Treasury yields soar

The U.S. has “created an inflationary monster” with its multi-pronged bailout and other countries are raising the red flag,” said Edmonds. “They are screaming get your fiscal house in order,” said Edmonds.

Related article:
Get Ready for Inflation and Higher Interest Rates: The unprecedented expansion of the money supply could make the ’70s look benign (Wall Street Journal)


Government debt prices tumble as $19 billion of reopened 10-year notes comes to auction and Russia says it will sell some of its holdings.

NEW YORK (CNNMoney.com) — Treasury yields soared – with the benchmark 10-year yield briefly touching 4% – after the government sold $19 billion of 10-year notes and Russia said it would reduce its share of U.S. debt.

The government has been selling large amounts of debt to fund various stimulus programs aimed at boosting the economy. On Wednesday, $19 billion in a reopened 10-year hit the auction block. Would-be buyers bid nearly $50 billion for the debt for a bid-to-cover ratio of 2.62.

Related articles:
Russia May Swap Some US Treasuries for IMF Debt (Bloomberg)
Russian Central Bank To Cut US Treasury Holdings (Wall Street Journal)

That was enough to send the 10-year yield soaring to its highest level since Oct. 15, 2008. Bond prices and yields move in opposite direction.

Yields for longer-term Treasurys have been flirting with seven- and eight-month highs in recent weeks as investors become hesitant to park their money in traditional “safe havens” for longer periods of time amid a rising threat of inflation.

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London’s Metropolitan Police accused of waterboarding drug suspects

police_torture_waterboarding_police-state
The claims are part of an investigation which includes accusations that evidence was fabricated and suspects’ property was stolen

Metropolitan Police officers subjected suspects to waterboarding, according to allegations at the centre of a major anti-corruption inquiry, The Times has learnt.

The torture claims are part of a wide-ranging investigation which also includes accusations that officers fabricated evidence and stole suspects’ property. It has already led to the abandonment of a drug trial and the suspension of several police officers.

However, senior policing officials are most alarmed by the claim that officers in Enfield, North London, used the controversial CIA interrogation technique to simulate drowning. Scotland Yard is appointing a new borough commander in Enfield in a move that is being seen as an attempt by Sir Paul Stephenson, the Met Commissioner, to enforce a regime of “intrusive supervision”.

The waterboarding claims will fuel the debate about police conduct that has raged in the wake of hundreds of public complaints of brutality at the anti-G20 protests in April.

The part of the inquiry focusing on alleged police brutality has been taken over by the Independent Police Complaints Commission. It is examining the conduct of six officers connected to drug raids in November in which four men and a woman were arrested at addresses in Enfield and Tottenham. Police said they found a large amount of cannabis and the suspects were charged with importation of a Class C drug. The case was abandoned four months later when the Crown Prosecution Service said it would not have been in the public interest to proceed. It is understood that the trial, by revealing the torture claims, would have compromised the criminal investigation into the six officers.

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Get Ready for Inflation and Higher Interest Rates: The unprecedented expansion of the money supply could make the ’70s look benign

monetary-base

Rahm Emanuel was only giving voice to widespread political wisdom when he said that a crisis should never be “wasted.” Crises enable vastly accelerated political agendas and initiatives scarcely conceivable under calmer circumstances. So it goes now.

Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That’s more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers’ expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.

With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs — such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid — are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.

But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

About eight months ago, starting in early September 2008, the Bernanke Fed did an abrupt about-face and radically increased the monetary base — which is comprised of currency in circulation, member bank reserves held at the Fed, and vault cash — by a little less than $1 trillion. The Fed controls the monetary base 100% and does so by purchasing and selling assets in the open market. By such a radical move, the Fed signaled a 180-degree shift in its focus from an anti-inflation position to an anti-deflation position.

The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10 (see chart). It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless. The currency-in-circulation component of the monetary base — which prior to the expansion had comprised 95% of the monetary base — has risen by a little less than 10%, while bank reserves have increased almost 20-fold. Now the currency-in-circulation component of the monetary base is a smidgen less than 50% of the monetary base. Yikes!

