Daily Digest

Daily Digest 12/10 - Gold And The Eurozone, Big-Box Superstores Predicting Consumer Behavior, Blast Rattles Syrian City

Saturday, December 10, 2011, 10:33 AM
  • William K. Black: Justice Department is the Dog that has Refused to Bark for a Decade
  • Gold Daily and Silver Weekly Charts - Divvying Up the MF Gold and Silver
  • Gold And The Eurozone?
  • Big-Box Superstores As Bellwether Indicators
  • Most European Leaders Agree to Work on Fiscal Treaty
  • Blast Hits Pipeline In Syrian City
  • North Dakota's Bakken Oil Fields Go From Strength To Strength
  • Volcanoes: Disturbing Forecast For 2012

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Economy

William K. Black: Justice Department is the Dog that has Refused to Bark for a Decade (June C.)

From Goldman Sachs to governor to grilling, Jon Corzine former CEO of the now bankrupt MF Global testifies on Capitol Hill. He claims he is clueless about how and where the possible $1.2 billion dollars of his client's money is that is missing. How has all of this happened three years after the financial crisis when Wall Street was supposed to be reined in? And can we expect anything o change? We speak to William K. Black, a former regulator who during the Savings and Loan crisis oversaw more than 10,000 criminal referrals, 1,000 felony convictions, and where hundreds of bankers went to prison. He says Corzine doesn't have a viable defense of being not involved in the firm's day to day activities with this much money at stake, but that the Justice Department has been the dog that "refuses to bark" when it comes to prosecuting financial executives.

Gold Daily and Silver Weekly Charts - Divvying Up the MF Gold and Silver (June C.)

Fane wrote HSBC after the bankruptcy, asking the bank to transfer the bars to his account at Brink’s, according to a copy of his letter filed in court. The trustee wrote HSBC saying the gold and silver was “customer property,” and the bank shouldn’t turn it over to Fane, HSBC said in the filing. Brink’s provides vaults and other services for the safekeeping of valuables.

Gold And The Eurozone? (ScubaRoo)

Intuitively, I believe that at a macro-economic level things currently are worsening in the Eurozone, the U.K., the U.S. (contrary to what most U.S. economists seem to think), and elsewhere. I also think that over time that will negatively impact on the financial markets unless the macro-economic trend I think is occurring reverses.

Big-Box Superstores As Bellwether Indicators (jdargis)

Major retailers like Costco and Walmart often act as indicators of the overall economy, because they can reveal trends for what -- and if -- people are buying.

Most European Leaders Agree to Work on Fiscal Treaty (jdargis)

Importantly, all 17 member of the euro zone agreed to the new treaty, along with six other countries who wish to join the currency union one day. Two countries, the Czech Republic and Sweden, said they would want to talk to their parties and parliaments at home before deciding, said President Nicolas Sarkozy of France, but it seemed unlikely that Sweden would join. Hungary said it wanted to examine the detail, leaving Britain isolated.

Energy

Blast Hits Pipeline In Syrian City (jdargis)

The news agency, Sana, blamed the attack on “armed terrorist group,” the phrase the Syrian government has used to describe those behind the country’s uprising. Some activists in Homs suggested that the government was responsible, as part of an effort to besiege a city that has proven the most rebellious since the revolt began in March.

North Dakota's Bakken Oil Fields Go From Strength To Strength (James S.)

The "Economic Miracle State" of North Dakota pumped another record amount of oil during the month of October, producing more than 15 million total barrels in a single month for the first time ever, at a daily rate of 488,068 barrels (see chart above, data here). Compared to October of last year, oil production in North Dakota is up 42%, and production has more than doubled over the last two years, from 240,000 barrels per day in October of 2009. North Dakota's rich Bakken oil fields produced almost 9% of America's domestic crude oil production for the month of October, up from less than 2% of the nation's oil in 2006.

Environment

Volcanoes: Disturbing Forecast For 2012 (ScubaRoo)

Katla enjoys a very ill reputation in Iceland. The eruptions of this volcano were noticed back in the 8th century. The volcano erupts every 40-80 years. Katla woke up in 1918, 1934 and 1955. The eruption of 1918 became the volcano's strongest during the 20th century.

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10 Comments

junkyard71's picture
junkyard71
Status: Member (Offline)
Joined: Sep 6 2009
Posts: 22
Intentions of the "system"

I believe that the system is now being destroyed on purpose.  Watch cspan,  Watch anything.  Its clear that we're being driven to collapse.  Any effort at all to re-rail this train is just smoke and mirrors. 

