in secret detention centres around the world, but President Obama decides that the Camp may have to remain open for another year, as he doesn’t seem to know what to do with the prisoners. The right thing to do would have been to send a plane to Guantánamo Bay Naval Base on the day of his inauguration, to move all the prisoners to the USA.

President Obama then also decides not to prosecute those who committed the crimes of torture or abuse of prisoners or were responsible for these crimes. The president’s excuse was was that he sought to turn the page on “a dark and painful chapter”. It was a “time for reflection, not for retribution”, he said.

He is quite wrong. Reflection complements the law. It is not a substitute for it. Those who can be charged with these offences should be tried and, if found guilty, punished according to the law. If among the guilty parties are CIA agents and former vice-president Dick Cheney, then so be it. If you cannot do the time, you should not do the crime. This is not vengeance, it is justice – and it is the law. Justice must be done and must be seen to be done before healing and reconciliation can start.

World’s top hedge fund manager has a gold position of at least $5.5bn

May 24, 2009 by Infinite

My prediction for the future is that gold will be at least at $2000/oz within one year from now.

Just look at the increase of the money supply in the US to realize that this is – per definition – not a deflation scenario.

The greatest financial collapse in history will be a hyperinflationary depression.

The ‘Greatest Depression’ is here. Got gold … and silver (plus food and water for several months)?

China has doubled its bullion reserves and left us in no doubt that it will spend more of its $40bn monthly surplus on hard assets rather than the toxic paper of Western democracies.

gold-bars

The world’s top hedge fund manager John Paulson has built a gold position of at least $5.5bn, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993.

Britain has become the first of the Anglo-Saxon “AAA” club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores.

Gold prices tend to slide in late May and languish through the summer, because of the seasonal ups and downs of jewellery demand. The trader reflex would be to short gold at this stage after its $90 vault to $959 an ounce over the past month. They may think again this year.

Paulson & Co has bought $2.9bn in SPDR Gold Trust, the biggest of the gold exchange traded funds (ETFs), which now holds 1106 tonnes – three times the Brown-gutted reserves of the United Kingdom.

Mr Paulson has also built up a $2.3bn holding of Anglo Ashanti, Goldfields, Kinross Gold, and Market Vectors Gold Miners. The fact that he is launching a “Paulson Real Estate Recovery Fund”, reversing the bet against sub-prime securities that made him rich, tells us all we need to know about his thinking. This is a liquidity-reflation play.

Senator Feingold: Prolonged detention would set the stage for future Guantanamos

May 24, 2009 by Infinite

Senator Russ Feingold (D-WI) has sent a letter (pdf) to President Barack Obama which praises many aspects of his Thursday speech but also expresses concerns about his intention to create a system of “prolonged detention” without trial for certain terrorists.

Feingold announces in the letter that he plans to hold a hearing on the matter next month and asks for top Justice Department officials to testify.

“While I appreciate your good faith desire to at least enact a statutory basis for such a regime,” Feingold writes, “any system that permits the government to indefinitely detain individuals without charge or without a meaningful opportunity to have accusations against them adjudicated by an impartial arbiter violates basic American values and is likely unconstitutional.”

Feingold goes on to note that “such detention is a hallmark of abusive systems that we have historically criticized around the world. It is hard to imagine that our country would regard as acceptable a system in another country where an individual other than a prisoner of war is held indefinitely without charge or trial.”

“Once a system of indefinite detention without trial is established, the temptation to use it in the future would be powerful,” Feingold continues. “And, while your administration may resist such a temptation, future administrations may not.”

“There is a real risk, then, of establishing policies and legal precedents that rather than ridding our country of the burden of the detention facility at Guantanamo Bay, merely set the stage for future Guantanamos, whether on our shores or elsewhere, with disastrous consequences for our national security. “

RBS chiefs handed £5m in bonuses, paid by the taxpayer

May 24, 2009 by Infinite

rbs

ROYAL Bank of Scotland has handed four of its senior executives share bonuses worth close to £5m, risking fresh accusations of excessive executive pay at banks that had to be rescued by taxpayers.