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Royal Canadian Mint lost tens of millions in precious metals

Tories call in Mounties over mint’s missing millions

Canada’s money-makers can’t find tens of millions in precious metals that are shown on the books

royal-canadian-mint
Employees work June 8, 2009 at the Royal Canadian Mint in Ottawa, where there are worries security could have been breached following the revelation that a large amount of precious metals recorded on the books is missing. The mint uses gold, silver, platinum and palladium in its operations.

OTTAWA – The federal government has asked the RCMP to launch an investigation into the tens of millions worth of precious metals that have gone missing from the Royal Canadian Mint.

The announcement comes after an external audit was launched to reconcile the mint’s records with the physical stock of metals.

And it comes after the Star revealed today that the value of the missing metal was worth more than $10 million.

“I think we are all very concerned,” said Rob Merrifield, minister of state for transport, the department responsible for the mint.

Merrifield said he “instructed” mint staff today to call in the Mounties to assist with the ongoing audit, which has been under way since early March.

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Air France crash killed two of the world’s “most prominent” illegal arms trade and international drug trafficking foes

pablo_dreyfus
Pablo Dreyfus

The puzzling crash of Air France’s Flight 447 killed two of the world’s “most prominent” illegal arms trade and international drug trafficking foes, according to a little-noticed report.

In a revelation sure to fuel conspiracy theories over the plane’s demise, the report reveals that two key figures in the neverending internecine battle against global arms and drug trafficking perished when the plane abruptly fell out of the sky. Both were particularly active in efforts to stem illegal arms trading in Latin America.

A 39-year Argentinian man, Pablo Dreyfus, was said to be a major player in an effort by Brazilian authorities to stop flow of arms to drug gangs in Rio. He was a consultant for Small Arms Survey, a Geneva-based thinktank.

Another consultant for Small Arms Survey also died in the crash, “Ronald Dreyer, a Swiss diplomat and co-ordinator of the Geneva Declaration on Armed Violence who had worked with UN missions in El Salvador, Mozambique, Azerbaijan, Kosovo and Angola,” according to Scotland’s Sunday Herald.

“Both men were consultants at the Small Arms Survey, an independent think tank based at Geneva’s Graduate Institute of International Studies,” the Herald reported. “The Survey said on its website that Dryer had helped mobilise the support of more than 100 countries to the cause of disarmament and development.”

Dreyfus and Dreyer were reportedly traveling to Switzerland to “present the latest edition of the Small Arms Survey handbook, of which Dreyfus was a joint editor.”

Dreyfus advocated for “stringent labeling” of ammunition produced by weapons companies, the paper said. He averred that such labeling would greatly aid the tracking of arms acquired by criminals.

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China’s Hidden Bankruptcy

Throughout 2008, only 3,500 enterprises formally filed for bankruptcy in China. Hiding behind this tiny number however is the approximately 800,000 businesses that exited the market by either cancelling their registration or having their business license revoked.

The rise in the number of these hidden bankruptcies has emerged since a new bankruptcy code came into force in China on June 1, 2007.

In order to solve problems that have emerged since the introduction of the new legislation, the Supreme People’s Court has accelerated it’s timetable to release judicial interpretations of the law.

The draft interpretation of the law on enterprise bankruptcy, which consists of more than 200 provisions, has already been circulated among judicial circles. In coming months, a new draft will be unveiled for feedback and advice from related authorities and the public.

After amendments based on suggestions received from stakeholders, the interpretation of the law on enterprise bankruptcy will come into effect next year.

Professor Li Shuguang, the vice principal of China University of Political Science and Law’s Graduate School, noted that currently “the biggest problem is that hardly any enterprises have filed for bankruptcy.” As one of the authors of the current bankruptcy law, he has paid close attention to its implementation.

According to Li, the huge gap between the number of businesses seeking bankruptcy and those exiting the market via other means demonstrated that most enterprise withdrawals were not in accordance with the procedures as stipulated by China’s Law on Enterprise Bankruptcy.

“Among those 800,000 enterprises, some managed to responsibly resolve issues related to creditors’ rights and to settle their debt, but many enterprises simply cancelled their license or registration in order to avoid debt obligations. This kind of withdrawal can be deemed as malicious bankruptcy or even credit fraud.”

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German retail giant Arcandor goes bust: 43,000 jobs at risk

arcandor
Retail and tourism giant Arcandor has filed for bankruptcy

BERLIN (AFP) — Retail and tourism giant Arcandor said on Tuesday it had filed for bankruptcy with the likely loss of around 43,000 jobs in Germany, after Berlin dismissed its request for emergency state aid.

