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How to Replace Austerity with Freedom, Independence and Prosperity

The Economic Collapse Blog has this list of examples of how European-style “austerity” is already hitting the U.S., including cities closing schools and fire stations, and states eliminating whole state agencies and raising taxes. That includes the state of Illinois whose legislature has passed a “temporary” 66% personal income tax hike that the Democrat governor will sign. Rest assured, this income tax hike will be as “temporary” as the one in Massachusetts , still in place since 1989. Such austerity measures may lead to the same kind of social unrest Europeans have been experiencing. The Economic Collapse Blog concludes, We are entering a time of extreme financial stress in America.  The federal government is broke.  Most of our state and local governments are broke.  Record numbers of Americans are going bankrupt.  Record numbers of Americans are being kicked out of their homes.  Record numbers of Americans are now living in poverty. The debt-fueled prosperity of the last several decades came at a cost.  We literally mortgaged the future.  Now nothing will ever be the same again. To say that “nothing will ever be the same again” is just pessimistic and unnecessary. We actually can return to the prosperity of the past, by replacing debt and austerity with freedom and independence. There is no need for Americans to suffer through what European countries are suffering, because nearly all the problems we face are caused by governmental intrusions into many aspects of our personal and economic lives — intrusions by federal, state and local governments. Regardless of the good intentions that the welfare and military socialism statists have in justifying their use of compulsory government powers, what America needs is to cut the shackles of State-imposed dependence, restrictions, regulations, taxation, all those policies of moral relativism that involve violations of the Rule of Law: theft, trespass, denial of Due Process, and other acts of State-initiated criminal aggression. Freeing Americans includes repealing all forms of intrusive presumption-of-guilt regulations and restrictions that are in place having nothing to do with whether any individual is suspected of any crimes against others. Regulations are before-the-fact demands by the government that presume the individual and one’s business guilty, in which one must submit one’s private personal or financial information to the government to prove one’s innocence. Government regulations and arbitrary restrictions are literally searches and seizures by the government of information that is none of anyone else’s business, and effect in the stifling of everyday citizens’ growth and prosperity. Ending all personal income taxes , corporate taxes, estate taxes, and capital gains taxes frees people who own or share in the ownership of businesses — i.e. employers and prospective employers — to invest in their own research and development and in the expansion of their businesses, which is the genuine force behind jobs creation, in both blue collar and white collar sectors. Ending all personal income taxes frees people to explore their own ideas and inventions, and to start their own businesses that will employ more people and advance society further. Also…

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Picture du Jour: U.S. at risk of losing its AAA status?

While the debate about the U.S. debt ceiling is taking place, Société Générale is of the opinion that a downgrading of the country’s sovereign debt is just a matter of when and how fast interest rates on its borrowings rise.

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What happens when SNB is stopped out?

We have brought up the Swiss National bankers and what they have been doing for last several months by buying Euros in their attempt to weaken the Swiss Franc but the market keep pushing the Franc higher and Euro lower. A while back SNB kneed down to the market in a statement by the central bank in which the bank stated they wouldn’t buy Euros anymore. Well, SNB banker did pause for a while and guess what? Swiss Franc actually weakened instead of gaining strength versus the Euro. Perhaps it was that very market move which forced the SNB bankers to get to the kill again. What amazes us is that Swiss take pride in banking and thus are known as the smartest of bankers, but what have they been doing since past year? Are they not worried about their jobs? For we have stated several times in the past we’d hate to be at the helms of SNB when it had such a large exposure of Euros. A year earlier the pair stood at 1.48 whereas today and as we write it stands at 1.249s. The interventions efforts which we can imagine would have been discussed and deliberated upon many many times in closed rooms shall prove to the stupidest decision the bank has ever taken. This reminds

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Bloomberg Sues Trichet & European Central Bank

Bloomberg News filed a lawsuit against the European Central Bank, seeking the disclosure of documents showing how Greece used derivatives to hide its fiscal deficit and helped trigger the region’s sovereign debt crisis. Video — Dec. 22 Bloomberg — Matthew Winkler, editor-in-chief of Bloomberg News, discusses the news agency’s lawsuit against the European Central Bank. —