Ellen Alemany, the head of the bank’s American business, could receive close to 6m shares in RBS under the bonus deal – worth £2.4m based on Friday’s closing price.

Three other senior executives have been promised shares under the scheme, including corporate banking bosses Alan Dickinson and Chris Sullivan, and the bank’s chief administration officer, Ron Teerlink.

Vince Cable, the deputy leader of the Liberal Democrats, described the awards as “completely unjustifiable” and “utterly unacceptable”.

“Without the billions poured into RBS by the taxpayer there would be no company,” Cable said. “This is not the right time for the bank to be awarding such bonuses – especially to senior staff.

“It was the senior executives who were ultimately responsible for RBS’s collapse. It’s the money poured in by the taxpayer that make these share awards so valuable.”

ON THE EDGE with Max Keiser: The Worst Is Yet to Come (05/22/09)

May 23, 2009May 23, 2009 by Infinite

This bear market rally is short lived. The Greatest Depression is here.

This is a MUST-SEE.

Insiders are dumping their stocks at an alarming rate.

1 of 2:

Source: YouTube

2 of 2:

Source: YouTube

Rachel Maddow: Indefinite detention? Shame on you … President Obama

May 23, 2009 by Infinite

Source: YouTube

Conservative radio hosts gets waterboarded, and lasts six seconds before saying its torture

May 23, 2009 by Infinite

What a genius !

Chicago radio host Erich “Mancow” Muller decided he’d get himself waterboarded to prove the technique wasn’t torture.

It didn’t turn out that way. “Mancow,” in fact, lasted just six or seven seconds before crying foul. Apparently, the experience went pretty badly — “Witnesses said Muller thrashed on the table, and even instantly threw the toy cow he was holding as his emergency tool to signify when he wanted the experiment to stop,” according to NBC Chicago.

“The average person can take this for 14 seconds,” Marine Sergeant Clay South told his audience before he was waterboarded on air. “He’s going to wiggle, he’s going to scream, he’s going to wish he never did this.”

Mancow was set on a 7-foot long table with his legs elevated and his feet tied.

“I wanted to prove it wasn’t torture,” Mancow said. “They cut off our heads, we put water on their face…I got voted to do this but I really thought ‘I’m going to laugh this off.’ “

The upshot? “It is way worse than I thought it would be, and that’s no joke,” Mancow told listeners. “It is such an odd feeling to have water poured down your nose with your head back…It was instantaneous…and I don’t want to say this: absolutely torture.”

“Absolutely. I mean that’s drowning,” he added later. “It is the feeling of drowning.”

“If I knew it was gonna be this bad, I would not have done it,” he said.

The 42-year-old radio host is no stranger to controversy. In 2005, he was maligned for saying that then-Democratic National Committee Chairman Howard Dean was “vile,” “bloodthirsty,” “evil” and “should be kicked out of America.”

Watch him be waterboarded in the following video:

And watch his response here:

John Byrne
Friday, May 22nd, 2009

Source: The Raw Story

Peter Schiff on CNBC (05/22/2009)

May 23, 2009 by Infinite

Source: YouTube

US Will Eventually Lose Its AAA Credit Rating: Bill Gross

May 23, 2009May 23, 2009 by Infinite

Geithner Pledges to Cut Deficit Amid Rating Concern

May 21 (Bloomberg) — Treasury Secretary Timothy Geithner said the Obama administration is committed to reducing the federal budget deficit after concerns rose that the U.S. debt rating may eventually be threatened with a downgrade.

“It’s very important that this Congress and this president put in place policies that will bring those deficits down to a sustainable level over the medium term,” Geithner said in an interview with Bloomberg Television. He added that the target is reducing the gap to 3 percent of gross domestic product or smaller, from a projected 12.9 percent this year.

The dollar, Treasuries and American stocks slumped today on concern about the U.S. government’s debt rating. Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said the U.S. “eventually” will lose its AAA grade.