“Arcandor AG today filed with the Essen District Court to open insolvency proceedings due to threatening illiquidity,” the statement said.

Related article: Arcandor Files for Insolvency on State Aid Rejection (Bloomberg)

Travel agency Thomas Cook, in which Arcandor holds a 52-percent stake, “will remain unaffected by the insolvency proceedings,” the statement added.

The group, which employs 70,000 people in Europe, two-thirds of whom work in Germany, said its department store chain Karstadt, as well as mail-order company Quelle, would also be affected by the insolvency.

On Monday, Berlin rejected the company’s request for 650 million euros (902 million dollars) in state loan guarantees and 437 million euros in emergency loans but gave the firm one last chance to submit an improved bid.

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China censors all home computers

The Chinese government wants all computers sold in China after July to come with software that automatically censors the internet.

Chinese citizens at a computer shop: China moves to censor home computers
The Chinese government wants all computers sold in China after July to come with software that automatically censors the internet Photo: REUTERS

The move will give the government unprecedented control over what can and cannot be seen on the internet. In recent weeks, China blocked access to a host of websites, including Hotmail and Twitter, and expressed worries that the internet was becoming a tool of protest.

An issue of the state-controlled magazine, Outlook Weekly, strongly criticised local officials for not paying more attention to the internet, saying that online debate forums in China are not just “ordinary chit chat in free time” but could also be stirring trouble.

Under the directives from the Ministry of Industry and Information Technology, which declined to comment on the topic, computer-manufacturers will be asked to install blocking software from a company with ties to the country’s military.

The program, called Green Dam, is designed primarily to stop access to pornography, according to its makers, Jinhui Computer System Engineering company. “From July 1, every PC will be shipped with the software before it is sold to customers,” said a member of the company’s marketing department, who identified herself only as Miss Zhou.

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Top Chinese banker: US government should start issuing bonds in yuan, rather than dollars

The head of China’s second-largest bank has said the United States government should start issuing bonds in yuan, rather than dollars, in the latest indication of the increasing importance of the Chinese currency.

china-yuan
Top Chinese banker Guo Shuqing calls for wider use of yuan

china-zhou-xiaochuan
Zhou Xiaochuan, head of the People’s Bank of China, has published a personal paper proposing to replace the dollar as the international reserve currency.

Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), also said he is exploring the possibility of issuing loans to trading companies in yuan, allowing Chinese and foreign companies to settle their bills in yuan rather than in dollars.

Mr Guo said the issuing of yuan bonds in Hong Kong and Shanghai would help to develop the debt markets in China and promote the yuan as a major international currency.

It was the first time the head of a major Chinese bank has called for the wider use of the yuan, although a chorus of senior government officials have already voiced their concerns about the stability of the dollar and have said the yuan should be used more widely.

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US is a weapons supermarket for terrorists, inquiry finds

Undercover inspectors manage to buy high-grade gear including nuclear triggers and evade export bans

The US is a virtual supermarket for terrorists and foreign governments seeking high-end military technology, including components that can be used to build nuclear weapons and equip militants fighting US and British troops, the American government has found.

Over the past year, government investigators posing as private buyers purchased military-grade body armour, technology to stabilise and steer guided missiles, a device that can be used to detonate nuclear weapons, and other munitions through legal means in the US. They evaded export controls and posted dummy versions of the gear to countries known as trans-shipment points for terrorist groups and foreign governments seeking arms and weapons components.

The investigation shows lax sales restrictions and export controls could allow terrorists and hostile foreign governments to buy equipment to use against US and British troops in Afghanistan, Iraq and other countries, US officials say. Foreign governments and terrorist groups have sought to purchase military technology from the US, according to officials, and in 2008 more than 145 people were charged with violating export control laws, with 43% of those attempting illegally to ship gear to Iran and China.

The private US companies that provided the equipment – in some cases from government surplus – said they were not required to check buyers’ backgrounds or obtain government licences for the sales. The US commerce department found that the companies selling the equipment had not violated any laws or regulations. The problem, investigators said, was that sensitive military equipment barred from export was often legal to sell within the US, with little restriction, and buyers need only establish a plausible front company.

