http://biz.yahoo.com/rf/020801/economy_japan_koizumi_1.html
Snippit:

TOKYO, Aug 1 (Reuters) - Japanese Prime Minister Junichiro Koizumi promised on Thursday to forge ahead with his reforms, including plans to end full state protection of bank deposits, but hinted again that there was some room for retreat. "This is when the Koizumi cabinet's reforms will really get on track," he told a news conference, responding to critics who say he has failed to match bold reform words with deeds. The government aims to lift its full guarantee on savings accounts next April in what analysts see as an important step in bringing the nation's financial system up to international standards.


Black Blade: It appears that the next April Fools Day Surprise is still on the table. There have been mixed signals that the guarantee would remain in place. The confusion had helped to dent the POG in Japan earlier this morning.

Former WorldCon CFO Scott Sullivan and Controller David Myers are to be arrested today. Looks like another "Perp Walk" before the cameras this morning. No word on former CEO Bernie Ebbers. Looks like a lot of "entertainment" on tap for today.

- Black Blade

http://www.mrci.com/qpnight.asp
Wow!!! With all the horrible news including renewed terrorist activity, slumping markets, corporate scandals, deepening recession, war preparations, etc. and what happens? Gold sinks below $300 an ounce. Looks like a bargain. Petroleum prices are static though more rumors abound that the natural gas storage numbers are being questioned again. The USD is stronger and no one really seems to know why except that foreign currencies are crap. The US market futures are sinking lower though if there is a lot worse economic news then the stock markets will probably rocket higher - at least that appears to be the new paradigm - or the Gomez Addams approach to investing. "Intersting Times"

- Black Blade

http://www.forbes.com/newswire/2002/08/01/rtr683251.htmlSnip:

Ifo, which publishes the monthly Ifo business climate index seen as the best leading indicator for Europe's largest economy, lowered its forecast to 0.7 percent this year from the 0.9 percent it and Germany's five other top economic institutes predicted in April.

It cut its projection for 2003 growth to 2.3 percent from 2.4 percent. The recovery from last year's downturn was still underway, but was very fragile and at risk from financial market turbulence caused by accounting scandals in the United States, Ifo said.

Misetich

From Continent to Continent we are witnessing ANOTHER global economy slowdown

How will these slowdowns affect derivatives? Credit? Debt? Banks?

Got gold?

http://www.nytimes.com/2002/08/01/business/01HALL.htmlSnip:

By JEFF GERTH and RICHARD W. STEVENSON

WASHINGTON, July 31 � With Washington focused on corporate responsibility, Vice President Dick Cheney's tenure as chief executive of Halliburton is under scrutiny from government investigators and his political opponents.

Most of the attention has been focused on a Securities and Exchange Commission investigation into changes made by the company in its accounting practices for construction projects while Mr. Cheney led Halliburton.

But the company and its shareholders have also suffered from the hidden costs from a deal that was, at the time, the high point of Mr. Cheney's five-year Halliburton career: his acquisition in 1998 of Dresser Industries. The deal, which Mr. Cheney hailed as a "win-win" merger, ended up saddling the company with the growing costs of legal claims from people who say they were injured by or are at risk from asbestos in products made by Dresser and a former Dresser subsidiary that was spun off in 1992.
............
At issue now is whether Halliburton under Mr. Cheney was aggressive enough in investigating the asbestos liabilities it was taking on in acquiring Dresser, and whether it adequately informed shareholders of the risks at the time they were asked to approve the deal.

Previously undisclosed court documents show Dresser was notified a month before the merger that it might face greater asbestos liability from its former subsidiary than it had disclosed. Halliburton said it was kept in the dark by Dresser about the greater risks until after the merger was completed.

Halliburton's stock price has fallen sharply as the extent of the asbestos problem has become clear since Mr. Cheney left the company to join the Republican presidential ticket in August 2000.

Mr. Cheney sold nearly $40 million in Halliburton stock about the time he left the company at prices above $50 a share. He had said he would sell his Halliburton stock if the Republican ticket prevailed in the fall. The stock closed today at $13.20.

*************

Misetich

We wait patiently as the corporate governance laws are applied. Nobody is above the law right?

Got gold?

http://www.washingtonpost.com/wp-dyn/articles/A28776-2002Jul31.htmlSnip:

By Anthony Faiola
Washington Post Foreign Service
Thursday, August 1, 2002; Page A01


MONTEVIDEO, Uruguay, July 31 -- Several additional South American countries have been swept up in what is becoming the region's worst economic crisis in two decades, igniting fears of a replay of the Latin American financial collapses of the early 1980s.

The crisis, which analysts had hoped would be contained to Argentina's financial meltdown six months ago, has now spread to its neighbors Brazil, Uruguay and Paraguay. It has threatened to engulf other politically unstable economies in the region as well, including Bolivia and Venezuela, where analysts predict deep recessions for this year.

But this week, investor flight has particularly hit Argentina's immediate neighbors. In Brazil, Latin America's largest economy, government bonds have fallen to half their face value in recent weeks because of fears of a government default. The Brazilian real, in a tailspin that has lowered its value against the dollar by 19 percent this month, today touched its lowest point since going into circulation as the national currency in 1994.

Paraguay has come face-to-face with the prospect of a banking collapse and a deepening recession. Here in tiny Uruguay, dubbed the "Switzerland of Latin America" for its rock-solid financial system, government officials trying to stave off a debt default are seeking an immediate loan from the International Monetary Fund, the U.S. Treasury and other major foreign lenders.

.............
To ease the pressure, the Uruguayan government was forced to close banks Tuesday for the first time in 20 years
...........

************

Misetich

From continent to continent Global economic slowdown is accelarating
Latin America is a big market for US products - US bank exposure is much larger in Brazil than it was in Argentina

Got gold?

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APUkYuRQCQWxsaWFuSnip:

Munich, Aug. 1 (Bloomberg) -- Allianz AG, Europe's largest insurer, may shed 3,000 more jobs at Dresdner Bank AG, 6 percent of the unit's workforce, after a surprise second-quarter loss.
...........
Industry Slump

Since the end of 2000, European banks have announced almost 83,000 job cuts as slumping equity markets and a rising number of corporate bankruptcies eat into earnings. Deutsche Bank AG, Europe's No. 1 bank, has so far said it's shedding 13,000 jobs.

Dresdner has eliminated 5,000 of the 8,000 positions it planned to cut, Fahrholz told reporters in Frankfurt today.

************

Misetich

Banks, insurers, earnings, portfolios deteriorating - Will they improve as the Global economy slowdowns further?

Got gold?

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APUkOeBVqRGV1dHNjSnip:

By Silje Skogstad

London, Aug. 1 (Bloomberg) -- Deutsche Bank AG, BNP Paribas SA and Barclays Plc, three of Europe's biggest lenders, reported lower earnings and said they see no signs of improvement.

Banks are reporting shrinking net income as corporate defaults drive up loan losses. Slumping stock markets also are battering profits because Deutsche Bank, BNP Paribas and Barclays depend on revenue from investment banking.

``The current market environment is a challenge for all of us,'' Deutsche Bank Chief Executive Officer Josef Ackermann said in a letter to shareholders. ``Going forward, we take a cautious view on the world's financial markets and major economies.''

Frankfurt-based Deutsche Bank posted a 76 percent slump in second-quarter net income after more than doubling provisions for bad loans to 588 million euros ($575 million).

BNP Paribas, France's No. 1 bank, said its second-quarter profit dropped 13 percent and Barclays of the U.K. said its first- half earnings fell more than expected.

``It's quite difficult for banks at the moment,'' said Carsten Gerlinger, who helps manage about 800 million euros at DZ International in Luxembourg, which holds Deutsche Bank shares. ``Perhaps, we will still see some more bad news.''

Slashing Jobs

Deutsche Bank, Europe's largest lender, said second-quarter net income fell to 204 million euros, or 32 cents a share, from 834 million euros, or 1.67 euros, in the year-earlier period. The company is slashing costs, including the elimination of more than 14,000 jobs, and shedding assets to try to bolster earnings.

***************
Misetich

Will corporate defaults increase as the world economies slowdown?

Got gold?

Thanks for the encouragement my friend. I know this is a business setting but let me get personal for a moment. You know Waverider when I listen (or read) some of the conversations here at the round table I observe human compassion displayed that totally intrigues me. That's one of the reasons why I chime in on rare occassion after all I've been a guest here at the castle since 1999 and I've probaby only posted ten messages or so in all that time.

What I have noticed is when someone is hurting, others are there to offer support and incouragement and sometimes that can make the whole difference in a persons day or even life. Words are very powerful, we all know that.

For example when Robotguy got the pink slip I felt that my story may give him a little bit of encouragement even if from an unknown such as myself. In my brief existence here on this great planet earth one of the great discoveries I have made about people in general is that they carry to much emotional luggage around with them. If you could see those emotions with your naked eye some of us would be carrying 200 pound backpacs around with us everywhere we went.

At a few points in my life I felt like I too was carrying that 200 pound pac as I would guess many others have felt on occasion. Thats why so many Americans as well as other countries have to take every thing from valium to xanex or whatever just to deal with everyday happenings. The greatest waste of life are the things we worry over.

I just take this day that I have and even if it seems mundane at times I count it worthy of my best attitude and disposition. Its in mundane moments that you may think nothing you say or do can make a difference in somebody's life because you don't witness the outcome but I learned "after the fact" that many times what I said or did in one of those moments actually did make a difference. I just had to quit dwelling on me me me and redirect my attention to whoever was hurting, the process brought healing and comfort to me.

Never give up hope because hope is the fuel of the future. I try to get a hold of my emotions and don't let them run free because its so easy to just let those emotions have their way. I learned to fix my attention on the objective not the obstacles. Its character I'm after not comfort, you won't read that in Peoples Magazine. It isn't easy, practical or swift advise but well worth the effort. As our fine Nobel Sir Mr. Gresham said the other day in so many words, knowledge without application is useless.

A few things they didn't teach me in school is that life isn't fair and the world won't care about your self-esteem. For encouragement I read books about some of the great individuals that has influenced my life such as Sir Winston Chruchill for example. He over came such great odds not only with his health and personal life but in his political career and with WWII to boot all working in harmony like the perfect storm in his life yet he overcame his obstacles. As BlackBlade said in simple terms, making lemonaid out of lemons.

When I compare some of the obstacles that I have over come or am faced with next to some of the challanges that others have gone through and are going through, my problems dissipate to nothing in comparison. A quick walk in your local hospital offers some shocking perspective adjustments thats for sure. Moving along here, I don't want to sound like I'm preaching to the choir.

Hey PH in LA I enjoyed msg 81991 well put and straight forward. I just love this forum. There are so many comments I could make to so many great nobles and nobletts here at the castle but time does not privledge me to do so and on that note.

Have a great day to all,

Rock.

http://www.usatoday.com/money/markets/us/2002-07-31-mart_usat_x.htmBy Adam Shell, USA TODAY
NEW YORK � Investors may welcome the dog days of August after the bite their portfolios took in July.

Pct. change
2002 -7.9%
1974 -7.8%
1975 -6.8%
1969 -6.0%
1986 -5.9%
Source: Sam Stovall of Standard & Poor's

Despite two rallies in the past six sessions that raised hopes stocks had finally hit bottom, the Standard & Poor's 500 fell 7.9% last month, its steepest July drop in more than a half-century.

Still, investors were heartened by the ability of the broad market gauge to rise Wednesday, despite a spate of fresh economic data that suggest the budding recovery is slowing.

Indeed, a government report that the economy grew half as much as expected in the second quarter didn't prevent the S&P 500 from clawing its way to a 1% gain to 912. But for the month, all 10 of the S&P's industry sectors finished in the red.

Skeptics say more weak economic numbers like Wednesday's could place renewed pressure on stocks.
+++++++++++++++++++++++++++++++

It's tough propping all those 500 stocks at once.

It's the "Strong" Yen Stupid!Business - Dow Jones Business News
Thu Aug 1, 2:45 AM ET

TOKYO -- Japan 's sales of new cars, trucks and buses, as measured by registrations, fell on year in July for the eleventh straight month as lingering economic weakness kept consumer sentiment under pressure.

Sales in July totaled 367,902 units, down 5.8% from the same month a year earlier, the Japan Automobile Dealers' Association said Thursday.

The on-year percentage fall, however, is relatively limited compared with the 8.9% decline in the June.

+++++++++++++++++

This is the reason that the Yen must fall back to the 133-135 area soon, thus the dollar will fall too as the Japanese authorities will stop buying dollars and start selling yen.

Their largest industrial giants are in trouble�it getting close to "Every man for himself" time.

So...as the yen moves back to 133 the Japanese gold bugs will come out again. It's as easy to predict as snow on the top of Mount Fuji.

http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=swhat triggered the drop in the dollar and the spike in gold?

http://www.kitco.com/charts/livegold.htmlNot sure...maybe Exon's 41% slide in earnings in the last quarter, the slow pace of expansion in U.S. manufacturing, Worldcom former CFO arrested by the FBI...delayed reaction to yesterdays GDP revisions...PPT has gone fishing today...Spike is scary when he growls and instills fear...hmmmm maybe panick when he's let loose....

The dollar does look likes it's in freefall mode though. Cheers,
Waverider

http://biz.yahoo.com/rf/020801/economy_bush_lunch_1.htmlHere are two that know.

HEADLINE: Bush, Greenspan to review economy over lunch

WASHINGTON, Aug 1 (Reuters) - U.S. President George W. Bush on Thursday will host Federal Reserve Chairman Alan Greenspan for lunch to review the U.S. economic outlook following a second-quarter growth slowdown, the White House said.

...White House spokesman Ari Fleischer said the lunch was one in a series of "periodic" meetings Bush holds with Greenspan.
-------------

Study the past two years of monetary events in South America, gathering momentum.

R.
Bush, joined by Treasury Secretary Paul O'Neill, would meet Greenspan to review the "status of the economy, to listen to Chairman Greenspan's thoughts and ideas ... listening to the chairman's thoughts about the future of the economy," Fleischer said.

http://www.usagold.com/ProductsPage.html

Gold Today!

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In the final analysis -- in times of stress -- paper is only paper.

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Woke up this morning with an outline of the attitude behind controlling gold -- the whole $1-$2 limit up allowed per day, then the jumps which then consolidate and volatility nearly disappears short-term once more. This time "they allowed" the 310-320 range for awhile, then suddenly it gets "spanked" back down toward $300 (Dad must have been delayed on the subway), but then stabilizes there.

Buyers and sellers are all interested in only these $3-$5 moves, day after day? 1% up, 1$ down. WHO is making a living doing this, if it were a normal market. It is hardly even the shadow of gold market moves pre-1995, is it?

The word "orchestrated" seems too mild to describe the continual suppression of volatility, and the quick containment of occasional outbursts. Now, however, the time intervals between volatility outbursts are getting shorter and shorter. The dealer's "tell".

This whole battle -- being fought out in the 270-320 range -- FOR YEARS! How will the history of markets assess this? Does this look like the normal action of any market, in any era?

In light of this morning's action in gold, I was mulling over the recent movements in the price, trying to rationalise what was going on and figure out where it might be headed, when it occurred to me that maybe I should be looking at the price in terms of euros instead of US dollars. Through most of the end of last year, gold was trading around US$280, give or take, and the euro was around US$0.89, give or take. So an ounce of gold was around 314/315 euros. Since then the world has gone to Hell in a hand basket and in euro terms, gold right now is at 309. So, even though we're supposed to have been in a period of gold resurgence, in euro terms the price has dropped. Even when gold was holding at US$323 and the euro was at par, you couldn't really say that gold had taken off in euro terms.

I don't see how the US dollar can go anywhere but down from here based on the current economic climate, so in euro terms the price has to go up just to stay even. I can understand why institutional investment managers may have unloaded gold shares last week to take profits in gold and avoid the realisation of losses elsewhere. But if what we have witnessed over the past few days in the stock markets has been a bear market bounce, gold and gold shares will have been passed from weak to stronger hands, and the next leg up will be greater than the last one.

That's the view from here.

CG

He is still sticking to his guns. He said that when the book was written, that stocks were under valued, and even more undervalued today. He said that he thought that by the end of the decade, the dow would be at $36,000.00. Buy and hold is his mantra. It would be nice to be privey their personnal stock history to see how they adhere to this buy and hold gibberish.

When people like him, Abby, and the too many to mention shills are no longer invited to speak on the markets, is one indicater that we have reached the bottom.

Where Interest Rates are Also Controlled so.......inflation [The general price level] is also be controlled.

All this was stipulated by Lawrence Summers and Robert Barsky in "Gibson's Paradox and the Gold Standard" in the 1988 Journal of Political Economy.

See...the good Professor Summers discovered that in a gold standard regime, interest rates and the "General price level" varied inversely. He and his partner studied data way back and therefore had found a formula for what we now know to have been the "Goldilocks" economy...a kind of economic utopia.

This Master Plan was put into place for good in the month of June 1996 when the cabal [Assembled by the Fed] succeeded by their concerted selling, in breaking the 200 day moving average of the price of gold to the downside. Thus they had demonstrated a full control of the price of gold.

Having grasped the utopian goal of no inflation through a manipulated gold price, the Fed and it's acolytes began to figuratively rape and pillage the investment landscape.

Interest rate derivatives exploded 225% at JPMorgan Chase that quarter because there now was no threat of higher interest rates because the last remaining force that might move the dollar down, rising gold, had been vanquished. GSEs through Fannie Mae and Freddie Mac exploded for the same reasons...it was a sure thing, once higher interest rates were out of the picture.

These neo-alchemists forgot to tell their Master of the Universe one little thing.

They forgot that it would be necessary to sell tonnes and tonnes of a limited physical gold resource in order to keep this whole ponzi scheme afloat. So the IMF wrote rules to double count the central bank gold reserves in order to "Inflate " the actual metal deposits [IMF Statistical Accounting Seminar October 1999 Santiago, Chile].

That's not the only cockroach between the Boston and the Cr�me Pie.

The gold derivative "assets" [$41 Billion worth] on JPMs books aren't really assets at all since they came from a loan from the US Treasury and Fed. They must according to GAAP rules be called a liability [The conflict between IMF and GAAP meets HERE].

So Mr. Harrison, JPMs CEO, faces a dilemma on August 14, 2002. Does he certify that the gold derivatives are assets or liabilities. He could go to jail if he chooses the wrong accounting "door".

The web gets more tangled by the day...losing more gold...facing more heat from the inexorable diffusion of the truth.

It is the truth, in the end, that smashes corruption. The truth uttered sometimes from the lips of children.

So we are on a gold standard...that is sagging under the weight of gold loss and the growing, relentless, unstoppable assult of the truth.

The Fed's main thug, JPM is also sagging under the latest 10K report that says they have a $22 Billion "Goodwill" charge leaving them with only $800 Million in cash. Their derivatives house of cards is tilting steeply with a rumored $20 dollar per share contract trigger point. Enron's was $50 per share.

Financial Armageddon below a JPM $20 close. All the counter parties to all those gold [$41 Billion] and interest rate [$16 Trillion] derivatives...charred toast. It might even be a Fed- ending apocalypse.

So...there are many ways to envision the death throes of Summers "Goldilocks Economy".

http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2002/08/01/national1127EDT0574.DTL
The Bush administration and the International Monetary Fund scrambled on Thursday to find ways to stabilize a worsening economic situation across Latin America.

The International Monetary Fund was conducting simultaneous negotiations with Brazil, Argentina and Uruguay in an effort to reach agreements to supply the countries with billions of dollars in additional loans to stabilize choatic financial markets.

Meanwhile, Treasury Secretary Paul O'Neill was seeking to undo the damage from remarks on "Fox News Sunday" that the administratin would oppose any new financial aid to Latin American without assurances that the money wouldn't simply "go out of the country to Swiss bank accounts."
+++++++++++++++++++++++++++++++++++++

Guess which big Fed bank has $3 Billion in Brazilian loan exposure?

JP Morgan Chase...Can we all say "Hello $20 per share"?

Here we have again the clueless media asking the wrong question. The question should be...Do You Expect To See
$36,000 Gold In Your Lifetime ?

However, in all fairness CNBC did offer up my vote for qoute of the day. It came from Arthur Cashin when asked about why the markets were struggling today. ( I assume in context on thier way to 36,0000.) Arthur quipped in his answer that with all the governments revisions on figures it appears one of the large accountanting firms has been doing the government books.

So Mr. Harrison, JPMs CEO, faces a dilemma on August 14, 2002. Does he certify that the
gold derivatives are assets or liabilities. He could go to jail if he chooses the wrong accounting
"door".

After reading your post I went over to the huge calender on my wall, flipped it over to August and took my yellow highlighter and circled the 14th. I then took my red marker and drew a "smily face" inside the circle. I drew a J for one eye, a P for the other eye, and M for the mouth. Its quite ugly really, but is bringing a smile to heart and soul today.

Your post has stirred a desire to pick up the phone and call a buyer at Brooks Brothers to suggest a new product line for the fall season. Something in orange with white pin stripes.

Man, you are good. That is an incredible assessment of the current situation. Could you please elaborate what you meant by:

"Their derivatives house of cards is tilting steeply with a rumored $20 dollar per share contract trigger point. Enron's was $50 per share."

I think that I know what you are saying, but the quickest way for me to be wrong is to assume that I am right. If you have a chance to expand on this thought for this slow poke it would very much appreciated.

Take care and thanks for all you contribute to this forum.

Paper Avalanche

Making money in the 270$ - 320$ zone ! Yes, good Sir, *they* generate a lot of money out of this 20% range.
When you have quasi unlimited fiat-resources at your disposal and you are the "mover" of the price...no-one can beat you. Good old monopolist theories. Who dares to interfere with protected monopolists and within such a very narrow "trendless" price range ? cfr. Microsoft. The ultimate mega protected monopolist who doesn't even pay any dividend.

In the given circumstances, Gold cannot be cornered by any would be pirate. Permanent Accumulation of Physical is only adding pressure and forcing the monopolists to throw more fiat at the Gold derivatives. It is them who keep Gold's weight very inconveniently heavy for its price ! Smile Ari !
And indeed again Sir Gresham : Keeping things within a very well defined (price)range does serve a higher cause ! Hope you can profit from it and relax with your knowledge of the underlying. And that ridicule "range" already 3 years of age is reason that when POG moves 2 - 3 or 6 $ per ounce..."they" call it *spikes*. Let us have a good healthy laugh, shall we.

But the price "range" you mentioned is much older than the recent 3 years. In fact it is a 21+ number of years (since the 1980 ATH). Gold has been "ranged" after it went parabolic (1971 > 1980) and was in the process of radically imposing itself as THE FREE STANDARD ! And the super "price-ranging" of the past 7 years was necessary because of stealth accumulation pressure of the scarcing Physical ! The Anglo Saxon Gold barrons and their vazals do have to ridicule the above (my personal intuitive conclusions).
Gold commentary from the koelie-media are already boring for quite some time now. The many inconsistancies infiltrated on purpose are there to divert any serious attention on Gold's underlying fundamentals. The mantra that "there is no interest in Gold" is another lie added to all other blatant lies that is petfood for historians .

In other words : I do like very visible and time-extended price ranges. The best indication that something big is in store.

sector: I agree with Paper Avalanche -- you get better and better in your writings that marshal our available data into a few paragraphs. I was thinking about "G's Paradox", thinking about writing one with my name on it, and having something to do with interest rates (they'll stay down -- until they uncontrollably spike up!), but then we had a tooth-bashing tumble downstairs and I'm on a short fuse from here on out. Saving brain resources for the next emergency of the day...

Beligian: Yes, the trading range has been for paper only, a high-volume casino on top of a rigged "commodity" as sector said (or as miner49er has suggested, it is for international currency balancings?). And I have not cared really whether it has been 20 above 300, or 20 below. For my few ounces, not much of a difference, really.

Playing for the long ball, and time is more the concern. 1 year? 5 years? 10?

I don't really care WHAT path it takes to $2,000+, as long as it gets there in MY lifetime. Meanwhile, the present risk/reward looks unmatched by anything else. 300 level is supposed to bring up the chart goblins of "200", but in physical reality, how could this happen? And to do it in paper, would be such a confession of desperation, that the signals by now (thanks to sites such as ours) would be read clearly by so many more than in years before this.

And now to hit the "Shut Down" buttons, and clear this 'puter's memory for some heavy work output -- yeesh, it takes a lot to pull away from stimulating minds and head for the doldrums of drudgery... ;)

Allow me to join Paper Avalanche and Operative in congrats to you ! Thanks for that *brilliant* synopsis of the fundamentals.

- Goldilocks >>> formula !!!
- The cabal >>> assembled by the FED !!!
- ...it "was" a sure thing !!!
- *neo* alchimists !!!
- Gold standard, sagging under the weight of Gold loss AND GROWING RELENTLESS !!!

Personally I'm not betting the (Gold)farm on August 14.
Another (fiat)prince will be found for JPM/C. My bet goes rather to the (slowly)awakening general public that will realise that their nest eggs are under water. They will suddenly try to evacuate and exchange (rotten)eggs for cash.
This struggle of the general public (Trillions of savings)wanting to get out of the funds and the FED wanting to keep them in...is recipe for panic.

Canuck Gold and euro-POG : If we combine the high probability of the euro/Gold/Oil concept and the FED's Gold manipulation (sector's synopsis), with the 1996 - 1999 (euro-intro)timing...
Could we say that the euro-builders have been facilitating (encouraging) the POG situation for the many reasons mentioned earlier (TG/FOA/A) ? The FED and ECB playing cat and mouse with gold-derivatives ? The cat residing in Bazel and the mouse in New York ?

And is the recent dollar-boost against the euro not the result of Brazilian flight into the dollar, not to be countered, immediately, with euro Gold-action ? Me just wandering.

Timing of Gold setting itself FREE !? ***Major*** events never receive any timing. Otherwise it weren't "major" events by definition. cfr. The collapse of USSR-communism or Berlin wall...Iraq invasion..., etc...
Gold can break Free any day when the opposing forces decide to let it Free, today or tomorrow. Gold will break Free when opposing forces are exhausted or lose grip for God knows what unexpected reason. Will the world collapse when POG revalues into the thousands ? Defenitely NO ! Herein lays some timing-answer. The ongoing Permanent Currency Depreciations MUST and WILL be faced rather soon than later.
Economic utopia (sector) is a cyclic show and there will be no reason anymore to cap the price of Gold, once the show has run its full course. Economic utopia ends with paper fires. The past and present *Gold Intervention* was ment to make paper fire-proof ! ALL PAPER. Yes, neo-alchimy. The only thing in wich those neo alchimist succeeded was to make the general public believe that GOLD has been changed into paper ! No Paper has ever been made fire-proof.
Almost zero interest rates are the right ignition temperature for that final fire. The dollar paper is almost there. Do you think that rising interest rates in the given circumstances, will remain controllable ? Do you think that an orderly retreat in lockstep to the financial exit can be organized ? Are you answering your timing question here ?
1 year, possibly...3 years, very unlikely...10 years, NO WAY ! And on top of this Sir...a 7% yearly IR doubles your input within 10 years. POG=600$ in 2012 ? Cappice ?

The past 20 years of stockmarket explosion was the perfect "canalization" of the underlying inflala. This will shift to real goods and services and leave those stock-paper for what it is really worth. The present generation (general public) will never touch any stock again when all is settled and done. Back to the basics, where all cycles find peace and tranquility at their appropiate bottom.
Then their is no reason anymore to oppose against Gold to set itself Free. That's why the ECB decided and stated that their Goldreserves will remain important...very important indeed. We never heard such statements from the dollarblock with the exception of Hashimoto from Japan and the historical statement from A.G. that CB stand ready...

Can you agree that we are getting closer and closer or do you see another obstacle that can't be overcome ?

http://www.morganstanley.com/GEFdata/digests/20020801-thu.html#anchor0

Snippit:

Washington statisticians have once again redefined the economic landscape. Courtesy of the so-called benchmark revision of the national income and product accounts, the recent performance of the US economy has been cast in a very different light. The direction of this annual revision was hardly a shocker. The incoming monthly flow data had tipped us off to expect a weaker picture than the previous data had painted (see my 27 June dispatch, "House of Mirrors"). But there is more to this revision than statistical noise. In my opinion, the new data now place the US economy right on the brink of another recessionary relapse -- the dreaded double dip.

Black Blade: Interesting assessment of the US economy. Roach does present a fairly good study of the recession.

First let me say, I have been an observer for the past four years. I am a Vice President in an international company. I have the opportunity to travel all over the world. Many of the end users of our products are well known to each of you, be they Cisco systems to John Deere tractors. The reason for this post is, an observation that is probably understood by many of you. The current economic climate, despite the rosy projections of our nations economist, are what BLACK BLADE would term, grim. Not only is the situation grim here, Europe is starting to feel it, as is China and the Pacific Rim. After all if the American consumer pulls back, ( this is just a matter of time ) the game is up.
While I am not a conspiracy buff, it appears the government is trying with all their might to manage the flow of information the public receives, to prevent any hint of a rout in the markets. Obviously, there are some days where they are more successful than others. What prompted this was seeing a news snippit where the President and Alan Greenspan are having lunch to discuss the current economic conditions. What???? They don't know?
The fact is they do know, however, they also know they have it barely under control. What to do??????????
From my perspective, now more than at other time is for good people to move in to hard assets. From my view we still have a little time before the the game is completely up. Let me conclude with this, We do business in South America, We have distributors in Argentina. One day they woke up, and found that their currency which use to exchange at a one for one ratio, was now worth 25% against the dollar. On top of that they could only with draw $250.00 per week. Now before they did this, they didn't take an AD out in the local paper, they just enacted tit over night. This is now being replayed in Uruguay, and coming soon to Brazil. That is of course, unless the IMF delays the day of reckoning. The point is, when things get to that point in this country, and I think it will, there will be no warning, they will do this in the dead of night and you will wake to the new order of things. So when I read, where the prez and Greenspan are getting together, its for one reason, damage control.

http://www.boston.com/dailyglobe2/213/business/Accounting_board_may_tweak_expensing_rules+.shtml

Snippit:

NEW YORK - In a move that could wipe out billions of dollars in corporate profit, the board that sets the nation's accounting standards may consider tweaking rules on how companies that volunteer to expense employee stock options switch to the new accounting method. Under current rules, companies that opt to record stock options as an expense on their income statement don't have to grandfather in previously issued options. Instead, only awards granted after the beginning of the fiscal year in which a company chooses to expense its stock options are subtracted from a company's income statement.


Black Blade: This is long past due. Options should be expensed. If they were companies such as Cisco and Microsoft would have no earnings. The average hit on earnings across the board would be about 10% lower. This is compensation and should be treated as such.

Operative & BoxmanI've heard of taking a bullish stance but that James Glassman interview by CNBC was a joke. I've watched that guy before the bubble, during the breaking of the bubble and currently and he still cherps the same tune.

All I can say is if the Dow hits 36,000 can you imagine the inflation? The Dow will soon spit up all its gains from that one day suckers rally last week.

Mr. "G" I hope your right when you say when gold goes up to $20,000 an ounce that you don't expect a state of chaos in the US. I'm of the opinion when Gold goes up that high goods and services will also go through the roof and many people will have suffered great loss and I think there will be public outrage and maybe even riots in different places.

Because I think when gold blows through to that level the world economy including the US will be in a state of depression. The question I guess is how do you anticipate the masses reaction to living through the greatest stock market crash and depression in history?

Cheers,

Rock

http://theonion.com/onion3827/debt-consolidation_loan.html

Snippit:

WASHINGTON, DC�Plagued by late fees, high interest rates, and harassing creditors, the U.S. took out a debt-consolidation loan Monday, combining the nation's $6.1 trillion debt into a single, easy monthly payment. "My fellow Americans, we have just taken the first step toward regaining control of our finances," said President Bush at a press conference. "Thanks to a joint arrangement between the Treasury Department, the Federal Reserve, and E-Z Debt Services of Baltimore, we are finally on our way to freedom from debt." As of press time, the national debt stands at $6,144,393,982,061.52.

Under the terms of the consolidation, E-Z Debt Services will repay the nation's estimated 45,000 creditors, a majority of whom are foreign investors, insurance companies, banks, and other privately held entities. In return, the U.S will make a single monthly payment of $9.26 billion, adjusted for inflation, to E-Z Debt every month for the next 70 years. "We are proud to enter into this arrangement with the federal government," E-Z Debt spokesman Phil Rizzo told reporters. "We know how hard it is when you're buried under a mountain of bills with seemingly no way to get out. When you don't know where else to turn, E-Z Debt is there to help get you back on your feet."

The government first became aware of E-Z Debt Services on July 10, when Sen. Max Baucus (D-MT) happened to see a commercial for the company while watching late-night television. Two days later, President Bush saw the same ad during a 3 a.m. M*A*S*H rerun. According to White House press secretary Ari Fleischer, Bush was sitting at his desk clutching a fistful of past-due notices when he saw the ad. "He was holding all these unpaid bills, and tons more were piled high on his desk, including a three-month-old bill from Lockheed-Martin for $5.3 billion worth of jet fighters," said Fleischer, who was in the Oval Office working late at the time. "He raised the handfuls of bills above his head and shouted, 'I can't take it anymore!' That's when the ad came on."


"I was definitely skeptical about E-Z Debt, as were many of my colleagues," Senate Majority Leader Tom Daschle (D-SD) said. "I'd heard horror stories about those debt services. England used one to get out of a recession in the late '80s, and they're still paying for it." "But E-Z Debt is different," Daschle continued. "Jim [Smoller], our E-Z Debt representative, sat down with me and the other senators and really convinced us that debt consolidation was the way to go. He was extremely helpful, taking the time to patiently answer all our questions. He even gave us a free quote."

Opponents of the plan charge that it unnecessarily endangers the numerous national assets offered as collateral. Among the valuable properties being put up are Yellowstone National Park, NASA, and the state of Alaska. "In the end, everybody came to see that E-Z Debt isn't just another loan. It's a way to get out of debt without declaring bankruptcy," Daschle said. "Thanks, E-Z Debt. We couldn't have done it without you."


Black Blade: Sorry about that, I know it's a joke, but it probably isn't that far off the mark. All American from the consumer to the corporation to government are buried under crushing debt and there is no way out. Bankruptcies are at all time records and with the new bankruptcy laws we should see a lot more pain.


Anyway, off to the gym � healthy body �health mind (OK � healthy body anyway)

Probably one of the best short and to the point posts I've read. Keep it up.

To All:

We talk about the bone pile, layoffs, Argentina, etc., but yesterday I personally and face to face, had to lay off 4 good employees. All with families, all with debt, and one single mother who I thought was near suicidal as she left.

For nearly twenty years in management capacity I have not lost to much sleep over terminations, since there was a job market, an expanding economy, and the bulk of the terminations were justified for non-performance, etc. Now it is extremely different.

I didn't sleep well last nite, but one thing I do know, before this depression is over, and if I have anything to do with any part of the recovery, a good portion of my time will be spent doing what I can to help get what's left of this country back to, as Trapper sometimes says, "live simple" or at least something sustainable for all.

After watching both a CFO and a Controller in cuffs today, I at least have some satisfaction that the two times I've been associated with situations similiar, I have resigned for cause and walked. But I still work for and help very aggressive organizations. Both my professional and political orientations are recieivng a thorough mental revaluation.

My more immediate concern is that it's probably going to get a lot worse. I always did envy Spock with his "emotionless" life. The lows for the last 10 years have totally overwhelmed what few highs there have been in the rat race we have created. Also gettin kind of hard rootin' gold higher knowing some of the misery the higher prices portend.

A not to happy with himself,

Pizz

Their derivativers are strongly [Everywhere on Wall Street] rumored to......have a stipulation that if there is a close of JPM below $20 then the contract becomes callable at prevailing spreads in interest rates or bullion strike levels.

This means that JPM would have to pay a mountainous sum to ALL of the counter Parties who elect to call their derivatives contracts. In the gold derivatives JPM would be required to return the borrowed gold [By purchasing or somehow obtaining metal from some source] to a long list of borrowers...some of whom are terrorist nations [Libya, Syria].

JPM does not HAVE the cash to satisfy even a tiny portion of those contingent liabilities...let alone the "Insurance". They barely have $800 Million.

It is reasonable to assume, as our newest poster Griffon5 has perceptively done, that today's Greenspan/Bush lunch meeting has something to so with JPM and the precarious stae of US, World stock and currency markets. Moreover, the President cannot be ignorant of the rising tide of complaints of manipulated and corrupt markets.

It's a guess that the future manipulation timeline was not a very long one...probably measured in months.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APUmZzhYeQ2l0aWdySnip:

Boston, Aug. 1 (Bloomberg) -- Citigroup Inc. Chairman Sanford Weill is meeting with Robert Rubin and other top bank officials to ensure the company limits its risk in Brazil after losing $2.2 billion in neighboring Argentina, a bank executive said.

............
Citigroup, which has 53 branches in Brazil as well as an asset management business and credit-card operation, increased commitments in South America's largest economy to almost $13 billion at the end of March, based on filings with the U.S. Securities and Exchange Commission. The bank has declined to provide more recent figures.

...............

``I would like the bank to come out and say this is our exposure in Brazil,'' said Michael Stead, who manages the $700 million in assets, including Citigroup shares, in the Wells Fargo SIFE Specialized Financial Services Fund in San Francisco.

************

Misetich

Lets stay on this HOT TRAIL shall we!

Got gold?

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APUmaXxQRVS5TLiBKSnip:
By Bill Koenig and Jeff Green


Detroit, Aug. 1 (Bloomberg) -- U.S. auto sales rose 8.2 percent in July, spurred by a 24 percent gain at General Motors Corp. after the largest automaker revived no-interest loans. Sales rose 1.5 percent at Ford Motor Co., the second-largest automaker's first increase this year.

