Daily Digest

Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, Saudi Arabia Overstating Oil Reserves, GM Beets 'Partially Deregulated'

Thursday, February 10, 2011, 10:38 AM
  • Under The Big (Market) Top
  • JPMorgan, HSBC Silver Futures Cases Consolidated
  • NYSE Deal Good for America?
  • Exchange Mergers, or “Pump Up The Volume”
  • WikiLeaks Cables: Saudi Arabia Cannot Pump Enough Oil To Keep A Lid On Prices
  • Wikileaks on Peak Oil
  • Did WikiLeaks Confirm "Peak Oil"? Saudi Said To Have Overstated Crude Oil Reserves By 300 Billion Barrels
  • WikiLeaks: Saudi Oil May Have Peaked Already
  • Pirates Seize Oil Tanker with $200 Million of Crude
  • Smackdown: Climate Science vs. Climate Economics
  • USDA ‘Partially Deregulates’ GM Sugar Beets, Defying Court Order

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Economy

Under The Big (Market) Top (Ilene)

The Fed can feed $3.5Tn into the thrusters and you can have a spectacular launch that looks like it’s heading straight to the moon but it’s right at the peak, when you need to fire that second stage perfectly, that you have the highest probability of failure. When a market escapes gravity – you will know it. Like the Nasdaq in 1999 and oil in 2008 – not just a little up every day but spectacular gains that go unpunished. That’s what we’ll see if they hyperinflation begins to creep into the markets.

JPMorgan, HSBC Silver Futures Cases Consolidated (TomA, signup required)

A judicial panel on Tuesday consolidated class action litigation alleging JPMorgan Chase & Co. and HSBC Holdings PLC violated antitrust laws by manipulating the silver market and potentially reaped billions of dollars while keeping the price of silver artificially low.

NYSE Deal Good for America? (Adam)

Discussing whether the government should block the NYSE, Deutsche Boerse merger, with Joe Saluzzi, Themis Trading co-founder.

Exchange Mergers, or “Pump Up The Volume” (Adam)

Without doubt, the NYX – Deutsche Bourse combination will be an exceptionally powerful derivatives exchange; it will provide perhaps the last real opportunity in electronic trading to form a monopoly-like cash machine. Scott Wapner on CNBC had this right all day yesterday, and hats off to him; the merger is about derivatives dominance. For shareholders of both companies, the NYSE and Deutsche Bourse, this deal is a home run. Why?

Energy

WikiLeaks Cables: Saudi Arabia Cannot Pump Enough Oil To Keep A Lid On Prices (Darren E.)

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

Wikileaks on Peak Oil (Bill S.)

"The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%."

Did WikiLeaks Confirm "Peak Oil"? Saudi Said To Have Overstated Crude Oil Reserves By 300 Billion Barrels (Rick R.)

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%." Could the OPEC cartel's capacity for virtually unlimited supply expansion to keep up with demand have been nothing but a bluff? That is the case according to Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, who met with the US consul general in Riyadh in November 2007 and "told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached."

WikiLeaks: Saudi Oil May Have Peaked Already (Walter C.)

This won't come as a surprise to anyone who's been following the oil industry over the past few years. Matthew Simmons' Twilight in the Desert, which I reviewed six years ago, made a detailed case that Saudi Arabia's production capacity had pretty much maxed out already, and Business Week published an article three years ago based on internal Saudi documents that said much the same: the Saudis could pump 12 million barrels a day in short spurts but only 10 million barrels on a steady basis — and that's all there is. Production capacity just isn't going up.

Pirates Seize Oil Tanker with $200 Million of Crude (Bill S.)

Suspected Somali pirates captured the supertanker Irene SL early Wednesday off the coast of Oman as it was transporting some 2 million barrels of Kuwaiti crude oil destined for the United States.

Bill Box is the communications manager for INTERTANKO, an association whose members own about three-quarters of the world’s tanker fleet. The Irene SL falls under this group.