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Global military spending sets new record

military The value of military hardware manufacturers has soared.

Global military spending rose 4% in 2008 to a record $1,464bn (£914bn) – up 45% since 1999, according to the Stockholm-based peace institute Sipri.

In contrast with civilian aerospace and airlines, the defence industry remains healthy.

“The global financial crisis has yet to have an impact on major arms companies’ revenues, profits and order backlogs,” Sipri said.

Peace-keeping operations – which also benefit defence firms – rose 11%.

Missions were launched in trouble spots such as Darfur and the Democratic Republic of the Congo.

“Another record was set, with the total of international peace operation personnel reaching 187,586,” said Sipri, or Stockholm International Peace Research Institute.

Growth industry

As the world’s aerospace and defence industry prepares for next week’s Paris air show centenary, it seems much of the focus is set to shift away from troubled civilian aircraft makers, which are struggling with reduced orders from recession-hit airlines, towards the companies that make fighter jets and other military hardware.

The top 10 global arms producers fighter-jet

– Boeing $30.5bn
– BAE Systems $29.9bn
– Lockheed Martin $29.4bn
– Northrop Grumman$24.6bn
– General Dynamics $21.5bn
– Raytheon $19.5bn
– EADS (West Europe) $13.1bn
– L-3 Communications $11.2bn
– Finmeccanica $9.9bn
– Thales $9.4bn
Source: Sipri All figures from 2007.

In total, the 100 leading defence manufacturers sold arms worth $347bn during 2007, the most recent year for which reliable data are available.

Almost all the companies were American or European. Some 61% of the total was accounted for by 44 US companies, with 32 West European companies accounting for a further 31%. Other companies were Russian, Japanese, Israeli and Indian.

“Since 2002, the value of the top 100 arms sales has increased by 37% in real terms,” Sipri said. “The US presidency of George W Bush… was a period of continuity in the arms industry. This followed a period of consolidation in the 1990s and early 2000s.”

The US aerospace and defence giant Boeing remains the world’s largest, with arms sales of $30.5bn during 2007. The UK’s BAE Systems ranked a close second, with arms sales of $29.9bn, while Lockheed Martin was third with $29.4bn in sales.

Big spender

The US remains the biggest spender, accounting for 58% of the total global spending increase during the decade, though China and Russia have reduced the gap.

The top 10 military spenders george-bush
-USA $607bn
-China $84.9bn
– France $65.74bn
– UK $65.35bn
– Russia $58.6bn
– Germany $46.87bn
– Japan $46.38bn
– Italy $40.69bn
– Saudi Arabia $38.2bn
– India $30.0bn
Source: Sipri. All figures from 2008.

Both tripled military spending over the decade, and Russia “is maintaining plans for further increases despite severe economic problems”.

Military spending in the Middle East fell slightly during 2008, but Sipri saw this as a temporary drop. “Many countries in the region [are] planning major arms purchases,” Sipri said.

One exception was Iraq, whose military budget rose 133% during 2008 when compared with 2007. “Iraq remains highly dependent on the US for ams supplies, with numerous orders planned,” Sipri says.

US military spending accounted for 58% of the total global spending increase during the decade, with extra funds set aside to fight the “war on terror”.

In addition, the wars in Afghanistan and Iraq cost the US $903bn.

“The idea of the ‘war on terror’ has encouraged many countries to see their problems through a highly militarised lens, using this to justify high military spending,” said Sam Perlo-Freeman, head of the military expenditure project at Sipri, or Stockholm International Peace Research Institute.

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Protests against Putin sweep Russia as economy goes bust

From Vladivostok to St Petersburg, Russians are taking to the streets in anger over job losses, unpaid wages and controls on imported cars

politicial-demo-against-putin
Russian police detaining a demonstrator at an unauthorised protest against Prime Minister Vladimir Putin in Moscow. Photograph: ALEXANDER NEMENOV/AFP/Getty Images

Russia’s prime minister, Vladimir Putin, is facing the most sustained and serious grassroots protests against his leadership for almost a decade, with demonstrations that began in the far east now spreading rapidly across provincial Russia.

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NASA Study: Solar Cycle, Not Man, Responsible for Gobal Warming

Some researchers believe that the solar cycle influences global climate changes. They attribute recent warming trends to cyclic variation. Skeptics, though, argue that there’s little hard evidence of a solar hand in recent climate changes.