Automakers sold 1.52 million cars and light trucks and July's annual sales rate hit 18.1 million vehicles, the highest pace since October, according to Autodata Corp. The General Motors surge helped U.S.-based makers take almost a full point of market share, to 62.1 percent, from overseas-rivals such as Toyota Motor Corp. and Honda Motor Co.

U.S. automakers used discounts to clear out 2002 models as the stock market slumped and consumer confidence marked its biggest monthly decline in nine months. General Motors benefited most because it had both the financial strength to act first and some desirable cars and trucks to back it up, analysts said.

``What's driving it is incentives at General Motors,'' said George Magliano, director of automotive industry research-Americas at DRI-WEFA. ``While overall confidence is shaken by the stock market, people will still buy if there's a deal.''
............

Misetich

The housing and automotive industry are red hot - YET the US economy is barely nudging forward

Low interest rates are fuelling this two industries - the auto and part manufacturers, are major employers -

How long can this pace keep up?

One can imagine what would happen to the US economy and the unemployment if the debt ridden consumer slows down a little

Got gold?

I was on the phone perhaps two hours ago with MK and told him in no uncertain terms and without need for exaggeration that my view of the situation at hand is that we are on the brink of the most significant financial crisis faced by the likes of modern man.

Not only are we on the backside of a U.S. equities bubble, but there is a South American contagion growing apace, all at a time when the euro project has grown legs to challenge the dollar's stronghold as THE reserve asset by offering a "love it or leave it" alternative, along with mark-to-market gold.

Given the scope of this transitional threshold coming not smoothly but at a time of incredible financial instability, the Eurolanders have got to me thanking their lucky stars that Maastricht was implemented not a moment too late, and yet they are surely wringing their hands with worry over impending global systemic calamity.

Anyone who knows me well knows that it wasn't lightly that I posted the following concluding comment on Monday about how bad the situation currently is:

"Even rivals [i.e., dollar and euro factions] W/R/T the end-game may pull together at intermediate times to fend off mutually assured destruction, yes, things being that bad."

It remains my hope that this may pass, somehow, to the everlasting benefit of all, the public kept largely unaware if necessary -- to avoid the alternative of widespread social upheaval.

With or without social awareness and upheaval, there is no doubt that with the passing of this time there will be with it a fundamental transition in the structure of the financial power base. Those with physical gold will emerge with their wealth none the worse for the wear. An understatement. Both a nominal and a real revaluation of the noble metal would factor large in the outcome.

It seems that many people simply fail to appreciate the recent history (and the calm surficial illusions possible) of such things as the collapse of LTCM. Life went calmly on for most people in the Fall of 1998, but the banking/financial powers of the world were living through a very bleak and hellish reality steeped in the actual awareness of the financial seizure at hand during and shortly after that October '98 annual gathering of the IMF/WB and associated parties.

Even when Greenspan & Co. frankly admitted afterwards that we were at that time in fact poised on the brink of collapse of the international monetary system, it still strikes me that the revelation made seemingly very little impression on the daily concerns of the general public. To be sure, it could not be thought of as a one-off event as there have not been significant structural changes (but for the worse) as far as stabiltiy goes. Bailing wire, twine and duct tape, and on we go from there.

Not this time. This time we get a new machine out of the old wreckage. Now the question remains, will it come rolling in smoothly to save the day, or will it fall out of the sky, crushing many in its arrival?

Randy

http://www.morganstanley.com/GEFdata/digests/latest-digest.html#anchor0Snip:

I continue to believe that there is a deeper meaning to all this. Like it or not, the post-bubble excesses of the US economy remain largely intact. That's the unfortunate outcome of a still mild recession -- it doesn't result in a major purging of long-standing imbalances. That's especially true of America's gaping current-account deficit. The current-account gap widened to 4.3% of GDP in 1Q02, and based on the import surge just reported for 2Q02 (+23.5% in real terms) undoubtedly expanded further in the period just ended. However, the benchmark revisions will make the current-account gap look far more onerous as a share of GDP. That's largely because the level of nominal GDP was lowered by 1.2% in 2001; but it also reflects the likely impacts of downwardly revised exports (1.6% lower in 2001) and upwardly revised imports (+0.2% higher in 2001). The net result is that the current-account deficit as a share of GDP could easily be one percentage point larger than we had previously thought -- surpassing the 5% threshold that typically triggers a current-account adjustment. Needless to say, that has important implications for capital inflows into the US and for the dollar -- requiring more of the former and implying more downward pressure on the latter.

*****************
Misetich
"
as a share of GDP could easily be one percentage point larger than we had previously thought -- surpassing the 5% threshold that typically triggers a current-account adjustment."

Typically a country would see their currency devaluated to the tune of 30-40%

Since this particular currency- US $- is supposed to be the "world reserve currency" the bastion of all fiat (please refrain from laughing outloud)allowances are being made -

Clearly this is unsustainable! Will the US $ crash! Perhaps we should have a contest - When and by how much

Got gold?

http://story.news.yahoo.com/news?tmpl=story2&cid=580&ncid=580&e=9&u=/nm/20020801/bs_nm/tech_cisco_stocks_dc_6Snip:

SANTA CLARA (Reuters) - Shares of Cisco Systems Inc. closed down more than 8 percent on Thursday amid rumors, swiftly denied by the company, that Cisco President and Chief Executive John Chambers would resign.
............
Cisco, the No. 1 maker of equipment that directs Internet traffic, also said there was no truth to another rumor that Chief Financial Officer Larry Carter would resign soon.
............
Cisco reports its fourth quarter and fiscal 2002 financial results on Aug. 6.
*************8

Misetich

If stock options expenses changes are made - Cisco is in deep trouble, earning wise

Got gold?

RE: ROCK RE: WAVE RIDER>
ahhhhhhh someone answed, sir/mama, for i cant tell which gender you are due to the golden glare coming from behind you and your long white cape. Are you a Wizzard? I come here seeking refuge. Ive been peering in thru the cracks, listening to the conversations that occur over at that roundtable over yonder. Occasionally i throw a message over the heavily fortified walls here. NO sand under this castles foundation i can see. But today it struck me I had to get inside here,As our fine Nobel Sir Mr. Gresham said the other day in so many words, knowledge without application is useless. My knowledged gained from the outside makes it imperative that i seek SHELTER NOW in this golden castle! Im just a lil inquisitve, hobbit, a burrowing one at that i may add,who in the past 18 months has been ridiculed, laughed at'scorned,and even shuned by the local populace for trying to expalin exactly what was going to happen.Which as you know is unraveling before us daily. Ive had the pleasure of conversing in person with one Mr Murphy. You know of him dont you! I even handed him one of my stickers, you rember it,as i threw it over the wall once, and respected the kings wishes, not to show it (adveritse) it round here.I have coresponded with a Few of the other nobel knights. But it is here where i come to find out the truth, to get to the core so i can learn more in order to shear the wool away from the sheeples eyes with the knowledge, the insights and most importanly the Facts that are presented here. Pluss i want to stake out my lil corner,cause i see many are starting to follow in the footstep os the giants as ANOTHER and friend of another suggested, and i have a feeling there will be many many more following me shortly. So I humbly ask can this lil hobbit come in? I dont need a seat at the roundtable, i just need to be close enough to soak up the ambiance, the warmth and the golden brotherhood that destoys all barriers,all nationalities, and that unites us as ONE ARMY THAT CANNOT BE STOPPED,Nor SHALL WE STOP TILL WE ACHIEVE OUR GOAL!!!! "FREE GOLD." Which in turn should bring about the return of justice ,fairness, transperency and an honest monetray system to this wonderful place we call home! Can i come in please?

http://www.businessweek.com/bwdaily/dnflash/jul2002/nf20020731_4273.htmSnip:

In it, they applauded Federal Reserve Board Chairman Alan Greenspan for telling Congress in recent testimony that the answer to the infamous "bubble question" is that "it is most unlikely."

Greenspan's wisdom aside, the truth is somewhere in between. If you define a real estate bubble as a period in which home prices are rising at unsustainable rates, then it's pretty clear we're in one now. On a national level, home prices climbed 8.1% in the first quarter this year over last year. That's pretty steep.

RECORD SALES. And in the fastest growing markets, such as metropolitan New York and Washington, D.C., prices grew 20% over the first quarter of last year. Home prices historically rise at the rate of inflation, now under 2%, plus a percentage point or two.
............
VICIOUS CYCLES. Given the mixed economic outlook, it's possible that the economy could go into a double dip while the housing market races on. That could lead to a rather vicious cycle in certain local real estate markets -- experienced last by homeowners in the Sun Belt in the mid-'80s and in the Northeast in the late '80s. In those regions, property prices plummeted along with local job markets, leaving newly unemployed homeowners stuck with houses worth a lot less than they owed the bank. That led to a crisis for banks and consumer confidence that took years to fix.

Most experts think that's unlikely to happen on a national level, however. Some bearish investors are worrying now about Japanese-style deflation in America's future. But that's about as pessimistic as it gets.

***********

Greenspan says its not a bubble- who are we to question the Maestro?

Got gold?

http://www.safehaven.ca/Editorials/Chapman/Chapman080102.htmSnip:

In the Kondratieff winter, gold has clearly outperformed. The rationale for owning gold and gold stocks remains firmly in place. We summarize:

Demand - While Gold demand abated as we went over $300 yearly demand/supply shortfalls are still 1500 tonnes per year or more. Some of this is made up by Central Bank Supply but with no new mines coming on stream and companies needing more time to reopen closed mines there is no foreseeable turnaround to annual shortages. Silver inventory supplies in the United States have run out and there has been no new production coming on stream in years. Silver demand remains very firm with a plethora of industrial uses.
Short positions - The conservative estimated gold short position is in excess of 5000 tonnes and the more probable realistic short position ranges from 10000 to 15000 tonnes. Silver short positions are also quite large.
War risk - The war on terrorism is an open ended long lasting affair. There remains a serious risk of a broader war in the Israel/Palestine conflict, or an outbreak between India/Pakistan and the probable invasion of Iraq and possibly even Iran.
Country Debt collapse - Argentina collapsed and there is further risk in Brazil and having the contagion spread to other Latin American countries. Many African countries are perpetually bankrupt.
Corporate corruption - Enron, Global Crossing, Tyco, WorldCom, Aldelphia, America Online and more. The sight of the arrest of the Rigas (Aldelphia) father and sons seemed to help the market on July 24. So where were the shackles and the orange jump suits? Now that would have left an impression. The SEC has decreed that over 900 companies CEO's and CFO's must certify their most recent filings by August 14, 2002 or risk jail terms. Failure for numerous companies to comply could abort any rally underway. There are also investigations into J.P. Morgan, Citigroup and Merrill Lynch over their dealings with Enron. J.P. Morgan is the $24 trillion derivative bank. The problems at Enron concerned the hiding of derivative deals. Even Bush and Cheney are under investigation for their nefarious dealings at Harken Energy and Halliburton. The White House is trying to stonewall the investigation and a lawsuit against Cheney. Something is rotten in America and to think they used to criticize Japan for effectively the same thing.
Oil - We are running out of oil. Long-term shortages should begin to show up by the end of this decade. We have contended that the War on Terrorism and the probable invasion of Iraq is more about the oil then it is about terror or weapons of mass destruction. The USA consumes 25% of the world's oil and worldwide supplies are not secure. There has been no major find in years. Commencement of war with Iraq could spike oil prices over $40 and higher.
Trade wars - America calls itself a free trader. You would never know it with the trade wars developing over lumber, steel and farm products. Trade wars, through the Smoot-Hawley Act of 1930 was a major contributor to the Great Depression.
Trade deficit - The US trade deficit that recently hit record levels of $35 billion/ month and is more than 4% of GDP is clearly unsustainable and cannot be financed from non-existent US savings.
Debt - This is the real Achilles heel and we are only beginning to see its potential deflationary effects as corporations go bankrupt. Consumer bankruptcies are on a record pace and will rise as any recession or worse gets underway.

Fried "golden"trout, pickled lemmings,and upside down cake!

Firstly, congrats Sector - excellent post.

Secondly, on Brazil, my view is this:

Currency turbulence of last few days is due to exporters/multinationals scrambling for dollars as unable to roll over debt, rather than wholesale capital flight.

Key to this is the fact that the parallel exchange rate moved to a 10-15% discount to commercial rate, and a huge spread opened up between the bid/ask on commercial.

http://br.biz.yahoo.com/cma/dollar.html

Today's fall back to 3.13 seems to be anticipating rumours of a $10-20bn package agreement with the IMF.

The head of the Brazilian CB, Arminio Fraga, is an extremely sharp trader and knows when to act.

The problem is the presidential elections:

The fairy-tale scenario would be Cardoso (FHC) electing Jos� Serra. The problem is that the PFL and the Northeastern elites have already decided that with Serra they will have to take their hands out of the till and have shifted to Ciro Gomes, who is far more charismatic, but is a 'loose cannon' - volatile, impulsive and capable of just about any kind of deal with anyone. Anyone who knows anything about Brazilian politics can see what kind of an animal Gomes is by seeing who is backing him - all the oligarchs from the Northeast like ACM and Bornhausen, as well as the politicians who fought tooth and nail to stop Collor from being impeached in 1992. The likelihood of a slide into populism and corruption under Gomes is thus high, particularly since he does not have a well-defined power base.

Polls suggest that Gomes could beat Lula and that he is now 13 points ahead of Serra, who seems to be failing to capture the imagination of the electorate. This may turn around in September as Serra has far more air time than the other candidates, but right now, his campaign appears to be in trouble.

My take on it is thus that FHC will pull all the strings to get Serra elected, but he may not succeed - if at any point it becomes clear that Serra is out of the race, FHC's agenda changes and rather than keeping things afloat, he won't be sad to see the opposition candidate inherit a crisis. Also, Fraga's resignation as head of the BCB would be an extremely negative sign, although it is possible that any government might invite him to stay on.

As such, I wouldn't expect Brazil to fall apart for at least another month or two, but this is merely because Cardoso is buying time in the hope that he can elect his successor - which currently seems an uphill struggle.

Correct me if I'm wrong, but international press coverage of Brazil seems to have grasped the wrong end of the stick completely.

ENTER, and go forth STEADY(ly)!!!
<;-)
PS: The Hobbits loved your "Luncheon Menu" !

http://smh.com.au/articles/2002/08/01/1028157814498.htmlSnip:

In another development on Wednesday, members of Congress accused Mr Bush of undermining a corporate reform law by rolling back protections for company whistleblowers who provide evidence of fraud.

Hours after Mr Bush signed the law on Tuesday, the White House quietly issued a statement outlining its interpretation of the law. It said whistleblowers who provided information to congressional committees conducting investigations would be protected, but not necessarily corporate whistleblowers who approached individual legislators with evidence of fraud.

***********

It sounds like the corporate lobby group sneaked one by

Is it a sellout?

Got gold

Just one question - if JPM is already de facto under control of the Fed/some US government authority - couldn�t the latter evoke extraordinary measures to prevent the other side collecting on its contracts if JPM's share price slid under $20?

I'm sure the answer to that is YES.

First, I'd change your nom de guerre. Second, I'd buy only physical gold (and maybe a good CA jr. with gambling $$).

Black Blade -- Thanks for "The Onion" humor! That one was just waiting to be written, and you caught it for us.

Pizz: That's a sad one. I hope you can take some comfort in companionship here (especially if the bone pile beckons your way), and also consider conducting your own special "exit interviews" with those worthy individuals. Give them the larger context, the possibilities of some "hard savings", and the addresses to some good sites to read.

The background of it is: As long as we are all (well, 91% anyway) wage slaves, we will live on the edge of the bone pile. The self-employed can hunt for themselves (and not even very well at that, at times). I know that such a blanket statement has holes in it, but it is the attitude I want people to consider. The price of "security", in this era, is chains. And no significant reduction in anxiety.

That was a teriffic and very accurate appraisal of the situation (not normanl). Best2U...CM

He's been there and done it in gold once already during a time when I really had no insight whatsoever about the gold market [1977-1980]




::Dear Tommy:

::I agree with your analysis that nothing can stop this bull ::market in gold I know of. It can be delayed but not ::reversed.

::Regards,
::Jim

-----------------------------------------------------------

/ /_
/ / /
/ From the Tan Range Interactive Web Site
/_________/ /
/_________/

============================================================
S E N D A M E S S A G E
============================================================
TO: Tan Range Exploration Corporation

Date: Tue Jul 30, 2002 at 7:18:21 PM Pacific Time
============================================================
FROM: []

============================================================

Messages, Questions and Comments:
:
: For Jim Sinclair:

: A short note, Jim, to thank you for your
: eloquent analysis of the gold market, the international
: financial situation, the condition of the Dollar and the
: condition of JP Morgan/Chase.
:
: I listened to your interview with Jim Puplava from
: 7/20 and have recommended it to a few others.

: I've been waiting for this gold bull for 20 years.
: Some proprietary research I had developed over that
: period indicated a long term gold bull mkt. opportunity
: window to open up in June of 2001.

: I do agree that the elements are in place for gold to
: put in the new high, no matter what, and, although I
: fully understand that this is inevitable, your expert
: commentary and experience I hold in high regard.

Welcome Sir. The industry I rely on for my daily bread is rather strong (corrugated packaging aka, "empty boxes"). We were down last year (tonnage) almost 6%. This year, we've just put a price increase thru successfully and quickly and many of our 67 plants are very, very busy. Typically we lag the downturns and turnrounds by 6 months. I will be reporting from time to time on this.

A report from N. colorado where I know a number of people is "nothing is moving". The economy is at a standstill here. This region has been one of the fastest growing in the country.

danke scheon

steady you sound like you need a little refuge from said elements. If I can be of any assistance in furthering your pursue of peace, tranquility and truth I'd be glad to. Wizard I'm not but I do tend to swim much deeper than the average Joe Sixpac. What's your email address and we can continue the dialog if its off subject. I have a block on everyone except aol users to cut down on the spam or I'd give you mine.

Sector what a post! Bravo my friend.

Sir Rock

Greetings. Welcome to this highly esteemed forum. I would recommend that you walk the golden trail so as never to have to pronounce yourself as an "idiot" to other posters on this site. Few, if any, true contributors to this site preface their posting with a diatribe that would likely reflect the circumstances of those who may be lurking here for the first time so as to create an emotional bond whereby anyone following said post would think to his or her self "you know, I am in the same boat."

I would suggest that you strongly consider THAT which physical gold imposes on all who seek the liberty that is inherent in it's ownership: responsibility for one's own education and decisions.

I know that I may offend some by being adversarial to those who appear to be hapless newbies on this site, but I truly treasure the exchange of ideas and information on this forum so much that I have taken it upon myself, albeit without the request of any other poster or the gracious host of this site, to directly engage those who appear to have the same typical questions or MO that I have found on other sites.

If I have offended anyone, as I have said before, please note that I do not care.

Paper Avalanche

...because it is THEIR death too!They are interconnected through counter party incestuous relationships...like the Borg Hive made famous in Star Trek. So if one is infected and dies they ALL get infected and die.

The most likely scenario is that there will be an increasing divergence between a falling DOW and a strangely levitated JPM. Thus attracting even more attention to the rig job.

As Gretchen Morgensen [The crack NYT financial reporter] said this week after a SOXX futures Goldman Sachs rig, "Wall Street Cannot Afford Any More Coincidences".

The Fed's propping JPM will only draw more attention from the un-corruptible Moody's and S&P ratings agencies. All they need to do is issue even more downgrades and voila... the millions of JPM shares still held by funds will pop onto the market.

The Fed may own All the JPM stock in the end. At that point, everybody will know, especially the JPM derivatives counter parties who then may sue, alleging fraud in setting up the derivatives under false pretenses in the first instance.

The Enron litigation, potential litigation from counter parties, Latin American loan losses...take you pick and pick your 2002 week for the JPM dead man to stop "walking".

Tonight's headlines:


US-Brazil trade group calls O'Neill uninformed - Reuters Market News - 8:12 pm
Uruguayans loot, strike amid spiralling crisis - Reuters Market News - 7:02 pm
O'Neill says no 'magic bullet' for Latam woes - Reuters Market News - 7:00 pm
Brazil's real stages big comeback on IMF hopes - Reuters Company News - 6:30 pm
Argentine peso posts strong gains, shares dip - Reuters Company News - 6:26 pm
GLOBAL MARKETS-Global stocks slump on weak US data, bonds gain - Reuters Market News - 6:00 pm
Mexico stocks down 4.41 at year-low on economy woes - Reuters Company News - 5:48 pm
Dour manufacturing data spark rally in Treasuries - Reuters Market News - 5:38 pm
Revlon reports wider second-quarter loss - Reuters Company News - 4:52 pm
Fed had no large 1-day net misses in reserve projections - Reuters Market News - 4:34 pm
U.S. M-2 money supply up $15.4 bln July 22 week - Reuters Market News - 4:33 pm
Bush, Greenspan review economy over lunch - Reuters Company News - 4:27 pm
COMEX gold bounces to end above 4-month lows - Reuters Market News - 4:22 pm

Brilliant post, Randy (I feel privileged to have heard you speak it!). The most important point has to do with the South American crisis. In talking to a Wall Street friend yesterday he said to me: "Mike, we're right back in 1997-98 and I don't know if this group in Washington can handle it." (He's a Republican.) All the while, the press concentrates on the small pox vaccine, the Pope's travels and whether or not there are enough handcuffs to go around for all the corporate executives going to jail. Today, one of the talking heads at CNBC echoed a point I made here some time ago. "We can't believe corporate America's numbers," she said, "and we can't believe the government's numbers. It's all very disconcerting." Now, that's a worthwhile observation. Apparently, the revised numbers (I didn't catch the details) were better than five iron from the initial numbers. So the stock market tanked. . . . Observation: This is the difference between a Republican and a Democrat in the White House. She never would have said something like that during the Clinton years even though his administration wrote the book on phony numbers. Republicans are fair game as far as the press is concerned. Democrats are holy ground. The only good to come out of it is that the public is going to finally find out about things discussed here on an on-going basis. Watch out for Hillary -- the fifth Horseman?? In the meantime, get some gold. If you've got gold, try to figure out a way to add more. If you don't have it and you're thinking about it, don't wait for Larry Kudlow to give the buy signal.

LOSER (08/01/02; 17:10:04MT - usagold.com msg#: 82052)
Hello esteemed and knowledgeable members of the group --
===
Happy to see you here, and my suggestion is that positive thinking is a better mode to assist your wealth recouping than negative thinking. In our lives, WE have all been a LOSER at one point, or another. At times, some of us (LIKE ME) have been BIGTIME losers !!

After you have had an opportunity to review the "Hall of FAME" messages and reviewed the present GREAT postings of many here at the FORUM, you have the opportunity to make the correct decision, -- ONE that fits your lifestyle.
REMEMBER, that you too can "follow in the FOOTSTEPS of GIANTS"!

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028185353918&p=1012571727088By Julie Earle in New York
Published: August 1 2002 22:00 | Last Updated: August 1 2002 22:00

Investors continued to flee a grim US stock market in July, with early industry estimates suggesting that some $47bn was pulled out of equity mutual funds - the largest net monthly outflow in history, according to new data. The forecasts have raised concerns that investors are losing faith in equities and could further upset an already volatile market.

Wall Street received another setback on Thursday after downbeat reports on reports on manufacturing data and unemployment benefits cast doubt on US economic recovery. By mid session yesterday, the Dow Jones Industrial Average was down 200.06 to 8,536.53, while the broader S&P 500 index gave up 23.83 to 887.79.

Investors already pulled $18bn from equity mutual funds in June as the stock market lurched lower, compared with a $5bn net inflow in May, according to the Investment Company Institute (ICI), the mutual funds trade group. The second straight month of big equity fund outflows in July, would be the fifth monthly outflow in 12 years.
+++++++++++++
It's even worse that stated above because the vast majority of fund holders have yet to receive their July statements. August might break July's outflow record.

That may begin to show up next week as unrelenting DOW pressure and volatility that accelerates into and through theLabor Day weekend.

It will be "The Economy Stupid" times ten. George Bush now cannot avoid the "Herbert Hoover" epithet.

http://www.euromoney.com/index.htmlSnip:
Seasoned international bankers believe that changes are now necessary in the area of off-balance-sheet financing � an activity that has exploded out of all recognition in the past decade or two. "Deregulation started 20 years ago and has gone way too far," says Minos Zombanakis, a well-known former Euromarket banker who is now an international financial consultant. "To allow off-balance-sheet financing of such enormous amounts is ridiculous. Banks use off-balance-sheet structures all the time to avoid capital adequacy." He adds: "The whole idea of off balance sheet is wrong. Consolidation is a necessity. You can use any kinds of structures during the year that you want, for administrative purposes or whatever, but when it comes to reporting, you must consolidate. That is the only way to protect the investor."

............

Investment bankers may need to change their focus as regulators and accountants catch up with them. But no-one doubts that they will find ways to keep innovation alive and their fee-earning power high. A Wall Street lawyer adds: "Investment banks will carry on regardless until someone puts a gun to their heads and says: �Stop. Now.� It is most unlikely they will stop doing anything until they are told to do so. And even if you do put down a dam, like water they will always find a way around it."

***********

http://www.usatoday.com/money/markets/us/2002-07-31-mart_usat_x.htm

Snippit:

NEW YORK � Investors may welcome the dog days of August after the bite their portfolios took in July.

S&P 500's worst Julys
Pct. change
2002 -7.9%
1974 -7.8%
1975 -6.8%
1969 -6.0%
1986 -5.9%
Source: Sam Stovall of Standard & Poor's

Despite two rallies in the past six sessions that raised hopes stocks had finally hit bottom, the Standard & Poor's 500 fell 7.9% last month, its steepest July drop in more than a half-century.

Black Blade: Sure we saw a couple of suckers rallies last month, however, the economy is slipping off into the abyss. Yesterday it was the horror of the GDP numbers and even worse revisions, today it is the ISM data that suggests a very weak economy and more surprising is the 2.2% drop in construction for July!!! July is the middle of the construction boom � this could be a signal that the real estate bubble is beginning to deflate. The "Bone Pile" continues to grow daily � with more added today according to BLS data (even accounting for "seasonality" and those who don't count for numerous reasons). Tomorrow we get the "Bone Pile" numbers for last month and the revisions. Whatever the outcome, the "Bone Pile" continues to grow as many who were cut loose have not found jobs and many others have only found lower paying jobs. The US economy is falling off into oblivion and now that the lights have been turned on and the cockroaches have scattered, we are only now able to assess the damage even as the primates on CNBC and CNNfn attempt to cover it up and spin some ludicrous story. As always, get out of debt as soon as possible (and stay out of debt), stash enough cash for several months expenses, get Gold and Silver portfolio insurance to transport wealth across these and coming trouble times, and most definitely store several months worth of nonperishable food and basic necessities for when that income check no longer arrives.

Michael, did you mention Larry Kudlow and a gold buy signal in one breath? Physical is probably not for selling at all but I've often thought that a buy recommendation from a Kudlow or Cramer would alert us traders that it's time to sell some paper gold assets. From Rukeyser, sell some more!
As much as we may wish otherwise, I believe you are spot on in stating that the press and general public do not see those things which makes me wonder how the system can last much longer.
From your unique viewpoint, can you tell us what you see concerning the availability of both gold and silver supply? Also, the Comex is not reflecting much more than the beginnings of a bull market, has demand for physical shown otherwise?
Thanks,
Rich

RE: Nikkei; when to expect "official" intervention IYHO?

http://www.forbes.com/newswire/2002/08/01/rtr684538.htmlSnip:

"People don't want credit risk," said one head trader at a
European investment bank. "Big portfolios have gotten burned
owning spreads and betting on spreads coming in. People are
scared and want to be in five-year Treasuries and 10-year
Treasuries."
...............
Traders have noted many investors paying fixed rates in
swaps against losses in other issues, like mortgage-backed
securities, agencies or corporate bonds since the sharp move
wider began last week on worries about liquidity problems at
J.P. Morgan Chase and Citigroup.
***************
Misetich

Lets stay on the JP Morgan and Citi HOT TRAIL!

Got gold?

http://www.washtimes.com/national/20020731-980104.htm

Snippit:

Democratic Sen. Joseph I. Lieberman yesterday backtracked to say he will subpoena former Treasury Secretary Robert E. Rubin "in a minute" if he determines that Mr. Rubin can shed light on the Enron collapse. "If Mr. Rubin would add something, I don't have any hesitation to call him," said Mr. Lieberman, chairman of the Governmental Affairs Committee. "So we'll see." Democrats have tried to blame recent corporate scandals on Republican policies, and Republicans say calling Mr. Rubin on the carpet would undercut their political strategy. Mr. Lieberman, Connecticut Democrat, told The Washington Times last week that he had no plans to call Mr. Rubin, a Citigroup official who asked the Bush administration to intervene with Wall Street credit-rating agencies on behalf of Enron when those agencies were about to downgrade Enron's ratings.

Committee Republicans who have debated pressuring Mr. Lieberman to call Mr. Rubin as a witness say they doubt he would do so. "I don't think if we insisted on calling Robert Rubin that the chairman would do it," said Sen. Jim Bunning, Kentucky Republican. "I know Joe Lieberman." "I've been looking at some of the documents we got from Citicorp to try to determine his involvement," said Sen. Susan Collins, Maine Republican. "There's some documents on which there's 'R. Rubin.' But I'm not sure it's the same Rubin. So we've still got some work to do on that." Mr. Bunning said Mr. Rubin has shown an ability to talk at length in congressional hearings without really answering the questions posed by lawmakers. "He would take one question and filibuster the answer," Mr. Bunning said. "He does that all the time when he appears before committees. I call it obnoxious rather than smooth."

"It's outrageous that they go around beating up all of these corporate fat cats, and one of the biggest fat cats, Robert Rubin, is now clearly implicated, or Citibank is clearly implicated in some of the corporate accounting scandals when he was there," Rick Santorum (R-PA) said. "Not to have him come and account as they have made other folks come and account is purely political. If this was a former Republican secretary of the Treasury, I guarantee you that he would have been called up here a long time ago." He said it would take great political courage for Mr. Lieberman to subpoena Mr. Rubin.


Black Blade: Can you just see it? Robert Rubin in cuffs doing the "Perp Walk". I'm not holding my breath though. But there are some tough questions that Rubin should answer and it could be an embarrassment to the Democrats as Clinton and Gore were recipients of big Enron money. It appears that Rubin may have got his position by providing political favors when he was Secretary of the Treasury. Can you say "Teapot Dome Scandal"? I knew you could.

http://www.washingtonpost.com/wp-dyn/articles/A28776-2002Jul31.html
Argentina's Neighbors Swept Up in Turmoil as Some Investors Flee

Snippit:

MONTEVIDEO, Uruguay, July 31 -- Several additional South American countries have been swept up in what is becoming the region's worst economic crisis in two decades, igniting fears of a replay of the Latin American financial collapses of the early 1980s.

The crisis, which analysts had hoped would be contained to Argentina's financial meltdown six months ago, has now spread to its neighbors Brazil, Uruguay and Paraguay. It has threatened to engulf other politically unstable economies in the region as well, including Bolivia and Venezuela, where analysts predict deep recessions for this year.

But this week, investor flight has particularly hit Argentina's immediate neighbors. In Brazil, Latin America's largest economy, government bonds have fallen to half their face value in recent weeks because of fears of a government default. The Brazilian real, in a tailspin that has lowered its value against the dollar by 19 percent this month, today touched its lowest point since going into circulation as the national currency in 1994.

Paraguay has come face-to-face with the prospect of a banking collapse and a deepening recession. Here in tiny Uruguay, dubbed the "Switzerland of Latin America" for its rock-solid financial system, government officials trying to stave off a debt default are seeking an immediate loan from the International Monetary Fund, the U.S. Treasury and other major foreign lenders.

To ease the pressure, the Uruguayan government was forced to close banks Tuesday for the first time in 20 years. It decided today to extend the banking holiday until Monday. The closure left many Uruguayans lining up in front of ATMs.


Black Blade: One should not forget the financial crisis in Colombia either. Chile casts a wary eye to the east as well. The people had better get prepared because this is like a plague that has Buenos Aires as ground zero and is spreading outward. Even Mexico is concerned about the impact to its economy. I have some gold Uruguayan pesos, however, USAGOLD has offered several Gold coins from south of the border (Argentine, Uruguayan, and Brazilian). Unfortunately these Latam people are going to suffer badly and only those who have prepared will come through this without too much difficulty. When this mess shows up on our doorstep in the north (Mexico, US, and Canada) it is sure to spill across our borders.

I smell devaluation and/or default.Friday, August 2, 2002 9:44 a.m. JST

Govt To Redesign Bank Notes For 1st Time In 20 Years

TOKYO (Nikkei)--The government and the Bank of Japan decided Thursday to redesign the 1,000 yen, 5,000 yen and 10,000 yen bills, with circulation planned to begin in fiscal 2004. _Read More...

http://smartmoney.com/tradecraft/index.cfm?story=20020724

Snippit:

PERHAPS IT'S TAKEN the evaporation of trillions of dollars of stock-market wealth and several of the biggest corporate bankruptcies in history to get us thinking, finally, about the risks associated with paper assets. While some of you might think hard assets like gold bullion are owned only by Montana Militia types, I've found owning gold to be a satisfying, prudent and (lately) profitable endeavor. And with U.S. equities and the dollar in virtual free-fall these days, my interest in the precious metals has become something of a fetish. Whether we're talking Eagles, Maples, Kruggurands or gold bars, the only way I can describe the experience of holding even a single ounce of gold is to say that it feels like wealth. And these days, wealth feels really, really good. Gold's recent strength has been attributed solely to weakness in the U.S. dollar and a skittish stock market. But I'm of the belief that gold is just plain undervalued � especially relative to more traditional investments (read: equities).

Black Blade: Jonathan Hoenig is also known as the "Capitalist Pig" (portfolio manager of Capitalist Pig Asset Management - a hedge fund) and is a frequent guest on FOX's "Cashin In" where he always pushes Gold as an asset class even when ridiculed by the other guests (who incidently have lost their shirts over the last couple of years). In the article he takes another view of the Gold/DOW ratio as a measure of value.

The Griffon5 message came across very clear today. We need more folks to come to the realization that the times are as bad or worse than most understand. Almost daily I try to bring the conversation to gold with friends. It is very difficult to deliver the message without feeling awkward. Why is it so hard for most to understand we have so little time left to salvage our wealth? We are a very strong society recently based(few decades) on a very weak paper system but the idea that we need to back our investments with gold is foriegn to most folks I know.

This country will need strong people with gold to kick start the next economy. Awkward or not, this message must reach more people. Gata keep trying. You guys(and gals) are great.

Joan Veon interviewed William R White, BIS Economic Adviser and Head of Monetary and Economic Department a few weeks back. The Bank that deals in gold!

Veon: With regard to gold............

White: With regard to gold, there are a number of combinations to explain its rise. One is that gold prices were very low for a long period of time. The flow demand for gold is significantly higher than the flow supply, in part because flow supply is down reflecting the low prices and the cost to open up or reopen mines. Flow demand is rising and could rise sharply for structural reasons. China and India are doing very well with opening up the middle classes and gold particularly in India and in China is considered a symbol of status such as jewelry. I would think that as they become more liberalized that it will change the price of gold, simply because there are people whose culture tells them to buy it......
________________
Joan Veon is a reporter and financial advisor who has been following the changes that are taking place on the world financial scene.

Another --- "Can you not follow in the footsteps of Giants. I tell you it is an easy path to follow"

http://www.financialsense.com/Market/wrapup.htm
Snippit:

Just about everywhere you go these days, Wall Street and the financial press are doing their best to discredit the metal. Why? The reason is that gold is a barometer on government and the financial markets. It is unloved, talked down, and discredited by Washington and Wall Street. They know the rise in gold calls into question the expansion of money and credit. Like a barometer signaling an approaching storm, gold is the one true barometer of the financial system and on government itself. It is the reason gold is hated in Washington and on Wall Street.

Alan Greenspan, writing in Gold and Economic Freedom in 1966 said, "In the absence of the gold standard, there is no way to protect savings through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done, in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and therefore declined to accept checks as payments for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves." That is why Washington and Wall Street wage a war against gold.

The talk in financial circles that gold is an archaic relic of the past will prove to be shallow as it continues to rise against one currency after another around the globe. If you were a citizen in Argentina, Brazil, or Uruguay, where would you rather have your money -- in paper or gold? Gold or silver would have been the only life preserver that would have enabled you to protect your capital in times of crisis as your nation's financial system imploded and your banking system was shut down. This is what Japanese savers are now doing after 12 years of deflation and repeated recessions. It is also starting to happen here in America. In a CNBC poll of its viewers, 22% of all those polled now believe gold will produce the highest returns in the next 12 months.


Black Blade: A good article � check it out. Comments? No need, Puplava nails it.

Maybe the Forum should put together a nice little gold present (hint MK) so I can get away more...market seems to do well...though hopefully it will do better yet in next few days. I am still concerned that we may have to wait till October for real break-thru though today looked good

Saw three Companies....two are very well known ....and there is NO recovery in sight ...people are scared at all levels and wonder how long their jobs will be there and more importantly what next...I have never seen this degree of fear... not quite panic but getting closer.

Also I had a long talk with an executive from Europe...he is shocked at the coverage of US News....so very little economic facts...so much happy days are coming etc...yet lots about when we are going to war...as he said...you Americans are living in Country wide Disney World of make believe...what a shock when you find out what is really out there!