Geithner, 47, also said that the rise in yields on Treasury securities this year “is a sign that things are improving” and that “there is a little less acute concern about the depth of the recession.”

Benchmark 10-year Treasury yields jumped 17 basis points to 3.37 percent at 4:53 p.m. in New York. The Standard & Poor’s 500 Stock Index fell 1.7 percent to 888.33, and the dollar tumbled 0.8 percent to $1.3890 per euro.

Gross’s Warning

Gross said in an interview today on Bloomberg Television that while a U.S. sovereign rating cut is “certainly nothing that’s going to happen overnight,” financial markets are “beginning to anticipate the possibility.”

Britain saw its own AAA rating endangered earlier today when Standard & Poor’s lowered its outlook on the nation’s grade to “negative” from “stable,” citing a debt level approaching 100 percent of U.K. GDP.

It’s “critically important” to bring down the American deficit, Geithner said.

Columbia Space Shuttle Investigation Cost $175 Million. Challenger Investigation Cost $100 Million. 9/11 Investigation Only Got $15 Million

May 23, 2009 by Infinite

Many people have written on the 9/11 Commission’s budgetary constraints. See this.

Want to Know has a great new summary of the Commission’s scandalously inadequate budget:

The 9/11 commission was originally allotted only $3 million. Eventually, after much begging and haggling, the commission was given $15 million. Yet a CNN article lists the cost of the Lewinsky investigation at $30 million. A Los Angeles Times article states the cost of the Columbia space shuttle disaster investigation was $175 million.

How could 9/11 – the greatest disaster in American history – be given such a small budget for investigation?

Remember, the Commissioners stated that government did everything it could to cover up and obstruct their investigation:

The Commission’s co-chairs said that the CIA (and likely the White House) “obstructed our investigation”

Indeed, they said that the 9/11 Commissioners knew that military officials misrepresented the facts to the Commission, and the Commission considered recommending criminal charges for such false statements (free subscription required)

9/11 Commissioner Bob Kerrey said that “There are ample reasons to suspect that there may be some alternative to what we outlined in our version . . . We didn’t have access . . . .”

9/11 Commissioner Timothy Roemer said “We were extremely frustrated with the false statements we were getting”

9/11 Commissioner Max Cleland resigned from the Commission, stating: “It is a national scandal”; “This investigation is now compromised”; and “One of these days we will have to get the full story because the 9-11 issue is so important to America. But this White House wants to cover it up”

The Senior Counsel to the 9/11 Commission (John Farmer) – who led the 9/11 staff’s inquiry – said “At some level of the government, at some point in time…there was an agreement not to tell the truth about what happened”. He also said “I was shocked at how different the truth was from the way it was described …. The tapes told a radically different story from what had been told to us and the public for two years…. This is not spin. This is not true.”

Given such a lack of cooperation, $15 million wasn’t enough to even start getting to the bottom of what happened. $15 million didn’t pay for much other than some press releases and the costs of printing reports. It certainly wasn’t enough to pay for real investigation or legal struggles to discover information which the government was stonewalling.

U.S. Treasury Blues: The Bond Bubble Has Burst

May 23, 2009May 22, 2009 by Infinite

If the bond bubble has burst, then the safe haven is gold and silver and not munis, because the US dollar will be destroyed in the process. The Greatest Depression is here. Don’t forget to stock up food and water etc.

The bear market in Treasuries will worsen, because of a glut of government bonds. Instead, consider high-yielding mortgage securities and certain munis.

THE BUBBLE HAS BURST. We’re talking about U.S. Treasury securities, not housing. At the end of 2008, risk-averse investors poured into Treasuries, driving down yields to the lowest levels in decades. The 30-year Treasury bond fetched less than 3%, and short-term T-bills carried yields of zero.

Marc Burckhardt

Since then, the economy has shown signs of bottoming, the credit markets are functioning more normally, and the stock market has roared back from its March lows. Treasuries now are in a bear market, while bullish enthusiasm has taken hold in other parts of the credit market, including corporate bonds, municipals and mortgage securities, all of which had fallen from favor late last year. The 30-year Treasury, for instance, has risen to a yield of 4.10% from 2.82% at the end of 2008, cutting its price by 20%.