Environment

Smackdown: Climate Science vs. Climate Economics (Don S.)

The standard line among climate hawks is that science recommends "80 percent reduction of greenhouse gas emissions by 2050." (That's for developed world countries; globally, the target is 50 percent by 2050.) But that recommendation is based on the last IPCC report, which is by all accounts woefully conservative, especially given that the science since then has been uniformly grim. There's good reason to think these official consensus forums underestimate the severity of the problem.

USDA ‘Partially Deregulates’ GM Sugar Beets, Defying Court Order (Don S.)

A week ago, the USDA shocked the organic-farming community by "fully deregulating" genetically modified alfalfa, after acknowledging that organic farmers had legitimate concerns about the move and hinting they'd be taken into account.

On Friday, the agency didn't simply skulk away from its own words in an apparent attempt to appease the agrichemical industry. This time, it defied a court order banning the planting of GM sugar beets until a proper study of their environmental impact can be done. The USDA announced that it would allow farmers to begin planting Monsanto's Roundup Ready sugar beets -- genetically tweaked to withstand copious lashings of Monsanto's herbicide -- even though the environmental impact study has yet to be completed.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

24 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

"“The inescapable conclusion from our market balances is that the physical market has tightened significantly,” the Paris-based IEA, an adviser to consuming nations, said today in its monthly Oil Market Report. "

"(Reuters) - Federal Reserve Chairman Ben Bernanke on Wednesday warned against sharp cuts in spending at a time when the economic recovery is still fragile enough to require extraordinary support from the central bank.

Even as he warned about the need for a long-term plan to address "unsustainable" budget deficits, Bernanke said steep reductions in government outlays could compromise growth at a time when employment is just beginning to rebound.

"The cost to the recovery would outweigh the benefits in terms of fiscal discipline," Bernanke told the House of Representatives' Budget Committee. "I think we really need to take a long-term view.""

  • Other news, headlines and opinion:

Japan Government Debt Hits Record Y919 Trillion

Egypt Raises Treasury Bills Sales 82% as Yields Rise

Rising bond yield sounds alarm for Portugal

Mayor's trip to NY aims to keep LA out of credit crunch

S&P cuts New Jersey rating over pension underfunding

Downtown vacancies plaguing Des Moines

From FDR To IOU: Social Security Hits Tipping Point (NPR)

Medicaid, prisons could drain General Fund budget (Alabama)

SC budget board OKs $100M Medicaid agency bailout

States must cut health care programs

Moody's Cuts Arizona's Outlook To Negative On Budget Woes

US lawmakers pound public pensions, fear bailouts

Caltrain proposes station shutdowns

San Joaquin County faces more than $36 million budget deficit

Florida cities face underfunded pension benefits and Report: Cities unprepared to honor retirement promises

Minnesota governor proposing tax increases, jobs spending

Illinois Expected To Pay High Rates On $3.7 Billion Pension Bond

FOCUS: Weakening Egyptian Pound Fuels Rising Food Prices

RealtyTrac: We're in the eye of the storm

Retirement system's unfunded liability to take 30 years to pay off (New Hampshire)

Public employees' pensions eat tenth of San Luis Obispo County budget

Wheat Hoarding Likely to Be `Widespread,' Prompting Price Gains, UN Says

Russia Stocks Head for Worst 3-Day Drop Since July on Inflation

ECB Said to Buy Five-Year Portuguese Bonds After Yields Advance to Record

Cotton Rises to Record as USDA Cuts Global Production Forecast

King Faces Ticking Clock on Interest Rates as Inflation Soars (UK)

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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

 

"Americans should brace for higher food prices in the next few months now that demand for corn has pushed U.S. supplies to their lowest point in 15 years and costs for dwindling supplies of wheat, sugar, coffee and chocolate have risen.