Now, a new research report from a surprising source may help to lay this skepticism to rest.

solar_activity_proxies

Solar activity has shown a major spike in the twentieth century, corresponding to global warming. This cyclic variation was acknowledged by a recent NASA study, which reviewed a great deal of past climate data.

A study from NASA’s Goddard Space Flight Center in Greenbelt, Maryland looking at climate data over the past century has concluded that solar variation has made a significant impact on the Earth’s climate. The report concludes that evidence for climate changes based on solar radiation can be traced back as far as the Industrial Revolution.

Past research has shown that the sun goes through eleven year cycles. At the cycle’s peak, solar activity occurring near sunspots is particularly intense, basking the Earth in solar heat. According to Robert Cahalan, a climatologist at the Goddard Space Flight Center, “Right now, we are in between major ice ages, in a period that has been called the Holocene.”

sunspot-observations
Past studies have shown that sunspot numbers correspond to warming or cooling trends. The twentieth century has featured heightened activity, indicating a warming trend.

Thomas Woods, solar scientist at the University of Colorado in Boulder concludes, “The fluctuations in the solar cycle impacts Earth’s global temperature by about 0.1 degree Celsius, slightly hotter during solar maximum and cooler during solar minimum. The sun is currently at its minimum, and the next solar maximum is expected in 2012.”

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Taser use to obtain DNA not unconstitutional: NIAGARA COURTS RULING

A decision by Falls Police to use a Taser to obtain a DNA sample from a suspect in an armed robbery, shooting and kidnapping is not unconstitutional.

Niagara County Court Judge Sara Sheldon Sperrazza reached that conclusion in a 16 page decision handed down Wednesday that refused to dismiss an indictment against Ryan Smith and denied his request to have DNA evidence that links him to two separate criminal cases thrown out.

The ruling left Smith’s attorney, Patrick Balkin, stunned and requesting additional time to prepare for a trial that had been scheduled to begin later this month.

“Your honor, I was not expecting this ruling,” Balkin said. “I have not begun to have the DNA evidence analyzed and will need time to do that.”

Sperrazza set a new trial date of Aug. 10.

“I was not surprised. I was confident the judge would rule in our favor,” Assistant District Attorney Doreen Hoffmann said. “Clearly, we are satisfied that the judge heard all the evidence at the hearing and made the correct decision.”

Balkin sharply questioned the ruling.

“She’s the first judge in western civilization to say you can use a Taser to enforce a court order,” Balkin said.

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Federal Reserve to Hire Ex-Enron Lobbyist in PR Move to Counter Doubts about Fed’s Growing Power Over U.S. Financial System

How is the Fed responding to:

(1) a bill in Congress with 190 co-sponsors to audit the Fed

(2) a new law giving the GAO some power to examine the Fed’s actions

and

(3) calls by many to abolish the Fed altogether?

A promise of 100% openness and full disclosure to Congress and the American people?

An agreement to stop all behind-the-scenes shenanigans?

An end to the whole scam of private bankers “creating” credit and bilking the taxpayers out of trillions in interest?

Of course not!

Instead, the Fed is . . . launching a new p.r. campaign to show everyone how wonderful Ben and the boys really are.

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Uganda’s Oil Reserves Rival Saudi Arabia’s, Says U.S. Expert

Kampala — Uganda’s oil reserves could be as much as that of the Gulf countries, a senior official at the US Department of Energy has said.

Based on the test flow results encountered at the wells so far drilled and other oil numbers, Ms. Sally Kornfeld, a senior analyst in the office of fossil energy went ahead to talk about Uganda’s oil reservoirs in the same sentence as Saudi Arabia.

Related article: Uganda toughens as oil bullies close in Xinhua

“You are blessed with amazing reservoirs. Your reservoirs are incredible. I am amazed by what I have seen, you might rival Saudi Arabia,” Kornfeld told a visiting delegation from Uganda in Washington DC.

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US Treasury bloodbath soaks top fund managers

“If I were clairvoyant and knew we were going to have a sell-off of this magnitude, I would’ve been all in cash ….”

I have predicted this scenario many, many months ago and I have posted as much important information as I could find on the bond bubble. You do not have to be clairvoyant to know this.