Sad commentary!

http://news.bbc.co.uk/2/hi/business/2165767.stm

Snippit:

The 98bn euro (�62bn; $95bn) budget of the European Union is an accountant's nightmare, riddled with mistakes and full of loopholes, according to one of its own former auditors. In an interview with the BBC, Marta Andreasen - who was ditched from her post as chief accountant at the European Commission in May - says the Commission's numbers fail even to meet minimum accounting standards. Officials can change numbers without leaving any kind of electronic trail, offering a standing temptation to fiddle the figures, Ms Andreasen said. The charges come at an embarrassing time, just as the world is trying to tighten the rules after a spate of accounting irregularities committed by large private corporations.

Ms Andreasen told the BBC's Today programme that the systems at the Commission made accurate record-keeping impossible. "The effect of all this is that the accounts do not present a true and fair view of the situation at the commission," she said. "The computer system on which the transactions are processed is incoherent, insecure and allows no audit trail." The lack of security, she warned, "gives big room for fraud" - and makes tracking it almost impossible. Ms Andreasen was moved to a job with few responsibilities on her old 125,000-euro salary in May after refusing to sign off on the Commission's 2001 accounts. She had been pressured to do so by senior officials, she said, and is now facing disciplinary action initiated by Neil Kinnock, former UK Labour Party leader and now Commission vice-president in charge of administration.


Black Blade: And it gets worse. It appears from leaked documents that the EU is rife with corruption and fraud. It appears that some one has a lot of explaining to do. I suspect that we could see Euro markets take a big hit at the open of trading. Do they do "Perp Walks" in Europe? Hmmm...

http://quote.yahoo.com/m2?u
Asian markets have resumed the big slide into oblivion. Looks ugly tonight. The data from the US over the last couple of days is certainly not inspiring to the world markets. Even the "Currency War" is turning out to be a losing proposition. Euro markets should be hammered at the open as well. It should be an "entertaining" night as we watch the world markets.

- Black Blade

"Leaked document"....hmmmn....certainly timely for the $ ...if it gets wide spread publicity

Gee I never use to be a conspiracy theory person...but the more I see/read ...the more I wonder when things come out like this

Though no doubt US has same or worse problems.

http://www.kitcomm.com/comments/gold/userimages/whack.jpgI took trade deficit numbers and yearly POG data. I graphed the amount of time that the US gold stockpile could finance the balance of trade shortfall. This looks like a recipe for currency trouble.

And it looks like gold is pretty cheap, and that it is miniscule in availability when compared to the current account....you want money that is real or a promise to pay from a broke bank?

No GOLD, no guts, no GLORY!!!

Mr. Gresham: Thanks for the supporting words. It's a tough nut when in today's corporate world and condition it's in, one has to have a suit of armor over his/her humanity to do what has to be done (???). I thank God I still have some feelings left.

Griffin5: Welcome and don't just lurk, I'd (and probably quite a few others) prefer to hear more of your thinking rather than try to fathom the depth of your post - it was a damn good one. Greenspan & Bush lunch? I'll add a thought - how bout a luncheon update? "Where are you withregards to the timetable" and/or "how much time do we have left??" Probably the latter.

Cavan Man: I never have believed in coincidences. The two largest economies in the world just happen to overhaul their currencies at about the same time - and both with major banking problems?? Right - I vote for DEFAULT.


Now, about war and elections. Has anyone ever given any thought to the fact that assuming our enemies just might be waging a bit of a financial war against us, if the markets really crashed before elections, I would think the Democrats might just gain control of Congress, in a big way.
Might put a crimp in the Iraq plans. And on that basis, now that their spining the Iraq idea off til next year . . . what a twisted web is being woven.

Pizz

They propped the Nkk225 back up to 10,000 in December 2001...for the end-of-year mark-to-market drill. This to save their insurance industry and massive pension funds.

Will they do it again? Don't know.

The Bigger question relates to the story about a currency redesign due in 2004.

Get this STRAIGHT. The new currencies of Japan and the US will NOT be introduced in 2004!

They will be issued long before 2004 and they will represent, synchronous massive devaluations of both nations currencies. Canada and Mexico will be "Assimilated" by the Federal Reserve's plan.

There can no other explanation for both US and Japanese currency paper design changes at this juncture.

What will happen to gold holders? They will keep their wealth...maybe surreptitiously...but they will still HAVE it.

What about gold shares? They go to the moon....in "New" dollar units because "Old" dollars will not trade on electronic stock markets [Just a wild guess].

The goal of the Fed will be to introduce so much confusion about the "New" money's conversion factors that people will not understand they have been swindled by their government...that their "Social Security" payments will be reduced by a factor of 10X.

I have been thinking lately (after lurking here and at the ?other place?) more and more about how the individual States could reaffirm their 10th Amendment Rights again and uphold the US Constitution even if Congress refuses to abide by it.

The biggest obstacles I see are the Fed Notes.

Article 1, Section 8 of the US Constitution requires the money to be coined and the States can?t print their own. Since Congress seems to have deferred its right to declare what is money and set the value to the private Federal Reserve Bank, they have violated their duty and the Constitution.

Now in Article 1, Section 10, it says that the States can only make gold and silver coin as payment of debt.

If I was the Governor of my State I would be in a quandary as to how to abide by, and uphold the Law of the United States Constitution and that of my State Constitution.

The Fed Notes are what the Federal Government has declared to be legal tender to pay all public and private debts. Are these supposed to be the public and private debts payable to the States or only to the Federal Government? If they are to be used for paying State debts then this is a violation of Article 1, Section 10. That section has never been changed to my knowledge.

So, here is where my brain told me it had an idea.

What if, as Governor, I declared (or was to sign some newly passed legislation) that six months from now all tax money delivered to the State Treasurer would have to be in the form of gold or silver coins. Along with the declaration would be a pronouncement that every State funded project currently being funded would cease until enough revenue was collected to pay the State?s bills (e.g. State employees and any private contractors). However, the Fed Notes still held in the State Treasury and in private hands would still be used to pay off the Federal Income taxes and any Federal taxes owed which had been collected within the State (i.e. gas, phone and other Federal fees).

This could help to get rid of all the paper money, or at least Fed Notes, but would make a problem with having to pay everything with coin. (I haven?t figured out yet how to get rid of the base metal coinage. Still working on that issue.)

One proposal I would want to implement as the Governor would be the laws on property taxes. If you are paying a mortgage or property taxes you are not a free person. I would have to get a law passed somehow to prevent the Federal Government from ever being able to cease someone?s property if the land and house was fully paid for. I would also have to get a law passed that would abolish any property taxes on property that the owner has full title on. Now the way I see things regarding mortgages is the bank owns the land and house. A bank is not a person, but an entity. A person shouldn?t be taxed. The bank can be taxed. If you have a mortgage then the property belongs to the bank and can be taxed. Once a person was to fully pay off the mortgage the land/house/property becomes theirs and all property taxes would stop and the land would be freely transferable to all heirs of the estate. I think this would get people to pay off those 30-year mortgages quickly as it would help them save money in the long run. However, if someone was to re-mortgage the house/land/property, then property taxes would again take effect.

Now the States cannot print money, but can they issue gold and silver certificates on coins in storage. If a State set up a system of 100% backed certificates off of the gold and silver coins collected, would it be legal?

I haven?t figured everything out yet, but I thought I would present some of my thoughts to my fellow knights to comment on.


Signing off for the night,

THX-1138

Slingshot/Gandalf - seems that the Siege Engine is moving forward in full force...maybe others will join in too...it's fun!

Rock - my pleasure - there's such an awesome group of people at this Round Table and it's a total privilege to participate and learn. I love it here too for many of the same reasons.

Steady - I see that Gandalf and Rock have opened the door and invited you in...I saw a seat around this Noble Table that has your name on it...reserved just for you - I hope that you found it.

Black Blade - the Onion Humor was the joke of the week, great find.

Pizz - hang in there. I think that in one way or another we're likely all going to be faced with others suffering and unfortunate circumstances before this is over. I wish I had an answer for you but I haven't.

Welcome to all the new posters...and a BIG thank you to each and every Knight and Lady who participates here - you're an awesome group!

Cheers,
Waverider

We haven't heard from you in a while...hope you have the time to join us again soon. Cheers,
Waverider

http://www.nationalpost.com/utilities/story.html?id={BBC0F9C9-DFC2-45B9-B50F-ECDBD28D1799}
Analyst blames Trizec chairman for company woes

Snippit:

A routine conference call turned ugly yesterday for Trizec Properties Inc. after frustrated analysts assailed the real estate company for missing its second-quarter profit targets and accused chairman Peter Munk of hurting shareholders by basing his business decisions on self-interest. Jon Litt, an analyst with Salomon Smith Barney in New York, pinned the company's financial performance squarely on the shoulders of Mr. Munk, who he criticized repeatedly in a pair of scathing outbursts.


Black Blade: It appears that Munky Man is not only sticking it Mega-Hedger Barrick shareholders, but also to those who have the misfortune of being Trizec shareholders too. Barrick has grossly under performed against its peers as has Trizec. Time for the shareholders to vote with their feet and dollars.

Hey Belgian, you wrote:
...What relief can a POG back to 270$ bring to this gigantic mess ???
A sub$300 PoG is imperative if further rate cuts are intended...the logic being "the Currency - @ 1% - is as good as gold, and look! POG is proving it"....as the Bond yield charts show, (as posted previously) another rate cut (or three) are inevitable imho.
....Or what good effect could possibly come, from a Dow back above 10.000 ???
No GOOD effect other than to forestall the chaos in Bonds if Yields sink too much lower.
...Both events result in a stronger US$ making the growing debtload as heavy as Gold ???
Yup, thats the plan, all thats gone before is discounted, we're talking global Systemic support for the $US...spotfires will be extinguished as they flare but the System WILL be supported.....until...one fine day...at a time of their choosing...it'll all be over!
...Massive defaults or Hyperinflation are the only choices left. IMVHO, it will be both.
Yes Sir, agreed. In the mean time we'll trade it.

The numbers game (gold-derivatives + physical uptake) remain at zero transparancy (remember that the BOE goldsales were ment to bring "more" transparancy-humhum). It is only the insignificant numbers that are happely exposed. Is it a co-incidence that the *rate of attrition*
(depositors demanding their metal) goes in lockstep with the pre-meditated decline in interest rates, already at 40 (fourty) years lows ? Premeditated : 1 yr US-IR 1,75% >> 1%.

In simple words : What is the difference in holding US$ at 1%/yr and holding Physical Gold in Possession or leasing Gold at 1%/yr ? And why isn't the euro following those dollar-interest rates declines (reaching towards zero) ?
With the euro quarterly marking to market and the dollar not. Here I'm at a complete loss. Can the CBs force the bullion banks into the market for ever larger quantities of physical, with the pressure of declining IRs ? This, of course (as you mentioned) to block all attemps to escape currency detoriation (depreciation).

Can you please elaborate on that big picture of : Systematic Declining interest rates + contradictional currency depreciation and low (lower) POG ? The mechanism of who is pushing (squeezing) who (central bankers versus undisciplined bankers).
I think it is in the very interest of all Gold students (including myself) to understand the exhorbitant contradictions, manifested today : Interest rates still declining after already having reached 40 yrs lows and at the same time an underlying *proliferating* reserve currency (US$) refusing to detoriate plus the Gold manager's capability to limit POG's volatility, almost perfect. The Gibson paradox isn't (strong) enough for me to explain the magnitude of what's happening.

How long can bullion bank's POG-operations, function, to cap POG for protection of the massive gold loans...with a projected interest rate of 1% (from 1,75%), probably by the end of this year, if SMs dip consistantly below 9/11 valuations ? Is there another magical trick possible ???
(euro-assistance < compromised mark to market> and pitty for the dollar out of pure selfinterest-?). We must not forget that a US-SM crash, affects us ALL.

Many thanks for your patience and goodwill. Regards, Belgian.

Our postings crossed whilst writing to USAGOLD.

To execute what you are suggesting (POG > sub 300$), I think the US (FED) needs Euroland (ECB) co-operation (mark to market), as suggested in usagold posting. The western hemisphere working, temporary, together for orderly unwinding of the luring financial market's crash (US-seats at BIS-?). I have my doubts about the ECB's co-operation, because of not showing signs to lower Euroland's IRs as well (FOA mentioned that before).

But what do we gain from postponing the final day of reckoning and hoping that buying, time, might bring salvation...if we have the Japanese (failing) experiment (of zero IR for years now) as an example ? Japan residing into the dollar-block.
Interest Rates must stop somewhere and reverse the more dramatically at their zero floor. Yeah, I know...all a bit too logical and therefore out of reality.

Question : Do you still dare to *trade* without your Golden Physical in Possession-parachute...so close to mother earth's surface !?

We saw what Japanese housewifes did to Gold, once they understood/percepted (fully or not) what is happening. They hoarded Physical by the kilograms, rather than holding yens/dollars at 0,zero IR. The Gold rush peithered out when the price trend discouraged them. Will the same thing happen with americans when reaching 0,zero IR ? Where will the fresh Physical come from to discourage them ? Answer : it is all in those unknown numbers...ppffftttt. Nice weekend to you Topaz.

http://biz.yahoo.com/rb/020803/economy_oneill_1.htmlReuters Business Report
O'Neill Says U.S. Gov't Mending Economy

WASHINGTON (Reuters) - U.S. Treasury Secretary Paul O'Neill on Saturday sought to reassure investors who have seen their retirement accounts shrink after a wave of corporate scandals that the government is making the repairs it needs to ensure the economy remains sound.

In an opinion piece published in The Washington Post, O'Neill said the U.S. economy remains fundamentally strong despite the recent sharp drop in stock prices.

"We have had two straight quarters of solid growth. Consumer spending has stayed strong and business investment is picking up. As our economy continues to grow at a healthy pace, Americans will see their incomes and their retirement accounts grow as well," he said.

comment
The country faces a systemic economic meltdown and Paul says "take two aspirin and wait till next year". Wouldn't it be nice to have some leaders who could tell it like it is? This country has come a long way (down) from the vision of its fathers.

http://www1.standardandpoors.com/Forum/RatingsCommentaries/FinancialInstitutions/Articles/073102_stockforjbank.htmlSnip:

Impact on Capital
Since September 2001, unrealized losses in "other securities", including cross- held shares, have been deducted from Japanese bank's Tier 1 capital. For the 13 major banks, these unrealized losses totaled �1.3 trillion at March 2002, which further damaged their already weak capitalization.

In fiscal 2002, stock prices have continued their downward trend, with the TOPIX index dropping by 11% between the end of March 2002 and its lowest mark on July 26, 2002. Given that the beta or responsiveness of the major bank's stock portfolios to the TOPIX index is around 0.6, the value of the major bank's stock portfolios is estimated to have fallen 6.6% over this period. Assuming no change in the composition of banks' stock portfolios since March, a 6.6% reduction corresponds to �1.7 trillion (�25 trillion x 6.6%) in real terms. To account for the loss, the banks would have to deduct �1 trillion after calculating tax benefits (�1.7 trillion x 60%) from their capital. This figure represents 5.7% of the major banks' Tier 1 capital as of March 2002.

Furthermore, the impact on capital may be greater than this estimation, as the ability of the major banks to utilize tax benefits has almost reached its ceiling. As a result of the continued use of tax accounting provisions since fiscal 1998 (ended March 1999), the major banks have increased the amount of deferred tax assets on their balance sheets. Currently, deferred tax credits account for about 50% of Tier 1 capital at the major Japanese banks. Deferred tax assets can in principle be included in capital in an amount equal to the bank's projected taxable income for the following five years, multiplied by the corporate tax rate. If the banks are unable to use this tax provision, the amount to be deducted from their capital would be 100% of unrealized losses, not 60%. In other words, the impact would be 1.7 times greater, or 9.7% of the major banks' Tier 1 capital.
............
Since the introduction of limits on deposit insurance from April 2002, depositors have shifted funds from term deposits, which are no longer fully protected, to liquid deposits, which remain fully protected until March 2003. These liquid deposits could potentially be withdrawn immediately in the event of any negative market rumors surrounding a bank. This situation could trigger a downgrade of the affected bank.

Japanese banks have been increasing their disposal of stockholdings, particularly in light of the planned introduction of new regulations slated for September 2004 that would limit banks' stock holdings to 100% of Tier 1 capital. In fiscal 2001, the major banks sold �5.2 trillion in stocks. However, simply reducing stock holdings from the current level of about 140% of Tier 1 capital to meet the regulatory target will not be enough to ameliorate equity holding-related risks for Japanese banks. Internationally, major banks typically hold stocks equivalent to just 20%-30% of their Tier 1 capital. Furthermore, the quality of the Japanese banks' capital is fragile and thus their risk tolerance is much lower than that of their overseas peers.

***********

Misetich

From continent to continent Banking woes continue to accelerate -

The setback of US economy numbers revisions this past week- does not augur well for US markets and stock markets worldwide -

Got gold?

http://www1.standardandpoors.com/Forum/RatingsCommentaries/Insurance/Articles/073102_market.htmlSnip:

Investment returns are so crucial to the income flows and capital levels of insurance companies�especially life insurers�that recent developments in both the equity and debt markets are likely to create problems for the sector.

The life insurance industry at large still has a number of fundamental strengths working in its favor, including extremely strong capital, a very strong business position, strong operating performance, high-quality investment portfolios, and the general stability of protection-based products. In addition, the industry has responded well to capital pressures, with companies improving their capital deployment through use of reinsurance. At the same time, many companies are improving earnings through the use of technology and better distribution techniques.

However, many of these fundamental strengths are now being eroded by the numerous challenges facing the industry, including continued deterioration in asset quality, increased corporate defaults, earnings pressures on spread- based businesses, and the impact of poor equity market performance. Although Standard & Poor's generally does not react in its ratings to short-term market shifts, the duration and magnitude of these challenges has shifted the balance toward an overall negative outlook on the industry.

Standard & Poor's revised its outlook on the U.S. life insurance sector to negative from stable, in tandem with a slew of ratings actions on individual groups (see Tables 1 and 2) on July 30, 2002. About one-third of the U.S. life insurers that Standard & Poor's rates interactively either have a negative outlook or are on CreditWatch with negative implications. (Being on CreditWatch with negative implications puts a company under increased surveillance for a possible downgrade in the short term, whereas a negative outlook indicates the likely direction of a rating over a one- to three-year time horizon.)
.............
Falling stock values affect life insurers both directly and indirectly. There is direct exposure through investment portfolios, while for writers of variable annuity products, there is a decline in fee income. With the S&P 500 dropping by 27% from Jan. 1, 2002, to July 30, 2002, many insurers with large equity portfolios will experience substantial hits to their earnings and capital bases. In addition, because of lower projected profitability in this product line, insurers are expected to accelerate the pace of their amortization of deferred acquisition costs, which will further pressure overall earnings performance.

Under a volatile equity market, in addition to a declining fee income stream, statutory earnings will continue to be affected by minimum death-benefit guarantees reserve increases on variable annuity products. Following years of aggressive marketing that locked in higher guarantees for policyholders, insurers are now needing to bolster reserves to support the business on their books and to meet statutory accounting requirements.

A more indirect impact of sustained downturns in stocks is reduced demand for variable products. When an individual buys a variable annuity policy, the payout he or she receives at retirement depends on the value of an underlying pool of assets held by the insurer in a separate account, and separate accounts are generally heavily weighted toward equity investments.
............
Conclusion
Downgrades in 2002 are expected to continue to be driven by a decline in earnings and capital becasue of asset-quality issues.

Well-positioned companies for the remainder of 2002 will have:

Strong fundamental earnings from diversified sources.
Sustainable competitive advantages through product or distribution.
Multiple franchises or a protected niche in selected markets.
Operational efficiency.

Vulnerable companies for the remainder of 2002 will have:

A higher-than-average level of investment risk.
An overdependence on equity markets.
A concentration on revenues and earnings in a single product line.

************

Misetich

From banks, to life insurance corporations - recession in Japan, little growth in US, slowdown in Europe, Argentina's contagion in Latin America -

Central bankers have their hands full - in inspiring confidence - come to think of it - weren't these same Central Bankers cheerleading with the new found economy, the new paradigm?

The business cycle is alive and well and Central Banks planners are being thumbed down!

Got gold?

http://www.nytimes.com/2002/08/03/business/03ECON.htmlSnip:

"The real question I have is whether the labor market is beginning to turn around or whether the stock market will short-circuit that process," said William Dudley, director of domestic research at Goldman Sachs. "Alongside the net hiring in July, there were more than enough signs that were disturbing."
.................
Employers cut the average workweek by an unusually large three-tenths of an hour, to a flat 34 hours. Not since the Labor Department began to track the average workweek in 1964 has it been as short, except in two unusual months: January of 1996 when a blizzard struck the East Coast, and October of last year, in the aftermath of Sept. 11.
.............
Many economists see the meager job growth since April as evidence of the determination of employers to hold down labor costs. More evidence came in the rise of 191,000 part-time workers in July who sought full-time hours and could not get them.

Such data does not offer a good omen for the third quarter, says Peter Hooper, chief domestic economist for Deutsche Bank North America. "Total hours worked in July were less than the average worked in the second quarter," he said. "We started the third quarter at a lower level than the weak second quarter.

************

Misetich

US economic recovery which has been trumpted by Bush, O'Neil, Greenspan and Wall Street economists is anemic -

The US has been in recession since the 1st qtr 2001 except for the "rebound" in Q1 -2002 more as a result of inventory liquidation than production- Estimates for Q2 2002 were reported as 1.1% - subject to being revised


Eleven rate cuts have not done the job
Tax cuts have not done the job
Government spending has not done the job

Little if any excess capacity has been reduced -

Got gold?

http://www.washingtonpost.com/wp-dyn/articles/A38003-2002Aug2.htmlSnip:

By Caroline E. Mayer
Washington Post Staff Writer
Saturday, August 3, 2002; Page E01

As the stock market continued to drop last month, investors of stock mutual funds remained on their rapidly retreating course, selling off the largest amount of holdings in equity funds ever recorded in a single month.

Preliminary estimates indicate that perhaps as much as $55 billion flowed out of equity mutual funds in July -- almost double the $30 billion outflow posted in September after the terrorist attacks.
...........
Misetich

Most investors had flocked to "premium" nifty 30 Dow stocks -and must have felt comfortable as the Dow had resisted most onslaughts - as time and time again it rebounded -

The shock must have been seeing the Dow tank below 8,000 level -

With economic conditions worldwide being what they are - and little hope in the near term - stocks are destined to go lower at which point we can expect further mutual fund redemptions,

Lets not forget the effect on pension plans, banks, life insurance companies of lower stock market values

Got gold?

http://www.washingtonpost.com/wp-dyn/articles/A38736-2002Aug3.htmlSnip:

Reuters
Saturday, August 3, 2002; 1:22 AM

WASHINGTON (Reuters) - U.S. Treasury Secretary Paul O'Neill on Saturday sought to reassure investors who have seen their retirement accounts shrink after a wave of corporate scandals that the government is making the repairs it needs to ensure the economy remains sound.
............
"We have had two straight quarters of solid growth. Consumer spending has stayed strong and business investment is picking up. As our economy continues to grow at a healthy pace, Americans will see their incomes and their retirement accounts grow as well," he said.
............
Misetich

O'Neil must be on drugs - if he considers 1.1% estimated GDP growth in 2nd Qtr 2002 "solid growth"

The following passage in the article is 'very interesting' to say the least
Quote
In an opinion piece published in The Washington Post, O'Neill said the U.S. economy remains fundamentally strong despite the recent sharp drop in stock prices.
End of quote

Now they are beginning to qualify their statements - is he speaking "personally" or as Treasury?

Got gold?

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028185386202&p=1012571727108Snip:

By Nicol Degli Innocenti in Johannesburg
Published: August 2 2002 17:41 | Last Updated: August 2 2002 17:41
Royal Dutch/Shell, the oil company, is to be cited in a multi- billion-dollar class action lawsuit brought by a team of lawyers on behalf of the victims of South Africa's apartheid regime, a lawyer said on Friday.

"We have filed against seven companies and corporations so far and in the next few weeks, probably before August 9, we will file against another two or three including Royal Dutch/ Shell," said John Ngcebetsha of the Apartheid Claims Taskforce.

Shell, which is accused of supplying the white minority regime with oil in violation of an anti-apartheid embargo, will be added to the list, which already includes IBM, the computer company, Deutsche Bank, Dresdner Bank, CommerzBank, UBS, Credit Suisse and Citicorp.

A total of 35 companies and banks, including Honeywell, Exxon Mobil, Barclays and Natwest, have so far been identified by the task force. Letters were sent to them in July to propose voluntary settlement talks, and those that have not responded will be taken to court in an effort to force them to pay reparations to the victims of the apartheid regime.

The first hearing is scheduled for August 9 in New York. The team of lawyers bringing the class action lawsuit is headed by Edward Fagan, the US lawyer who in 1998 forced Swiss banks into a $1.25bn settlement for victims of the Holocaust.

Mr Fagan claims reparations of up to $100bn could be won for the victims of apartheid and says the case will finish in two to three years.
*************

Misetich

Lawyers are certainly being kept busy...
What are the effects of all these lawsuits, investigations, inquiries on Corporate Executives and their staff - A vast amount of resources and time must be given-
Valuable time and effort is being spend unproductive

Got gold?

http://www.economeister.com/reg/popup/single_story.jsp?prod=114&ts=1028309160000&sn=1&banner=mainwireSnip:

By Isobel Kennedy

NEW YORK, Aug. 2 (MktNews) - The economic data releases were horrid
all week, and Friday's U.S. employment report might be the final nail in
the U.S. economy's coffin.
..............
Though July average-hourly-earning were up 0.3%, the year-over-year
rate slipped back to +3.2%, and hours worked fell.

The U.S. Bureau of Labor Statistics tried to gave this a good spin,
saying the data represented a "steady" labor market.

In fact, however, the data suggest no economic growth and slippage
in production and incomes that are more consistent with a double-dip in
growth, economists said.
...........
Economists generally called the report poor and some said they were
revising their gross domestic product forecasts down for the second
half.

They said the figures are a bad start for the third quarter and
point to lower industrial production and housing starts.
...........
The totally unsubstantiated rumors centered around European
institutions in possible trouble, coordinated rate cuts from central
bankers and hastily called meetings at insurance companies.
..............
Some buyside accounts have been saying they don't want to buy any
corporate names that have not gone through the SEC certification
process. The SEC confirmed receipt of Golden West's letters late
Thursday or early Friday.
*************

Misetich

Lets repeat that again
Quote
The totally unsubstantiated rumors centered around European
institutions in possible trouble, coordinated rate cuts from central
bankers and hastily called meetings at insurance companies.
End of quote

Got gold?

http://www.economeister.com/reg/popup/single_story.jsp?prod=114&ts=1028306220000&sn=1&banner=mainwireSnip:

WASHINGTON (MktNews) - President Bush ignored the weaker details of
Friday's employment report, focusing on an unchanged unemployment rate
for the month of July in brief remarks to reporters at the White House.

"Today the statistics are out that show that the unemployment is
holding steady," Bush said, referring to a Labor Department report
indicating that the jobless rate remained unchanged at 5.9% last month.
............

Misetich

Bush was ambushed by the GDP revisions- Was it a setup? or did the President intervene in the last few weeks to 'save" the markets? even though HE MUST HAVE KNOWN of the GDP revisions!

Why would Bush and the his whole economic team spin the solid economic growth in the last couple of weeks - when reported numbers say otherwise?

November elections are a few months away - but that's ANOTHER story..

Got gold?

http://www.economeister.com/reg/popup/single_story.jsp?prod=114&ts=1028299560000&sn=1&banner=mainwireSnip:
By Ann Meyer
CHICAGO, Aug. 2 (MktNews) - Portfolio managers with Putnam Income
Fund (PINCX) recently told MarketNews International that they have
scaled back on U.S. corporate bond and short-term Treasury holdings and
are now emphasizing U.S. mortgage-backed securities.

"There has obviously been a tremendous amount of market volatility,
particularly over the last two months," said Kevin Cronin, Putman's
chief investment officer for fixed income.
............
"The corporate bond
market has been challenging," Cronin said. "You need a very diversified
portfolio of corporate bonds to mitigate the effect of a blow up."
...........
At the same time, bank and finance paper and old-line economies
like autos, rails and defense issues have continued to perform well.
"That has produced disequilibrium in the marketplace," Cronin said.
"Either the weak sectors will come on or the strong ones will fall off."

As a result, Putnam has been cutting back on old-economy
transportation issues, in anticipation they may fall. "What's next is
the pension liability that old economy companies have," Cronin said.
While so-called new economy companies tend to have younger workers and
401Ks for retirement funds, old-line companies like automakers and
defense have defined-benefit pension plans.

"The correction in the equity market, coupled with the aggressive
return targets of those pension plans, have caused many to go to
under-funded status. That's the next shoe to drop," he said.

Cronin notes that the corporate bond market has become less liquid
than it used to be.

"There's a contagion effect in the investment grade corporate
market that is contributing to a constrained liquidity. People will sell
WorldCom until there is no more bid for WorldCom, then it goes on to
Sprint and AT&T," he said, even if they don't have the same issues that
surround WorldCom.

The result is a market that's unreliable. For example, Cronin said,
"We don't think Qwest is going away. That being said, the debt is
trading at 50 on the dollar," so as a practical matter, it's not a good
holding.
.............
******************
Misetich

"Either the weak sectors will come on or the strong ones will fall off."

The bet is on the latter-

Got gold?

http://www.forbes.com/home/free_forbes/2002/0812/068.htmlSnip:
Benjamin Fulford and Neil Weinberg , 08.12.02
Rodney Adler is the kind of guy a friend labeled a "spoilt brat." He was born into wealth in Sydney, Australia. In 1988, at age 29, he inherited a 30% stake, worth about $300 million, in commercial insurer FAI Ltd. when his father died suddenly. As FAI's chief executive over the next decade, Adler struggled to keep the firm afloat while its stock sank. The American Depositary Receipts fell from a peak of $73 to $5. He bailed out in 1998, selling FAI to HIH Insurance Ltd., another Australian insurer, for $180 million. Three years later HIH declared bankruptcy with $3.2 billion in debts, ranking as one of the largest failures in Australian history. (Figures have been translated from Australian into U.S. dollars.)

Turns out that Adler pulled off the sale with help from some very fishy reinsurance contracts. Supplying one of the policies was Ajit Jain, who runs Berkshire Hathaway's National Indemnity reinsurance arm and has been described by Warren Buffett as the "guiding genius" of the firm's major-catastrophe line.

Investment bank Goldman Sachs, it also turns out, had looked hard at buying into FAI, only to turn up its nose. Then it emerged as the financial adviser in its sale. The firm has faced questioning by the Australian government for knowing about FAI's financial artifices but saying nothing.

To top it off, Adler was all the while scheming to pump up the stock of FAI--whose assets included the troubled Hotel St. Moritz on Central Park South--by hyping its U.S.-listed ADRs. His partner was a stock tout who, it later turned out, was working for the New York mob.

Australia set up a Royal Commission, akin to a congressional investigative committee, last year to look into the scandal. It has uncovered evidence that Berkshire's Jain worked out a contract "designed to enable FAI to book a net profit on the transaction" in the year it was up for sale, according to Geoffrey Bromley, executive vice president for Guy Carpenter & Co., the Marsh & McLennan subsidiary that acted as middleman for the reinsurance. At no time was Adler interested in insuring against risk, Bromley conceded in testimony to the panel.

Instead, Jain negotiated to "develop a structure that would pass muster" with regulators, Bromley said. It included at least the appearance that FAI was transferring risk to National Indemnity. Then, when National Indemnity paid a large "claims recovery" back to FAI in the first year of the deal, the policy's status as reinsurance enabled FAI to book the money as a profit. When the deal was done, the parties backdated a cover note almost one year, possibly to give the appearance of a forward- looking policy. A commission attorney has labeled the Berkshire policy a "sham."

FAI's final chapter began on Christmas Eve in 1997, as Malcolm Turnbull, then head of Goldman Sachs' Australian unit, met with Adler. Goldman's U.S. private equity arm wanted to expand in Australia and figured it might do well taking FAI private, whipping it into shape and selling out. Adler was keenly interested. Over the previous three years FAI had lost a cumulative $38 million on $2.6 billion in revenues. The prospect of a big payday apparently convinced Adler to take extreme measures to pretty up FAI. In May 1998 he hosted New Yorker Jeffrey Pokross and his wife in Sydney, wining and dining them at swank nightspots.

Back home Pokross ran DMN Capital and worked with Bobby Lino, a.k.a. Robert L. Little, a member of New York's Bonanno crime family. Pokross had been charged with a "pump-and-dump" stock-ramping scheme the previous January by the National Association of Securities Dealers. He returned from the Sydney trip promising to "support the [FAI] stock."

In mid-June 1998 FAI's fiscal year was winding down and Adler faced a loss of as much as $30 million on $600 million in revenues. One week before his book closing he began negotiating to buy reinsurance--a product through which one insurer is supposed to assume another's risk. FAI's policies were from National Indemnity, a unit of Omaha-based Berkshire Hathaway, and GeneralCologne Re, which Berkshire bought in late 1998. National Indemnity sold FAI a policy costing $33 million over five years. FAI had to pay only $3.3 million in fiscal 1998 but received $24 million in an unusual claims recovery that, as a reinsurance buyer, it could book as profit. The real bill would come due over the next four years via $7.4 million annual premiums. The coverage ostensibly had to do with earthquake damage in Sydney. There were no earthquakes, but the claims-recovery gambit made for the quick payback.

Meanwhile, FAI promised to pay GeneralCologne Re $55 million for $52 million in coverage. Geoffrey Barnum, general manager for GeneralCologne in Australia, was asked by a commission attorney if he could "think of any benefit that FAI might have derived from the transaction, except a perceived advantage to its reported results, if it accounted for the contract as one of reinsurance?" Replied Barnum: "I can't think of any other advantage, no." Testifying under oath, Barnum admitted the apparent transfer of risk that qualified the policy as reinsurance in the contract was actually overridden in separate private documents. If they had been disclosed, the policies would not have been approved by regulators, he said.

***********

Misetich

Got gold?

http://www.usagold.com/cpm/abcs.html

The ABCs of Gold Investing

"Without waxing philosophical, a few words are helpful concerning the mind-set with which you pursue your interest in gold ownership. Some enter the gold market to make a profit, others to hedge disaster, some to accomplish both. No matter into which category you fit, make sure you understand why you are going into the gold market. Convey that understanding to the individual with whom you are structuring your gold portfolio. The whys have quite a bit to do with what you end up owning.

"Frequently investors will say that any kind of gold will do because after all gold is gold, isn't it? This type of attitude has helped a great many coin shop owners unload unwanted inventory they hadn't been able to get rid of for years. This is probably a good deal for the coin dealer, but it could spell disaster for you. In the same vein, I have talked to hundreds, probably thousands, of investors in nearly a quarter century in the business. Quite often, potential investors have no more reason for buying gold than 'everybody else is doing it.'

"In Chapter 16 on portfolio planning, you will find some details on this important subject. For now, consider the inscription over the entrance to the temple of the ancient Delphic Oracle: 'Know Thyself.' Study. Read. Learn what's going on around you. Call a few gold firms and ask questions. There's nothing like conversation to stimulate thinking. Take time to lay a little groundwork. Then make your move. The political and economic situation being what it is, there is no better time to start than now. Know thyself -- your goals and needs -- and you will be a more confident, happier gold investor." (more)

Please Remember: It is your purchase from USAGOLD / Centennial Precious Metals that nourishes these pages.

http://www.bearforum.com/cgi-bin/bbs42.pl?read=246419Out of great crisis comes great opportunity -- for new owners.

I woke up this morning thinking about the Polaroid bk and its "purchase for a song" ($255m for hastily written-down assets several times that) by an arm of Bank One, as the template for what's likely to happen for most of the telecom sector. All that fiber, and cable, and wireless -- up for grabs! People are still going to make calls...and watch cable...

And guess what? It won't be you or me there buying the assets at Filene's Basement grabrack prices!

Equity -- on-paper equity -- whether in corporations or your house, is just the froth on the wave over the oceans of debt. (the TRUE eventual owners, in many current cases, after a token "haircut") Run the equities up, run 'em down, re-arrange the stock certificates, or issue new ones.

Ma Bell's widows 'n' orphans? Who needs 'em! Time for a change!

Just as in the 80's, the sharks like KKR & others took companies private in LBOs, with lots of debt, betting that the trend toward an equity boom would multiply their small investments, so now the new owners will take over via private arrangements. And we will awake to new masters collecting our utility bills (well, really the same ol', but with new "XYZ Corp." names) after our brief "ownership" fantasy has crumbled into penurious old age.

(My guideline lately is turning into: "Whatever it takes to converge the U.S. into a Third World society/economy with the large 'slave' labor class most nations of the world already have.")

Oh yeah, same goes for the gold -- new institutions, new owners. Why, there's some offshore Bermuda shell at this very moment doing what Goldmem... - er, ah -- Goldfinger couldn't accomplish at Ft. Knox.

Thus "capitalism" ends -- Where the people are not vigilant, ANY system turns into ancient "grabbing and looting" -- piracy. The theoretical possibilities of capitalism will remain the "unknown ideal" until people are trusting only in the correct situations, and not merely of "experts" crowned so by the media.

The key resource of a nation -- ask the Pharaohs on their Pyramid Mall Grand Opening Day! -- is the labor of its people. It can be appropriated in many, many ways.

Oil comes in a close second, in recent decades at least. And gold -- well, that's an accounting device, which you always need -- but it will just sit there without the other two.

Getting the people to drive an hour to work every morning for that green stuff to fund those 401k'd "early retirements" -- now THAT'S resource extraction!