The price of corn affects most food products in supermarkets. It’s used to feed the cattle, hogs and chickens that fill the meat aisle. It is the main ingredient in Cap’n Crunch and Doritos. Turned into corn syrup, it sweetens most soft drinks."

"The company said it planned to raise prices in the United States this year as it faces $300 million to $400 million in cost increases related to spikes in corn, juice, metal and plastic."

 

 

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Doug
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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

This should get interesting:

http://dailybail.com/home/breaking-ron-paul-to-chair-house-sub-committee-on-domestic-m.html

BREAKING: Ron Paul to Chair House Sub-Committee On Domestic Monetary Policy - Paul Calls It Official! (Video)

Quote:

Paul announces Wednesday night that Spencer Bachus has promised him the Chair of the House Sub-Committe on Domestic Monetary Policy.  Let that sink in.  Ron Paul will be killing Bernanke in committee every Friday for the next 2 years.  A big win over the Fed's K Street warlords.

Doug

 Oops, didn't see the 12/10 date til it was posted, but still should provide hours of entertainment on CSPAN.  Have they been having hearings?  I'm not aware of any.

Doug

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britinbe
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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

Dutch central bank forces a pension fund to sell its gold

http://www.zerohedge.com/article/here-comes-executive-order-6102-qe-gene...

Interesting and worrying

LogansRun's picture
LogansRun
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If true, very disturbing.

Those sources disclose that the call which Obama put into Abdullah, who is recuperating from back surgery at his palace in Morocco, brought their relations into deep crisis and placed in jeopardythe entire edifice of US Iran and Middle East policies.

The king chastised the president for his treatment of Egypt and its president Hosni Muhbarak calling it a disaster that would generate instability in the region and imperil all the moderate Arab rulers and regimes which had backed the United States until now. Abdullah took Obama to task for ditching America's most faithful ally in the Arab world and vowed that if the US continues to try and get rid of Mubarak, the Saudi royal family would bend all its resources to undoing Washington's plans for Egypt and nullifying their consequences.

According to British intelligence sources in London, the Saudi King pledged to make up the losses to Egypt if Washington cuts off military and economic aid to force Mubarak to resign. He would personally instruct the Saudi treasury to transfer to the embattled Egyptian ruler the exact amounts he needs for himself and his army to stand up to American pressure.

Through all the ups and downs of Saudi-US relations since the 1950s no Saudi ruler has ever threatened direct action against American policy.

 

http://www.debka.com/article/20650/

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Egypt's Mubarak To Step Down!

"Embattled President Hosni Mubarak's three-decade authoritarian rule in Egypt could possibly come to an end Thursday night, CIA Director Leon Panetta told the U.S. Congress."

Also seen on CNN.com: "Egypt State TV says President Mubarak will address the nation tonight amid reports that he'll step down."

http://www.cnn.com/2011/WORLD/africa/02/10/egypt.protests/index.html?hpt...

Poet

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Dr. Paul's first hearing

Dr. Paul's first subcommittee hearing from yesterday.

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Re: Daily Digest 2/10 -States must cut health care programs

 link from Saxplayer:

States must cut health care programs

"44 states and the District of Columbia project shortfalls totaling $125 billion for fiscal 2012, which begins in July for most."

anyone notice that the total payroll on wall street for the past year was more, at $135B?

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alcatwize
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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

OMG, LOL.  Last statement Ben made was that congress needed to get their expedentures and deficits under control.  Now when someone in the congress suggest that, he fires off an opposite statement.  Unreal.  What a moron.

"(Reuters) - Federal Reserve Chairman Ben Bernanke on Wednesday warned against sharp cuts in spending at a time when the economic recovery is still fragile enough to require extraordinary support from the central bank.

Even as he warned about the need for a long-term plan to address "unsustainable" budget deficits, Bernanke said steep reductions in government outlays could compromise growth at a time when employment is just beginning to rebound.

"The cost to the recovery would outweigh the benefits in terms of fiscal discipline," Bernanke told the House of Representatives' Budget Committee. "I think we really need to take a long-term view.""