Formerly safe bonds are increasingly a risky investment (Chicago Tribune):
“The seemingly safest of bonds look like they’ve been transformed from security blankets into bombs.”



NEW YORK (Reuters) – Investors have been blindsided by one financial catastrophe after another over the last 18 months, but throughout the tumult, the government bond market has been their friend.

Until now.

A brutal drop in long-dated Treasury prices has caught even the best money managers off guard — in some cases wiping out as much as 60 percent of the gains they booked in last year’s huge rally in U.S. Treasuries.

The Vanguard Group, Fidelity Investments, T. Rowe Price and Hoisington Investment Management have seen their government funds down anywhere between 10 percent and 30 percent, as record amounts of debt flood the market to pay for the swelling budget deficit.

What’s stunning about the portfolio declines is the swift plunge in Treasury prices within a short period of time despite the Federal Reserve’s buyback purchases intended to hold down interest rates. Benchmark 10-year Treasury yields have surged to levels not seen in more than six months, resulting in meaningful losses for many portfolios.

The 10-year T-note and 30-year Treasury bond are down 8.58 percent and 24 percent, respectively, in terms of price for the year to date.

“If I were clairvoyant and knew we were going to have a sell-off of this magnitude, I would’ve been all in cash, but I’m not,” said Van Hoisington, whose flagship Wasatch-Hoisington U.S. Treasury Fund is down more than 20 percent.

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Treasuries tumble, driving two-year yields to an eight-month high

The yields are not rising because the economy is improving.

They are rising because investors are selling Treasuries to get out of the bond bubble and the US dollar!

Don’t miss:
Jim Rogers on CNBC: I expect a currency crisis (06/04/09):
“The Chinese don’t wanna get trapped in long bonds if something does happen to the dollar, which I expect and they expect. They don’t wanna get stuck and they’re sitting there with 30 year bonds, they’re dead.”
Geithner tries to assure Chinese investors, draws laughter from the audience (BBC News)
Rising US bond yields may spark Credit Crisis II (Reuters)
Bond Vigilantes Confront Obama as Housing Falters (Bloomberg)
Marc Faber: U.S. will go into Hyperinflation, Approaching Zimbabwe Levels (Bloomberg)
US Will Eventually Lose Its AAA Credit Rating: Bill Gross (Bloomberg)
U.S. Treasury Blues: The Bond Bubble Has Burst (Barrons)

“Obama may borrow a record $3.25 trillion this fiscal year ending Sept. 30, almost four times the $892 billion in 2008.”

Every investor (with a brain left) knows that Obamanomics will fail and wants to get out of Treasuries and the US dollar.


Treasuries Tumble as Jobs Report Renews Fed Rate Speculation

June 6 (Bloomberg) — Treasuries tumbled, driving two-year yields to an eight-month high, as traders speculated the Federal Reserve may boost interest rates later this year after a report showed the U.S. lost fewer jobs than expected in May.

Treasury two-year note yields surged the most in almost a year as the smallest decline in U.S. payrolls since September bolstered expectations the worst of the recession may be over. U.S. debt fell for a third consecutive week as oil touched a seven-month high, heightening speculation inflation will accelerate as the labor market bottoms out.

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Obama’s Homeland Security Nominee Withdraws Amid Questions About Torture


Philip Mudd was nominated for an intelligence post. (AP)

WASHINGTON – The Obama administration’s nominee to lead intelligence efforts at the Department of Homeland Security withdrew Friday after it became clear that lawmakers would raise questions about his role in the Bush administration’s interrogation programs.

Philip Mudd, who has 24 years of intelligence experience, said in a letter to the White House that he worried that his nomination could become a “distraction” from President Obama’s agenda.

Mr. Mudd is now a deputy in Federal Bureau of Investigation’s counterterrorism unit. Before that, he was deputy director of the Central Intelligence Agency’s Counterterrorism Center. It was in the latter post that legislators believed Mr. Mudd became deeply involved with the government’s enhanced interrogation efforts, including the use of the simulated drowning technique known as waterboarding.

A White House aide said the president was well aware of Mr. Mudd’s links with interrogation programs that the Obama administration has described as torture. Still, the aide said Mr. Obama had complete confidence that Mr. Mudd was the best person for the Homeland Security post.

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