"There is nothing on earth
that can be all things to all people.
Gold comes damned close."

-- R. Strauss

OK, here is a scenerio that I find plausible, but hope does not come to pass. I hope someone will tell me why this will not happen.

---------------

One image I carry with me is of 100,000 laptop computers located around the world. Each one is pre-programmed to "rush to the exits" with a single keystroke. When it is clear that game is up, all the laptops will start their "doomsday" program. Of course, one mutual fund or one hedge fund can always cash out. But when they all try at once, the system will lock up.

At that point, it counts what you have on hand. Do you have documentation for that savings account. If you cashed your last paycheck, you are ahead of the guy that used direct deposit. All the credit card accounts are frozen.

The federal reserve will start at the top of the pyramid, and offer unlimited liquidity to its favorite players. These players, in turn, may choose to pay their favorite stocks. Certain issues (not just gold stocks) may soar. Many players who are not as well connected will go belly up fast for lack of liquidity. Their carcasses will be bought and sold by the inner circle.

I suspect that there will be some unusual games designed to hide how expensive physical gold is. I do not think that ownership of gold will be forbidden. But there will be complex regulations on the purchase and sale which will hide the true price from the public.

I suspect that a massive number of assets will transfer to a small number of players. Individual wealth will be wiped out (except for those who have taken Black Blade's advice).

What will gold be worth? The real question is what you plan to do now to avoid being without gold when the system locks up. The question of "worth" in dollars may not have much meaning.

Practicality and experience tells me that interest rates (the cost of money), currency depreciation (the cost of holding money), and gold prices (the cost of holding an alternative asset) are not correlated at all. Instead they are "independent variables" impacting the individual investment portfolio. As such, the investor must make choices, and that's precisely what anyone managing their portfolio must do -- make choices. And in this manner, money flowing in either direction can impact prices, cost of money, etc. But all of that is after the fact. Which fact? Investors' decisions as to how they are going to employ their capital.

Now. . . .I wouldn't emply capital based upon some unproven correlation like interest rates going down means gold is going to go up or vice versa, or that gold going down means interest rates are going down. I see this as incorrect thinking. Better to say to yourself: "Interest rates (an independent variable) are going down. The nations of the world are deeply immersed in competitive devaluation schemes (another independent variable). My savings now yield 3% (another independent variable.) I believe that gold has a better than 50-50 chance of going up at least $9 over the next year, and the possibility of doing even better under the circumstances. Therefore, I will convert some of my savings to gold." Simplistic, I know, but that's how I think and most investors think. And my apologies if I am stating the obvious. . . .

Now with respect to the economic question on gold and dollar/euro interest rates, we need a starting point and I think the starting point needs to be that economically we live under a fiat money regime (as opposed to a gold based economy). The Fed along with market demand for the dollar dictate interest rates with both playing primary roles. So the Fed can print money via the debt monetization tool, or a flood of dollars can repatriate from overseas, or any one of a number of additional variables -- and of course those dictate the price of money. Gold is a separate venue. It too succumbs -- as FOA pointed out copiously day after day, month after month, year after year -- to the supply of cheap paper that has nothing to do with currency rates. With respect to you question about the relationship between gold lease rates and currency yields, I reference what I wrote in 1997 in "The ABCs of Gold Investing":

"The central banks actually take gold out of their
holdings and loan it to the mines at interest rates that
ranged in 1995 from .5 percent to 6 percent. Private
gold bullion banks like Morgan Stanley (correction 2002: J.P. Morgan) and Republic
National in New York act as intermediaries, or brokers
to these transactions. The mines then sell the gold on
the open market through the bullion banks to raise
capital for their mining operations through the bullion
banks. This obviously has a depressing effect on the
price. As more and more pressure mounts on the existing
gold reserves at the central banks, the lease rate rises. Whenever it reaches the domestic currency lending
rate, the incentive is to curtail borrowing gold and
instead borrow the currency, or curtail borrowing entirely."

Note: If I were to rewrite that today, I would adds speculators like the hedge funds to the mix. They face the same analysis.

As you correctly point out, that is what is happening today. It is perfectly conceivable to see in the mind's eye a financial world where interest rates are dictated under one set of circumstances and rules, and gold paper under another. Is it necessary to put the two together separated by an "equal" sign? I could see that under a gold standard regime like the Bretton Woods arrangement where a currency gold price has to be defended, but I don't see it under a fiat regime.

As for how long can the bullion banks hold out?

As I see it, at some point, as dictated by the market, their internal management committees or (now) related law enforcement efforts (including elevated accounting standards), the bullion banks will be forced to reform internally. What we have had since the Washington Agreement is a systematic unwinding on gold derivative positions. This trend, as I mentioned, is reflected in the LBMA numbers, the closing of institutional gold trading departments, etc. The scandals have to be pushing this unwinding process forward on a faster timeline -- and we have had hints of that as reported by GATA and various press stories. Ultimately, physical demand will be the coup de grace, but no one cannot predict where that will come from. In the 1960s/early 1970s that came from DeGaulle, Adenauer and finally Great Britain ( oddly enough America's ally in the London Gold Pool.) Those in Europe who follow in the Gaullist tradition might lead Europe to force gold higher to make their own currency stronger. That is the significance of the resurgence of the right in both France and Germany (Florian, was correct, the conservative candidate in Germany is running well.) and the upcoming Trichet ECB chairmanship. It will be interesting to see how the central bank will operate under French leadership. (The Bank of France has been decidedly pro-gold even going so far as to say that they do not, have not and will not be a gold lender because of the deleterious effect to its own reserves.) But then again, official sector demand could come from across the Pacific where huge dollar reserves have been built up, and where the lessons of gold's value gained during the Asian contagion were not lost on the various societies or its politicians. The situation in Japan remains interesting. Koizumi recently stated that he will not deter the move away from insured savings. This has pushed Japanese investors into gold (under the same interest rate analysis you allude to). What better way to move gold from the West to the East without causing a stir? How can the United States government complain about the Japanese housewife's desire to protect her savings with universal money?

Now, I know your question was leading Belgian, and I thank you for the opportunity.

- - - - - - - - -
"Indeed there can no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally acccepted as the unalterable fiduciary value par excellence. " Charles de Gaulle

- - - - - -- - -

As nation states watch the developments within the United States -- the engine of the world economy -- does the thought framed so well by DeGaulle pass even fleetingly through their minds? My guess is that it does, and that ultimately, in the interest of self-preservation they will be forced to act upon it. In that respect, encouraging domestic demand among individual investors could turn out to be a model strategy -- an interesting and perhaps encouraging turn of events for physical holders the world over.

I deleted this paragraph to put at the end of the post, but then forgot to do it:

Now, I know your question was leading, Belgian, and I thank you for the opportunity. You must be thinking about something along these lines and I think you might be looking for an opportunity to speak your mind. So, my friend. . . . .What's on your mind?

http://www.upi.com/view.cfm?StoryID=20020802-100315-8253r
A S&L bubble fix redux,typical re-telling of the sorry old saga,the last paragraph really caught my eye,

"It(the S&L crisis)was managed by the autonomous,able, utterly professional,largely apolitical Federal Reserve.The political class provided the professionals with the tools they needed to do the job.This mode of collaboration may well be the most important lesson of the S&L crisis."

Maybe this author,after turning off the effusive,gushing praise valve,could inform us what the most important lesson of the imploding asset bubble created by said professionals of the Federal Reserve is?

"We saw what Japanese housewifes did to Gold, once they understood/percepted (fully or not) what is happening. They hoarded Physical by the kilograms, rather than holding yens/dollars at 0,zero IR. The Gold rush peithered out when the price trend discouraged them."

Belgian:
Your words above give the impression that you perhaps believe that it was somehow the Japanese housewives that caused the POG to rise to its present level over $300/ounce. In my view, this was merely the impression pitched by the media to explain the unthinkable in recognizeable, traditional supply/demand terms so that the broad concept of a "market" can be preserved, including the fiction that the paper markets and gold metal itself are one and the same thing. Admitting that the value of the dollar and and the POG were being "managed" to new levels is an idea that must never be hinted at by the talking media-heads or government officials. Yet, almost any thinking observer must be reaching that conclusion somewhere in his subconcious mind. I like your thoughts concerning the coming zero-percent interest rate climate coming soon. With such writing already on the wall, a new concept POG is also on the same wall. Of course, if the ECB caves in by lowering interest rates also, it will smear the writing on the wall a little bit, right?

Michael K's interpretation of how investors think is another facet of the same reality. It's all the same reality... just depends on how one tries to put that reality into words/thoughts. Either explanation works. Lots of others, too. "How about astrology?" you might ask? Maybe that's stretching the thought processes a bit too much, right? Ha, Ha!

http://biz.yahoo.com/rb/020803/wkndcolumn_assets_2.htmlReuters Business Report
Tiffany Glass Smashes Auction Records
By Richard Chang

NEW YORK (Reuters) - Tiffany stained and blown glass is in vogue again, a century after its creator illuminated homes with his trademark lamps, windows, bowls and vases during the Art Nouveau movement.
While Louis Comfort Tiffany's works were always pricey, many of them are now worth the price of a house, or at least the down payment.

"An 18-inch Peony lamp in 1980 would have cost $20,000 to $25,000. Today, it's $125,000 to $175,000," said Arlie Sulka, managing director of Lillian Nassau Ltd., a New York gallery that has specialized in Tiffany lamps and glass since the 1950s (http://www.lilliannassau.com).

"I don't like to tell people to buy for investment but clearly Tiffany has a following and prices have been secure," she noted.

comment;
My great grandfather was the head watch repairman at Tiffany's in Manhatten during the late 1800's and early 1900's. He recieved a signed cartoon by Thomas Nast, a drawing of Father Time that says "for keeping Nast on time".

Look for more evidence of "collectables" prices reflecting safe harbor inflation.

Hi all, I couldn't believe my eyes and ears the other day when I heard Larry Kudlow of all people say that he thinks gold has to get up to at least $350.00. Well thats a beginning Larry! He was one of the worst bashers of gold for years so to hear him make those comments yesterday on his new program with James Kramer confirms to me that he's begining to see the bright glare light of gold shining through the cracks of all that confeti Even his side kick James Kramer promonted gold stocks as one of his picks, he admits taking a turn of opinion regardiing gold. At least Kramer humble enough to admit it he was wrong.

LOSER: I saw that commercial where the guy had LOSER stamped in large back letters across his head that pretty was funny.

Cherrs,

Brave Heart

http://www.economist.com/agenda/displayStory.cfm?story_id=1265006
Snippit:

America's treasury secretary, Paul O�Neill, is about to visit three Latin American countries which face economic disruption or meltdown. The problems of Brazil, Argentina and Uruguay may differ in many respects, but American and international help is crucial to resolving all of them.

Black Blade: This is just the beginning. The US will likely give US taxpayer cash to bail out these countries, however, they are not the only ones in trouble.

That's a page from the "Creature From Jekyl Island".

http://www.msnbc.com/news/789126.asp
Snippit:

Aug. 2 � This week the stock market once again showed its true colors: grim shades of gray. Sure the Dow Jones industrial average rallied more than 1,000 points in the last days of July before tumbling 400 points Thursday and Friday. And to be sure, there will be many more rallies in the weeks and months ahead, as history teaches pretty clearly. But this week the handwriting was scrawled on the wall all over again: The stock market is headed lower.

Black Blade: Just like the last Great Depression, the market had suckers rallies, and this one will be no different.

http://biz.yahoo.com/rb/020803/bizfunds_1.html
Snippit:

NEW YORK (Reuters) - Mutual funds that slammed their doors to new investors during flush times are laying out the welcome mat again. Beaten up by the depressed stock market and investor withdrawals, fund firms are rethinking moves to shutter fast-growing portfolios -- particularly once-hot small company funds -- to new shareholders. Funds are reopening at a time when mutual fund companies are trying to hang onto trampled investors, not turn them away.


Black Blade: A sign of sheer desperation. With fund investors running for the hills, previously closed funds are going begging and will likely continue to go begging for new sheep to shear. Investors are bailing out and taking their cash with them. This is not likely to change because some previously closed funds are falling on hard times. BTW, outflows from mutual funds last month exceeded $47 billion � a record.

http://biz.yahoo.com/rf/020803/politics_gore_1.html

Snippit:

WASHINGTON, Aug 3 (Reuters) - Al Gore criticized President George W. Bush's policies and defended his populist positions in the 2000 campaign, saying power and greed have hurt millions of Americans with a string of recent corporate scandals.


Black Blade: Forrest Gump in a case of the pot calling the kettle black. Maybe he should look in the mirror if he wants to look for those to blame for the economic mess today. It was Clinton-Gore policies that were in play when the recession started. What a duffus.

About Japanese housewifes and Kilograms of Gold : Yes, I did then and still do "relativate" today, the event. These housewifes did not "MOVE" POG but were a nice example of what is most probably to come. I did exactly the same in the 1980 POG runup : Bought Physical Gold in Possession with my very humble savings. And it was not because of zero interest rates but exactly for the opposite reason > ATH IRs !!! Isn't that funny and confusing ? No it isn't. I sold that Physical when IRs started to decline together with POG. Never touched Physical again until I landed on this site and studied TG/A/FOA. More on this later as RE to USAGOLD's posting.

>>> Interpretations of how different investors think is another facet of the same reality ...>>> Either explanation works. I am not trying to find an explanation, per se, for what is happening with POG. I want to look into Gold's future. Trying to understand to what extend our economic/financial situation has detoriated and speculating (not gambling- !!!! ) on Gold's chances to play a very important role as a solution to the e/f deadlock. I'll remain a Gold student for ever.

The extreme situation, reflected in ATH interest rates in the eighties, is finding its *contrary* analog in the making today (ATL - IRs). Add the roller coaster US$ exchange rate within this period and we have enough stuff to strecth our thought processes, don't we ?

More tomorrow, because I went to another one of those heavenly barbeques with some nice people and its bedtime.

I see the news that "$47 billion was pulled out of Equity Mutual Funds in July...."

Just how is that done? If the Mutual Funds handed over $47 billion to one group of folks, they must have got the $47 bil from another group that put their money INTO equity mutual funds?

Just how does anyone know that money is "going out" of equity mutual funds? Of course, we can know that the price is going down, or going up. But about "puling out"...that's not clear at all.

Maybe the $47 bil refers to a fall in the value of the total assets of those equity mutual funds. But, a reduction in the value, due to fall in price, is not the same as "pulling $47 billion out".

Am I right or just very mixed up?

Sierra

It is now the close of 2002. The stock market has been moving sideways between 6000-8000 with no relief in sight. Gold has broke thru the hedge boys schemes and is beginning to soar at 450.00 /oz. troy and Greenspan is on the ropes. The once flush fund headed by the PPT is low and Greenspan knows if he starts the presses, gold will go even higher. The Euro is at 1.2 $US and now the tidal wave of redemptions of U.S. Treasuries is draining the Washington D.C. trough dry. Strife and rebellion is running rampant in at least 9 countries and the Saudis are asking for payment of oil in physical gold.
Congress is fired up at the currency traders and like other 3rd world dictators, they are convened to study the idea of outlawing currency trading in the U.S. As this is taking place Bush ambushes gold horders at the proverbial pass and ask for emergency legislation to outlaw physical gold and all foreign currency inside U.S. borders. As tax rates begin to rise in an effort to sop up dollars and keep the government going, bartering and secret gold trading goes on a rampage.
People are taking to the streets now as their retirement dreams and daily subsistance is down to bare essentials.
Does anyone want to take it from here? I want a continuation--------
Cyberbat

http://members.shaw.ca/valueinvestor/Weekly_Money_Flows.htmlSierra....It means investors called their brokers and sold
their holdings in stock mutual funds. When the mutual funds
sold and sent funds back to mutual fund investors...it was $47 Billion pulled out of stock mutual funds. That means investors
got money back....with losses. Say a person bought a mutual fund at 10 and sold at 6. They put in 100,000 and got back 60,000.What has me a bit puzzled is why more of that money does not go into PM funds. I have a feeling we will soon see a powerful run in PM.
Here is a site I came across that is updated weekly.
Has good charts and commentary. Click on link above.

You ask, "Just how is that done? If the Mutual Funds handed over $47 billion to one group of folks, they must have got the $47 bil from another group that put their money INTO equity mutual funds?"

No. You're (improperly) assuming that all equities are assets under mutual fund management, and you assume that the only avenue for these equites to be sold by MF Management is if they are bought via other MF Management.

I'm sure the source of your temporary confusion has now dawned crystal clear -- with the awareness that not all equities are bought and held under professional MF management.

$47 billion sold to Ma and Pa bottom fishers and free agents?

Hope this helps.

R.

BOSTON (AP) -- A high-level shake-up at FleetBoston Financial Corp. has cost some top executives in its risk-management division their jobs as the company tries to work through bad loans, many to the telecoms sector.

Among the departures are John Mastromarino, executive vice president for risk management and Ed Bayone, chief of global risk. Fleet spokeswoman Allison Gibbs confirmed Friday that those two and three unnamed executives had left the company, though she did not say how many were actually fired.

Gibbs said the departures were part of a company realignment.

"That division as well as the whole company is looking at reorganizing to better fit the risk management area with the wholesale banking division that it serves," she said.

http://www.observer.co.uk/international/story/0,6903,769064,00.htmlPresident George W. Bush will announce within weeks that he intends to depose Iraq's ruler, Saddam Hussein, by force, setting the stage for a war in the Gulf this winter.

Amid signs of active preparations for a war within six months, senior officials on both sides of the Atlantic have said that war against Iraq is now inevitable.
----
Senior officials, however, anticipate that Bush will bring an end to the debate by ordering the Pentagon to prepare for war. Most in the administration expect a fairly swift victory.

'I'm absolutely convinced the President will settle on a war plan that brings about regime change,' a senior Republican foreign policy specialist told the Washington Post last week.

Sierra

every week the mutual funds report (Barron's reports the figures for the entrie mutual fund industry which is where I read it...) how much new money their shareholders invested in the fund and how much money investors took out (redeemed). In July there was redemptions (net) of $ billions . The reason that drives the stock market down is that fund managers have to provide the cash to pay off the redeeming investors. But most funds have almost all their cash invested in stocks with perhaps only 5-10% in cash. So when they see net redemption coming in for more than a few days (and it has been going on for several weeks now) they are forced to sell stock out of the fund portfolio to come up with the cash for the redeeming shareholders.

HTH

A mutual fund is nothing more than a small business which accepts money from investors, then turns around and invests that money in the stock (or bond) markets. Usually the fund has some vaguely defined investment plan and this is the way that you, as an investor choose between them. For example a lot of the funds are 'index' funds in that they track a particular basket of stocks found in an index, such as the S&P 500 or the NASDAQ.

The & $ 47 B figure is from a company called trimtabs ( http://www.trimtabs.com ) who track the flow of money into and out of the biggest mutual funds.

The way this money is returned to the investor is that when an individual calls the fund to request a redemption (or return of their money) the fund will either dip into their cash reserves (some funds are not 100 percent invested all the time) or more likely, the fund will SELL an equivalent amount of stocks in the particular sectors or indexes that they track. For example, if you requested a redemption of $ 100,000 and the fund tracked the DOW, then most likely SELL orders for $ 100,000 of DOW stocks would be placed and executed.

This of course, exacerbates the already precipitous decline in the market to date ... i.e. the market falls, people request redemptions from mutual funds, they execute sell orders for stocks causing the market to fall and the whole vicious cycle repeats. The reverse situation is responsible for the huge gains in the stock market over the last 10 years.


BTW On of the funniest and most interesting theories I have seen about the rise and subsequent lack of capitulation in the stock market begins with the fact that the use of prescription mood altering drugs, anti-depressants ,lithium, XANAX, etc are at an all-time high over the last decade. In other words people are half-stoned into a blissful state which allows them to pump up the stock market to dizzying heights in the 90's and at the same time, refuse to change their strategies when the market tanks. There are still so many sticking to the 'buy and hold' strategy.

Interesting concept (and in my opinion, definitely true to a certain extent) that the whole thing was and IS drug-induced :)

Wonder what would happen if Saudi Arabia falls first to an Al Qaeda or extremist faction ....certainly getting dicey there

Could it be possible that Bush wants Iraq as a counter to Saudi?

They are certainly beating those drums of war despite rest of world being against for most part and that even military supposedly has reservations ,,,,,US will bear tremendous cost burden as well as risk...but that lovely black gold is singing siren song to certain special interests

Us in Iraq oil fields ...and staying long term to establish new regime and support change....while rest of Middle East boils....and our ally Turkey has problems.

There are those who believe Bush's tenure in office will be short-lived due to scandal or worse. This would play into the hands of the top Pentagon brass, who are opposed to an invasion. Believing Saddam has been contained, a 9-11 repeat (on 9-11-02 or other dates) could be blamed on Al-Quada, the Palestinians, Moammar Khadhaffi, North Korea, or other convenient scapegoat. Irregardless of the evidence, in the manner of the Oklahoma City bombing, WTC bombing, and other cover-ups. Practically speaking, Iraq is a low probability for actual invasion, unless WWIII is someone's goal- an unintended outcome of WWIII has only miraculously been avoided so far, given the constant global conflict and bloodletting.

In well over 100 countries , US troops are deployed, in various roles such as in Japan, to protect multinational banana, drug, or coffee plantations, oil wells, refineries, and drilling rigs, as "peacekeepers", for "regional stability and democracy", etc. At what point are our foreign committments overextended? When our National Guard is no longer focused within the nation? When our "allies" are no longer wartime allies? When our leaders are no longer role models, but disgraced and scandalized? When our "Homeland Security" must be patched toether out of the FBI, CIA, and other alphabet soup travesties? When illegal immigration annually exceeds 5 million? We have been sold out too many times to let them pull a fast one AGAIN. Peace.

Just a brief addition on collaboration with Tom Ridge and other public servants in the new Homeland Security behemoth, besides the CIA (Central Intelligence Auction) and FBI (Federal Bureau of Incestuation)... INS (Immigration and Neutralization Service), BATF (Bureau of Addicts, Theives, and Frauds), NSA (National Security Attorneys), and NASA?, and...

After the space shuttle Challenger exploded it was said that NASA stood for "Need Another Seven Astronauts". Hmmm...

http://money.cnn.com/2002/08/02/news/international/japan_gold.reut/index.htm

Expected gold purchases may be curtailed as government backs away from plan to end loan guarantees.

Snippit:

TOKYO (Reuters) - A week ago it seemed so simple: Japan scraps full state protection of bank deposits, investors panic, bullion houses sell a lot of gold. That formula sent gold prices soaring in February as the first stage of a plan to end deposit guarantees prompted investors to pile money into traditional safe-haven assets. It was supposed to happen again as the fiscal year-end approaches next March, when the government is due to finish the job. But signs this week that Tokyo could be backtracking on bank reforms have put Japan's expected gold rush in question -- and given bullion houses pause as they prepare sales campaigns reminiscent of last year's media blitz.

Lawmakers in Japan's ruling party this week called for an end to the plan to limit protection of all deposits to 10 million yen ($83,890) per customer per bank from April -- a move analysts call crucial to bringing the financial system up to scratch. Prime Minister Junichiro Koizumi has vowed to forge ahead with his reforms, but hinted that there was room for compromise. Analysts say that as long as the main plan to scrap protection on savings accounts remains in place, gold prices can expect to rally at the year's end. "Most important are private, normal accounts," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities. "At the moment, Japan's basic policy is restricted only to companies' accounts. That won't have so big an effect on future demand for gold." Sonoda forecast investor gold demand reaching a hefty 30 tons between December and March, helping to push the price of bullion up to $350 an ounce on the spot market.


Black Blade: The rumor is that the plan is still slated to go forward. Regardless, the Japanese banking system is insolvent and bank deposit guarantees are uncertain even before the April Fools Day Surprise.

This time a bomb exploded on an Israeli bus. There are 9 dead so far, and 49 injured. It appears that many are Israeli soldiers returning from weekend passes. Hamas claims revenge for the Israeli attack in Gaza. It appears that nothing has changed. There is also a shooting in east Jerusalem with 3 dead near Damacus Gate. Israel vows revenge. The Middle East is on edge once again. If these attacks occurred during market trading it is possible that the reaction would be apparent on the stock market indices. "Interesting Times"

- Black Blade

Entire libraries could be written with serious analyses on the extra-ordinary fact of 22 years (twenty two) interest rates (IR) declines, from ATHs to almost zero % levels.
During this 22 yrs of almost linear decline, there were many different (changing) reasons (explanations) and effects for those IR to decline and decline further. I would like to come to final conclusions on this and make projections...NOT with discussions on statistical validy on correct correlations, but rather on the underlying fundamentals of these LT and very LT perpetual moves.

Enlarge the chart of IRs and go back to 1940 up to 1980.
The most beautifull picture of a rising parabola, broken in 1980 and steady decline with no floor (stop and reverse) in sight.

No consistant correlation possible between this IR perfect (smooth) pattern and POG ! No correlation with the 60 years of linear decline in purchasing power (depreciation) for the world's reserve currency US$.

But does this mean that IRs / US$ / POG are independant variables ? No Sir, they are NOT ! IRs/US$/POG are MANAGED with an unimaginable overwhelming Force. These variables are not "independant" on their own and not FREE to correlate or become inter-dependant. These variables are SQUEEZED into an outlined TREND, wich has to run its course up until the bitter end. The small, confusing, vibrations one sees within those LT established (managed) trends are futile efforts to correlate or become interdependant.

Main reason for all this, is the before's and after's of the fatidique 1971 date (your GOLD/DOLLAR standard regime). The Gold window pr� and post.
The zigzags within those giant trends of IRs/US$/POG are small abberations where some very minor capital flows, tried to protest. As some fish (Japanese housewifes) manage to swim for a given period against the mainstream.

We would be foolish (rebellion) to emply capital "AGAINST" unproven (unvisible) correlations or swim against the MAJOR TRENDS at our own peril. Long Term (LT-50/60 yrs) "trends" are there to be seen for each and everyone of us, having his screen on the net. The ensemble (whole) of those variables do feed our intuitions to correlate (interrelate) them with the sole purpose of projecting "new" trends, LT trends for the future. No big boring theories but simply taking an eagle's point of vieuw and painting the BIG picture.

Do the same for a 100 years of Dow Jones index (finance not economy) and see how this pattern is divided into 3 main parts :
1/ 1900 > 1930 : average return of 3,1% yearly.
2/ 1930 > 1980 : " " " 9,2% "
3/ 1930 > 2000 : " " " 13,6% "
Overwhelming, structured, systemic, managing forces !!!
Correct statistical correlation zero, but not possible without an ever depreciating fiat currency and/or very LT trends in IRs.

I'll try to be less boring, more practical, better readable in part II.

I've noticed over the last few Yr's that most drop-dead, logical trades fail in favor of the "House" - interest rates are a prime example, logic dictates when a currency's rate is lowered, an across the board devaluation would (should) be forthcoming...rarely if ever has this been the case (lately)...so a kind of warped logic, centred around "House interests" comes to the fore.
The Treasury Bond Market is another example...what's been going on there defies belief...and then there's Gold - if ever Gold was going to rocket, it should have during these last couple of Mth's ...it hasn't.
OK, where to from here (warped):-
Gold lower, IR's lower, Bonds flatline, DOW steady then UP!...(other indices follow in concert)
The dip in POG lately should have frightened the "longs" into submission and bought much needed Physical to Market...if it didn't....the next dip WILL! (off warped)

No Sir, I'm still 100% Physical (no intention of changing) and the conclusion of each trade is converted ASAP.

...and Yes, I am enjoying the W-end...Boatshow this am and Man of La-mancha in the A-noon....B-show indicates wealth effect alive and kicking here in OZ, and "The Man" is to be highly recommended.
We Goldbugs share an affinity with Don Quixote eh! (wink)

http://550.org.il/44/75.htmThis blokes theory may be of interest to you Belgian - keep up the effort, eagerly awaiting Part II.

It is easy to chart (picture) 100 years of history for DOW and IR or even the (different) purchasing power(s) of the US$. These pictures (facts) speak loudly and clearly and easely lead to commenly accepted conclusions.LT rising/flat/decline. Massive Confusion comes in when everybody starts trying to "explain" the WHY's/WHO's and WHATFOR's.

The 31 years POG chart is not only 3 times shorter than 100 yrs, but quite a different animal. An Hybride or idendity in the process of mutation. And therefore not possible to be correlated consistantly. Reason for this :

We, our globe in all its diversity, ARE STILL PONDERING ABOUT THE ****** IMPORTANCE ****** OF GOLD !!!!! Pauze...


I'm interested in finding a window, through wich, we can see how this pondering about Gold's importance is evolving.
I'll bet you do the same, daily, for more than 20 years now.
How important or un-important is GOLD today ? Same questions on IRs and currency detoriation.
And how do we (can we) quantify the processes ? My answer : *** charts >>> patterns >>>behavior *** !-?
De Gaulle or Japanese housewifes are post factum explanations. The picture of a chart, the factual results of decisions, and the the behavioral pattern(s) ...must be and are interpreted as nakedly as possible. Naked, without confusing explanations. But framed into an intuif evolving correlation with related (independant or not) variables (IRs and currency depreciation or even financial compensating overvaluation-say Dow hysterical canalization)

Regardless of any fundamental having a *temporary* impact on Gold...Gold will be sollicited for its importance by the widiest possible diversity on this globe all together.

Theoretically, the permanent detoriation of the US$-fiat-standard and the accompagning long trends in managed IRs, might bring all Gold sollicitors into a lockstep behavioral pattern. Housewifes, Belgians, Chineze and more Russians, might start acting on Gold as to invite more Americans and SA to join a disciplined Gold march. I commented on POG's 30 yrs chart (behavioral pattern) before. Impossible to visit each and every Gold participant and have a chat with them, informing about their thoughts about Gold's importance, ,now and into the future. The end result is reflected and to be interpreted from the not so old POG chart in mutation.

Gold's fundamentals will never change, as you stated without any hesitation, Sir. That's what I've learned here.
But Gold's *importance* does alter as does valuable water in different circumstances and environments.

Rockbottom IRs for the dollarblock plus further surrounding detoriation, will result in an inevitable "change", constant/prolonged change, for another trendy (managed) period. Gold's **behavior** during the past 30 yrs, still very strongly suggests to me that it "gradually" will take off in *importance* for revaluation on a very a high importance-level. Stop/reverse and rising IRs will trigger unforeseen measures other than the past
*package* devaluations of currencies.

Packaged offers will no longer be accepted. Packages are mixed bags with Trojan horses in it. We want the real stuff to be set FREE ! Thank you Sir Kosares and forumers, please forgive me my poor English resulting in confusing nuancing.

You : ...logical trades fail in favor of the House !
You nailed it right between the eys. AMAZING it is and makes one speechless against this overwhelming forces, constantly falsifying our (Western) EXTENDED period of prosperity.

GOLD is still into its "accumulation" phase for the past 21 years ! Accumulation whilst pondering about its future "importance". But accumulating it is, with or without degrees of "doubt". Those ever declining IRs are the almost perfect cover for the un-imaginable currency depreciation, already installed under the skin but not yet outbursting ! Not an explanation for POG's behavior (performance) but the understanding of how "The Houses" operate. The "houses" being the assembly of colluding well-do-ers, false servants of the collectivty's temporary prosperity. Colluding politics and financial brotherhoods.
A gigantic web with a handfull of big spiders driven by a consensus.

Where to from here...

Continued hyper-focus on stockmarket valuations. Unwinding proces : denial > acceptance > capitulation and panic > Change ! As classic as can be.
Let a balanced mixture of 10 yrs plus charts of Stocks (and/or macro-econ. statistics/resources), parade on your screen and tell us what you are feeling ! Financial paradise lost ? Thanks confrator Don Quichote.

http://www.nytimes.com/2002/08/04/international/asia/04TAIW.htmlSnip:

By KEITH BRADSHER


HONG KONG, Aug. 3 � President Chen Shui-bian of Taiwan said today that separate countries now exist on either side of the Taiwan Strait and voiced support for legislation authorizing a referendum to declare Taiwan independent of China, positions that are certain to anger Beijing.

****************

Misetich

Will US and China tension rise?

Got gold?

http://www.nytimes.com/2002/08/04/business/yourmoney/04BRAZ.htmlSnip:

By TONY SMITH

S�O PAULO, Brazil
WHEN a giant falls, the noise is loud and the collateral damage wide. Fear of such a prospect is gripping Latin America.
...............
"There is no doubt that a Brazilian collapse would contribute to the drag on the global economy," said Christian Stracke, head of emerging-markets debt strategy at CreditSights, a Wall Street firm that analyzes credit risk. "The question is whether a greater cascade effect would develop from losses at large companies and banks working their way through the larger economy."

................
BRAZIL'S Latin trading partners, as well as the multinational companies that have poured money into the country at a torrid pace in recent years, can only hope that he is right. The central bank estimates that American companies had about 170.5 billion reals in assets, or about $55.3 billion at current exchange rates, tied up in Brazil as of 2000, far more than any other country's corporate investors, with General Motors, the troubled telecommunications company WorldCom and the electric utility AES among the most heavily exposed.
.................
Some economists agree with Mr. Fraga that anxiety over a Brazilian default is misguided and overblown. But they are concerned that international banks and large multinational companies, many of them stung by losses in Argentina and the bankruptcies of companies like Enron and WorldCom, are limiting the availability of credit to Brazilian corporations.

................
Besides worsening the indebtedness of Brazilian companies with foreign loans, the real's decline has deeply hurt Brazilian companies that must import raw materials. Lawrence Pih, president of Moinho Pacifico, a large Brazilian flour mill, said the cost of producing flour has doubled for him because of higher prices for imported wheat. And if he needs to borrow money, domestic banks will lend at 42 percent interest.

..................
Misetich

Global defaults, market nervousness is not a plus for the Brazilian economy - The IMF has poured over $28 billion in the last couple of years and is set to add at least ANOTHER 20 billions in the next year or so

With the "world consuming engine" - US - showing anemic growth and world economic growth decelarating once again - Brazil might/will get caught in the squeeze.

Lets stay on this HOT TRAIL

Got gold?

http://www.nytimes.com/2002/08/04/business/yourmoney/04WATC.htmlSnip:

By GRETCHEN MORGENSON


he regulators investigating Wall Street firms' allocation of hot initial public offerings are likely to discover some juicy material. As they examine the records, they will find that many top executives of telecommunications companies, including Bernard J. Ebbers, founder of WorldCom, and Joseph P. Nacchio, former chief executive of Qwest Communications, received I.P.O. shares of upstart companies � like Juniper Networks � that had won, or later would win, contracts to sell equipment or services to the big telecom concerns.

At Salomon Smith Barney, Jack B. Grubman, its embattled telecommunications analyst, decided which executives received the shares his firm was underwriting, according to David Chacon, a former broker in the firm's Los Angeles office, and another former Salomon employee with firsthand knowledge of the arrangements. Philip L. Spartis, a former broker who handled the WorldCom employees' stock option plan in Salomon's Atlanta office, also said Salomon had offered sweetheart allocations to several titans of telecom.

...............
But the former employee said the telecom executives had routinely been among the top recipients of the stock in each Salomon offering. They received shares that Salomon held back from other clients, this person said, adding that the allocations had been made to executives when Salomon wanted to build relationships with the executives' companies or keep existing relationships strong. These executives were, in effect, part of an exclusive, very prosperous club, and membership was controlled by Mr. Grubman.
.............
The former Salomon employee with knowledge of I.P.O. allocations said: "If you were an insider back then, you had a pretty good life. There was a lot of money made, and they shared it between themselves. What bothers me the most is that some people made out so well and so many other people lost everything."


****************

Wall Street "cozy" arrangements robbed US and foreign investors
It appears that the "bad apples" are not just a few- How many IPO's have been "tainted" with infectious greed?
How many transactions have been created by investment bankers to increase their fees, with the intend of assisting their clients, though being accomplices in perpetrated deception and fraud by their cients to investors?

How many stock analysts, researchers, talking heads trumpted values of stock - most of which they had a personal position in - at the expense of investors

How many government officials, SEC, CFTC etc KNEW of these scams - and did very little to STOP IT - Yes they're pretending to do it now - closing the barns gate after the chickens have flow the coupe-

There are more rotten apples than the "few" that the Bush Economic Administration and Wall Street wants us to believe

...and it is thanks to them that millions of investors have and will lose the majority of their hard earned savings -

Gold has been suppressed by a consurtium, to facilitate the scam on these unsuspectful investors

Gold shines in turbulent times, where the dark side of excesses and malinvestments - brought upon us by the above noted perpetrators - bring on the general public and astute investors in protecting their assets and adding PHYSICAL GOLD TO THEIR PORTFOLIOS

Looking ahead to the next 10 - 15 years horizon, with baby boomers reaching retirement age - the social security system worlwide will be severely tested, if not bankrupt - government debt will skyrocket in the tens of trillions- global population will increase as will consumption of gold, - gold production is diminishing due to the damage perpetrated to the mining industry in recent years- and Central Bankers will have disposed of most of their reserves by then-

Gold is money-always was- always will be

Got gold?

Today : Euroland can live (feeling comfortable) with the ongoing/evolving, US$/� exchange rate ! Is Guy a Frenchy, following the Gaullist tradition ?
And is Euroland forcing Gold higher to make their own currency stronger ? Not visible with a frog perspective on POG chart but being concluded with a much higher eagle's vieuw. And is Guy another tiny step (evidence) in USAGOLD's conclusion that ultimately, physical demand will be THE COUP DE GRACE ?