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Gold and Silver Prices to Spike Next Week

Gold and Silver Prices to Spike Next Week

Gold and silver prices have remained volatile in both directions since October. But indications from the COMEX show suggest we may see a spike in these precious metals prices next week… As prices moved higher over the past two weeks, strong bouts of profit taking have hit the gold and silver markets in each instance, stalling the next attempt to hit another new high. World Gold and Silver Demand World investment demand for gold has increased 250% in the past ten years. Investment demand for silver has skyrocketed 522% since 2007. Sales of official gold coins (like the American Gold Eagle) have increased 618% since 2007. World governments are hoarding silver; official sales have plummeted 83% in the past three years. Gold demand for ETFs has increased 20,470% since 2002. Above-ground silver supplies dropped 86% last year. Industrial demand for silver has increased over the past decade, despite a 236% increase in prices. On the downside action over the past two weeks, strong buying support has come in as precious metals prices looked like they were going to sell off— thus our current holding pattern in gold and silver prices. This will change to the upside within the next two weeks as major buying of physical metal will need to take place in order to meet contractual obligations on the COMEX before December 31, 2010. Contracts for gold and silver December futures that demand physical metal must be met by then. But there appears to be a significant shortfall in the actual physical metal required to meet these demands — especially in silver… If these contractual obligations are not met by the 12/31/10 deadline, then we could see a default scenario, which would drive the metals prices even higher and cause great instability for other markets as well. This potential default is due to the fact that JP Morgan Chase, the largest fractional stock holder of the Federal Reserve, has been wildly shorting silver and is now caught between a rock and a hard place. Word on the street is that JP Morgan Chase has opted to go massively long copper in an attempt to hedge their losses in silver, which could be enormous. This is…

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Introduction to the Naked Truth About Drugs

Filed in BP, deflation, o, sov, sovere, Spot Gold, target by on December 15, 2010 0 Comments

For nearly one hundred years our government has been wrong about drugs, about the people who use them and the risks they pose to society. Much of what they report is blatant misinformation, if not outright lies, despite a veneer of good intentions. It is also my contention millions of Americans agree with me. And it is not just the millions doing drugs responsibly, either. It is the millions more who’ve come to see society’s approach to the drug crisis generate more harm than good. They cut across all age, income and race demographics. Over the last thirty-plus years I’ve made it a point to talk with a number of them. And listen. What I’ve gathered reflects not so much a change of mind as it does a change of heart. We still consider drugs to be harmful, but have come to view our drug laws as worse–and many of us no longer consider legalization a four-letter word. But when Richard Nixon first convened his drug war council, escalating the conflict, hardly anyone outside of what was derisively labeled the “lunatic fringe” favored legalization. How dare we, they scolded, when marijuana tuned innocents into murderers and LSD would sufficiently scramble our DNA to produce three-headed babies. None of that was true of course, but it is what our government wanted citizens to believe. And many did. But that was then. This is now. We have come to see the responsible use theory, the one so close to the alcohol lobby heart, parallel itself in the illicit drug environment: as not every drinker is a drunkard, so too is not every drug user an abuser. The Naked Truth About Drugs … All drugs were legal and cheap and readily available in America prior to 1914, and we were even encouraged to use them. Heroin was available from the Sears mail order catalog, as was morphine, opium and cocaine. But if you couldn’t wait for the mailman, all those same drugs were sold at the corner grocery or drugstore. Our addiction rate then was very low, near identical to now. And we had no drug crime [emphasis mine]. What changed it all, what disrupted our peaceful co-existence, was the…

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The Best Signal of All: Railroad Stocks

It’s increasingly likely that stock prices will keep their positive bias going into 2011. That is, if there isn’t a major shock to the system like a new war or sovereign debt default. At the end of the day, the earnings picture, along with accommodative monetary policy, is supportive of rising stock prices. Goldman Sachs

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Will the Euro Fall to $1.20?