Barron’s called a top in Treasuries and a bottom in the rest of the bond market in an early 2009 cover story (“Get Out Now!” Jan. 5). We weren’t alone in recognizing some of the nutty year-end developments. Warren Buffett highlighted the sale in late 2008 by his Berkshire Hathaway of a Treasury bill for a negative yield. Buffett wrote in Berkshire’s annual letter in February that when “the financial history of this decade is written…the Treasury-bond bubble of late 2008” may rank up there with the housing bubble of the early to middle part of the decade. – How does the market look now? Treasuries still look unappealing for several reasons. Yields are very low by historical standards, the government is issuing huge amounts of debt to fund record budget deficits, and the massive federal stimulus program ultimately may lead to much higher inflation.

United Arab Emirates exit leaves Gulf currency plan on brink of failure

May 22, 2009 by Infinite

saudi-arabia
Saudi Arabia dwarfs other states in the region and analysts say there is concern that a common currency would serve to concentrate power in Riyadh

A project to establish a common currency for the Gulf has been dealt a near-fatal blow with the decision by the United Arab Emirates to abandon monetary union after disagreement with Saudi Arabia over the location of a future central bank.

The loss of the Emirates to the currency project could accelerate decisions within some Gulf states to diverge from Saudi Arabia’s desire to maintain a currency peg with the dollar. This could lead eventually to the UAE, the Gulf’s most sophisticated economy, floating its dirham, analysts in the region said.

The UAE attributed its decision to quit the Gulf Cooperation Council (GCC) project to the choice of Saudi Arabia as host of the key monetary institution.

Evidence of mounting rivalry and distrust between the Gulf’s two biggest economies emerged two weeks ago, when a meeting of the GCC voted to locate the central bank in Riyadh. UAE officials expressed reservations about the decision. The choice of Riyadh would enhance the physical presence of Saudi Arabia within the GCC, as the organisation’s secretariat is already headquartered in the Saudi capital.

The UAE is the second state in the six-member GCC to pull out of the common currency, which was due to be launched next year. Oman had said already that it would not take part, but the loss of the Emirates, which has the greatest international trading links, makes it unlikely that the project will get off the ground.

Russia Dumps the U.S. Dollar as Reserve Currency

May 22, 2009 by Infinite

The US dollar is not Russia’s basic reserve currency anymore. The euro-based share of reserve assets of Russia’s Central Bank increased to the level of 47.5 percent as of January 1, 2009 and exceeded the investments in dollar assets, which made up 41.5 percent, The Vedomosti newspaper wrote.

The dollar has thus lost the status of the basic reserve currency for the Russian Central Bank, the annual report, which the bank provided to the State Duma, said.

In accordance with the report, about 47.5 percent of the currency assets of the Russian Central Bank were based on the euro, whereas the dollar-based assets made up 41.5 percent as of the beginning of the current year. The situation was totally different at the beginning of the previous year: 47 percent of investments were made in US dollars, while the euro investments were evaluated at 42 percent.

Daimler invests in electric car maker Tesla Motors

May 23, 2009May 21, 2009 by Infinite

daimler_tesla1

Daimler’s investment in Tesla Motors provides both companies with something they desperately need and could be the first step down the aisle toward marriage.

The world’s oldest automaker hitched its electric wagon to Tesla on Tuesday when it bought nearly 10 percent of the company and a seat on its board. Neither side is discussing specifics of the deal, reportedly worth $50 million, but both sides walk away winners.

Tesla gets a much-needed infusion of cash and help building the gorgeous Model S sedan. More importantly, Tesla gains legitimacy as it continues raising funds. Having the company that invented the automobile as a partner makes you much more attractive to investors.

Daimler’s investment buys it a whole lot of battery know-how, something German automakers are short of. And a seat on the board gives Daimler gets a close look at Tesla’s business plan and financials so it can decide if it wants a bigger piece of the action.