Oh yeah...where will the Physical Demand come from (small detail) ? Answer : From those who hold piles of US$ and need time to discover that young fullblood euro, hiding to some extend (temporary) that it is Gold's best friend !!! The idendities of those dollar-holders ? Just about anyone or group thinkable. But first, the Houses want as much dollars as possible in the condemned debt-papers for having witching feasts and fires. Do they succeed in luring enough paper into bonds, rising in price with declining IRs ? You bet they do. Another 5 Trillion of confetti, retreating, out of the SMs into the sweet honey US$ DEBT PAPER BONDS. Hummm, jammy, jammy. Once this rich flows do stop...IRs, FLY HIGH, HIGHER, HIGHEST ! Paper burn, burn burn.

Many see it, feel it but are paralysed and shaved for the umptieth time, big and small alike. Because those houses (the hyperconcentrating colluders) have a very long tradition on managing those ventures. 40 years (1940 >1980) of rising IRs followed by already 22 years of declining IRs. The houses make the winds, tides and seasons, artificially, at their conveniece. Better NOT to fight the BIG trends and venture some trading-luck on the small ones.

Have a look at some Long Wave charts at Bronson Capital Markets Research. 70 years of declining stock market dividend yields quite close to exhaustive bottoming-zone. Note the long periodical correlation with IRs .

A "profitless" economy upon a "fabricated" financial bubble within a gigantic falsified frame...leads to FREE GOLD.

How long will Israel put up with these attacks? I find their restraint surprising. It is like they are waiting for some event (planned or otherwise) to happen. If it is bad enough, sentiment will temporarily suppot Israel's actions.

Maybe the plan (Bush's plan) is for Israel to then launch an attack on Iraq. Then we can lend support. Same bombs, different return address. Allies not needed (as badly).

I think this is a real and imminent possibility. As a result, oil will go front and center, leading gold and silver through resistance levels.

The Belgian finance minister should be satisfied with the naturally evolving euro/dollar exchange rate, since the primary reason for euro introduction was to free itself from the economic policies of other nation states -- primarily the United States. If the wisdom of such a move becomes reflected in the euro/dollar exchange rate then that's direct validation of the euro's founding fathers.

Supply-demand imbalances -- our economics text tells us -- eventually find equilibrium in the price. But what happens when the price is controlled on the paper markets? Those interested in holding the price down must find willing sellers at the restrained levels -- a machination that stands apart from ordinary economic action and a free economy and asks the seller to take a bullet for for the cause. In the past finding that supply of gold has been accomplished through various quid pro quos -- those quid pro quos as I have pointed in other posts -- have now hit the wall via the Washington Agreement and a growing sense among gold depositors that their deposits could be in systemic jeopardy. Only an explosion in the price will settle the true supply/demand imbalances that exist NOW -- let alone those that will exist as the dollar tanks. And that spells hyper-danger for the bullion banks.

Free gold? Indeeed. . . .End what Kevin Phillips calls the "financialization" of the American (and world) economy. The tail (paper) has wagged the dog (real wealth) for too long. And I include not just gold here, but all commodities, and the corporations which produce our manufactured goods. We need to get back to meat and potatoes economics -- make a product or service and sell it to customers. When General Electric is found to have made a transgender change from manufacturer to paper manipulator/quasi-financial firm, I would say its board of directors has lost its sense of direction. Make a profit honestly and legitimately -- not through some slick trading operation. This nonsense of creating profits through every machination imaginable (mostly dreamed up by paper traders dealing in obscure financial arrangements) must come to an end. That's how we got to where we are, and that's what we have to scrap in order to make a new start. What's extraordinary about the American financial scandals is not that they occurred. We have always had individuals (usually small time operators) tyring to rape the public through one snake-oil scheme or another. What is extraordinary about the present situation is the enormity of the attack on some of America's largest corporations. Nachio, Ebbers, Lay - - Barabarians at the Gate? No more, but barbarians within the City (!!) -- looting, pillaging, burning as they move along. As Randy pointed out end of last week, this is not just an ordinary crisis. Instead it is perhaps the greatest crisis of most of our lifetimes. Whether or not the barabarian allusion can be carried to the Fall of the Empire (a la Rome) remains to be seen. I hope not, but things do not look all that hopeful. We cringe as one scandal after another surfaces and one business after another ends up in bankruptcy court. Confidence reaches to the depths no matter how many business executives are led off in handcufs. In the meantime, gold will play its time-tested role as arbitrageur of economic and financial problems that come at cycles' end -- whether that cycle be Magnitude One or some subcycle on the historical continuum.

Speaking of which. . .

I was reading Jacquest Attali's extraordinary book (A Man of Influence: The Extraordinary Career of S.G. Warburg, 1985) the other night, when I came across a reference to the fall of the British Pound which Attali puts at 1949-1950. The British were already reeling from the dollar making inroads into replacing the pound as the world's reserve currency post World War II. India (the Jewel of the Empire) and Pakistan declared independence in 1947 -- an event which many historians note as the final blow to the empire. A scheme to restore international confidence in the pound by making it convertible to gold introduced in 1947 collapsed in a one month period of time. Gold was leaving the British treasury at an unprecedented rate due to an intractable trade deficit despite the Commonwealth and Empire. Clement Attlee threw in the towell in September 1949 devaluing the pound from $4.03 to $2.85. Winston Churchill at 77 years old came back to power along with the Conservative Party. Attali -- who writes the book strictly from financial perspective -- attributes the fall of the pound to a relatively obscure event: the Cairo government's denunciation of the Ango-Egyptian canal treaty and the Sudanese condominium agreement which allowed for the stationing of British troops on Egyptian soil. "So began events, " says Attali, "that would end in the disappearance of the international role of the British pound." Britain, in a very short period of time, had gone from 475 million subjects to 75 million seemingly overnight. (An American fall will not be measured by the same standard, but probably more a loss of market for the dollar itself.)

Sometimes the events which define great historical changes are obscure to their contemporaries -- even those shaping or attempting to shape events. So it will happen with the euro. . .and the dollar. We won't know which even will be the culminating even in either the dollar or gold. . .We'll just see it happen, though I'm sure the events will be debated and discussed here and we'll have a better understanding than the public at large.

Time to play a little defense, my fellow Americans. . . . . .Though the culminating events for the pound could not have been defined as such by investors at the time, the trends were obvious, and they had to do primarily with Britain's eroding trade balance and debt problems.

http://www.usagold.com/cpm/abcs.html

The ABCs of Gold Investing

"Gold will play a critically important role in American investment portfolios in the years to come. This book provides investors a basic education on private gold ownership from one of the nation's top experts." --Rep. Ron Paul, Texas, U.S. House of Representatives

Please Remember: It is your purchase from USAGOLD - Centennial Precious Metals that nourishes these pages.

What is a liquidity trap (possibly in Gold): For the bullion banks, to be able, unwinding their Gold positions...there must be a big and liquid enough "market".
Are further declining (ST) IR and relative stable dollar exchange rates, favouring/providing enough liquidity for/into the Gold market ? A decline in paper-gold-trade (LBMA-Comex-Tocom) could set the market to dry for adequate price adjustment and impossibility (delays) for unwinding the gold derivatives. Nobody (outsiders) is ready to buy or sell. The product (paper gold contract) has no sufficient market anymore. Not finding sufficient counterparties, drives the premiums up, out of proportion. And Gold ready for an explosive break out ? Any more insights on this path ? TIA.

USAGOLD : If a similar Sterling Empire fall would happen to the dollar...it would probably come out of the Arabian oil corner. Saudi Arabia going solo ?

Hi good Sir Nomad you noted in your post msg 82200 that prescriptions are at all time highs on XANEX and other anxiety drugs. Were you aware that the drug business is already built in the banking system, if you were to remove all the drug money in the global bank they would collapse.

Cyberbat I read your story "Dark Vision" I sure hope it doesn't turn out like that but I believe the way It does turn out will be in a way that no one expected or planned for.

Many times I have thought that the president with the stroke of his pen could re-enact the old FDR 1993 law. But there are limitations as to what they can do especially if you read that book Investing in Gold by the king of this castle. Its all about good "intell" and then acting on that intell.

There are two type of people, those who snorkle and those who scuba dive, I'm the ladder. Thanks again for all the inspiring words. A proven motivator will make it to the top faster than a proven genius, Never underestimate the power of inspiration!

Peace,

Brave Heart

Well, they are at it again. The local newspaper says Greenspan is thinking about a 50-75 basis point rate cut. We all should have known at this forum that it was going to be the chinese water torture plan. Now watch for foreign paper repatriation by the zillions. But if one thinks about it, it had to be that way; why; because the government offered a ponzi scheme a while back called INFLATION PROOF BONDS. People actually thought that they would be rewarded a premium on those bonds when inflation rose. Only one small hitch---real inflation to you is not real inflation to the Fed. Therefore, anyone buying these bonds, bought in to a ponzi scheme. But hey, it's the new age of corruption by those in high places; only difference is if yo government boy, no prison time. If yo not government boy, maybe some prison time for the token public consumption.
Hang tough folks; when the corruption dams break, you will see a golden demon out of control. Remember "The best laid plans of mice and men often go awry."
It will be called "Revenge of the gold bugs"!!
American by birth; Southern by the grace of God!!
Cyberbat

"Mah mama done tol' me
When ah was a knee-pants
A brokers a two-faced,
A trubblesome thing
Will leave ya ta sing
DA BLUES, IN DA NITE!"

Don't get the blues, get gold!

Sierra

*****************************Unemployment figures. No problem.
Credit Card Debt. No problem.
Real Estate Bubble. No Problem.
Bankruptcies. No problem.
National Debt. No Problem.
M3 money. No Problem.
Low Personal Savings. No Problem.
Stock Market. No Problem.

On And On It Goes!
What will it take for the public to wake up?
Plenty of sour notes is what I am hearing.
Slingshot----------------<>

Sir Slingshot,
Would you be kind enough to get someone to re-arrange my deck chair. I've got another boat to catch, so I'll be going off the side in to a golden sunrise!!
The good ship "Golden Warrior" beckons me now. Hope no one notices or everyone will eventually want to abandon the band and the ship.
Capt'n cyberbat

http://www.pimcofunds.com/PIMCO?op=www&mainsection=bond_center⊂section=commentary&request=investment_outlook&content_id=38434Snip:

Last week, the corporate bond market pond was nearly frozen solid. It has thawed somewhat in recent days, but there's still ice visible on the surface. Take a look at the charts below as an indication of the lockup and lockout of risk capital in recent months.
..............
Still, while many of our corporate bond holdings (and those of other Big Seven managers) will undoubtedly do well in future weeks and months, the dominant determinants of corporate bond underperfomance will be with us for the next few years at a minimum.
............
If PIMCO's belief that (1) technological change and (2) the reversal in bank lending attitudes are key to the pricing of the corporate debt market over the next several years, it remains unclear where appropriate spreads to Treasuries should eventually rest. While many corporate bonds are trading (if at all) by dollar sign as opposed to yield, suggesting the potential for huge gains or huge losses, there is no J.P. Morgan of the 21st century willing to step up to the plate and "save" the market. Some would suggest Greenspan is that man. The Fed's staff has for instance in the past year or so done academic studies on the potential for the Fed to buy either corporate bonds or stocks in an emergency situation. Preliminary indications seem to indicate that they believe the Fed can do anything it is not specifically prohibited to do, and therefore the support of corporate bonds would be fair game. Our "close to the Fed" sources, however, suggest that while Greenspan might have the authority to act, he is in no way disposed to. We understand that he is well pleased with the off-loading of credit risk from the banks to the Big Seven and insurance companies alike. To his mind, the moving of risk from a levered sector (the banks) to an unlevered sector (investment managers and insurance companies) is just what the doctor ordered to stabilize the economy in an emergency environment. Perhaps. But let me alert you, Mr. Greenspan. The corporate market at the moment is close to full tilt, half frozen, trading on price�not yield. While you perhaps contently rest on the historical laurels of near zero percent real Fed funds, its stimulation to the housing market, and your hopes for an eventual robust recovery, the cost of capital for corporations is nowhere near 13/4% or even that 6% level available to first time borrowers in the mortgage market. The cost of capital for Baa and lower corporations is in double digits. Aa and A companies can barely come to market. You sir, have a problem. If the cost of corporate capital skyrockets, the markets move the other way, and then of course, the economy follows.
And oh, for skeptics who will claim that this is an attempt to get the Fed to bail PIMCO out of its lousy corporate positions�forget it. I like my Sprint bonds even though I bought them at 95 cents on the dollar instead of the current level of 60. Anyway, despite my assertions that Fed staff have researched the possibility, I do not believe they will or even should do so. We're corporate light, even though in this case one Lite beer is one too many. We have only benefited from the naivet� of the "corporate tilters" that went too far. We're in the catbird seat, such as it is, or better yet the Captain's chair on that tuna boat sailing on the high seas. It's just fair warning that with a tilting corporate bond market, the economy itself may not be far behind. Let's just hope the pinball analogy doesn't apply to the economy itself and that we soon aren't forced to declare "Game Over." Greenspan's almost out of quarters.

***************

Misetich
Here's ANOTHER interesting passage from the article
Quote
Warren Buffett, or perhaps his sidekick Charlie Munger, is fond of saying that if you look around the poker table and you can't identify the fish, then you be the fish. Managers using corporate tilts may have thought they were the skippers of their own ocean-faring tuna boats, but as it turns out, they had gills and are now sucking for oxygen in a local trout farm located in a city near you. They be the fish.

End of quote

Got gold?

http://www.forbes.com/newswire/2002/08/04/rtr685657.htmlSnip:

By Eric Burroughs

NEW YORK, Aug 4 (Reuters) - Severe stress in global markets has nerve-wracked investors fearful that one big shock could jam the gears of the financial system -- much like the crisis days of 1998.

"People feel like gasoline has been dumped on the floor and it wouldn't take much to ignite it," said James Glassman, senior U.S. economist at J.P. Morgan Chase.
..........
MONEY HARD TO GET

Interest rates charged on high-quality corporate debt right now stand at near-record levels -- 2.2 percentage points above risk-free Treasuries, up more than half a percentage point since early June.

Investors, scared they cannot trust corporate balance sheets, have proven reluctant to lend money. Corporate bond issuance by investment grade companies sank in July to $22 billion, down 63 percent from its January to June average. Last week investment grade debt suffered its worst week since at least 1997, and junk bonds are set for their worst year ever.

Funding through the short-term commercial paper market also has become very difficult, with total outstanding issuance for nonfinancial and financial firms falling a hefty $93 billion this year. Banks have turned skittish about lending. Initial public offerings have dried up.

"The way the events are unfolding right now for the near term, dealing with these many financial constraints is going to impinge and impinge and impinge on economic activity," said prominent Wall Street economist Henry Kauffman, who has argued the Fed should cut interest rates.
............

The current pain in capital markets has yet to reach those extreme levels of distress, said J.P. Morgan's Glassman. But he said the market sees conditions as deteriorating to the point where a crisis could happen "at any moment."

************
Misetich

Greenspan is hoping to get help from the "growing economy" -aiding ANOTHER bubble (housing) and spreading the risk around - from banks to insurance corporations etc -

Lobby groups want to be "rescued" - suggesting Fed should buy stock and bonds and lower interest rates

On the other hand Captain Greenspan has been alerted of an incoming GOLDBERG ahead - too late for him to steer away from -

Got gold?

Just strolling through a near-perfect golden garden, nipping the viney thorny things in the bud.

You can thank me now, or thank me later, or just ignore that I was ever here bustin' my hump to keep this a "clean, well-lit place" for sharing the latest thoughts and news on gold.

R.

Thanks!

http://www.lemetropolecafe.com/pfv.cfm?PfvID=2405GATA reports letter from Mike Bolser to JPM Chairman:

"The following three current documents indicate that JP Morgan Chase has reported to the Office of the Comptroller of the Currency $45,234 Billion in total gold derivatives as assets under the control and use of JP Morgan Chase however they have not accounted for these gold derivative assets in either their SEC form 10Q March, 31, 2002 or their 2001 Annual Report. This finding implies that JPM shareholders have far greater risk than previously disclosed by the company. "

Way to go, Randy -- your housecleaning techniques DO inspire confidence...

http://money.iwon.com/jsp/nw/nwdt_ge.jsp?section=news≠ws_id=reu-n01135375&feed=reu&date=20020802&cat=USMARKETSnip:


By Katherine Baldwin

BRASILIA, Brazil, Aug 2 (Reuters) - With a preelection bailout for Brazil's sinking economy all but inevitable, presidential candidates face the challenge of helping secure international aid without appearing to sleep with the enemy.

The International Monetary Fund wants an "understanding" from leading candidates in the October race on basic economic policies before extending Brazil's current loan deal through 2003. For the candidates, it is all about passing the IMF buck, analysts say.

Acquiescing to IMF-penned policies does not mesh well with opposition candidates' offer of change after eight years under President Fernando Henrique Cardoso, who brought macroeconomic stability but failed to combat poverty and unemployment.



But refusing to collaborate with an "understanding" on policy may hamper Cardoso's ability to secure funds. That could exacerbate the economic chaos eroding salaries and increase the chances of the victorious candidate having to run to the IMF on his first day at work.

"The opposition has an interest in putting all the onus of an IMF accord on the government," said Ricardo Caldas, an analyst at the University of Brasilia. "The opposition will carry the burden of having to agree to something, but the onus is less than signing an accord in their own government."

............
While it is improbable the fund will demand anything in writing from the candidates -- nor would they be likely to sign -- the opposition may have to formalize pledges of low inflation, fiscal austerity and respect for contracts in an accord with Cardoso's government, analysts say.

In terms of their proposed policies, little changes. But candidates will be walking a tightrope between appearing to help stem the crisis and endorsing policies that many of the 40 million Brazilians who live in poverty dislike.

"They (opposition candidates) will try to remain ambiguous, saying they favor the IMF as long as there is no sacrifice for the country, that this is absurd but it's a last resort," said political analyst Luciano Dias at Goes consultancy.

............
Eventually, though, the burden of an agreement with the IMF for those voters who oppose it could be shared. Brazilian officials and economists have suggested the IMF could draft a two-part deal, giving some funds to Cardoso but conditioning a second round of cash to the president-elect subscribing to a deal.

In the meantime, candidates must juggle pledges of jobs and better wages with the reality of an economy in crisis and under the reins of the IMF.

"This is a dangerous political game for all of them," said Dias.

********************

Misetich

Lets stay tuned to this HOT TRAIL - JP Morgan and Citi have huge exposure

It appears that "they" haven't sounded the panic button yet - underestimating the deceleration of global economic growth just ahead -

Got gold?




Got gold?

"Treasure chests throughout history
have been filled with gold, and not by idle choice."

-- R. Strauss

http://money.iwon.com/jsp/nw/nwdt_rt_top.jsp?cat=TOPBIZ&src=202&feed=bus§ion=news≠ws_id=bus-n04347060&date=20020804&alias=/alias/money/cm/nwSnip:

"My own view is that the odds of a double dip recession are very, very small," Poole said in answer to a question after addressing a group of Southern state legislators.

"The overall national picture is that the national economy is going to be recovering," he said, pointing to strength in home and auto sales, and the resilience of household spending.

............
STOCK MARKET BLUES

In his speech, Poole noted that stock prices impact both business and consumer spending.

However, he cautioned that it is the level of total household wealth, including the value of bonds and real estate, that is important when evaluating the so-called wealth effect -- that is, the degree to which asset prices might impact consumer spending.

Federal Reserve Chairman Alan Greenspan has said rising home values had to a good degree offset the dampening impact of falling stocks.

Poole also said the wealth effect appears to be spread out over time and is small relative to the effect of household income, which has been rising.

............
CAUSES FOR CONCERN

But he warned of some potential clouds on the horizon that could lead to instability in financial markets, zeroing in on the heavy debt load of mortgage market giants Fannie Mae (FNM) and Freddie Mac (FRE).

The two so-called government-sponsored enterprises, or GSEs, had $1.3 trillion in debt outstanding at the end of last year and, according to Poole, had guaranteed another $1.8 trillion of mortgage-backed securities.

"In the case of the GSEs, the massive scale of their liabilities could create a massive problem in the credit markets," Poole said. "If the market value of GSE debt were to fall sharply ... what would happen? I do not know, and neither does anyone else," he said.

Fannie Mae and Freddie Mac, while shareholder-owned companies, were chartered by Congress to provide a deep and even flow of funds to mortgage markets, which they do by buying mortgages and repackaging them as securities for investors.

Under their charters, the firms have credit lines with the U.S. Treasury, which -- although never tapped -- many think have contributed to a view in the market that the government would stand behind their massive debts.

"I do not see any immediate risk of a GSE debt problem, but am not willing to assume that in different conditions in the future one could not occur," the St. Louis Fed chief said.

Poole said the credit lines the GSEs have with the Treasury Department should be withdrawn, adding that they could be replaced by credit lines at commercial banks.

In addition, he said the companies over a period of years should add to the amount of capital they hold. He said both Fannie Mae and Freddie Mac hold a level of capital "well below" what is required of banks.


�2002 Reuters Limited.

***********
Misetich

Poole "own opinion" grasping at straws - red hot housing and auto have thus far contributed to little over 1% GDP growth in Q2-

Oh the GSE's he must have finally got Doug Noland's alerts- He knows that unsustainability - will sooner later - be reckoned with

Got gold?

OK Lads, let's fire it up!...........Mr. Poole has made comments unbecoming a clear thinker before.

http://news.bbc.co.uk/1/hi/business/2167553.stm

Snippit:

Investors will be bracing themselves on Monday for another rough ride on the world's stock markets. Last week was marked by turbulent trading as renewed fears over the health of US economy sent stocks plunging. The downwards trajectory also dashed hopes early last week that the stock markets were attempting a recovery. "I can't see the market staging a huge recovery next week," said Jeremy Batstone, head of research at NatWest Stockbrokers. Meanwhile, stocks in Tokyo are expected to approach 18-year lows again this week, as volatility on Wall Street shakes investor confidence.

Fears are rising about the state of the US economy after disappointing growth figures were released on Wednesday, increasing the threat of a double-dip recession. It's a potential landmine and there is nothing to do but wait and see whether it blows up. The bad news continued with some poor corporate results and weak unemployment figures. On Friday, Goldman Sachs investment bank predicted the US Central Bank would cut interest rates to 1% before the end of the year, increasing the feeling that the US economy recovery would be fragile.


Black Blade: In short, prepare for another Great depression. Earnings are falling faster than share prices leading to grossly overvalued stock prices. A rate cut now would be an admission that Greenspan and the Fed are absolute failures and it would be another big sell signal. The same thing happened in Japan and it will happen here also. The looming August 14th deadline will expose many more companies as having lied about their financial health. As more companies expense options, earnings will fall. The new S&P accounting standards that eliminate bogus "operating earnings" will lower earnings as well. The light is about to be focused on Wall Street's cockroaches.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APUvy_BZoU2x1bXBp
Snippit:

New York, Aug. 3 (Bloomberg) -- The U.S. stock rally that fizzled this week may set a pattern for coming months, as some investors take advantage of any surge to sell shares amid concern the economy is slipping back into recession. ``You are probably going to have a lot of selling as the market tries to go up,'' said Jim Luke, who helps oversee about $10 billion at BB&T Asset Management in Raleigh, North Carolina. ``The guy who bought Cisco at $20 says, `If that stock gets back to $16, I am going to sell.''' Cisco Systems Inc. shares closed at $11.89 Friday.


Black Blade: Individual investors have been bailing out. Of course investors will sell into the rallies because there is no choice. The only ones left are the institutional investors who continue to tout the "recovery" story with complicity of the financial media. The jig is up and there are fewer sheep left for shearing. The people are wising up while the Wall Street Pied Pipers continue to desperately scream "all is well" against a background to economic collapse. It just doesn't sell anymore. The global economy is toast. In a word � "Grim".

http://groups.yahoo.com/group/gata/message/1200James Turk, editor of the Freemarket Gold and Money
Report, examines statements issued by the Federal
Reserve and Treasury Department and finds that they
only evade the pointed questions posed about U.S.
policy toward gold:

http://groups.yahoo.com/group/gata/message/1200

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@yahoogroups.com

http://cbs.marketwatch.com/news/story.asp?guid=%7BB99198D3%2D4E97%2D4185%2DB693%2D9156F7E48EAF%7D&siteid=mktw

Snippit:

WASHINGTON (AP) -- The Bush administration will provide an emergency $1.5 billion loan to Uruguay to help the country deal with an economic crisis that forced its banks to close last week, officials said Sunday. The U.S. assistance will come in the form of a loan to be repaid in a matter of days once the South American nation receives a new loan package from the International Monetary Fund, said the officials, speaking on condition of anonymity.

Treasury Secretary Paul O'Neill left Sunday for Brazil, and later will visit Uruguay and Argentina. The administration took office pledging to oppose the type of direct financial assistance and big bailouts the Clinton administration used during the 1997-98 Asian currency crisis. But the deepening economic woes in Latin America have forced the Bush administration to reconsider that stance.


Black Blade: In other words, US taxpayers are footing the bill for Uruguayan mismanagement. Even the lion's share of the IMF funding is US taxpayer cash. The taxpayer will soon be bailing out Brazil, Venezuela, and Colombia as well. This disaster will not show up in the growing US deficit as it is "off the books" so to speak. Meanwhile the "official" US government debt grows daily.

I'm just curious,how many people have read Darrin Perkins analist reports in the last 28 months? I have off and on and I am amazed how one voice has so much compasion and concern for what is taking place now and the months ahead!I've been saying prepare for this crisis for 6 years now,and at one time my wife wanted to strangle me something fearce! GOT GOLD......

Thanks. It's an honor to see the continuous results of your efforts and postings. Looking forward to the years ahead, Michael B. (mikal)

RE: Uruguay LoanDoes this require Congressional oversight? What was the scale of the package offered to Mexico? TIA...CM

It used the IMF's gold which was "Loaned" then sold with the ...proceeds going to Mexico to reliquify their banks.

I am not sure what say Congress has over such loans, owever, considering that the Congress is on vacation and the Uruguay events came to a head rather quickly, I would be inclined that this was done without Congressional approval.

- Black Blade

http://www.gold-eagle.com/gold_digest_02/chapman080502.htmlJP Morgan Chase on August 14 has to make a choice. They either certify that their gold derivatives are assets or liabilities. It will be interesting to see what choice they make. We are watching and if they play Mickey Mouse they' ll end up in jail.
_____
Gold Digest Report

http://www.imf.org/external/np/sec/nb/2002/nb0283.htmLet me see. The U S is going to loan Uruguay $1.5 billion, to be paid back in just a few days, with $800 million loaned to Uruguay by the IMF! I never was real good at math, but it appears that Uruguay could be a mite short on the payback. May be that O'Neill is going to make up the difference out of his own pocket!

http://news.ncmonline.com/news/view_article.html?article_id=831

Snippit:

According to European political observers and Middle Eastern analysts, Saudi Arabia may be on the verge of collapse, which could place it at risk of falling into the hands of al-Qaeda. According to reports published in the British newspaper The Observer, al-Qaeda counts sympathizers not only among the general Saudi population but also within the House of Saud, the royal family itself. Here Prince Abdullah, the current regent and designer of the recently failed Saudi peace plan for Palestine, has locked horns with Defense Minister Prince Sultan, whose views for Saudi Arabia's future are markedly pro-Islam and very close to those of the radical Sunni Salafia movement.

As recently as last March, unrest in the Saudi kingdom was expressed in a series of street protests that started in the eastern part of the country and rapidly spread throughout the nation. Thousands of pro-Palestinian, anti-American protesters were brutally repressed by Saudi security forces.

Saudi Arabia is not only home to a fourth of the world's oil reserves, but is also the location of the sacred Islamic cities of Mecca and Medina. The country is no newcomer to religiously inspired popular uprisings. In 1979 a group of rebels, mostly Sunni but representing a wide spectrum of the Saudi population, seized the Grand Mosque in Mecca. The resulting stand-off between Saudi security forces and the rebels lasted three weeks and ended in a blood bath when the rebels were forced out of the mosque by a task force of Saudi troops, Jordanian militia, and French counter terrorism operatives. Sixty-three rebels survived the assault and were later publicly executed.


Black Blade: Quite an interesting article. If the Saudi oil is kept from the west, the whole global economy is dead. Oil is the life blood of the economy and Saudi controls the bulk of ME oil.

SWEET 16 (07/30/02; 10:15:50MT - usagold.com msg#: 81855)
Goldentrill & Gandalf
Hi Guys,
Sure is hot and dry in South Dakota. How are you doing? My car is being painted pink this week, I am so excited!
===
How does the PINK Car pink look ?
Perhaps you can have the next one painted GOLDEN !
<;-)

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APU3xpBXCQXNpYW4gSnippit:
"Taiwan stocks tumbled after President Chen Shui-bian described the island as a separate nation from mainland China, prompting a rebuke from Beijing. The TWSE Index plunged 5.2 percent to 4666.04 as of 11:29 a.m. in Taipei. That's the biggest drop since Sept. 13, Taiwan's first trading day after the terrorist attacks in the U.S. All but 13 of the 564 shares in the index declined.

``I'm not expecting a war, but the market fall is going to reflect the increased anxiety of the mood of the people,'' said James Chen, who helps manage more than $2.9 billion in stocks at Fu Hwa Investment Trust Co."

Waverider: Actually Taiwan is down about 6% at the moment.

http://bigtexas.com/dmc/gold/
Will this one do? (see link)

- Black Blade

http://bigtexas.com/dmc/
Leave it to a Texan to have a car plated in 24K gold.

- Black Blade

Yesterday I posted a query about "money flows" out of Equity Mutual Funds, which were reported to be $47 billion in July, a record.

The answers I got did not satisfy me entirely.

Let's see, the Mutual Funds have some cash, I hear some of them have less than 5% of assets in cash.

Now, if $47 bil of holdings in the Mutual Funds are redeemed by the owners, some of the $47 might come from the Mutual Funds own cash. However, that is not likely; at most, the outflow from the Mutual Funds would be only temporary, for these Funds would have to replenish their cash holdings.

How would they replenish their cash? By selling stock to new Mutual Fund investors, at lower prices, of course. So, the $47 bil really comes from OTHER INVESTORS coming in with $47 bil of Equity Mutual Fund holdings, at lower prices.

The flow OUT is compensated by the flow IN.

If there are no NEW BUYERS, then, the only recourse is to SELL TO THE FED, in exchange for cash. The FED becomes the new owner of stock in the Equity Mutual Funds, to the extent that it comes in to provide cash for redemptions.

If the FED adopts of policy of supporting the Equity Mutual Funds, to avoid a complete meltdown of prices, then it will be MONETIZING stocks - turning stocks into MONEY. Enough of that, and there will be enormous amounts of money sloshing around. That's called "inflation"; eventually it will show up in prices as the holders of the money use it.

For the time being, it seems that those large amounts presently being redeemed out of the Equity Mutual Funds, are being re-invested in Bonds and short-terms Gov't Securities. Prices of these go up (and the related interest rates go down).

This is Japan all over again.

As prices of stocks decline, which it appears will be happening, then it will take larger and larger quantities of blocks of stock liquidation, to make similar dollar quantities. In other words, if prices decline by 1/3, it will take 50% more units of stocks sold, to obtain the same dollars.

....

Are any posters at this Forum, getting more respect from their families these days, for holding outlandish ideas about gold? I know I have one stock-bull friend, who is VERY quiet these days! Out of mercy, as a gold-bug I don't jeer at my stock-cockroach friends. "Go, and sin no more!"

Sierra

I purchased the one from "Back to the FUTURE" and had it gold plated !
<;-)

http://groups.yahoo.com/group/gata/message/1201J.P. Morgan Chase has failed to report to the
Securities and Exchange Commission and to
its own shareholders the firm's $42 billion
in gold-related derivatives:

http://groups.yahoo.com/group/gata/message/1201

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@yahoogroups.com

http://www.forbes.com/2002/08/02/0802adviser.html?partner=yahoo&referrer=now on Forbes they're talking it up.

snip:

Talk about a crash course in crashing markets. Curtis Hesler earned his broker's license in 1973, the very day the stock market peaked before an ugly two-year slide. Now editor of Professional Timing Service, the Missoula, Mont., native said he appreciates the lessons of that bearish period--specifically, how to navigate the commodities markets when stocks go south. . . .
Forbes: This has been a horrible year for timers. The stock market has been oscillating so unpredictably. Have you been able to benefit from the rise and falls?

Hesler: The only significant signals have been on the short side. The only real buy-side action we've had has been in the metals.
. . . . .
You're predicting in your recent letter that the dollar will get bailed out of its current slump, causing gold to weaken. Is this a dip to buy on? Do you see another gold high ahead?

Absolutely. This is definitely a dip to buy on. We bought in late December and sold June 7. Our sell point was extraordinarily good, netting us over 41%. And since we sold, the Philadelphia Gold and Silver Index [the XAU] has fallen from 78.75 to below 60.

Interview by Missy Sullivan

At some point I suppose it's not of value to be a contrarian but to recognize that a contrarian viewpoint will be obviated for the short term.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APU3kAxVnQW5nbG9HSnippit:
"After more than $9 billion of takeovers in the world gold mining industry in the past year, AngloGold Ltd. Chief Executive Bobby Godsell -- like his rivals -- is running out of acquisition targets.

Almost half of the 36 companies in BNP Paribas's index of the biggest gold companies in 2000 have been swallowed up in mergers and acquisitions. That's forcing producers like AngloGold to buy small mines like Cerro Vanguardia in Patagonia rather than organize corporate takeovers in Toronto and Johannesburg."

http://biz.yahoo.com/rb/020804/markets_crisis_2.html
Snippit:

NEW YORK (Reuters) - Severe stress in global markets has nerve-wracked investors fearful that one big shock could jam the gears of the financial system -- much like the crisis days of 1998. "People feel like gasoline has been dumped on the floor and it wouldn't take much to ignite it," said James Glassman, senior U.S. economist at J.P. Morgan Chase. Plunging stocks and multibillion dollar bankruptcies the past month have investors assessing the widespread damage to banks and insurers. If more scandals or failures come to light further straining capital markets, it could force central banks to jump to the rescue, pumping money into the system through lower interest rates.

Fear is starting to hurt economies as well. The financial market squeeze in both the United States and Europe is depriving businesses of crucial capital and sharply increasing their cost of borrowing at a time when global growth, led by the $10 trillion U.S. economy, appears to be losing steam. "The Fed has to get concerned about the capital markets effectively tightening for the Fed at a time when it wants policy to remain accommodative," said Brad Stone, chief U.S. market strategist at Barclays Capital. "The Fed may need to lean against that. Some weeks ago that looked like a very low risk. Now it's definitely a real risk," he added.

Swap spreads -- a measure of banking sector risk that signaled the systemic distress in 1998 -- popped out last week on the credit anxiety about J.P. Morgan before stabilizing. Investors are even raising risk premiums on assets usually considered very safe like mortgage-backed securities. With markets so stretched, harried traders are looking anxiously for the one trigger that could set off an explosion. Rattled markets showed their heightened state of anxiety on Friday when rumors of an emergency central bank meeting in Europe to help a failing bank or insurance company swept through trading desks, sparking selling of stocks and powering gains in safe-haven short-term Treasuries. Banking trouble fears hit a fever pitch on July 24 when rumors spread of liquidity problems at J.P. Morgan Chase -- the largest U.S. bank-- and Citigroup after congressional revelations of their dealings with failed energy trader Enron Corp. The impact across credit markets was harsh and swift.


Black Blade: Maybe the Fed will cut rates and fire up the printing presses 24/7 to stimulate a bit of inflation. It appears that life will get to be quite "interesting" in the coming weeks. The global economy is on very shakey ground as one country after another implodes and the western markets crash. Should be quite "entertaining" tomorrow.

http://groups.yahoo.com/group/gata/message/1201J.P. Morgan Chase has failed to report to the
Securities and Exchange Commission and to
its own shareholders the firm's $42 billion
in gold-related derivatives:

http://groups.yahoo.com/group/gata/message/1201

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@yahoogroups.com

http://quote.yahoo.com/m2?u
Asian and Euro markets look a bit red today. Meanwhile Gold holds up well. The horrible economic data has not been good for investor confidence. All the "happy talk" about the markets have worn thin and investors are running for the hills.

- Black Blade

http://biz.yahoo.com/rb/020804/economy_2.html

Snippit:

WASHINGTON (Reuters) - The U.S. recovery seemed a sure bet only a few months ago but a relentless stock market slide and a batch of gloomy data have raised fears a second recession could emerge before the first has faded into memory. Most economists are hopeful the world's richest economy can avoid falling victim to a so-called double-dip recession, in which the economy suffers a renewed contraction after several months of recovery from a downturn.


Black Blade: We here at the forum were not fooled by the sweet lies of the analysts and media spin doctors. The facts are quite clear. How can the economy run full bore when the government, corporations, and consumers are accumulating record levels of debt by mortgaging everything they have to keep spending? The fact is � they can't. The bill eventually arrives and the piper must be paid. The party is over and the hangover must be treated. With corporate accounting scandals, job losses piling up, debt growing, corporate earnings not materializing, etc. it is going to get very ugly very fast.

http://straitstimes.asia1.com.sg/money/story/0,1870,135613,00.html?
Survey findings are a setback to Tokyo's push to get households investing moreof their $20.7 trillion savings in stocks

Snippit:

TOKYO - Four Japanese in five have never bought stocks, bonds or other securities and never intend to, a survey showed, dealing a blow to a government push to get households to put more of their US$11.8 trillion (S$20.7 trillion) savings into stocks. GOLD has been a beneficiary of the tidal wave of liquidity in Japan. Japanese gold purchases during the January-March period this year were 3.5 times higher than their level a year earlier, according to the World Gold Council. Purchases of gold bullion amounted to 45 tonnes, worth 65 billion yen (S$962 million) in total, during the period. However, Prime Minister Junichiro Koizumi wants people to buy more shares to stem a decade-long stock market decline that is draining banks' shareholdings and making it harder for them to dispose of bad loans.