Watch what they do,  compare that to what they say.   It's a harsh reality but unavoidable conclusion.

 

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3124
HSBC - Fane story

This story could have tremendous implications for any of us who have allocated PMs stored at HSBC particularly, but more generally at any of the storehouses around the country.  Harvey Organ advised that everyone take delivery immediately.  I would like input from those more knowledgeable than I as to what we should do.  Mine is all in IRAs so I would take a tax hit, but it would be worth it if there is a significant risk that another party could also have a "right" to my PMs.

Doug

SailAway's picture
SailAway
Status: Gold Member (Offline)
Joined: Aug 11 2010
Posts: 404
Re: HSBC - Fane story
Doug wrote:

This story could have tremendous implications for any of us who have allocated PMs stored at HSBC particularly, but more generally at any of the storehouses around the country.  Harvey Organ advised that everyone take delivery immediately.  I would like input from those more knowledgeable than I as to what we should do.  Mine is all in IRAs so I would take a tax hit, but it would be worth it if there is a significant risk that another party could also have a "right" to my PMs.

Doug

More on this on ZH:

http://www.zerohedge.com/news/gold-rehypotecation-unwind-begins-hsbc-sues-mf-global-over-disputed-ownership-physical-gold

 

Which is why we read with great distress a just broken story by Bloombergaccording to which HSBC, that other great gold "depository" after JP Morgan (and the custodian of none other than GLD) is suing MG Global "to establish whether he or another person is the rightful owner of gold worth about $850,000 and silver bars underlying contracts between the brokerage and a client." The notional amount is irrelevant: it could have been $0.01 or $1 trillion: what is very much relevant however, is whether or not MF Global was rehypothecating (there is that word again), or lending, or repoing, or whatever you want to call it, that one physical asset that it should not have been transferring ownership rights to under any circumstances. Essentially, this is at the heart of the whole commingling situation: was MF Global using rehypothecated client gold to satisfy liabilities? The thought alone should send shivers up the spine of all those gold "bugs" who have been warning about precisely this for years. Because the implications could be staggering.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 799
Taxes are on sale right now
Doug wrote:

This story could have tremendous implications for any of us who have allocated PMs stored at HSBC particularly, but more generally at any of the storehouses around the country.  Harvey Organ advised that everyone take delivery immediately.  I would like input from those more knowledgeable than I as to what we should do.  Mine is all in IRAs so I would take a tax hit, but it would be worth it if there is a significant risk that another party could also have a "right" to my PMs.

Doug

Doug,

Have you noticed that more people are aware of the US' debt and deficit lately? I certainly have. For years, I've been asking people what the US owes. It used to be that very few would even hazard a guess. Now, about a third know that we're over $15 trillion in debt and that our yearly deficit is in the $1.5 trillion range. I expect that astute politicians will tap into this newfound awareness. I expect that the 2012 elections will bring an austerity mindset to congress. In 2013, they'll have a honeymoon period where they can actually get some real work done. That means that they will be able to cut expenditures and raise taxes.

Who will they raise taxes on? Will it be the upper 1% who donate massive amounts to the congressional reelection campaign? Will it be the 50% who don't currently pay any federal income taxes? Unlikely! Taxes will likely be raised on those in the middle. Congress will be looking for significant revenue generators that won't raise the voting public's ire. So what would fits that description?

The government knows to the penny how much money is in IRAs, 401(k) accounts, etc. because we dutifully track it on our IRS forms. They also know what age those accounts will start to get drained. What would happen if the government confiscated all those funds and promised to pay higher than market interest rates to the "voluntary" participants? They could call it the "Government Retirement Arrangement" or GRA. Any money contributed would receive CPI plus a percent +/- and the earnings would be tax free. You would only have to pay taxes on the amount you contributed, but the earnings would be tax free. Who could be opposed to such a system? Wouldn't this help right the fiscal ship in the short term and kick the can down the road a bit? What disincentives could they impose to encourage you to voluntarily join the GRA crowd? My overactive imagination can think of lots of ways to punish the nonconformists. Although this is just speculation on my part, what other significant lumps of revenue could they attach?

I personally cashed out my IRAs several years ago. I paid the penalties and the taxes at that time and have put the money in "supplies" that I have control over. I don't trust a system that I believe will fail before I get my "investment" out of it. Do you think our current system will remain intact long enough for you to profit by staying within the bounds? If so, stay put. Unless you turn 59 before July 1st of next year, I'd pull the funds and pay the piper this year. (You don't pay the early withdrawal penalty if you withdraw the funds in the year in which you reach 59 1/2 years of age. In this case, I'd wait until early January to withdraw funds.)