Filed in Debt, euro, o, South African Gold, sov, sovere, sovereign debt by on December 1, 2010 0 Comments
Will the Euro Fall to $1.20?

Filed under: Forecasts , Market Matters , Currency The euro is a single currency holding 16 member nations together. Before the Greek crisis, countries’ sovereign debt was viewed fairly uniformly from country to country. In other words, you could hold a Greek bond or a German bond with relative security in your investment. Enter the Greek crisis, the Irish crisis and possibly the Portuguese and Spanish crises. Now the value of each country’s bonds fluctuates widely. Investors have lost faith, not only in individual countries’ bonds, but also in the euro, the currency that is holding the group together. Continue reading Will the Euro Fall to $1.20? Will the Euro Fall to $1.20? originally appeared on BloggingStocks on Wed, 01 Dec 2010 14:00:00 EST. Please see our terms for use of feeds . Read | Permalink | Email this | Comments

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Irish Relief Fleeting as `Day of Reckoning’ Nears

Borrowing costs for Europe’s most indebted nations are at record highs as Ireland’s capitulation in accepting a bailout of its banking industry stokes concern that other countries also will have to seek aid. “It’s no longer taboo to speak about a restructuring,” said Johannes Jooste, a portfolio strategist at Bank of America Corp.’s Merrill Lynch Global Wealth Management (*at least their in good hands !) Irish Relief Fleeting as `Day of Reckoning’ Nears Borrowing costs for Europe’s most indebted nations are at record highs as Ireland’s capitulation in accepting a bailout of its banking industry stokes concern that other countries also will have to seek aid. The average yield for 10-year debt from Greece, Ireland, Portugal, Spain and Italy reached 7.57 percent today, a euro- era record. The average premium investors demand to hold those securities instead of German bunds widened to as much as 492 basis points, the highest level of 2010. The average cost of insuring against default by the five nations using credit- default swaps reached a record 517 basis points on Nov. 23. “It’s no longer taboo to speak about a restructuring,” said Johannes Jooste, a portfolio strategist at Bank of America Corp.’s Merrill Lynch Global Wealth Management in London, which oversees about $1.4 trillion for clients. “The fact that bond yields continue to rise and put pressure on countries that have to fund from the market makes investors less and less confident, and it’s bringing forward the day of reckoning.” The Nov. 22 relief rally after Irish Prime Minister Brian Cowen conceded that the nation needed financial support proved transient. Irish 10-year bond yields fell 4 basis points, before jumping 104 basis points as of 3:13 p.m. in London today, exceeding 9 percent for the first time since 1995. The euro’s respite was more fleeting; the bailout inspired a 0.8 percent gain for the currency before it slumped to …

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New Zealand Markets – Worth a Look?

Filed in BP, currencies, Gold Investing, Gold Prices, o, silver, sov, sovere by on November 26, 2010 0 Comments

Here’s an update on the New Zealand markets. First up is a look at the currency, the NZD (also known as the “Kiwi”) took a bit of a dive in the past week or so on the back of a few things; first there was the Ireland and wider sovereign worries in the …

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Trade The News Weekly Market Update