Black Blade: Of course Japanese are not buying into the crashing Nikkei and instead opt for Gold or savings. I believe it was Abraham Lincoln who said: "You can fool most of the people some of the time, but you can't fool all the people all the time". Hmmm�

http://sg.biz.yahoo.com/reuters/nsyd11651.html

Snippit:

KALGOORLIE, Australia, Aug 5 (Reuters) - U.S.-based gold producer Newmont Mining Corp said on Monday concerns that South Africa could soon nationalise some of its gold mines made the country a high risk for explorers. "We have no intention of going into South Africa," Newmont president Pierre Lassonde told reporters. The document proposes that control of the mining industry must be in the hands of black business within 10 years. Mining licenses for existing operations must have a black empowerment partner with at least 30 percent equity. For new operations, the figure is 51 percent, thereby ensuring control for the empowerment entity. South Africa's largest gold miner, AngloGold Ltd has attacked parts of the draft as "unacceptable."


Black Blade: I saw the same thing happen with ME oil concessions and Chilean copper. I don't blame foreign business for avoiding SA like the plague. I sold off all my GFI (mostly due to a proposed 20% dilution of shares) and HGMCY holdings and readjusted into GG, MDG, and GLG. Hopefully the management of these SA companies will expand rapidly outside SA for when the inevitable happens. It's too bad that Marxist buffoons will slit their own throats like that.

Central Banks (China) and big hedge funds will move out of short term US-Bonds, gradually, and buy Bullion (derivatives). This, when the stock market stabilizes on its downturn and the accompagning decline in IRs is at its lowest. The declining (weaker) dollar adds to the argument. This will most probably happen before yearend (2002) and POG might be allowed to maneuver up to 400$ (???) NIA !

http://www.bday.co.za/bday/content/direct/1,3523,1145373-6094-0,00.html
Snippit:

Months of uncertainty in mining likely to continue until charter is finalised. More than a week since the draft of the empowerment charter for SA's mining industry was leaked, many companies are struggling to make up the lost ground. The damage done to investor confidence is not likely to go away and sentiment will continue shaky until a final version of the draft is made public. Many analysts now believe that the knock to investor sentiment created by the leak may be irreversible. It is not just the mining sector which is going to feel the fallout from the leaked draft, but the interpretation of the political sentiment, rightly or wrongly, may also have its negative consequences on other SA sectors.

Black Blade: It is unfortunate that racism that was supposed to end with apartheid has been replaced with racism under the black ANC Marxist regime. In the end, it will take away from investment in SA and likely divert it to western based gold producers and to physical as confidence is lost in stocks.

Wall Street does not want to hear words like confiscation and nationalization. People who invest in mining shares remember what happened when Salvador Allende nationalized Anaconda's copper mines and the losses to the major western oil companies when the ME countries confiscated the oil concessions. It is no wonder that investors are bailing out of SA investment.

http://money.iwon.com/jsp/nw/nwdt_ge.jsp?section=news≠ws_id=reu-syd296426&feed=reu&date=20020804&cat=USMARKET

Snippit:

KALGOORLIE, Australia, Aug 5 (Reuters) - Newmont Mining Corp (NEM), the world's largest gold miner, said on Monday it would look at ways to accelerate the unravelling of millions of ounces of gold pre-sold at fixed prices. The mining house has already extinguished some two million ounces of a total 10 million ounces inherited with the takeover of Australia's Normandy Mining in February, but has vowed to rid itself of the entire positions as soon as possible.

Black Blade: Pierre Lassonde said that he expects the POG to rise to $350 an ounce in the next year or two and that the bull market in gold to last at least 4 years. What a pessimist. Anyway, he says that as the hedge books of gold miners are unwound and closed out the POG will rise relentlessly.

Sir Belgian,

I agree, ...watch for a blow off in bonds as the bull market ends with the Fed's last gasp attempt to revive a dying carcass stock market (IR's at 1%). As the US$ keeps falling precipitously, then the Fed will have to come to its rescue with higher interest rates, crushing real estate, and the PM's will soar....

On the other hand, the PPT may abandon trying to support the dollar - a losing game - and capital flight from USA will accelerate, crushing SM's and real estate, and PM's will again soar...

The hedge funds will just ride the long term trends, as always...

I guess we could say that the Fed is caught in between a giant rock and a mighty hard place....

Cheers.

http://www.gold-eagle.com/cgi-bin/gn/get/forum.html?date=2002%3A08%3A04%3A23%3A00%3A00
Back from vacation. Stumbled on this post on gold-eagle while surfing on the net.

------------

Defeat by Default
(DavidJenkins) Aug 05, 03:25

"Last week there was much discussion about the possibility of the US invading Iraq and you may have wondered how that would affect you.
The discussion about such an event can be linked to a meeting in Germany on the 27.05.2002.
Between Bush and certain Central Bankers.
Those of you familiar with my postings may have noted my assertion that President Bush was summoned to Germany to face the Central Bankers on the 27.05 2002. �Memorial Day Weekend� and I have reasoned with you that the Bankers have told Bush to get his house in order. In a later post titled "Bankers being Bankers"
I discussed with you the possibility of the Central Bankers in the meantime, ahead of the rest of the world, in the knowledge that the US is unable to meet the demands made of it, have been quitting huge amounts of US funds and securities.
Now you ask what has that got to do with the US invading Iraq?
Bush, given such an ultimatum from the Central Bankers and faced with �defeat by default� of his country, could, and would blow up Iraq, and unsettle the oil flow to Europe and Japan.
At the same time it is possible that China would take that opportunity to move on Taiwan.
If the Central bankers call the great �Bush Bluff� and allow gold to rise and the dollar collapse and I say the US has been given six months from 27.05.2002 or sooner, the US may as well invade Iraq and go to the defence of Taiwan as it would have nothing to lose and everything to gain.
The invasion and declaration of war would allow it to suspend its Constitution, close it Banks, close Wall Street and generally renege on all payments, and, do anything and everything it wants to, all in the name of freedom from the fabricated terrorists.
Greenspan and his colleagues have a lot to answer for."

Just got a 5 page answer from the SEC on Manipulation. Does anyone have Butlers land address so I can forward to him for review???
THANKS.

So what was the bottom-line? Let me guess: they looked carefully, and found no evidence of manipulation.

http://www.silver-investor.com/slowman reach him thru that link. call/email him!

I thought for a moment that there would be no war-games (or at least a postponement) for the time being, as to give the financial markets some time to stabilize and consolidate. Think I have it wrong. I pull this conclusion out of CNN's, sudden, changing tone in its news coverages and President Bush opstinate responses on Israel.
The US for Iraq, whilst China is agitated/provoked at the same time with a declaration of independance. Not the slightiest sign to start any form of conciliation in Israel and (faible) war-opposition within the US congres.

So, war will be, regardless of economics. Or better, war is needed because of the economics.

Again the China factor in all this. As a major dollar-reserve holder and an Official Gold friend. Bottoming Bonds, a declining dollar, the US empire at war (a long war) and a growing arch rival, China, knowing that a decline in exports to the US (and dollar exchange rate), needs to be compensated for. So much positives for Gold, accumulating and coming closer.

Thanks for asking. The Firebird is beautiful pink. I just love it. Dad says I have to be extra good cuz everyone in town knows it is my car. It rained last night so I have the day free. My friend and I had a garage sale Saturday. It was kind of fun. Now I am going to buy some school things and a little silver bar.

I have written several letters but no one has written back yet. I hope I am helping. I think there must be someone who knows about the bad things being done. I just wished they would help us.

Hi Goldentrill, R Powell, Sector, Graefin, YGM and Mr. Murphy. I hope I didn't miss someone.

Sweet 16

Re: China/Taiwon

Am I just naive, or has Taiwon lost what little collective sense they may have had.

I can't see one positive to their announcement from their standpoint. To start throwing rocks at China while big brother is up to his rear end in the Middle East doesn't make sense.

China card looks like it may come into play sooner than at least I was thinking. thoughts???

Pizz

08/05/2002
Dow Jones News Services
(Copyright � 2002 Dow Jones & Company, Inc.)


WASHINGTON (Dow Jones)--Third Millennium Telecommunications Inc. (TMTME) ceased operations, because sales contracts with a WorldCom Inc. (WCOEQ) subsidiary and Globalstar USA Inc. have ended, meaning it can no longer earn enough income to continue profitable operations or pay its debts.

An 8K filed early Monday with the Securities and Exchange Commission didn't say what the company's intentions are for future operations or the disposition of assets.

http://www.atimes.com/atimes/China/DH06Ad03.htmlPizz, this is an interesting article....

"Recent comments by Taiwanese President Chen Shui-bian warning that Taiwan will follow "its own Taiwanese road" and recommending an islandwide referendum on independence will undoubtedly add to the tensions across the Taiwan Strait. Naturally the more alarmist voices in Beijing and elsewhere will argue that Chen's comments are part of a movement toward Taiwan independence. But the real worry for Taipei is not Beijing. It is Washington.

Chen's real motivations are probably not quite as nefarious as Beijing fears. Chen's comments are most likely bargaining tactics. Though they are in a weak position, Chen and the ruling Democratic Progressive Party (DPP) may believe they can force Beijing to moderate its conditions for direct talks by taking an ultra-hard line. What is more important, however, is how Chen's comments could affect Washington's policies toward Taipei. Taiwan's political elite is ignorant of how rash rhetoric by its leadership may undermine its own base of support in the United States, even among the most ardent Taiwan supporters."

Thanks.

Not only do I think we are more informed than about 99.99999% of the population, I'm beginning to realize that we may be more REALISTICALLY informed than a very large percentage of politicians world wide. At least we make economic sense, but I guess that may not be the political agenda.

Lie, spin, and who or what to believe now is the game, when they need to be looking at basics. Politicians have been, and I guess they will continue their basic natures until just before the long drop from a short rope, or as the blade starts to move quickly to their outstretched necks.

Pizz

http://www.ipab.org.mx Mexican Financial Regulators Shut Down Local Bank Anahuac

08/05/2002

MEXICO CITY (Dow Jones)--Mexico's federal deposit insurance agency will shut down seized local bank Anahuac after the Finance Ministry revoked its banking license.

The agency said in a press release late Sunday that the capital deficit of the small financial institution totals $69 million. The amount to be injected by IPAB for Anahuac's cleanup could be higher, as the agency still has to review the company's books.

The cleanup funds will come from IPAB's deposit insurance fees charged to banks operating in the country.

Financial regulators took over the tiny bank in late 1996, a move that prevented Amado Carrillo Fuentes, then head of the Juarez drug cartel, from purchasing a controlling stake in the company.

I agree that the suppression of gold, and the corresponding evils inflicted on gold-holders (and everyone else), is wrong. However, it is even more wrong to side with the enemies of the West, democracy and Western values simply because gold might become more valuable if those enemies make a move.

We must use our freedoms and democratic capacities to stop the use of official sector gold (and other market interventions) to suppress the POG.

WE MUST NOT cheer on tyrants, be they Islamo-fascists, or the governing clique of the Chinese mainland.

Because,

"What's sauce for the goose, is sauce for the gander"

And we want to steer clear of political denunciations or thunderations. Right?

Siberia is cold. I've been there.

STICK TO THE TOPIC: gold.

http://www.usagold.com/ProductsPage.html

Get the Legendary SECURITY of a Swiss Account...

...Delivered to Your Door.

Call Centennial for Arrangements
1-800-869-5115

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APU6eTBQmVS5TLiBTU.S. Stocks Fall; J.P. Morgan Chase, Citigroup, Cisco Decline

``Everyone is worried about where the market's headed'' as an economic recovery falters, said Scott Schermerhorn, who helps oversee $160 billion at FleetBoston Financial Corp.'s Columbia Management Group.

Citigroup Inc. led the declines after Lehman Brothers Inc. lowered its rating on the world's biggest financial-services company. Telephone shares tumbled as SBC Communications Inc. said it understated its level of short-term debt.
............
Citigroup led financial shares lower, dropping $1.53 to $29.35. J.P. Morgan Chase & Co., the second-biggest U.S. bank, lost $1.34 to $22.51.

Both had their ratings lowered to ``equal weight'' from ``strong buy'' by Lehman analyst Brock Vandervliet. He said the shares are ``likely to underperform near-term due to the implications of a very tough operating environment, economic uncertainty and significant headline risk.''

************

Misetich

The "Banking TRAIL is getting HOTTER by the minute - Lets stay on this one and see where it may lead

Got gold?

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APU6dShXgVS5TLiBFSnip:

By Carlos Torres


Washington, Aug. 5 (Bloomberg) -- The largest part of the U.S. economy slowed in July for a second month, adding to evidence the recovery is losing momentum.

The Institute for Supply Management's index of retail, financial, construction and other non-manufacturing enterprises fell to 53.1 last month from 57.2 in June. The gauge, covering about 85 percent of the economy, hasn't been lower since it fell in January to less than 50, the threshold for contraction.

``Sentiment is getting very sour,'' said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis. The recovery is ``going to be modest.''

............
Misetich

The much hoped "solid economic recovery" has been post-poned for ANOTHER year

In the meantime malinvestiments are growing in the US and global economy

Sooner or later the US $ needs to reflect reality and depreciate 30 to 40%

Got gold?

NEW YORK (Dow Jones)--Yet another energy trader is coming under the government microscope, as Mirant Corp. (MIR) announced Monday that it's the subject of an informal Securities and Exchange Commission investigation into its accounting.

Mirant stated in its announcement that it had expected the inquiry since it had discovered three accounting issues during an internal review of its 2001 financial statements. The three accounting issues relate to unrelated overstatements.

While the company may have expected the inquiry, the news upset holders of its securities. Its stock was recently quoted at $3, down 0.49 cents. Mirant's 10-year benchmark bonds were quoted about five points lower on a price basis, at 51 bid, following the announcement, said traders.

The overstatements are "something of a clerical error," said Robert Willens, an accounting expert at Lehman Brothers. The numbers seem so random that they don't seem to be an effort to "manipulate earnings," he said.

The Atlanta-based company says that it's cooperating with the SEC and its request for information about the accounting issues.

The SEC has also requested additional information from Mirant about recently disclosed shareholder litigation, any round-trip trades entered into by or on behalf of the company, and the Federal Energy and Regulatory Commission's investigation into energy trading practices in the western U.S.

Round-trip trades refer to offsetting deals to buy and sell energy.

Mirant is one of 150 companies under investigation by FERC for possible market manipulation during the California energy crisis of 2000-2001.

Meanwhile, Houston-based Dynegy Inc. (DYN) is attempting to negotiate a settlement with the SEC regarding its accounting practices.

The SEC has been reviewing round trip trades that appear to have boosted Dynegy's trading volume last year, according to Monday's Asian Wall Street Journal.

And XCEL Energy Inc. (XEL) is also among those being investigated by the SEC and the Commodity Futures Trading Commission about round trip energy trades, according to an article in The Wall Street Journal last week.

ummm u mean there are 150 of them out there being investigated
dang. u best have gold! for get got gold?

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APU6Y1xYUQnJhZGVzSnip:

By Charles Penty


Sao Paulo, Aug. 5 (Bloomberg) -- Marcio Laurelli Cypriano's efforts to shield Bradesco SA from Brazil's economic woes may fail to protect the biggest bank in the country not controlled by the government from a sovereign debt default.

As Brazil's currency lost a quarter of its value since April, the 58-year-old president moved foreign exchange gains from his overseas businesses to help cover losses on credit extended in reais, analysts said. He also cut loans to industries that analysts say have suffered most.

Some investors say that may not be good enough. With more than a quarter of Bradesco's assets in state debt, the bank is in danger should South America's largest economy default, some investors said. U.S. Treasury Secretary Paul O'Neill arrived in Brazil today to discuss a proposal for the International Monetary Fund to extend a credit agreement to the country.

``We didn't like the level of risk we were seeing,'' said Mead Welles, who manages about $160 million in emerging market debt for Octagon Asset Management LLC. He finished selling all his Brazilian sovereign and bank bond holdings a month ago.

................
Debt Holdings

Bradesco's government debt holdings, which totaled 31.9 billion reais at the end of March, were almost three times those of Banco Itau SA, which after Bradesco is the largest Brazilian bank not controlled by the state. Itau had a total of 11.3 billion reais of state bonds, representing about 14 percent of assets.

Bradesco's government bonds are valued at about 3.2 times its shareholder's equity, or total assets minus liabilities, compared with 1.4 times shareholders equity for Itau.

A debt renegotiation that reduced the value of Brazilian bonds 50 percent would cut Bradesco's shareholder's equity by 92 percent and Itau's by 41 percent. A 30 percent reduction would cut Bradesco's capital by 55 percent compared with 24 percent for Itau, Bruno Pereira, a banking analyst at UBS Warburg in Rio de Janeiro, said in a report.

............
Bradesco, whose foreign currency borrowings totaled 6.31 billion reais at the end of 2001, has tried to make the best of the falling markets, analysts said.

The currency's depreciation has fueled about 500 million reais in foreign exchange gains on the bank's $1 billion of dollar assets, such as accounts in the U.S. currency and overseas property, said Pereira of UBS Warburg.

(***********

Misetich

The Real devaluation is hurting the Brazilians economy more than is being reported - Multi-nationals have invested heavily in Brazil in recent years - most debts are being carried in US $

Lets stay on thie HOT TRAIL shall we !

Got gold?

Thought I saw somewhere this morning that Maria and CNBC are going to interview a JPM exec tonite. Can anyone confirm? Can't find anything on their web site.

Europe, S&P, Dow, all look technically very weak for next few days, while Gold seems ready to pop. Just one man's opinion, but if so, holding JPM over 20 might just be next to impossible without some pretty blatant intervention.

Trotting out a JPM exec on bubble vision would IMHO, be a desperation play.

Bank stocks may be this weeks crisis.

Pizz

See if you can BITE $310 !
<;-)

supposed to be on "After Hours With Maria Bartiromo." 9pm Eastern.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APU66PxPNSi5QLiBNSnippit:
"J.P. Morgan Chase & Co.'s top executives purchased $2.7 million of the bank's shares in late July, keeping a promise to buy after the stock fell to a six-year low, Securities and Exchange Commission documents show. The second-biggest U.S. bank's shares plunged as much as 19 percent on July 23 after J.P. Morgan and Citigroup Inc. bankers disputed during Capitol Hill hearings that they helped Enron Corp. hide debt. The next day, Chief Executive William Harrison told investors the bank's finances are sound and said senior managers would support the stock."

Waverider: ~Pizz, no doubt they're sweating bullets...there aren't many people in this world whom I wouldn't throw a lifebuoy to, but I'd be quite happy to see these slimes go TU!

EMAIL ME THE SEC RESPONSE AND I WILL ENSURE THAT TED BUTLER GETS IT

http://library.northernlight.com/FB20020804410000012.html?cb=0&dx=1006≻=0#docPreperations for coming war ? The attached link asks one critical question. How long do we intend to stay once Iraq is invaded. My guess, like Afgan, until the oil fields run dry.

Re: JPM

Ever catch a wave wrong and nose in at high speed? (or is that possible surfing?) I don't surf, but I've done it more than once on water skis. Only nice thing about sudden miscalculations, you don't immediately feel the pain, but you sure as heck realize real quick that something major is wrong.

Don't watch too much CNBC, but if JPM's Ceo is on tonite, it should be good for a laugh or two.

HUI got hammered back to support, must need a bit more fuel for the 120 assalt. Looks like there were a few players that didn't want to see gold close above 310 today either.

Pizz

http://globeandmail.com/servlet/ArticleNews/business/RTGAM/20020805/wurug/Business/businessBN/breakingnews-businessSnippit:
"Uruguay received an electronic transfer Monday of $1.5 billion from the U.S. Federal Reserve as embattled banks began reopening, nearly a week after they closed amid panicked withdrawals by depositors.

U.S. Treasury Secretary Paul O'Neill, who arrived in Brazil on Sunday for a regional tour, said the $1.5-billion (U.S.) temporary loan was in recognition of the strong economic program Uruguay was putting in place. All but the weakest financial institutions were to reopen Monday.

The lynchpin of the Uruguayan plan is a law passed on Sunday to block depositors' access to $2.2-billion in long-term deposits in the country's two state banks for the next three years. Niver Rocha, a 56-year-old merchant, said he was still coming to grips with the fact that his fixed deposit was frozen in a government bank. "I never imagine the state bank would do this to me," he said, adding he had planned to use his savings to buy a store."

Waverider: Once again people suddenly and unexpectedly have their assets frozen overnight!

Pizz ~ I hear ya - once you're in that situation there's no way to backtrack... I see the Dow's down >3% at the moment - we might see it break below 8000 today. Cheers!

http://www.usatoday.com/money/markets/us/2002-08-04-mart_x.htm

Snippit:

NEW YORK � Investors burned by past fake-out rallies are again wondering whether the market's recent low was truly the bottom. Renewed economic worries sent the Dow Jones industrials down more than 400 points the past two sessions, wiping out virtually all of last Monday's 448-point rally and giving investors a feeling of d�j� vu.


Black Blade: The pros thought that the bottom was reached several times so far. Also, notice that all the earnings releases tonight are the "Pro Forma" kind. The people are not fooled by the so-called "beat estimates" anymore. The share prices continue to fall in after hours.

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=37473.2911921296-800451515&siteid=mktw
Snippit:

Lehman said: "There continue to be a number of operational challenges at JPM, as well as those in the operating environment including legal and regulatory risk that dictate a cautious outlook." As for Citigroup, the broker said: "There is a confluence of negative trends and a high level of headline risk particularly for the largest institutions including Citigroup that dictates a cautious outlook in the near-term"

Black Blade: The translation to a "Sell" rating is obvious. No wonder insiders were ordered to buy shares at JPMC.

Off to the gym!

Enemies...conflicts...threats...wars, and so forth, are most of the time artificially created/constructed. People (governments-leaders) do need adversaries/opponents as a mean to establish their leadership. Religion...land/water...resources...ideologies...etc.

Before the WAT escalation, a US/China, conflict-building was in progress. Russia and communism had their time and couldn't be used anymore.
It is in this context that I see the Taiwan/independance-declaration as an event (out of the blue) to increase tension between China and US (Big Brother) and much less between China and Taiwan.
And indeed Pizz, we the lilliputans will always remain so naive as to believe that "things" just happen to happen without premeditation from any inducer (agitator).
After all, this world never was a rose garden. It already started in Eve's paradise garden (smile).

The timing and the impact of (news) events are controlling the degree of tension or detente. Most of the time, many conflicts can be avoided or quickly resolved. Only mankind has the privilege of creating conflicts *� la carte*.

Today's Taiwan event is just another step in the increase of tension. It even doesn't matter who induced it. We just note the tension-degree as unbiased as possible and get on.

Important to us is that China (and the US) has something with Gold and the dollar currency. And more important, China is not part of the Western financial brotherhood and therefore not a disciplined follower/vazal. And consequently not off topic or a political discussion.
China is the second biggest economy in line with Japan. And is not going to give up on this position. End.

Isn't it remarquable that already for two consecutive days on CNN ticker, it is mentioned that Japanse (housewifes) will change their mind about further accumulation of Gold, because Koizumi backs off about the deposit ensurance and even goes Welteke with his encouragement to buy Japanese stocks !? Why should one mention this as a "news" event out of any Gold context ? Answer : Gold scarcety and fear off...! Those lovely housewifes took 54 tonnes of Physical off the market and stashed it under the matrasses. Only politicians are allowed to push/promote shares without a disclaimer. One moment I thought that the Japanese would/could break loose from their cemented dollar-block. Wrong, they can't and wan't. So the Nikkei will decimate as well : 40.000 (1990) >>> 4.000. Just like Nassie. China will take over.

Black Blade, can you update us on China's situation on Crude Oil ? Projections of how much their consumption might grow and where they are going to get it from ? TIA.

Disjointed markets and knee-JERK reactions in the markets. How can or could anyone make any type of investment (other than the shiny stuff) when were faced with banks, hedgefunds, and mainline corporations all with derivatives exposure.

Corporation A has a long to short term interest rate swap, Bank A brokers this side, Corporation B has a short to long term swap, Bank B brokers this side, Insurance company A writes a risk policy for Bank A for Company A, Insurance company B does the same for Corporation B and Bank B, Reinsurer D covers both the insurance companies.

Confusing enough? Now take the same type of reasoning and distribute the rest of the alphabet, but don't forget that they all can trade with each other, or better yet, some stuff can be sydicated thru numerous bank, companies, insurers.

What's the risk? Who knows, cause they all probably have pushed books and off shore partnerships also. How solvent are the insurance companies? A lot less than two years ago that's for sure. Now pull a Tyco and/or an Enron out of the mix (or a few private hedge funds that may already be under). It's just like you or me going out and writing 100 S&P puts @850 and buying 100 puts @855. Our exposure is only 50,000 on the spread, but what happens if you lift the long side and then try to cover the puts you're short and there is no one willing to sell them to you - AND THEN WHEN YOU TRY TO PUT THE SPREAD BACK ON, NO ONE WILL SELL YOU THE 855'S EITHER - (BUT FOR A HEFTY FEE THEY MIGHT SELL YOU 900'S???)

Same works for gold, silver, energy, etc. This is going to take years (decades??) to figure out, but the August 14 deadline for sign off on public statements IMHO is not just to regain confidence in the markets, but more for the government, SEC, and Fed to figure out who may survive, who may get bailed out, and who are bankrupt, but just haven't figured it out (or reported it) yet.

What may happen??

If you haven't reconciled you check book for a couple years, and need to know how much money you really have, in a hurry, you don't try to reconcile it, YOU QUIT WRITING CHECKS AND WAIT FOR EVERYTHING TO CLEAR, OR YOU CLOSE THE ACCOUNT AND START FRESH - especially if you think your running on float with no way to cover - Now, just when do those new banckrupsy laws take effect? You know, the ones that have the derivitive net-out provisions and the credit card modified rules? We've got new money coming, and I've always used the "close the account" and start over option - it's easier to control - especially when you've got the money.

Stock holders and consumers are about to get the short end of the staff again. . . .and the term "negotiated default" may just be on the horizon.

Pizz

Thanks for your take on the China/Taiwan situation. I completely agree with your macro viewpoint/ but still in my opinion, I'll equate the adjective phrase "stupid beyond belief" to Taiwan's declaration.

They're playing badmitton on a rugby court and about to be either smashed by one side, abandoned by the other/ or both.

Pizz

Excellent thoughts and likely accurate speculation. Pearls of wisdom for your enjoyment here each day fence sitters.

Call Centennial (Mike Kosares--not a bad guy for a Greek) today!.....CM (a verys satisfied customer)

Hopefully you are enjoying the "tango" here each day. This is an excellent venue to learn priceless and timeless lessons.

"When a man learns to dance, the piper pays him.....'Ya gotta know the territory".

From: "The Music Man"

For any option traders out there, my example will make more technical sense if you substitute 845 for 855 for the strike on the long put, and 800 for 900 in the example.

I shouldn't try to do three things at the same time, but hopefully some will get my drift.

Pizz

Oo-oo boy! I see below here a Pizz post on Derivs & Counterparty risk! Gonna heat up some lunch, pop a cold 'un and sit back and enjoy reading that.

"still coming to grips with the fact that his fixed deposit was frozen in a government bank. 'I never imagine the state bank would do this to me,' he said, "

Don't want your assets frozen? Gotta stay below the frost line...

I believe China will get their oil from many Mid-East countries when they embargo the U.S. Even if they almost give it to them, it will create another market for their product. People may say, but they cant embargo the U.S., the U.S. is their big source of money. Well they had better rethink if they think that. They have used the U.S. policy of dollar hegemony for their own benifit of collecting real gold. Anyways the real players already have what they want for their oil they have the gold. Who cares now. They dont need the America as a customer anymore, might as well give their oil to China and embargo America. I could see it maybe.

http://news.bbc.co.uk/1/hi/business/2174961.stmSnip:

The International Monetary Fund has issued a gloomy prognosis on the US economy, warning that it may cut its growth forecast in September.
The chances that the economic recovery will be weaker than expected have been increased by the ongoing slump in the stock markets and a string of accounting scandals, the Fund said on Monday.

It also said it was concerned about the uncertain outlook for corporate profits.

In an apparent swipe at the White House, the IMF also said that economic forecasts by President George W Bush's administration were overly "optimistic".

The comments were made in the IMF's annual review of the world's richest economy.

.............

Originally, the IMF had predicted that the US economy would grow by 2.5% this year and by 3.25% in 2003.

"However, recent data releases and other developments, including the sharp decline in equity prices in recent weeks, have exacerbated the downside risks to the outlook for both personal consumption and business investment," the IMF said.

"The likelihood, therefore, is that downward revisions to the growth projections would be made in the... forthcoming World Economic Outlook."

.........
Mr O'Neill said he expected the economy to grow at 3% to 3.5% during 2002.

The IMF urged the Bush administration to focus economic policies on budget discipline and reforming corporate governance.
************

Misetich

We can expect further downgrades - not only the US - but global - as the "consuming engine" anemic growth may go into negative growth again!
Too many countries (if not continents) are US consumer dependent - As economies get weaker - Latin America, South East Asia, Japan - deflation winds will hit North America hard -
Europe (the turtle) economy will also be slowdown - however-the effects will be diminished comparatively to the rest of the world - as 65% of their trades occur within the European Union

Central Bankers tasks will get harder and harder - eventually hitting the oncoming GOLDBERG!

Got gold?

http://www.usagold.com/wgc.htmlLast Monday (or has it been two weeks now?) I mused that the recent behavior of the dollar was reminiscent of a time-compressed (into only five months) span of Plaza and Louvre agreements.

When you visit this week's WGC weekly gold market summary (link above) have a look at the accompanying chart, and bear in mind the essence of that old post:
========
TownCrier (7/29/02; 14:00:37MT - usagold.com msg#: 81776)

"The pace of change in today's economy is much faster than in earlier decades." -- Dr Olarn Chaipravat, a senior Finance Ministry adviser

Beside me, is anyone else struck by the performance of the dollar as resembling a blast from the past?

Athough it may be too early to render a final verdict, specifically, what we have witnessed over the course of just these five recent months seems to be a condensed replay of the September 1985 Plaza agreement to address an overvalued dollar, and the February 1987 Louvre agreement to help steady it again.

A good recollection of comments by public officials during this time (and the recent revival of the "strong dollar mantra) would seem to support coordinated efforts to this effect. And honestly, have we come to expect it any other way?

But to all gold advocates I hasten to say, take heart -- soundly based on the very same principle that saw gold break free from the very concerted official designs of $35 per ounce. Thus, it will not linger at $300 for overlong. Call Centennial to make your arrangements for delivery to your door the independent wealth of kings.
R.
======

PS. This week's report gives an overview of the 1933 St. Gauden's gold coin auction. For $7.59 million paid out, would you truly be happiest with this one coin, or would you rather have the better part of one tonne of gold sovereigns and other assorted uncirculated old world gold coins? Call the folks at Centennial tomorrow bright and early to get your personal accumulation underway.

R.

Hate to steal a quote from the old TV show "Andy of Maybury", but in this case it fits.

Just scanned a few intra-day stock charts and from about 1:00 on, the Dow lost 145 points plus or minus with JPM flat, plus or minus a quarter (After the 1.50 drop in the morning.)

Of course, the daily chart will show JPM off worse than the Dow in percentages for the day, and the prop job for JPM in the last two hours gets slightly obscured since they both closed at or near the lows of the day.

Wonder how the JPM employees' 401K's are doing. Are the bankers smarter than Enron employees - even with a crystal ball?

Pizz

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028185527917&p=1012571727108Snip:

By Jeremy Grant
Published: August 5 2002 20:56 | Last Updated: August 5 2002 20:56
As the elite of the car industry meets for an annual summit in Traverse City, Michigan, US executives may prefer to face their Japanese rivals on the resort's famous golf courses rather than in vehicle showrooms. For Detroit's carmakers - General Motors, Ford and Chrysler - times are tough. All three have watched this year as the Japanese have relentlessly gained market share in North America, the world's biggest car market.

The response of the "Big Three" has been to throw an array of financing incentives at consumers, from interest-free loans to generous cash-back deals. These offers have helped sustain sales at a time of growing fears about consumer spending - but at a cost of eroding already wafer-thin margins. Worse, they have not helped the US carmakers build a sustainable increase in market share. The Japanese, by contrast, are increasing market share with minimal use of incentives.

The Big Three's plight is uncomfortably reminiscent of a decade ago. Then, Lee Iacocca, former Chrysler chairman, famously admitted that his company had brought its troubles on itself by selling "some crap" to customers, who turned to better-quality Japanese products instead.

This time it is Dieter Zetsche, Chrysler's chief executive, who is speaking out. Chrysler, he declared last week, would "fight back" by tackling the Japanese head on in the passenger car market and by adopting similar flexible manufacturing systems.

If anything, the threat today is greater than it was in Mr Iacocca's time. Japanese manufacturers account for about half of all sales of passenger cars in the US, as US carmakers concentrate efforts on the higher-margin light truck sector. Monthly sales data released last week underline the scale of the Big Three's problem. Toyota, Honda and Nissan managed on average to sell 5.7 per cent more vehicles in July than the previous year, mostly at full price.

*************

Misetich

What is the price of Rubins and O'Neil - US strong $ policy? The manufacturing base in the US has eroded in the last 7 years - Such debasement brought short term gains and long term pain

Auto industry is still America's employment engine - yet at the height of a 'red hot auto market' US manufacturers are losing market share!!!!!!

The Bush economic team keeps on getting slammed by the market - each time they open their mouth - and use the 'sound fundamentals- etc. lip service -

The US $ is overvalued and needs a downward correction - however malinvestments and other misalignments make it impossible for the administration to lower the $ -

As Rubin said, the US is in uncharted territory - but other say that the territory is really not so uncharted - they warn of a GOLDBERG AHEAD!

Got gold?

Substitude "Gomer Pyle" for the TV show.

(Is the mind and memory the first or last thing to go as you get older and more cynical????)

Pizz

http://www.debka.com/body_index.htmlUS Preparations for Iraq Offensive
From DEBKA-Net-Weekly August 2
5 August: In total hush, the US has embarked on advance preparations deep inside Iraq for the coming offensive against Baghdad. In northern Iraq, these preparations are in the form of crash engineering projects.
According to DEBKA-Net-Weekly's military sources, US army engineers and equipment are working round the clock in the Kurdish regions of northern Iraq to throw up a series of six to eight small airfields that will cater to the main body of American and Turkish forces when they cross over into Iraq. The new fields, some of which are no more than widened landing strips, will also serve the fighter planes and helicopters providing a vanguard of special forces with air cover. The airfields are strung along three strategic axes..."

Note: I still believe that a second reason Bush has for going into Iraq is to secure oil in light of serious internal problems in Saudi Arabia

http://cbs.marketwatch.com/news/story.asp?guid=%7B5731653B%2D774C%2D4A81%2D8660%2D38F5C7A56DDF%7D&siteid=mktwSnip:

So far in 2002, corporations have announced 816,493 job cuts, down 17 percent from 983,337 after seven months in 2001. In all of 2001, 1.96 million job cuts were announced.

..............
"While it is a positive sign that job cuts have slowed so significantly, the news is weakened by the fact that the economy seems to be in a no-growth state," said John A. Challenger, CEO of the outplacement firm.

"Combined with the fact that wages are at a virtual stand still, the economy is in a dangerous state, one that is ripe for a significant slowdown in consumer spending and at high risk of dipping back into recession," he said.

Once again, telecommunications firms announced the most job cuts in July: 20,196. Computer companies announced 11,040 cuts.

*************

Misetich

The Bone Pile is 15% off the 2001 pace wherein 1.96millon job cuts occurred -

The unemployement number of 5.9% reported last week must be questioned in view that almost 2.7 million have been laid-off in the last 19 months and few jobs have been created.

The real story - can be found in local, state and federal govenrment tax revenues shortfall - and we've only seen the tip of the iceberg of economic stress at the state level

For all intensive purposes the recession is here - already - unless you want to quibble that 1% growth is "strong economic growth" as O'Neil keeps on reminding us - With trillions of equity value wiped out in the last few weeks - consumers will hard pressed to keep up the present spending momentum -

It is in difficult, critical times such as those upcoming - that gold shines the most. Get Physical - Get gold!

Got gold?

MNew Definitions...Checking vs. Savings...Have The Depositers Been Good?New financial safety net mulled

Yomiuri Shimbun

The government intends to restructure the deposit insurance system, whose main purpose has been to protect depositors, as a new financial safety net also for protecting settlement systems--the foundation of economic activity, sources said Thursday.

The plan to overhaul the main purpose of the deposit guarantee system--the protection of depositors--follows an instruction issued by Prime Minister Junichiro Koizumi to study reform measures for ensuring the stability of financial institutions' settlement systems before the imposition in April of a 10 million yen cap on refunds of liquid deposits at failed banks.

The government aims not only to prevent confusion due to the imposition of the refund cap but also to ensure the safety of settlements so that the stability of the financial system would be achieved.

For such purposes, the government is likely to stipulate that certain liquid deposits be excluded as targets of the refund cap and be fully protected. The Financial System Council, an advisory panel on financial affairs to the prime minister, is likely to hammer out concrete measures including:

-- Strictly redefining the liquid deposits to be fully protected even after the imposition of the refund cap.