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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

I'm surprised there are any of us that expect anything non-contradictory,rational, to come out of Gov.

robie

 

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Fed plans to buy back $97 bln in Treasurys

 

NEW YORK (MarketWatch) -- The Federal Reserve Bank of New York said Thursday it plans to purchase about $97 billion in Treasury debt in the next month, continuing its policy of buying bonds to keep interest rates low and aid the economy's recovery. The purchases also include $17 billion of reinvestments of cash from the Fed's maturing mortgage-related holdings into Treasury securities. The Fed delineated 18 open market operations through March 9. The Fed has purchased about $397 billion in U.S. debt since August, when the mortgage reinvestment plan began, according to Morgan Stanley.

 

"NEW YORK (CNNMoney) -- The U.S. Postal Service warned Wednesday that it may default on some of its financial obligations later this year after reporting yet another quarterly loss.

The USPS, a self-supporting government agency that receives no tax dollars, said it suffered a loss of $329 million in the first quarter of federal fiscal year 2011. That compared with a loss of $297 million a year earlier."

"Swiss Foreign Minister Micheline Calmy-Rey called for closer cooperation between Turkey, Iraq, Syria, Lebanon, Jordan, the Palestinians and Israel on managing increasingly scarce water resources, arguing that water could also be used to forge a "blue peace."

"The report comes to an alarming conclusion; five of the seven countries are experiencing a structural shortage and debit of most of the big rivers has declined by 50 to 90 percent between 1960," she told journalists.

"In the future the main geopolitical resource in the Middle East will be water more than oil," she added, warning that it was closely tied to peace efforts."

 

 

Mozambique-Food-Prices Mozambique may face food prices increase again -minister

 

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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...
  • Egyptian Army Takes Charge of Country; Mubarak to Address Country Shortly: Report (Story Developing)
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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

Mubarak tipped to stand down

Egypt's embattled president Hosni Mubarak is expected to quit within hours, after the army announced it was stepping in to the crisis which has paralysed the country.

Egypt's armed forces have announced they will be taking "necessary measures" to protect the nation and support the "legitimate demands" of the people.

The announcement on state television came as the secretary-general of Mr Mubarak's ruling party, Hossan Badrawi, said he expected Mr Mubarak to make a televised address to the nation shortly.

Cairo's Tahrir Square is packed with tens of thousands of protesters waiting for the promised speech.

Mr Mubarak is expected to hand power to his deputy Omar Suleiman.

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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

Hey britinbe-

   I saw that article on the Dutch National Bank (DNB) -which ZH says is equivalent to their Central Bank- ordering the SPVG pension fund to sell its gold too.   I agree that it is worrying...it struck me as pretty scary stuff!

   Check it out folks.  The SPVG pension fund refused to comply with the Dutch National Bank's order, the DNB took them to court, and the court came down on the side of the DNB!!   Per the ZeroHedge article at http://www.zerohedge.com/article/here-comes-executive-order-6102-qe-generation-dutch-central-bank-orders-pension-fund-sell-it:

DNB has found that such a large proportion of gold is inconsistent with the interests of the participants. SPVG sees gold as a medium of exchange, such as euros, but DNB believes that the price of gold fluctuates too much for it to be classified as an investment. Translation of the translation: the central bank has now directly ordered a fund how to allocate its gold assets, because it explicitly disagreed with the fund's statement that gold is money, claiming instead that it is nothing but a very volatile commodity. Very soon no pension funds in the Netherlands will be allowed to hold any amount of gold more than the merely nominal. This latest gold confiscation equivalent event is most certainly coming to a banana republic near you. [bold last sentence mine]

    LR, +1 to you!  I saw this and instantly thought of the CT article you posted in my Speculations thread re gold.

 

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Re: If true, very disturbing.