– Volatile trading has been the rule during the Thanksgiving-shortened week. In weekend negotiations with the ECB and the IMF, Dublin dropped its initial reluctance to a bailout and agreed to accept funds. Having evidently learned a lesson from the painfully drawn-out Greek crisis earlier in the year, European partners are rushing to finalize details of a rescue package, which will apparently amount to €85-100B, and will include funding from the ECB, the IMF and the UK. Meanwhile, contagion from the sell-off in Irish bonds has already driven risk spreads in Portugal and Spain to record levels, as S&P exerted additional pressure by cutting Ireland’s sovereign rating two notches. On Tuesday North Korea shelled a South Korean island in one of the most dramatic attacks on the nation since the end of the Korean War. The attack sent US and European equity indices tumbling and completely sidelined the relatively strong second reading of US Q3 GDP. Key economic data in the US was also in play this week. After growing in September, existing and new home sales returned to declines in October; sky-high inventories helped push median new home prices to lows last seen in 2003, raising concerns about a double dip in housing prices. The October durables data was also cause for concern, as the nondefense capital goods figure (ex aircraft) was down 4.5%, missing nearly all estimates, though it was cushioned by an upward revision in the prior month. Hope was seen in the weekly initial jobless claims, which fell to their lowest level since July 2008, possibly portending sunnier results in the November payrolls report next week. For the week the DJIA fell 1%, the S&P500 dipped 0.9%, and the Nasdaq gained 0.7%. – It was a big week for private equity deals. An investment group struck a deal to buy software developer Novell for $6.10/share in cash, in a deal valued at $2.2B. The acquiring firm Attachmate, a provider of technology services, is owned by an investment group led by Francisco Partners, Golden Gate Capital and Thomas Bravo. Takeover chatter starting last week materialized in a private equity deal for Del Monte Foods, as a group led by KKR announced it would buy the foods company for $19.00/share. Clothier J. Crew confirmed it would be acquired by TPG and Leonard Green for $43.50/share. Blackstone lost its $602M bid to buy power producer Dynegy after failing to win shareholder support, likely forcing the company to find another buyer, sell assets or restructure. Blackstone met strong resistance from Dynegy’s two largest shareholders, Carl Icahn and hedge fund Seneca Capital. Elsewhere, German fertilizer giant K+S said it would acquire Canada’s Potash…

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No Holiday Break for the EURO

Filed in BP, euro, Gold, o, silver, sov, sovere, target by on November 25, 2010 0 Comments
No Holiday Break for the EURO

A quiet Asian session clearly didnt set the tone for today’s FX trading. The week has been very busy with the EUR bearing the brunt of it over investor concerns in the EU and markets seem to be more than content to sit back and enjoy the Thanksgiving holiday. No further escalation in the Korean peninsula gave regional indexes room to trade higher. EURUSD traded in a tight range between 1.3300 and 1.3350 while USDJPY meandered within daily cloud cover. Even decent EU data including a very strong German IFO (still the one bright spot in Europe) failed to lighten the overwhelming bearish EUR sentiment. Peripheral yield spreads widened moderately and CDS pricing increased. Eurozone sovereign fears continue to be the principal driver of Forex price action. The situation in the EU has failed to settle down with political influences adding into the mix. The lack of a essential cooling off period after Sunday’s Irish bailout announcement has been a core contributor to the increased (rather than decreased) nervousness in financial markets. German Chancellor Merkel’s honest comments regarding the EURO and Germany’s questionable commitment to its survival clearly opened up the debate over EU members with never ending obligations. In addition, news that a German government paper proposed that new Eurozone sovereign bonds include a restructuring clause starting in 2011 illustrated that these comments are not just harsh rhetoric but are also being followed up with thought and planning. From Dublin, the political situation became stickier with the departure of minority members in the coalition government which will likely translate into a general election early in the New Year. Ireland’s four-year economic plan was published yesterday and in broad terms seems to fit the bill. The plans contains the necessary consolidation, at a realistic pace, which should make the market happy although the growth forecast might be slightly optimistic (cuts should reduce the fiscal deficit to a healthy 3.0% of GDP by 2014). Unfortunately, as we have seen in Greece, the easy part is putting numbers on paper, it’s the execution of necessary austerity measure that is difficult. Interestingly, the Irish government unequivocal pronounced that the corporate tax rate will remain unchanged. A government official asserted that “the Irish Government’s position on corporation tax is unambiguous. The Program for Government clearly states that the Government guarantees that the 12½% rate of corporation tax will remain. Nothing is changed by this Plan.” The fluid nature of Irish politics makes the consolidation plan questionable (just look at yesterday’s protest in Portugal). Today as to be expected, LCH Clearnet raised its margin requirement on Irish bonds to 45.0% from 30.0%. US fixed income markets activity clearly highlights the nervousness of investors with treasuries selling off …

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