-- Making the protection of such liquid deposits a permanent measure without using public funds to protect such depositors' interests in the event of a bank failure.

-- Allowing the refund cap to be applied as planned earlier to ordinary deposits in addition to time deposits, for which the refund cap has been in effect from April this year.

Koizumi on Tuesday told Hakuo Yanagisawa, state minister in charge of financial policy, that although imposition of the refund cap should be implemented as currently planned, the settlements system should not be put thrown into an unstable situation.

Following the instruction, the government decided not only to review the system by excluding liquid deposits from the refund cap but also to take into consideration a drastic revision of the deposit insurance law.

The deposit insurance system aimed to maintain the stability of financial systems by protecting depositors of 10 million yen or less as principal. By introducing a system to protect liquid deposits widely used by companies, in addition to the existing scheme to protect small-amount depositors, the government aims to establish a wider financial safety net.

Concretely, the government intends to redefine liquid deposits as deposits to be used for no-interest bearing settlements. Such deposits will likely be distinguished from deposits for investment or savings. Checking accounts, mainly used by companies for business settlements, will be the target of the liquid deposits. But the government also plans to study the creation of a new type of no-interest bearing liquid deposit for individuals and making it subject to full protection.

After taking measures to secure the settlement functions, the refund cap will be imposed from April on ordinary deposits, the sources said.

The government also intends to study measures to strengthen functions for checking and overseeing companies' management of computer systems for settlements, to improve Bank of Japan settlement systems and to shorten the terms for dealing with collapsed financial institutions.

+++++++++++++++++

Any Questions?

Gold Above $300.00Three lines of Goldbugs could clearly be seen. An impressive sight. Men stepping side by side formed three dark ribbons which moved like ocean waves on a sea of green as they crossed the rolling field. They have come to fulfill their quest and avenge the fallen messenger'struck down under a flag of truce. Their conviction now solidified.
Those who stood in front of the toppled tower looked up to where the arrow had come. Only to stare into the face of the Lord of the Castle. They turned back to the rolling tide before them.
It was a long walk and time slowed down in the crossing. The Goldbugs talked to each other in the ranks. Small matters. Mostly about family, what they did in life or where they lived.
Reaching the point in the field where the messenger lay in care of Lady Waverider, a tremendous yell was given by all.
One that curdled the blood of any man and those who faced them knew what it meant. The sun drew high in the sky.
When the first line came close enough the defenders could see their opponents eyes were like firey coals. But most extraordinary was they carried their weapons in their weak hands.
They soon found out as a hail of stones, thrown by angry men
came down. Very few escaped this barrage.
The line clashed with awful sounds. Two armies on a chess board were now intermixed in battle.
Clanging swords and axes as if ten thousand blacksmiths at work. Sounds of mortal combat. One could not tell between the victor or the vancquish. Shields and maces. Swords and pikes waved about in hellish tempo.
The second line of Goldbugs joined the first.
At the Main Entrance the Goldbugs had found the gate heavily fortified. They had to break through. The battle plan depended on it. Arrows rained down and a slaughter was taking place.
It was then from out of nowhere, Gandalf the White, appeared with the men. Tapping his staff three times on the stone bridge and reciting an incantation in Latin.
A aura encompasses the figure and arrows fail to penetrate the light. Seeing this the Goldbugs move away from the gate.
Gandalf the White raises his staff with both hands a fireball is discharged with a flash and hits the gate. Engulfing it in a blue haze. And like the thunderclap of the storm, the gate explodes into slinters and they way is cleared.
The Goldbugs with renewed vigor enter the castle.

Seeing the Wizard on the Bridge, Lady Waverider entrusts Lady Sweet Sixteen, with the care of the messenger.Joined by Ladies Goldentrill and Siochain they mount their horses and rush to the aid of the Wizard. Only to find an open gate and into battle they ride. Pushing the defenders back into the courtyard.

Sirs Canuck,Boilermaker, YGM, Pizz, Nomad and Misetich move into the stairways to dispatch the archers and end the death from above. They swarmed the ramparts before the archers notice and the high ground was theirs.

On the ground,Sir Black Blade rallied the men and the Goldbugs slowly beat back the enemy. Advancing up the ramp and into the Castle.

Reaching the summit, Sir Black Blade looked down into the courtyard. All was silent. Goldbugs now looked at him and raise their swords. The smell of blood was heavy and bodies littered the ground.

To the far end of the courtyard was the entrance to the main hall.

It was the The Lord of the Castles, last stronghold.

Could There be a Connection between these two Posts?Bad loans continue to mount at banks

Yomiuri Shimbun

The Financial Services Agency announced Friday that private financial institutions' bad loans increased by 9.46 trillion yen on a year-on-year basis to 52.44 trillion yen as of the end of March, the largest amount since March 1993 when authorities began disclosing the amount of bad loans.

In addition to poor performances by borrowers due to the economic slump, the agency's special inspections, which began last autumn, and more severe self-assessment of assets by financial institutions contributed to the inflation of bad loan figures, agency officials said.

Bad loans by major commercial banks, long-term credit banks and trust banks increased by 8.38 trillion yen to 28.39 trillion yen partly due to the agency's stricter assessment of the financial strength of large borrowers faced with falling stock prices and credit ratings, the officials said.

Regional banks and second-tier regional banks' nonperforming loans surged by 1.2 trillion yen to 14.82 trillion yen, the officials said.

With the number of financial institutions dropping due to bankruptcies, credit unions' bad loans dipped by 120 billion yen to 9.24 trillion yen, the officials said.

An analysis of the bad loans shows that because financial institutions toughened their assessment criteria, outstanding loans requiring special attention such as those more than three months in arrears and those needing a reduction in interest soared by 5.84 trillion yen to 19.13 trillion yen, the officials said.

Loans thought to have a high probability of becoming uncollectible because of poor performance of borrowers surged by 4.29 trillion yen to 22.91 trillion yen, the officials said.

Debts owed by bankrupt firms and those with no prospects for rebuilding dropped by 665 billion yen to 10.4 trillion yen.

The ratio of loans which became non-performing at the 13 major commercial banks deteriorated from 5.3 percent in March last year to 8.4 percent, the officials said.

However, the agency said that there will not be as many bad loans in the future because of the severe assessment of assets carried out to check all loans.

++++++++++++++

Any MORE questions? Oh yeah...the US and Japan are redesigning their currency...adding pretty colors.

Three guesses as to what that's all about and when it will all go down.

Just in Case You Guys Were Thinking I Make This Stuff UpBills to get facelift to counter forgeries

Yomiuri Shimbun

The government and the Bank of Japan announced Friday that fiscal 2004 would see the issuance of new counterfeit-proof 1,000 yen, 5,000 yen and 10,000 yen bills.

This would mark the first change in the bills' designs since 1984.

"Preventing counterfeits is the main purpose of these changes," Finance Minister Masajuro Shiokawa said at a press conference Friday.

"Issuing the new bills will create a more upbeat atmosphere and promote upgrades to vending machines and automated teller machines," he said, in an indication of how the new bills were expected to stimulate the economy.

Shiokawa also said the government had been looking into issuing new bills since the end of last year.

The new 10,000 yen bill will continue to feature scholar and educator Yukichi Fukuzawa (1835-1901), but the current pair of pheasants on the back will be replaced with a pair of phoenix statues at Byodoin temple in Kyoto Prefecture.

The face of scholar Inazo Nitobe (1862-1933) on the 5,000 yen bill will be replaced by that of novelist Ichiyo Higuchi (1872-1896). Mt. Fuji will be replaced on the reverse side by the calligraphic work "Kakitsubata-zu" by Ogata Korin (1658-1716).

The new 1,000 yen bill will replace the image of novelist Soseki Natsume (1867-1916) with that of bacteriologist Hideyo Noguchi (1876-1928), and the reverse side will feature Mt. Fuji and cherry blossoms instead of Japanese cranes.

Higuchi worked during the Meiji era (1868-1912), and her major works include "Takekurabe" and "Nigorie." Noguchi was primarily active during the Taisho era (1912-1926) and studied yellow fever on the African and other continents.

The changes will require the government to amend an ordinance that governs the types and other details of bills.

As of the end of June, the central bank had printed 6.21 billion 10,000 yen bills, 420 million 5,000 yen bills and 3.19 billion 1,000 yen bills. The government and central bank plan to replace the 10 billion bills currently in circulation with the new ones over a two-year period beginning in fiscal 2004.

The new bills will be created using new technologies such as holographic imaging--which enables users to tell at a glance whether a bill is genuine--and colored watermarks, which aim to make the bills harder to copy.

Similar technologies were used in creating the euro bills issued in January.

The bills also will have relief patterns to allow the visually impaired to distinguish between the different denominations.

According to the government and the central bank, the most sophisticated anticounterfeiting technologies in the world wil be used to make the new bills.

Katsusada Akiyama, director of the central bank's Currency Issue Department, said at the press conference that he was unable to provide more information on the technologies to be used, citing counterfeiting concerns.

In crafting new legislation a government will ultimately work things around to its OWN advantage within the available latitude.

Therefore, let Mother Nature insure the safety and stability of your most liquid wealth. Hold your excess funds in the form of gold.

This advice is applicable regardless of geography. Take note, North and South America, etc.

R.

Time to refill my gin and tonic, Maria is on with JPM's Harrison. (Probably best get a barf bag too.

Pizz

I am but a pup and have not read into the Plaza accords but as a technician I see strength in the dollar, at least short and mid-term, with the erupting currency crisis ('s) in South America.

Would this explain the radical upward reversal in the dollar and the 2 gold smackings of late?

It appears to me, at least in technical terms, that the dollar is not yet the weakest link. If you concur, when do you see the second rolling over for the greenback? Discussions now seem to point to fall/early winter.

(Anyone else w/ thoughts on the dollar)


Thanks,

silvercollector

Just watched 10 or so minutes of Harrison and Maria, the conversation is a 'shell game', I turned the channel to watch tree frogs change color, more entertaining.

This is really sad, billions of dollars on the hook, waiting for the PTB to make a call on. There are back room whealings and dealings going on to sort this out. 'Everyone' is going to take a piece of the 'hit' so this charade can be buried.

Do we really think that JPM is going to take the full hit, for integrity and morality's sake?

Gold has behaved like a commodity in the last couple weeks, inversely proportional to the dollar.

Euro has fallen off a bit, commodity currencies in Canada and Australia taking a hit, dollar strengthening with economic weakness in the cards and South American ruckus.

When/why does the dollar turn over again?

In the current economic environment, I would think that there should be a disconnect between the US dollar and gold. The reason being that all currencies are falling flat and therefore there is now only "relative strength" pitting national currencies against one another. At some point gold will have to break loose to find its own value against the diminishing value of the basket of world currencies (including the over-valued US dollar). From my point of view the economic collapse of the global economy is already set in stone as no one country has the political will to do what is necessary and therefore the markets will drive the correction regardless of government actions. In other words � we live in "Interesting Times".

- Black Blade

Agree with your take. What is your opinion on AU seeking safe haven abroad? Might it be necessary?

It is hard for me to see how AU can win in NA and SA when the kitty(s) is empty and the regimes are assuredly fiat both now and forevermore.

Wait a minute....or, will the FRD buy gold mines????

Notes are not verbatim, and my comments follow the dashes.


92% of Fortune 500 companies do business with JPM

---------that's a comforting statement.

They financed a lot of gas (deals) with Enron.

--------- I'll buy that.

Thousands of special purpose vehicles out there.

---------I'm really getting comfortable now


Legally correct????

---------OK, if you say so.

Misdleading vs. financial solutions

--------- Trying to imply that everyone but them is ignorant
--------- and complex transactions are normal business.


The hiding of funded debt e-mail - can always find a few e-mails inappropriately written - dropping ball back to the accountants (thanks)

---------more beancounters going to jail.

Internal investigation? absolutely, and he's comfortable and transparent. Just complex, but it was only financing.

-------- right!

We are in the risk business.

-------- is this a bank or a hedge fund?

Due dilligence? We've done the best we can.

-------- that's why auditing, compliance, and internal
--------control staffs are cut first.

They were comfortable extending credit to Enron. We got burned too and lost a lot of money.

--------Their fees must have been gigantic.

How much will it cost JPM (Enron). Don't think they have any bond liability. Most worried about surety bonds on prepaid contracts.

---------I'd be worried too.

Always risk in jury trials (used the "we are transparant" again).

---------guiotine, guiontine

Is a rating downgrade coming? thinks AA rating will hold

---------I'll take the other side of that bet.

50 billion net derivitives position. 85% is extended to investment grade companies.

---------based upon whose accounting? Enron's??? Net is the key word there, and my gut tells me he's got the gold deriviatives netted in that figure. If he doesn't he's in trouble.


Chase capital partners - overinvested in telecommunications, but still in top tier and he used 15 year example for returns. Reducing capital 5% in this sector.

--------heck, was there a telecommunications industry 15 years ago (smile). Everything starts close to zero.

JPM played within the rules (Enron).

--------rules need changing or clarification.

Regrets - wishes they weren't getting the publicity, but still sleeps well - and another reminder that they are in the risk business.

---------psycopathic hedge fund managers sleep well too.


Won't cut dividend, but won't make future predictions either, but we're ok now.

---------double speak.

Will re-regulation hurt them? Say's they have integrated model and investors like it. (investment brokerage vs. financing)

--------checked your stock price lately Mr. Harrison? Oh, you must mean your private clients who don't own yor stock.


And gee, no gold derivative questions.



Pizz

That's FED.

Even down here at the low end of the food chain I got word from a friend of a friend,that the fix was in, that the Financial Brotherhood was going to make a major effort to run up the stock market , but with the world drowning in debt ,war brewing in Iraq, and more terrorist attacks on the way this does not seem to be a good time to jump in .At the end all they will will have is a roomful of dead cats.

At least we dont have to listen to anyone lecture about how great things would be if we could just get the government off the backs of Enron, Arthor Anderson, WorldCon , J.P Morgan and the like.

If there is a serious disruption of the world economy countries such as China would be doubly impacted as so much of their economy is dependant on exports to the west . It has always been said that China must maintain a 7% growth rate or else unemployment would reach crises proportions with potentially hundreds of thousands of unemployed roaming the countryside.

The students still recall Tienanmen Square and long for western freedoms , the religious majority wants to reclaim its ancient heritage ,the Tibetans want their homeland returned, the Moslem minorites in the west are restive , the peasents and workers need to feed their families, Tiawan wants its independance.Chaos will reign.

While some might believe that Confucius is not relevant to modern China , much of the popular wisdom, sayings ,and folklore of China derive from the Confucian schools much in the same way that parables and sayings from the Bible permeate thought in this country .It is the foundation to which they have returned again and again .


For those not familiar with the story, Confucius prepared his entire life for a position of publc service and at age 51 became an advisor and judge for the rulers of one of the feudal states at the time. His fairness and wisdom in settling disputes was so celebrated that the rulers of some of the neighboring states became fearful that his influence would spread and paid a bribe of 8o concubines and 150 horses and Confucius was removed from office and spent the rest of his life of wandering the countryside.

A poem atributed to Confucius from that period illustrates the more meloncholy world view of his latter years.

********

Through the valley howls the blast
Drizzling rain falls thick and fast
Homeward goes the youthful bride.
Over the hills crowds by her side.
How is it oh azure heaven
That from my home I thus am driven
Through the world my way to trace
With no certain dwelling place
Dark ,dark the hearts of men
Worth in vein comes to their kin
Hastens on my course of years
Old age desolate appears.

*******

Confucius has never been thought of as the founder of a religion but more of a social reformer and moralist, more like Socrates , and his work more "statecraft"' , emphasizing such things as the just and uniform application of law, and the importance of cultivating character through education . He .founded a school taking students from all levals of society and training them for government office which became the model for the Mandarin system which prevailed in China for 2000 years


The Confucians also shared a more mystical bent along with their Taoest brethern amd the ancient sages of the distant past, the belief that "all things were ruled by virtue". If only the leaders posesed enough virtue a mysterious force would be generated that lept from person to person and would permeate society and finally create a just and peaceful world.

Eventually the system became ridged and insular and unable to adapt and China fell victem to a series foreign conquests; the Mongols in the 12th centuty and the Manchus in the 15th century. In the 1840s the western powers began the partition of China and in 1860 the British and French burned the ancient capitol of Peking.The Japanese invaded in 1895 and again during the 1930s.

Little wonder that the Chinese might employ extreme measures to reclaim their country .

Perhaps the current Chinese leaders are attempting to make good faith reforms allowing more economic, political and religious freedoms. Perhaps one day the state will " wither away " but the spiritual heritage of China will endure because it is embeded in the language, even in the vocabulary, and like some terrible computer virus it seems to reappear in each succeeding generation.

Here is another quote from Confucius from the 6th century BC.
***********
Do not do to others what you would not desire them to do to you.( Analects 15:23)

********

Kind of a catchy little phrase. Maybe if it could be polished up a litlle you might really have something.

Pizz was right! Good for a few laughs. Too bad Maria didn't have the guts to ask about JPMs involvment with gold. My take is that Harrison is being thrown to the "wolves" to salvage JPM. He and O'Neill should both be looking for gainful employment by the end of the month. JPM stock should hit the magic $20.00 by Friday. Better gitcher gold while the gittin' is good!

I don't recall all the info on the Chinese petroleum situation and the paperwork is piled high here at Black Blade Central. I seem to recall that China had made some arrangement for Iranian oil and is engaged in a massive exploration and production effort in western China as well as in the contentious Yellow Sea region. They also have made a deal with Japan for a NG pipeline from the mainland to Japan. China may find itself in a bind for petroleum energy as the country advances economically and as the people begin to gain in personal wealth. If I find more info I will post it. Cheers!

- Black Blade

Maria interviewed JPMC's CEO Harrison who stated everything was within the rules, just very complicated. Both he and Maria seemed extremely nervous. She appeared uneasy at having to ask the tough questions and he gave me the impression that he knew his answers weren't going to be accepted. I can't remember seeing as much tension in an interview in a long time. Harrison will never make it in politics, he can't evade direct questions smoothly while lying, smiling and exuding confidence. I'm guessing that even those that don't fully understand "prepays" saw that something wasn't right. It will be interesting to watch the price of JPMC stock tomorrow.

I'm not completely sure of them myself but I believe JMPC paid in full (to Enron) for gas that was to be delivered in the future. Enron probably held the gas in futures contracts which it could hold with a small (margin) downpayment. With Enron now toast, JPMC's "prepay" is money (a loan) that the bank can now enter in the loss column.
Have I got this right? Apparently JPMC set up this whole situation. Why not just loan Enron the $$$ and call it a loan? Probably because it was designed so that Enron could hid the debt from its shareholders and analysts. Will this intent, designed by the bank, become apparent to those interested. How many more companies are hiding debt in derivatives?
Rich

Earlier, Heckel and Jeckel (Kudlow and Cramer) had a guest on where they discussed the nasty "rumors" about JP Morgan Chase and how the SEC should do something. So much for these clowns who emphasize "buy the rumor and sell the news". Then comes Maria who asks a brief question about the derivatives and is brushed off by CEO Harrison. She conveniently neglects to follow up and drive for an answer, let alone drill him over the $23 Trillion notional value of the derivatives. This was nothing but an orchestrated white wash on back-to-back CNBC shows. Nothing substantive was to be expected, only a bit of light jazz and pillow talk for Maria. Makes one long for an "ambush interview" by Stone Phillips or Mike Wallace.

- Black Blade

It is the Pratley Islands in the South China Sea that are contentious, not the older oil producing areas in the Yellow Sea off Manchuria and Shandong in Northern China.

China has recently signed a deal (I believe with BP) to build a pipeline from the oil and gas producing province of Xinjiang east to Shanghai.

I don't think that China is likely to face a petroleum problem any time soon.

I also noticed Harrison's answer to total derivative exposure being about $50 billion. Does this mean that, if all open positions were covered (closed) tomorrow, the cash account would approximate $50 billion? I can't think of any other way to interpret this. Am I right?
Thanks
Rich

I am asking myself the same questions as every day goes by .....will we be able to maintain PM here...especially if there is anything to the idea of NA hegemony in the future....Mexico for cheap labor...Canada for resources

The question arises, will anyplace be safe haven?

It seems to me that the main present investing generation has been encouraged to behave in ways that no previous generation has. I have to credit for this a certain well known Television personality (who recently changed channels). For more than thirty years, he instilled into the minds of his listeners the notion that certain investing strategies, with regard to stock markets, were to be rigorously adhered to. These listeners are the ones now heavily invested in the markets. His advice not to trade frequently but to hold stocks long term, in my view, has had the effect of motivating millions of individuals to act on this adopted belief of theirs, that the stock market will always recover, and that what matters is not short term losses but long term gains. These people are not noticeably aware of the history of markets; specifically, that notorious declines do not experience recoveries for decades. It seems clear to me that this is having a result in present market events, particularly in the depth of lack of awareness on the part of these investors, of the need to get out of a bad thing while the getting is good. Throughout the 1990s I thought it clear that the subject advice in these matters would turn out to be more in the interest of stock market professionals than in the interest of working class investors. Ancillary to this is the type of activity we are seeing right now in the stock markets, namely that the working class public is being extremely slow to recognize the vulnerable position they are in, and are reluctant when it comes to taking wise action, which of course would have been to sell at least by this time last year, if not a year earlier. Two factors seem to me apparent in this: an unwillingness (or an inability) to spend time and exert energy in learing what the facts are, and trusting some other person to do that for them, such as a familiar TV personality. One thing that has consistently surprised me in this current bubble, going as far back as 1997 or thereabouts, is how slowly events are transpiring. I thought the bubble would burst much sooner than it did. I thought the public would panic a long time before now. Instead we see that the forces are very large, that they are enormously strong, and that the scale of the potential catastrophe is enormous. 'Protections' that have been built into the system are not only having the effect of delaying, but also of exacerbating, prolonging, and making more potent that which will happen. If circumstances were normal, by this I mean as they were in previous times, we should expect to see the public panic at some point in the very near future. But with the strategies that they have been taught in recent decades, I wonder whether the real danger for them is not that they will panic, but that they will not panic, will do nothing at all, and thereby follow the downward slide all the way, inch by inch, never getting out, not even at the bottom. This might prevent an outright collapse, where great hoardes are all trying to sell at once, while other, even greater hoardes are adamantly refusing to consider buying anything at all at any price. But even if such a panic were to happen, those teachings will have affected it, I perceive, so that in either case there will be an even greater transfer of wealth out of the hands of the working class, and into the hands of the thinkers.

I write this neither in approval nor in disapproval but merely in a sense of cold, objective observation.

How many companies hiding debt? Let's hope it's not a large chunk of the 92% of Fortune 1000 companies they do business with, but I'm more worried about the "thousands" of special purpose entities out there.

Ever put together a kid's toy without taking time to read the instructions? Seems like the finished product never quite looks right, and I usually have parts left over. I remember installing some of those "unremovable, smash on wheel locks" before I was supposed to, and had to junk the whole thing.

Let's hope derivatives aren't defined as my wheel locks.



Pizz

Thanks, I meant South China Sea. China, Vietnam, and the Philipines are scrapping over rights. Some concessions are overlapping and it is a real mess. Where one rock sticking out of the water can shift boundaries several mile miles, there is a lot of accusations and claims of ownership. However, at some point in the future there will be a severe energy shortage in China if they continue to develop economically. As a large population as that in China gains in individual wealth they will naturally spend on energy consuming items in there homes, in energy consuming factories, and more transportation. At the very least hydrocarbon exploration and production will expand greatly in coming years. Cheers!

- Black Blade

Can someone give me a definition of "notional value of derivatives"? I understand futures and options positions but many of these have unlimited or, at least, hugely unpredictable future value. A held (bought) option may expire worthless or may attain many thousands of dollars in value. Options sold many produce the sale price or cost the writer anywhere from a few to "unlimited" dollars. Futures bought or sold may gain or lose.
How does one determine the value as in JPMC's $23 trillion? This I don't understand.
Thanks
Rich

The net derivatives position - thats the way I understood it too, and there were too many comments about "we're in the risk business" to make me think otherwise.

Let's see, 50 billion net exposure (and that's not notional value) with about 40 billion in capital. You or I couldn't get a prepaid Visa Card with 120% of our net worth invested in futures or options (assuming we were transparent with the lender), and they're going to maintain their AA rating??

This guy's gotta be related to O'Neil somewhere back down the line. I'll be watching the daily action in JPM tomorrow. The prop job is going to be expensive - real expensive, and about twice as much as befor he opened his mouth, IMO (don't feel real humble today).

Pizz

http://www.usatoday.com/money/economy/2002-08-04-slowdown_x.htm
Snippit:

The odds still favor continued, but weak, economic growth for the rest of the year, despite a sharp escalation in fear that the fragile U.S. economy is slipping back into recession, analysts say. Last week, data on manufacturing, confidence and economic growth suggested the recovery is barely inching ahead. Moods soured further Friday when the government said only a handful of jobs were added in July, leaving 8.3 million Americans unemployed. Such data has led economists to conclude the dramatic drop in stock prices is having a measurable impact on the broad economy. That, in turn, is raising concerns that the USA is heading into a so-called "double dip," when a recession is followed by a brief period of growth, only to be followed by contraction again. Talk also is growing that Federal Reserve Chairman Alan Greenspan might soon take out his interest rate-cutting ax.


Black Blade: Yeah right. These analysts have such a stellar record too. They completely missed the recession and even denied there ever was one. Guess what? The data slapped them down hard. Dianne Swonk of Bank One was one such charlatan who was continuously trotted out on CNBC and who made such ridiculous claims. Now they are eating crow. Yet here they are again talking up how the economy will grow. This economy has lost more investor wealth (even adjusted for inflation) than the period of 1929 to 1932 � yep, more than the Great Depression!!! And it isn't anywhere near over yet. Just wait until the credit and real estate bubbles implode. Few corporations and investors are likely to fair well when it comes to dealing with record debt. Enron, WorldCon, Arthur Andersen, Global Crossing, Kmart, etc. are just the tip of the iceberg. Hey weren't these companies part of Harrison's elite 85% top tier companies that are holding JPMC derivative debt? Hmmm�

This just came to me by e-mail from Bill Murphy/Mike Bolser. If you remember, Enron hit the wall when Moody's downgraded its credit rating. Certain contractual arrangements go to margin (loan) call automatically when the credit rating drops below a certain level specified in those various contracts. I don't know if this is the case with JPM/Chase but it could be. If I remember correctly, when Rubin went to the Administration for help on Enron, it was to see if someone could get a hold of Moody's and get them to stand pat on the credit rating. Maybe the nervous reaction was warranted. . . . .

-------------------

Maria: We're back with JP Morgan Chase CEO & Chairman,
Bill Harrison. Bill, we've been talking about the
potential liabilities to JP Morgan regarding Enron. The
bond market has seemed to have made up its mind. JP
Morgan bonds are trading as if your company was a single
"A" rated company when, in fact, you're a double
"A" rated. Now, is it a dead give away when your bonds
are trading like you're about to get down graded by the
ratings agencies?

William Harrison: I don't think so. I can't speak for
the rating agencies. But, the fundamentals of the
company in terms of capital, liquidity and our strategic potential in terms of earnings uh, are very clear. So,
we hope that we'll be able to maintain our ability
ratings and I think we will.

Notional value is the equivalent of the strike price times the number of contracts. 10 JPM calls at 20 have a notional value of 10x100x20 or $20,000. If you have to exercise, you have to come up with the $20K. Where notional value comes into play is if you have to cover (exercise) and don't have the underlying stock to deliver.

The problem with JPM is that they offset with different instraments. Like long calls on JPM and short calls on Enron (using options as an example). If you have to cover face amount on one, and can't liquidated a dissimilar hedge (that the models say work in tandem - unliquidated) you've got to come up with the face or nominal amount.

Enron's can't deliver on their side of the hedges, and the JPM's of the world might have to cover.

If you're short gold via derivatives, and get called, your hedge with the miner for gold in the ground won't do you a lot of good, and cash settlement will break the bank - literally.

Hope this is clear, cause it's a bit complex.

Pizz

With comments like "there are thousands of special purpose vehicles", and "We did nothing wrong," and "this is what our capitalistic system was built on", should not go over well. The fact they have interests in 92% of the fortune 500 companies and find nothing wrong with this practice of deception, makes you realize this has a long way to play out. I loved the way he just so casually brushed off the fact nothing wrong had been done. The best part is he may be right, deceptive yes, illigal no. Better term for this might be "legal fleecing" or something.

I agree completely with your observation. Looking back, it clearly appears there has been a long term concerted effort in training the entire herd to run right over the edge of the upcoming cliff. Unbelievable, but clearly happening.

The training so complete that yes they will follow the downward slide all the way. I speak with people who are deadset in their thinking that the only way is ride it out. So sad.

How many more 911's would we need to start a real panic? That one did'nt work. The training has been so effective.

http://www.skolnicksreport.com/bigsec.htmlfrom the crooks? How dare they!

Before the Futures Industry Association, Boca Raton, Florida - March 19, 1999

By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives. This morning I should like to evaluate the scope of these markets, the nature of the risks they entail, and some of the difficulties we encounter in managing those risks.

At year-end, U.S. commercial banks, the leading players in global derivatives markets, reported outstanding derivatives contracts with a notional value of $33 trillion, a measure that has been growing at a compound annual rate of around 20 percent since 1990.

Of the $33 trillion outstanding at year-end, only $4 trillion were exchange-traded derivatives; the remainder were off-exchange or over-the-counter (OTC) derivatives. The greater use of OTC derivatives doubtless reflects the attractiveness of customized over standardized products. But regulation is also a factor; the largest banks, in particular, seem to regard the regulation of exchange-traded derivatives, especially in the United States, as creating more burdens than benefits. As I have noted previously, the fact that the OTC markets function quite effectively without the benefits of the Commodity Exchange Act provides a strong argument for development of a less burdensome regime for exchange-traded financial derivatives.

Of course, notional values are not meaningful measures of the risks associated with derivatives. Indeed, it makes no sense to talk about the market risk of derivatives; such risk can be measured meaningfully only on an overall portfolio basis, taking into account both derivatives and cash market positions, and the offsets between them.

Clearly, the degree of counterparty credit risk on derivatives depends critically on the extent to which netting and margining procedures are employed to mitigate the risks. In the case of exchange-traded contracts, of course, daily variation settlements by clearing houses strictly limit, if not totally eliminate, such counterparty risks.

In the case of OTC derivatives, counterparty credit exposures are far larger, though still a very small fraction of the notional amounts. On a loan equivalent basis, a reasonably good measure of such credit exposures, U.S. banks' counterparty exposures on such contracts are estimated to have totaled about $325 billion last December. This amounted to less than 6 percent of banks' total assets. Still, these credit exposures have been growing rapidly, more or less in line with the growth of the notional amounts.

The leading role played by U.S. commercial and investment banks in the global OTC derivatives markets is documented in a Bank of International Settlements survey for last June. This survey estimated that size of the global OTC market at an aggregate notional value of $70 trillion, a figure that doubtless is closer to $80 trillion today. Once allowance is made for the double-counting of transactions between dealers, U.S. commercial banks' share of this global market was about 25 percent, and U.S. investment banks accounted for another 15 percent. While U.S. firms' 40 percent share exceeded that of dealers from any other country, the OTC markets are truly global markets, with significant market shares held by dealers in Canada, France, Germany, Japan, Switzerland, and the United Kingdom.

Despite the world financial trauma of the past eighteen months, there is as yet no evidence of an overall slowdown in the pre-crisis derivative growth rates, either on or off exchanges. Indeed, the notional value of derivatives contracts outstanding at U.S. commercial banks grew more than 30 percent last year, the most rapid annual growth since 1994. Although episodes of extreme volatility have produced declines in the most highly leveraged contracts, the growth of the more "plain vanilla" products has continued apace or even accelerated.

The reason that growth has continued despite adversity, or perhaps because of it, is that these new financial instruments are an increasingly important vehicle for unbundling risks. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it. This unbundling improves the ability of the market to engender a set of product and asset prices far more calibrated to the value preferences of consumers than was possible before derivative markets were developed. The product and asset price signals enable entrepreneurs to finely allocate real capital facilities to produce those goods and services most valued by consumers, a process that has undoubtedly improved national productivity growth and standards of living.

Nonbank, as well as bank, users of these new financial instruments have increasingly embraced them as an integral part of their capital risk allocation and profit maximization. It should come as no surprise that the profitability of derivative products has been a major factor in the dramatic rise in large banks' noninterest earnings and doubtless is a factor in the significant gain in the overall finance industry's share of American corporate output during the past decade. In short, the value added of derivatives themselves derives from their ability to enhance the process of wealth creation.

While the value of risk unbundling has been known for decades, the ability to create sophisticated instruments that could be effective in a dynamic market had to await the last decade's development of computer and telecommunications technologies. The ability to create and employ sophisticated financial products also galvanized the academic community to develop increasingly complex models of risk management. While recent history suggests that such models are useful, they are doubtless in need of much improvement--an issue to which I will return shortly.

Yet beneath all of the evidence of the value of derivatives to a market economy, there remains a deep seated fear that while individual risks seem clearly to have been reduced through derivative facilitated diversification, systemic risk has become enlarged, as a consequence. Without question, derivatives facilitate the implementation of leveraged trading strategies, though the very technology that has made derivatives feasible has also improved the ability to leverage without derivatives. Nonetheless, the possibility of increased systemic risk does appear to be an issue that requires fuller understanding.

We should point out, first, the obvious. Overall, derivatives are mainly a zero sum game: one counterparty's market loss is the other counterparty's market gain. Counterparty credit exposures on OTC derivatives are a different issue and the source of much of the systemic concerns. Such losses rose to record levels in the third quarter of 1998. Nonetheless, the rate of loss remained well below that on banks' loan portfolios. Moreover, the counterparty credit losses in the third quarter can be traced primarily to the extraordinary events in Russia, which produced many defaults on ruble forward contracts. In the fourth quarter such losses dropped sharply, albeit not to the very low pre-crisis rate.

The bulk of the losses reported by the major derivative houses for the financially turbulent third quarter of last year reflected declines in the market values of their underlying trading positions, especially in equities, commodities, and emerging market debt. Derivative instruments were bystanders. They may well have intensified the losses in underlying markets, but they were scarcely the major players.

Yet, through the past decades' phenomenal growth of the derivative market, there has not been a significant downturn in the economy overall that has tested the resilience of derivative markets. (I operate on the premise that neither human nature nor the business cycle has been rendered obsolete.)

While nothing short of a major economic adjustment is likely to test the underlying robustness of the derivative markets, there are reasons to believe that there are some fundamental strengths in these markets. First, despite the growing use of more exotic over-the-counter instruments, the vast majority of trades are relatively straightforward interest rate and currency swaps. The market risk on such swaps is presumably less daunting to individual counterparties than their underlying exposures, or presumably the swaps would never have been initiated. Moreover, the credit risks are increasingly subject to comprehensive netting and margin requirements that, although they do not fully remove the risk, significantly ameliorate it. And so far as banks are concerned, capital requirements are applied to such risks as they are to loans that create credit risks quite similar to those of derivatives.

Hence, although one may harbor concerns about the overall capital adequacy of banks and their degree of leverage, there is little to distinguish such concerns between risk adjusted on- and off-balance sheet claims.

The one area of risk that needs more thought is so-called potential future exposure. At any particular point in time only a small fraction of the notional value of derivative contracts are in the money--that is, have a positive market value. Because prices will doubtless change in the future, those contracts with negative or even positive values have the potential of larger positive values and, hence, a potential credit loss on default.

That future potential for loss upon counterparty default will differ by the nature of the contract. For purposes of supervisory risk-based capital requirements, potential future exposure (over and above the current market value of derivatives, if positive) is currently estimated by separating derivatives into categories based on the underlying instrument (interest rate, exchange rate, commodity, equity, etc.) and the remaining maturity. The capital requirement is then derived by applying fixed factors to each category that reflect differences in the price volatilities of the instruments and the structure of the contracts. Interest rate swaps (70 percent of the notional value of OTC derivatives) have limited long-term loss potential, primarily because the contracts do not provide for an exchange of principal and the exposure is effectively amortized as interest payments are exchanged over the life of the contract. Foreign exchange, commodity, and equity derivatives, of course, entail far greater exposures, either because principal amounts are exchanged or because the underlying's price is more volatile.

This approach to regulatory capital requirements is not altogether satisfactory. The most sophisticated derivative dealers parse their derivatives book in more detail. And certainly a single point estimate cannot capture the range of losses that might reasonably be experienced. Hence, in evaluating derivatives risk, far more stress testing of the lower probability outcomes is a necessity. Even a one in 500 occurrence does happen once every 500 times, and if that occurrence could threaten the franchise value of the derivatives counterparty it is an important concern for risk aversion.

But we have to be careful of how we view these ostensibly low probability events. They are low probability only if we presume that the reality from which these events derive is best represented by a single bell-shaped probability distribution, be it a normal distribution or even a fat-tailed one.

Modern quantitative approaches to risk measurement and risk management take as their starting point historical experience with market price fluctuations, which is statistically summarized in probability distributions. We live in what is mostly a stable economic system in which market imbalances give rise to continuous and inevitable moves toward equilibrium resolutions. However, the violence of the responses to what seemed to be relatively mild imbalances in southeast Asia in 1997 and throughout the global economy in August and September of 1998 have raised the possibility of a discontinuous adjustment process.