Grover

Mr. Fri's picture
Mr. Fri
Status: Silver Member (Offline)
Joined: Feb 21 2009
Posts: 220
Iceland's Volcano and Texas

Katla's eruption in 1783 was even more catastrophic. The volcano was raging for eight months. Legends say that the eruption ended with something like a nuclear winter, which continued for a whole year.

There's hope for Texas yet.  According to long range forecasts, we're in for another long, hot, record breaking summer.  But, if the Katla volcano creates a "nuclear winter," we'll have a normal summer. Yeehaa! 

I'm a little sad that the rest of the world will plunge into cold temps with icy roads but at least Texas won't be so hot!

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2219
Doug wrote: This story could
Doug wrote:

This story could have tremendous implications for any of us who have allocated PMs stored at HSBC particularly, but more generally at any of the storehouses around the country.  Harvey Organ advised that everyone take delivery immediately.  I would like input from those more knowledgeable than I as to what we should do.  Mine is all in IRAs so I would take a tax hit, but it would be worth it if there is a significant risk that another party could also have a "right" to my PMs.

Doug

Only you can decide if the financial hit is worth having direct control over your assets.  But for me, at this point in time, I basically figure that if I'm relying on a disinterested third party or the "rules" to Do Right by me, I'm whistling past the graveyard.  If it's not in my direct control, it's just notional.  And notional doesn't feed, protect, or shelter me.  

One man's opinion.

Viva -- Sager

trupin's picture
trupin
Status: Member (Offline)
Joined: Oct 7 2009
Posts: 0
run

MF Global is likely to cause a run on financial and custodial assets if the clients are not made whole and the legal loophole that allows bad derivative bets to be paid off with client capital removed fast. Otherwise its cash and gold in the floorboards and the financial system is ruined.

RockyMountainPilgrim's picture
RockyMountainPilgrim
Status: Member (Offline)
Joined: May 10 2011
Posts: 1
Systemic controls

@junkyard71  I completely agree with your thoughts.  One thing that I have seen from a lot of "doom and gloomers" regarding Peak Oil is that it will be a mad dash to the cliff, followed by a catastrophic failure.  However, one thing that I believe they do not consider is the supposed "invisible hand of the market."  In my opinion, the invisible hand does exist, but not in the existential meaning so many other economists would have us believe.  The hand is under the control of the Powers That Be and they are deliberately imploding the system in such a way as to both 1) keep the current system working and resist any concerted push to alternatives in economics, markets, energy, etc.  And 2) keep the current system working at a less efficient rate, in order to syphon off as much wealth from the lower and middle classes of society as possible, before the inevitable collapse of the system and the return to a modern form of serfdom/debt-slavery/neo-feudalism.

It's just my opinion, but it sure seems that the markets have been under the control of significant "influencers" so that average investors are more and more likely to lose their shirts investing in the old ways.  Equities, bonds, mutual funds, all seem to be at the same level of investing as taking a trip to Vegas or Antlantic City these days.  I'm old enough to remember the days when one could contribute to a pension fund or mutual fund and have a very reasonable expectation to have a comfortable retirement under a long-term strategy.  Now, the olny people seeming to make money are 1) speculators and 2) market manipulators (i.e. the biggest banks).  And speculators in my opinion are more than likely to lose their shirts somewhere down the road.

What if The Powers that Be were deliberately grinding down the economic system, like a series of controlled detonations, because they know Peak Oil to be a reality?  That would explain a lot of the actions we have seen in the markets the last few years...  It would also mean that the other side of the Peak Oil slope might be more gradual than the "Mad Max" scenario described by many peak oilers out there.

Of course, it's just a theory, but it's one that I have yet to see any incontrovertible evidence against.

Best,

RMP

mryuri's picture
mryuri
Status: Bronze Member (Offline)
Joined: May 12 2011
Posts: 25
take delivery

 Anyone think that it would be wise to take delivery from Bullion Vault? Or safe to leave it in there?

playon's picture
playon
Status: Member (Offline)
Joined: Mar 23 2011
Posts: 9
 Doug, I would take the tax

 Doug, I would take the tax hit and get your money out of there, and into physical metal and cash.  Last year I waited til I became old enough to close out my IRA without penalty, but I would have been better off taking the hit and buying gold at $1300 instead of $1500.  The way things are looking shaky now, I would just get your assetts to place under your control and eliminate counter-party risk.

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