After MSNBC, CNN and all the other media outlets were shouting that Mubarak would step down....and now he's staying, with the Military's "kiss of faith", this story may have more legs than anyone wants to admit. 

And then, how will this play out throughout the world if the Saudi's are now backing someone against the US wishes AND, reaching out a dove of peace to Iran? 

Interesting times.

LogansRun wrote:

Those sources disclose that the call which Obama put into Abdullah, who is recuperating from back surgery at his palace in Morocco, brought their relations into deep crisis and placed in jeopardythe entire edifice of US Iran and Middle East policies.

The king chastised the president for his treatment of Egypt and its president Hosni Muhbarak calling it a disaster that would generate instability in the region and imperil all the moderate Arab rulers and regimes which had backed the United States until now. Abdullah took Obama to task for ditching America's most faithful ally in the Arab world and vowed that if the US continues to try and get rid of Mubarak, the Saudi royal family would bend all its resources to undoing Washington's plans for Egypt and nullifying their consequences.

According to British intelligence sources in London, the Saudi King pledged to make up the losses to Egypt if Washington cuts off military and economic aid to force Mubarak to resign. He would personally instruct the Saudi treasury to transfer to the embattled Egyptian ruler the exact amounts he needs for himself and his army to stand up to American pressure.

Through all the ups and downs of Saudi-US relations since the 1950s no Saudi ruler has ever threatened direct action against American policy.

 

http://www.debka.com/article/20650/

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U.S. Oil Imports Will Drop 20-40% With New Drilling Approach

We're saved!  Anyone with knowledge of hydrofracking being used to reawaken spent U.S. oil fields care to weigh in on the story?

 

http://news.yahoo.com/s/ap/20110209/ap_on_re_us/us_shale_oil

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Re: U.S. Oil Imports Will Drop 20-40% With New Drilling ...
msnrochny wrote:

We're saved!  Anyone with knowledge of hydrofracking being used to reawaken spent U.S. oil fields care to weigh in on the story?

 

http://news.yahoo.com/s/ap/20110209/ap_on_re_us/us_shale_oil

im not a petrogeologist but ive followed some discussions...most of those areas are pretty arid...frack water has to be trucked in from the missouri river to extract bakken oil...resulting brackish water is a hazard; EROEI is low compared to conventional oil...bottom line, there aint no free lunch anymore...

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Propaganda at it's best

Extreme weather pushes food prices higher

Crops lost to flooding, drought crimp already-tight grain stocks

 

http://www.msnbc.msn.com/id/41481344/ns/business-eye_on_the_economy/

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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

Defiant Mubarak clings to power

He is a general defeated on the battlefield who will not retreat before inflicting as many casualties as he can

I call on the youth of Egypt.. go back home, go back to your work. The country needs your hands, let's join hands to build and develop

– Egypt vice-president Omar Suleiman

I cannot find any embarrassment in listening to the youth of my homeland and responding to them. I cannot and will not accept to be dictated orders from the outside, no matter what the source is

– Egypt president Hosni Mubarak

There is fury in Egypt this morning after president Hosni Mubarak defied predictions that he would resign and instead pledged to stay on as president until later this year.

Mr Mubarak used a feverishly anticipated televised speech to the nation to say he would delegate power to his deputy Omar Suleiman and proposed constitutional reforms, but said the transition to end his 30-year-reign would last until September's elections.

His speech was met with furious chants of "Down, Down with Mubarak" among the more than 200,000 people who packed Cairo's Tahrir Square on the 17th day of massive nationwide protests demanding the strongman's overthrow.

The crowd chanted "neither Mubarak nor Suleiman!" as one elderly woman in the crowd moaned: "The old man just won't give up power."

"He is still speaking to us as if we were fools," said Ali Hassan, another protester.

"He is a general defeated on the battlefield who will not retreat before inflicting as many casualties as he can."

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Hydraulic Fracking.

 I've been hearing much in the news lately about how hydraulic fracking is now being used ["to recover additional crude oil in North Dakota, Colorado, Texas and California.  Analysts and oil executives say fracking in these areas could boost domestic oil production an additional 2 million barrels a day by 2015--more than is currently drawn from the gulf of Mexico"]  right at the same time we see these Wikileaks cables on Saudi Arabia overestimating it's capacity.  

 

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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...
pinecarr wrote:

Hey britinbe-

   I saw that article on the Dutch National Bank (DNB) -which ZH says is equivalent to their Central Bank- ordering the SPVG pension fund to sell its gold too.   I agree that it is worrying...it struck me as pretty scary stuff!

   Check it out folks.  The SPVG pension fund refused to comply with the Dutch National Bank's order, the DNB took them to court, and the court came down on the side of the DNB!!   Per the ZeroHedge article at http://www.zerohedge.com/article/here-comes-executive-order-6102-qe-generation-dutch-central-bank-orders-pension-fund-sell-it:

DNB has found that such a large proportion of gold is inconsistent with the interests of the participants. SPVG sees gold as a medium of exchange, such as euros, but DNB believes that the price of gold fluctuates too much for it to be classified as an investment. Translation of the translation: the central bank has now directly ordered a fund how to allocate its gold assets, because it explicitly disagreed with the fund's statement that gold is money, claiming instead that it is nothing but a very volatile commodity. Very soon no pension funds in the Netherlands will be allowed to hold any amount of gold more than the merely nominal. This latest gold confiscation equivalent event is most certainly coming to a banana republic near you. [bold last sentence mine]

    LR, +1 to you!  I saw this and instantly thought of the CT article you posted in my Speculations thread re gold.

 

I also recall, but cannot find, a story about the Dutch proposing to make the mentioning the people should withdraw their money from any bank illegal for fear that it causes a bank run.  I don't want to go all "Alex Jones" but it does cause me to situp

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SagerXX
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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...
britinbe wrote:
pinecarr wrote:

Hey britinbe-

   I saw that article on the Dutch National Bank (DNB) -which ZH says is equivalent to their Central Bank- ordering the SPVG pension fund to sell its gold too.   I agree that it is worrying...it struck me as pretty scary stuff!

   Check it out folks.  The SPVG pension fund refused to comply with the Dutch National Bank's order, the DNB took them to court, and the court came down on the side of the DNB!!   Per the ZeroHedge article at http://www.zerohedge.com/article/here-comes-executive-order-6102-qe-generation-dutch-central-bank-orders-pension-fund-sell-it:

DNB has found that such a large proportion of gold is inconsistent with the interests of the participants. SPVG sees gold as a medium of exchange, such as euros, but DNB believes that the price of gold fluctuates too much for it to be classified as an investment. Translation of the translation: the central bank has now directly ordered a fund how to allocate its gold assets, because it explicitly disagreed with the fund's statement that gold is money, claiming instead that it is nothing but a very volatile commodity. Very soon no pension funds in the Netherlands will be allowed to hold any amount of gold more than the merely nominal. This latest gold confiscation equivalent event is most certainly coming to a banana republic near you. [bold last sentence mine]

    LR, +1 to you!  I saw this and instantly thought of the CT article you posted in my Speculations thread re gold.

 

I also recall, but cannot find, a story about the Dutch proposing to make the mentioning the people should withdraw their money from any bank illegal for fear that it causes a bank run.  I don't want to go all "Alex Jones" but it does cause me to situp

Just reason #132 to have some cash outside the banking system...

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britinbe
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Re: Daily Digest 2/10 - The NYSE/Deutsche Boerse merger, ...

Bolivian President Evo Morales flees food price protest

http://www.bbc.co.uk/news/world-latin-america-12427057

It appears the unrest is spreading...where next I wonder!

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SagerXX
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CNN/Al Jazeera reporting Mubarak has left Cairo...

...and gone to Sharm El-Sheik.  

"Important statement" about to take place from the "office of the President"...

 

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