Almost all the time investors adopt strategies that seek profit only in a relatively long- term context, fostering the propensity for convergence toward equilibrium that ordinarily characterizes financial markets. But from time to time (and quite possibly with increasing frequency) the resulting propensity toward convergent equilibrium has given way as investors suffer an abrupt collapse of comprehension of, and confidence in, future economic events. Risk aversion accordingly rises dramatically and deliberative trading strategies are replaced by rising fear-induced disengagement. Yield spreads on relatively risky assets widen dramatically. In the more extreme manifestation, the inability to differentiate among degrees of risk drives trading strategies to ever more liquid instruments. Strategies become so tentative that traders want the capacity to reverse decisions at minimum cost. As a consequence, even among riskless assets, illiquidity premiums rise dramatically as investors seek the heavily traded "on-the-run" issues.

History tells us that sharp reversals in confidence happen abruptly, most often with little advance notice. They are self-reinforcing processes that can compress into a very short time period. Panic market reactions are characterized by a dramatic shift to maximize short term value, and are an extension of human behavior that manifests itself in all forms of human interaction--a set of responses that does not seem to have changed over the generations. I defy anyone to distinguish a speculative price pattern for 1999 from one for 1899 if the charts specify neither the dates nor the levels of the prices.

If this paradigm turns out to be the appropriate representation of the way our economy and our financial markets will work in the future, it has significant implications for risk management. Probability distributions estimated largely, or exclusively, over cycles excluding periods of panic will underestimate the probability of extreme price movements because they fail to capture a secondary peak at the extreme negative tail that reflects the probability of occurrence of a panic. Furthermore, joint distributions estimated over panicless periods will underestimate the degree of correlation between asset returns during panics when fear and disengagement by investors results in simultaneous declines (or, in rare instances, increases) in values as investors no longer adequately differentiate among degrees of risk and liquidity. Consequently, the benefits of portfolio diversification will tend to be significantly overestimated by current models.

Such a view of the world would also have important implications for approaches to the prudential oversight of capital adequacy for banks and other financial institutions. Regulatory minimum capital requirements for banks' trading portfolios are now based on the banks' own internal risk measurement models. Furthermore, regulators are exploring the potential for using an internal models approach to credit risk in the banking book.

Some may now argue that the periodic emergence of financial panics implies a need to abandon models-based approaches to regulatory capital and to return to traditional approaches based on regulatory risk measurement schemes. In my view, however, this would be a major mistake. Regulatory risk measurement schemes are simpler and much less accurate than banks' risk measurement models. Consequently, they provide banks with the motive and the opportunity to engage in regulatory arbitrage that seriously undermines the regulatory standard and frustrates the underlying safety and soundness objective. Specifically, they induce banks to reduce holdings of assets where risks and regulatory capital are overestimated by regulators and increase holdings of assets where risks are underestimated by regulators.

It would be far better to provide incentives for banks to enhance their risk modeling procedures by taking account of the potential existence and implications of discontinuous episodes. Scenario analysis can highlight vulnerabilities to the kind of flights to quality and flights to liquidity that seem increasingly frequent. Stress testing of correlation assumptions can reveal the disappearance of apparent diversification benefits in such scenarios.

Stress testing requirements already are part of the internal models approach to capital requirements for market risks in bank trading accounts. Stress testing of estimates of counterparty credit risks should also be required. The logic is the same as for market risk. The factors that are used to determine supervisory capital requirements for counterparty credit exposures are based on statistical analyses of non-panic periods. Moreover, during panic periods the usual assumption that potential future exposures are uncorrelated with default probabilities becomes invalid. For example, the collapse of emerging market currencies can greatly increase the probability of defaults by residents of those countries at the same time that exposures on swaps in which those residents are obligated to pay foreign currency are increasing dramatically.

Supervisors should avoid any temptation to increase the supervisory factors for potential future exposure to address these crisis scenarios, which have vastly different implications for different combinations of contracts and counterparties. But they can and should review the requirements relating to the scenarios to be simulated by the bank and the incorporation of stress test results into the policies and limits set by the bank's management and board of directors.

As we approach the twenty-first century, both banks and nonbanks will need to continually reassess whether their risk management practices have kept pace with their own evolving activities and with changes in financial market dynamics and readjust accordingly. Should they succeed I am quite confident that market participants will continue to increase their reliance on derivatives to unbundle risks and thereby enhance the process of wealth creation.



Black Blade: As this is not copy righted I presented it in whole. When Alan gave this speech in 1999 the notional value of the risk for the banks was only $33 Trillion, and now 3 years later it is $47 Trillion and growing). We saw the risk when Orange County derivatives blew up and then later as Long Term Capital Management threatened to take down the entire US economy with only a minor position but with extraordinary leverage (just like JP Morgan Chase, Bank of America and Citigroup). In other words � hang on for the wild ride if many of the counter parties to these banks blow up. It's going to get very ugly.

I've often thought exactly the same about how "slowly events are transpiring." It brings to mind Livermore's statement that waiting was what brought him the really big profits. Of course, he knew which side of the trade to take and usually knew when to take it before he waited.

I'm often amazed at how the events of recent years have followed so precisely the predictions of some analysts while disproving others entirely. I have become more and more a contrarian (and cynic). Again, as you say, often very slowly. I've been told and observed that currency trends move extremely slowly and often last for years so, if one believes POG is the direct inverse of dollar strength, it follows that the POG bull may be a gradual and multi-year affair.
However, perhaps dollar strength is only one of a great many influences on POG. Slowly or no?
Rich

MK, we won't know for sure, unless JPM does get downgraded, but even if some contracts don't "mature" on a downgrade, the downgrade will greatly increase JPM's cost of funds with a subsequent drop in earnings, in an already falling investment, loan, etc. business.

Now, if that happens, how does the FED help? Well, now we may know why everyone's anticipating a rate cut. JPM is and probably has been a big customer at the FED discount window lately, and they probably need the extra spread even without a downgrade. I have to think that big smart money has been and will continue to move out of JPM.

I'd sure like to see some good numbers on their liquidity. My gut says if Harrison had been Pinnochio while commenting on their liquidity, Maria would have been a shiskabob.

Pizz

this lil co has ties with producing oil in china UPL
they report tomorrow. and no i dont own shares, not now not tomorrow, not next week. not next month. i just happeen to know.

Kind of gives you a real warm fuzzy feeling doesn't it.

Think I'll dig out that good bottle of scotch I've got hidden for special occassions, and fondle a few maples.

Good scotch and warm gold, I feel better already.

Pizz

Other than a concerted official effort to jawbone some stability back into the sliding thing, I don't see anything *legimate* coming down the pike that will fundamentally give the dollar any substantial leg up (exchange-rate-wise).

And when the world's reserve currency has thus become a card-carrying member of the Weak Sister Society, it is not long before the foreign contributions at jawboning turn into less than hollow words as trading commences inevitably to the contrary for benefit of the home team.

This leaves the Bush administration in the unenviable position of largely going it alone, thereby being put into an uneviable position of being the "unfriendly administration" with respect to calling for an end to business-as-usual among Big Corporate America. Previously, who would have ever thought it would be a Republican administration that would be the one cracking down on America, Inc.?

They simply have to. We can think about it for a minute. How else does an admistration go about projecting SOMETHING to back the re-emergence (after a five month hiatus) of the empty rhetoric of a "strong dollar" while at the same time running budget deficits in a sagging economy with a Fed that will keep its foot on the dollar accelerator with low or lower interest rates (this all seeming very paradoxical -- as far as a "strong dollar" would actually be affected to the public onlookers).

Something like this. President Bush (hypothetical) to the world. "Look at our strong dollar! Built on the back of a national corporate structure that, prior to this new legislation, has never before been held to such a high standard of account!" What you won't here him say is that even now Alan Greenspan is comfortably positioned in the back room for printing up more of these "strong dollars" than the world could possibly choke down.

God bless them all, how they do try! But as far as your comments about gold being "smacked down" of late, I don't see it that way. I've got a rather odd, yet comfortable viewpoint that allows for the very real possiblity that a financial crisis could errupt PUBLICALLY (if it stays private it don't exactly count (cf. LTCM)) at any given day, while at the same time I appreciate the inevitable unfolding of the long-term economic trends that render the day to day details meaningless. Meaningless, that is, unless you are caught unprepared or leveraged against them.

As such, the recent "smack down" was nothing at all and scarcely worthy of comment, likewise as was the recent "smack up" close to $330. But since we're all here (you and I both) trying to enjoy a lively and stimulating conversation, let's keep watching and talking about these details, even as we are prepared (through physical gold ownership) for the long-term trending play of affairs.

I recommend a careful reading of Belgian -- particularly over the last couple of days in this regard. If I can lay claim to possessing any certain knowledge at all, it is this one thing: I am certain that, of all the great many economic, research and policy analysis I've filtered through, the generous economic musings offered by Belgian ring true to the ear. Something I enjoyed before in the tradition of FOA and ANOTHER before him.

Anticipate the short term, live for the long term. Gold will see you through. On a personal note, that's why I'm HERE rather than elsewhere in the wide world. I assume the same is true for many of the persons that gather here at the forum and particularly those that are personally businesswise known to MK and the rest of his crew at USAGOLD-Centennial. I couldn't imagine conducting gold business elsewhere.

Randy

Using your example of 10 JMP calls:

If JPM sold these calls with a strike of 20, then anytime before expiration the buyer can exercise them (buy JPM stock) at 20 per share. So, if JPM shares are trading at, say 50, then the call holder buys 10 x 100 x 50 or $50,000 worth of stock for whatever premium was paid for the 10 contracts. If JPM shares are trading at $150 per share, the options are worth 10 x 100 x 150 or $150,000. The option holder can buy $150,000 worth of stock for whatever premium was paid for the 10 contracts. Selling call options involves unlimited risk as the seller must produce the shares at the "strike" price. I once bought a 625 silver call for $175. This premium was cheap as silver was trading around $5.25 but then word leaked out of Buffett's buying and I sold the option for $5500 when silver spiked up to $7.25. Someone collected my $175 and then had to pay $5500! What if silver had gone to $20.00? What is the notional value of any derivative position if not the immediate offset price? If so, then how can anyone determine anyone's exposure except at the present price of the underlying commodity or share price or whatever the price that the derivative derives its value from? Buying or selling futures positions hold the same risk unless somehow hedged.
Are all JPMC's positions somehow hedged? If I buy gold at $300/ounce and sell calls at $350/ounce to collect the premium, then I've limited my gains to $50/ounce even if POG goes to $1000/ounce because it will be "called" from me at $350. Some positions are hedged to limit losses rather than gains. Unless, all of JPMC's positions are similarly backed or hedged, the notional value can not be determined, no?

If risk is limited by some kind of spread, like buying soybean oil while selling soybean meal, the position, while hedged, still has a notional value that changes with every up or down tick in price of either commodity. This is one reason why I can not understand the so-called derivative melt down price of $354/ounce gold. What am I missing in Chapman's argument?
Rich

I think I may understand this downgrade threat.
If an individual buys a futures position, margin (cash) is required so that some downpayment is holding the position. If the price of a commodity falls by an amount egual to greater than that margin, then more funds must be committed to hold the position. Each commodity has its own minimum margin requirements.

Are you saying that big companies and/or banks use the value or worth of their companies (as determined by share price and bond ratings) as margin instead of cash??
If so, this would explain much to me. This would be another domino or falling knife capable of severe damage to the house of cards. Is this analogy correct? Did Enron's bankruptcy result from too little margin (margin determined by shares held x share price) instead of too little cash deposit??
Thanks
Rich

test

http://cbs.marketwatch.com/news/story.asp?column=Thom+Calandra's+StockWatch&siteid=mktw
Sharp rallies now point to intense selling later

Snippit:

SAN FRANCISCO (CBS.MW) - A noted market researcher expects a series of massive red-ink days in the U.S. stock market -- sooner rather than later. The selling is destined to follow what Paul F. Desmond calls an "upside blow-off" that lifted the battered Dow Jones Industrial Average more than 400 points a week ago. Desmond's research suggests strongly the stock market is far from a healing stage that will mark a return to better days.

"Our 70-year history shows that 90 percent up days that are not preceded by 90 percent down days usually turn out to be upside blow-offs that are quickly followed by new lows," Desmond said. His NYSE-based study earlier this year showed the bear-market washout - a classic capitulation by every investor and their mother-in-law - comes after a series of these 90-90 down days, followed inevitably by furious buying. Desmond, using Lowry's Reports internal measures of supply and demand, says the one-day rally staged a week ago, "was accompanied by a significant increase in downside volume, showing that sellers were aggressively dumping stocks into the rally." "We are still expecting an eventual series of 90 percent down days at significantly lower prices," Desmond told me Monday.


Black Blade: Yep, it's 1929 all over again. The suckers rallies certainly did not hold up. I heard Bob Pisani of CNBC say that floor traders were complaining that it wasn't a matter of selling, rather that nobody was buying. Just wait until the next blow off when everyone wants out and they start to run for the exits en masse. It should be quite "entertaining".

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028185496385&p=1012571727195
Snippit:

Taiwan's finance ministry is preparing a package of reforms designed dramatically to increase the state-owned Financial Reconstruction Fund's role in dealing with the problem loans burdening the banking sector. The remodelling of the fund, which was established only last year, is a tacit acknowledgement that bailing out the banking system will demand more state money than previously reckoned.


Black Blade: Following in the footsteps of Japan. Hmmm�

Bill Bonner adds to your thoughts...In Greenspan We Trusted

The Daily Reckoning

Baltimore, Maryland

Monday, 5 August 2002

* * * * * * * * * * * * * * * * * * * * * * *

*** Help is on the way...what every investor wished he
knew...

*** Stocks fall on Friday...temperatures rise... some
preposterously large losses...

*** Are consumers getting desperate? Why do rich people by
designer brands? And more questions!


* * * * * * * * * * * * * * * * * * * * * * *

Help is on the way, dear reader.

MONEY magazine to the rescue. "What Every Investor Needs
Now....Answers to all your questions," promises the Special
Issue for September. We have a lot of questions, so we
decided to have a look...

"How bad is it?" was a decent first question.

"We have a crisis of confidence," say the Money folks.

"The economy is basically sound," writes Amy Feldman as if
she had a clue, so "why is the stock market sinking
relentlessly? And what will it take to turn things around?"

MONEY has no idea. "We think there are at least two
important reasons for the market's latest woes," writes
Feldman, "fear and valuations." But she doesn't mean that
stocks are still much too expensive for a bear market
bottom, but that investors have lost confidence in earnings
reports. "For the market to begin to rebound, investors
will need to get comfortable with investing again," she
writes.

What will it take to make investors comfortable?

"Clear signs that the market's continuing problems won't
end up leading the economy into a double-dip recessions..."
and "signs from regulators, legislators and prosecutors
that serious reforms will be put into place..."

Heh...heh...keep 'em hoping...keep 'em believing... that's
what MONEY and the rest of the financial press seems to be
doing. Do these people really think a few new regulations
and a few show trials can end a bear market?

"When will the bear market end?...Are stocks cheap now?
...Is our financial system broken?..." the MONEY team has
an answer for everything. And on almost every page is
another photo - a smiling couple from Cincinnati, a retired
man in Virginia, a family in St. Louis - all of the poor
hapless patsies sure that stocks won't let them down. "Be
reasonable," the magazine seems to say. "Be patient."

"Keep a diversified portfolio, stay in stocks for the long
run, and you'll be fine."

But nowhere in this entire Special Issue do they raise the
questions we most wanted answered: What is really caused
the boom....and what is behind the worldwide falloff in
equities? And our favorite: Is America following Japan into
a long, soft, slow depression? Finding no answer in MONEY,
we'll have to answer it ourselves... more below...

Meanwhile, Eric Fry is taking a few days off....so the
latest financial news from Addison Wiggin, in Paris....

*******

Addison Wiggin in the City of Light...

- In two days last week - Thursday and Friday - the Dow
gave back more than 400 points and all but wiped out last
Monday's wild rally gains. Nor did the Nasdaq or the S&P
500 fare any better. They shed 32 and 20 respectively on
Friday...

- If the twentieth century provides us with any guidance,
we can expect to see these kind of wild rallies in both
stock prices and hope... but we can also expect the bear
market to take us back to a point lower than from whence
the bull market began.

- For example, from 1923 to 1929 the Dow surged up nearly
450%. It started it's bull run at about 85, climaxed at 381
in September of 1929, then began it's descent. Despite
rallies in 1930 and 1931 that boosted the market as much as
35%, the Dow reached a low point of 41 in July of 1932...
less than half of the level it began 9 years before.

- "Our modern American bull market," writes
CBSMarketWatch's Thom Calandra, "began in 1990 with the Dow
at 2,365. When the 10-year rally began to unravel in
January 2000, the Dow was almost 12,000. A total gain of
almost 500%."

- The similarities are a bit eery, aren't they? If the
trend continues you might expect the Dow to drop to... half
of where it began... or, 1,185. Frankly, I had to check the
math a couple of times. A drop that far is simply too
preposterous to consider. Or is it?

- Well, just for the sake of being preposterous... that
would mean the Dow, which opened today at 8,313 would have
to lose another 7,128 points. And investors would lose
another $7 trillion or so. Of course, that's just a back-
of-the-envelope calculation... but it would take years for
that kind of carnage to works its through the economy.

- Friend and fellow scribbler John Forde (that's Forde with
an 'e') tells me that, among other things, if you spent a
dollar per second, 24 hours a day, it would take 242,904
years and 2 months before you spent your wad... $7.7
trillion in pennies would weigh about 23.7 million tons and
fill the entire Chicago Sears Tower... three times...(7.7
trillion is, in fact, exactly 39 times the total number of
hamburgers ever REALLY sold by McDonald's.)

- During the late great Tokyo bubble of '89 things were
even more out of hand. The Nikkei 225 exploded after
achieving the mind-numbing height of 39,000... a point at
which it was trading at 100 times earnings. "Once again,"
offers Calandra, "[after the collapse began] numerous
rallies ensued. The Nikkei rose almost 20 percent months
after the December 1989 zenith. About a year later Japan's
benchmark index rose by more than a third in a five-month
span, into the spring of 1991.

- "As we know, the Nikkei hasn't stopped skidding,"
Calandra continues, "It's been as low as 9,420 in the past
year... the number to remember, though, is where the Nikkei
started it's amazing run - 6,850 in 1984 - before reaching
its pinnacle 39,000."

- Investors are now beginning to feel like maybe "10 years
ago in Japan" was a) not all that long ago and b) not that
far away.

- As we reported in the Daily Reckoning late last week,
Stephen Roach has cautiously gone on record warning Morgan
Stanley's clients that a double-dip recession is, perhaps,
imminent. Folks in the farm belt, might be thinking
something like: "well, duh." In fact, one Daily Reckoning
reader writes:

"The corn crop is 88% destroyed and other crops are not
doing well either. Drought. The farmers say they are in a
depression, not a recession. 113 degrees almost every day.
Hardly ANY rain for almost 3 years. Grasshoppers everywhere
and they are HUGE. We've had a beautiful 15 room Victorian
house for sale for almost 3 years - can't sell it although
the price is $35,000 under appraised value, and can't even
rent it at $650 a month!

"Everything seems just like my grandfather told me about -
the depressions he lived through. He was born in 1869 and
died in 1952 and lived through several.

"Denial and greed seem to be the strongest emotions in the
human being. People who prefer to live in reality are NOT
liked (like me!). Some tell me, 'I don't want to hear it
ANYMORE,' and their money is still disappearing."

*******

Back in Baltimore...

*** Whew, it is hot. Yesterday, in France, we were wearing
sweaters outside. Here in Baltimore, we can barely go out
at all.

*** Catching up on family news, I discovered a cousin who
had lost his job and was forced to move in with his wife's
parents. Hard cheese for them. We can't help but wonder how
many people are nearing the same desperate straits... "In
the typical household," writes the Mogambo Guru, "both
adults are working, both adults have tapped out their
credit cares, both adults have borrowed against all the
equity in their home, and now they simply have run out of
money and fresh sources of credit to go shopping. Or even
pay the bills."

*** Vanity, vanity...all is vanity.

"The world is as it should be," said a friend at dinner
last night. He was referring to the habit of many wealthy
people to buy brand-name designer products at preposterous
prices.

"I was just in Europe with friends," he explained. "There
were people on the streets selling what looked like Gucci
bags for $25. They were such good knock-offs you couldn't
tell the difference. Logically, rich people should buy
them. Because they don't have anything to prove. People
would assume they were real, anyway. Only poor people
should buy the real ones - and get some sort of proof of
authenticity that they could show off to their friends."
"I asked one of my rich friends why she didn't buy the
cheap ones. 'I wouldn't be caught dead with a knock-off,'
she told me."


* * * * * * * * * * * * * * * * * * * * * * *

IN GREENSPAN WE TRUSTED
by Bill Bonner

"The mildness and brevity of the downturn are a testament
to the notable improvement in the resilience and the
flexibility of the economy," said Alan Greenspan to a
congressional committee recently.

"The fundamentals are in place," he continued....as the
stock market rose...."for a return to sustained healthy
growth: imbalances in inventories and capital goods appear
largely to have been worked off; inflation is quite low and
is expected to remain so; and productivity growth has been
remarkably strong, implying considerable underlying support
to household and business spending as well as potential
relief from cost and price pressures."

Mr. Greenspan spoke with no smile on his face. Nor were his
fingers crossed. He said what he said as though he meant
it.....as though he believed it himself.

Certainly, his listeners seemed to believe it. They looked
grave when the cameras turned in their direction. They
posed silly questions prepared for them by earnest
staffers. And laughed at their own dull jokes as if they
had botched lobotomies. None seemed to have the slightest
idea of how ridiculous and pathetically insipid the whole
show really was.

The spectacle seemed designed for the editors of MONEY
magazine...to reassure the Shareholder Nation that it faced
nothing more troubling than a temporary 'failure of
confidence' on the part of skittish investors...and that as
soon as a few miscreants were behind bars the whole nasty
episode would soon be forgotten. No one was rude enough to
point out that it was the star witness, Mr. Greenspan
himself, who bore much of the blame for the bubble and its
aftermath. Nor did anyone seem to wonder how the nation's
central banker could correct his mistake.

Stock market crashes produce more noise than light. After
the crash of '29, for example, similar hearings were held
by similar groups of Washington hacks. That was before the
days of air-conditioning, though. And few matters were
important enough to sweat through a summer in the nation's
capital. But when the weather softened, the pols turned up
the heat for the benefit of the rubes and patsies in the
home districts.

Albert Wiggin, head of Chase National Bank, no relation to
our own Addison Wiggin, was discovered to have shorted his
own shares and made million. Sam Insull presided over the
Worldcom of the '20s - Commonwealth Edison - a $3 billion
utility whose books were audited by Arthur Andersen. He
fled the country when the cops came looking for him. And
poor Richard Whitney, who had once headed the New York
Stock Exchange, went to prison for embezzling as much as
$30 million from the NYSE pension fund.

Mr. Greenspan, by contrast, is still greeted in
congressional hearing rooms as though he knew what he was
doing. The politicians - and MONEY magazine readers - are
still counting on him to save the world as we know it. If
only he could...

But what can he do? He can raise the fed funds rate. Or he
can lower it. He can loosen credit...or tighten it. Raising
rates is hard work for a central banker. In recent years,
only Paul Volcker seemed to have the stamina for it. At the
time - in the early '80s - people were so upset that they
burned the fed chief in effigy. Senators fulminated against
him as if he were old Beelzebub himself. But Volcker held
the patient down and gave him the medicine he needed
anyway.

Greenspan had a much lighter time of it. Every occasion
seemed to call for easier money...and the nation soon
became used to it. The credit-fed boom became as tedious as
the San Diego weather forecasts. Is it any wonder consumers
stopped saving for a rainy day? Even after last year's 9-
month recession consumers still did not get out their
umbrellas.

A recession is supposed to lower consumer spending and
increase savings levels. But, it did not. Instead,
consumers borrowed and spent more than ever before,
confident of clear skies tomorrow. Instead of being
alarmed, Mr. Greenspan told Congress that this reckless
behavior was "an important stabilizing force for the
overall economy." No one was heard to guffaw or laugh.
But consumers are now nearly as helpless and desperate as
the central bank. Paul Kasriel of Northern Trust points out
that for the first time since WWII, the average net worth
of Americans is going down. It rose by about $3,700 per
year in the last few years of the '90s. But in the last 2
years, it has fallen by about $1,000. The stock market has
wiped out between $5 trillion and $7 trillion.

Only real estate prices seem to defy the general
deflationary trend....the latest headlines from Denver and
other cities suggest that that bubble may finally have
found its pin too.

"As consumers finally begin to realize that a continuous
plunge of the stock market is burning what they considered
their reserves for retirement," writes Dr. Kurt
Richebacher, "they will return to saving from their current
income...It will be the final fatal blow for the recovery
and economic growth."

And what of Mr. Greenspan; can he not save the
situation...by lowering the fed funds rate
again....loosening credit even more...or maybe even
printing more dollars?

He can do nothing else. Raising rates would kill the
mortgage refinance business - and stop consumer spending
abruptly. The consumer is the last man standing in the U.S.
economy. Greenspan must do all he can to hold him upright -
even if he is already dead. "The Fed ...is stuck in a
policy that requires its figurative printing presses to
work 24/7" explains Grant's Interest Rate Observer.

Making a long story very short, the Fed's is increasing the
money supply of dollars at more than 11% per year. Its
major competitor - the European Central Bank - is going in
the opposite direction; the ECB's balance sheet is
shrinking by nearly the same number.

But making more credit available to people who are already
deeply in debt is like offering a tuna sandwich to a
drowning man; it is not the right moment.

"Within the next few months, it will become the general
recognition that the U.S. economy is on the verge of
sliding into a prolonged, severe recession," concludes Dr.
Richebacher in his latest letter. "This spells
unprecedented havoc to U.S. stocks, bonds and the dollar.
Under these circumstances, there is but one highly
lucrative investment for dollar-based investors: German and
French government bonds."

Bill Bonner

When he was asked a question today.Is U.S. going the way of Japan? Ron replied ...the Fed still has some room to move,they can take interest to "zero" and after that "they can print money".....how comforting.....
How does that mesh with a strooooong Dollar policy?
My question is in order to get exports moving do we devalue ?
If thats to be an advantage ,we must devalue against another currency that trades with us ,no?That begs the question which currency is going to allow the Dollar to depreciate against it?
except for the Yen? IT ain't gonna happin baby...
Its a race to the bottom..Only those economys that are resource based will go up.Australia,Canada,Russia is a maybe.
They can all depreciate against gold,but there is no trade advantage.We are doomed if the economy slides.What neighbor will we beggar?The worlds resources are priced in Dollars ,we cannot export food,coal,gold at an advantage.Our final choice will be ...give up being the worlds reserve currency or go broke !!!!

Has to do with rigged notional valuationsJPM carries $23 Trillion in various flavors, interest rate, commodities, debt etc.

They boast they have a better model with hubris similar to those who led the internet "Revolution". Their model simply understates their risk.

Like General Motors banking a 10% pension fund performance, JPM banks that gold can't rise more than ten dollars from here and the dollar will always be where it is today.

A good part of their model is based solely on a rigged gold price...in fact the model was created ON:Y with pog under their thumbs.

Like LTCM they will never see the 4 standard deviation blindside. Like all crooks they have forgotten a variable or two.

The massive, unrelenting mutual fund liquidation trend has only now begun to accelerate. The bubbles added armies of government salaries which the politicians don't have the courage to fire so state budgets are shot.

Everybody knows it. That's their 4 standard deviation event. The Steve Forbes, CNN interview Sunday, party-line "Tax Cuts" bluster went over like a dead albatross on a white linen table cloth.

Everybody knows what's ahead...in their hearts... if not their minds.

RE: Derivatives

I'll tackle your post (or at least attempt to) in the am.

Little bit too mellow right now (smile).

Pizz

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Energy%20News&s1=blk&tp=ad_topright_energy&refer=topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_all&bt=ad_position1_energy&tag=energy∣dle=ad_frame2_energy&s=APU6m3xQoVS5TLiBT
Snippit:

London, Aug. 5 (Bloomberg) -- U.S. Energy Secretary Spencer Abraham said he's encouraging other oil-consuming countries to expand petroleum reserves as a buffer against disruptions to crude oil imports. Consuming nations should examine their policies as part of an overall energy security rather than in relation to any ``specific matter,'' Abraham told reporters. The U.S. uses a quarter of the world's oil and imports about half its supply. President George W. Bush said last month the U.S. will ``use all the tools at its disposal'' to remove Iraq's leader Saddam Hussein from office. Any military action in the Persian Gulf is likely to disrupt shipments of oil from a region that supplies a third of the world's oil. ``We have suggested that as we are moving to fill our reserve, others should consider making sure that their reserves are adequate,'' Abraham said during a briefing at the International Petroleum Exchange in London.


Black Blade: It sounds like war preparation to me. The word is out to get prepared because the US is making no promises. Clinton dipped into US strategic reserves putting the country at risk in a treasonous act in order to help the electoral chances of Forest Gump (aka Al Gore). The advice is good though � get prepared as the global economy is toast. Get out of debt, stash enough cash for several months expenses, get Gold and Silver portfolio insurance, and start a storage program of nonperishable food and basic necessities.

http://quote.yahoo.com/m2?u
It appears that we will soon be talking about Hang Seng and Nikkei 225 going sub 9,000. Asian markets are tanking hard tonight. There is nothing, absolutely nothing positive in the markets that can encourage a positive finish. It has been quite "entertaining" so far. I expect much more "entertainment" in the coming months.

- Black Blade

http://www.washingtonpost.com/wp-dyn/articles/A47913-2002Aug5.html
By Thomas E. Ricks
Washington Post Staff Writer
Tuesday, August 6, 2002

--A briefing given last month to a top Pentagon advisory board described Saudi Arabia as an enemy of the United States, and recommended that U.S. officials give it an ultimatum to stop backing terrorism or face seizure of its oil fields and its financial assets invested in the United States.--

Black Blade:

Thanks for the link! I can always count on you to post the best of the best. Now if only we could somehow prevent Dubya from escalating the "war on terra" into a full-blown WWIII. Doesn't look possible considering that the crony capitalist system Dubya champions is crashing down upon all of our heads and there's little if anything he can do to stop it.

With the US and world economy implosions taking place on his watch, Dubya's only chance at re-election in 2004 is to make sure the US is so deep in war that the electorate would be too scared to change horses in mid-stream. Therefore, I'll boldly predict that the US will be deep in the middle of a major war during the 2004 election cycle.

My only questions are:
1) Which country/person is history going to blame for starting it?
2) Will the US be loved, honored, feared, held in contempt, or hated by the rest of the world after it's over?

http://www.imf.org/external/np/sta/ir/usa/eng/curusa.htmahem um sir KNOBLE NIGHTS could this be of use?

http://www.fromthewilderness.com/free/ww3/073002_cbs_story.html"... Last week, FTW received information from three credible and experienced sources that the Bank of America had made an urgent and secret appeal to the Federal Reserve for an emergency bailout. We are watching all of these developments closely and will have updated reports in the near future...."

--------------------
One to watch.....

http://www.mrci.com/qpnight.asp
The euro is crashing. I never did think that the euro was viable. How could 15 or so different countries with different systems (political and financial) ever agree on much of anything. The collapse of the euro is inevitable in my opinion. It was a stupid idea anyway.

Meanwhile gold pulls back, US market index futures are positive, the USD is charging higher and oil is falling. In other words, quite "entertaining".

- Black Blade

Sir Towncrier Plaza/Louvre reposting # 82309 was *perfectly* timed !!! Bravo !
POG stopped at exactly 310$ and ...we have euphoria here in Euroland with big smiling / shouting financial reporting. Big percentage gains on crucial (!!!) stock-valuations.
Dow futures up 100 plus points...POO down(sub 25$ resistance)...US$ up and targetting the �/$ > 0,95 (?).
Whoehaaa.

Thanks for yesterday's responses and many great postings (and compliment).
Made a print out because it's to much for digesting it in one day. Thanks.

Today's action...Flash in the pan or something more...? W'll assess that somewhat later.

http://www.mrci.com/qpnight.asp
The trading bizarre patterns on the US market futures indicate a single or perhaps very few traders are taking humongous bets on the market open in NY this morning. There is no news so this suggests either one big gamble or some insider trading. Of course there is that other possibility that the President's Working Group on Financial Markets are up to their old tricks again. About an hour and half ago futures were decidedly negative and now have gone soaring to the positive and yet there is no news. Hmmm...

- Black Blade

http://biz.yahoo.com/rb/020805/economy_usa_imf_4.html
Snippit:

WASHINGTON (Reuters) - The slump in equity markets, a host of accounting scandals and an uncertain outlook for business profits have increased the chances the U.S. economic recovery will be weaker than expected, the International Monetary Fund said on Monday. In its annual review of the world's richest economy, the Washington-based lender gave a fairly gloomy assessment, noting shaken confidence, a much bleaker budget picture, overly optimistic Bush administration economic forecasts and trade decisions that were counterproductive. In preparing the report, the IMF said it had envisaged the U.S. economy would expand by 2.5 percent this year and by 3.25 percent in 2003 after a tepid 1.2 percent advance in 2001, when the economy tipped into mild recession. "However, recent data releases and other developments, including the sharp decline in equity prices in recent weeks, have exacerbated the downside risks to the outlook for both personal consumption and business investment," the IMF said. "The likelihood, therefore, is that downward revisions to the growth projections would be made in the ... forthcoming World Economic Outlook," the lender said, referring to its next round of global forecasts, to be published in late September.


Black Blade: The IMF also suggests that the US government raise taxes. Nevertheless, the US economy is on the ropes and the markets should continue to plunge even though the futures suggest a strong opening. The die is cast and the IMF can make all the stupid suggestions they want.

Leaps out of his deathbed and rockets through the 50dma.

Belgian,many thanks for the great posts of late.

Gold drops $2.50 an ounce on soaring US dollar - actually crashing foriegn currencies. After all, all currencies are weakening, though the US dollar is holding up somewhat better. Also the rocketing US market futures are drawing some institutional interest away from gold and other asset classes.

- Black Blade

US$ bonds are "heavely" priced >>> overpriced in rate cut anticipation >>> at a Top ?
With M. Kosares "Financialization" in the back of the head...How will all these Trillions leave the Top (in progress) in bond valuation ? Cash ? > stocks ? > Gold ? or roll over to other bonds (longer maturities) ? or another currency ?

Bond Gods (holders) only have two things to worry about :
1/ Depreciation of the currency in wich their bonds are denominated.
2/ Default of the bond issuers. Declining capacities to pay back (redeem).

And here we are in the financialization-trap. A global economy, totally overshadowed, by the evils of financial greed and falsification.
The road to Gold, firmly blocked. Currency battles wich are totally un-related to economical fundamentals. Concerted IRs manipulation beyond reality. A "GIGANTIC" cover up of 1/permanent depreciation 2/virtual defaults.

Confetti might shift massively out of bonds into stocks ? What a releaving prospect. But how many times can one shave an already shaved sheap. Catapulting stocks >>> rise interest rates >>> shift back from hyper valued stocks back into higher yielding (declining) bonds ??? Wouldn't this be nice ? Financialization merry go round. The music is believed it will never stop. We keep on dancing with no economic chairs left. And more and more dancers (derivatives) are joining the feast.
That's my interpretation of today's umpthiet event. But !!!!
more and more confetti fractions, slide stealthly into Physical Gold.

All fiscal and monetary tools are only at financialization's services. Debt holes are to be filled with other debt holes. That's the financial brotherhood's job. Keep on servicing the system with more and more derivatives. Manage the virtual valuations of all paper collateral at your convenience !!!! Create more derivatives against that virtual paper collateral and "arrange" the convertibility at maturity or roll over time. Yes indeed Sir Kosares > Financialization in absolute hyper-form!!!

Stock prices (JPM/C) Bond prices and exchange rates are sub-ordinated in function of the maturity dates of their derivatives (dogs and dog's tails). Crazy volatilities might even go to double digit percentages. Absolutely not related to any part of the real economy anymore. But look at Gold's extreme "stability" within this chaos !!! DON'T MESS WITH GOLD !!! A warning ???

Financial institutions are in urgent need of more and intenser volatility as to financialize their precarious condition. New *fantasia* financial products are created with "convertabilty" against unknown future valuations of the collateral, for the buyers/consumers of these products.
Very complicated, over engineered financial products where even the inventor of it is uncertain of what will happen with it. Uncertain about the final outcome (succes) of the engineering.

ONLY, easy to understand, Physical Gold, can be accumulated further, quietly and serene. It is this obscene financialization that will cause the interrupting, crash-fall of globus economicus .
As TG/FOA so aptly corrected...not speculation but gambling ! Today, I'm convinced w're even further than gambling. That's why I used the word "obscene".

How many papers increased dramatically in virtual valuation, only hours after a serious (???) downgrading ? Who is fooling who here ? Siemens is this morning's example.
DAX up 3% plus within an hour.

What difference an hour makes....

Notional value does change with the underlying change in value of instrament, assuming there is a market for it. If not, contract or strike prices (extimates??) may be used - something is.

If you have dissimilar hedges it is possible to have extreme exposure, expecially with illiquid markets. I'd be willing to bet that when some of this stuff is marked to market, if it is, convienient estimates of notional values may have been used. Who knows? JPM is very selectively transparent.

As far the 354 gold derivative meltdown price, I'd venture a guess that this may be someone's estimate of the price that some of the risk control models say gold has to be purchased to mitigate risk in the position, which if bought works against the position, triggering more short covering, etc.

Without full disclosure, we will never know for sure.

--------------------

Market's are just a bit volitile???? Scary, cause my read is that they are getting very thin also. Crash time? Money looks like a herd of scarred rodents all trying to get into the same holes and the same time, and then finding dead ends and then trying to get out and find a different hole.

Pizz

http://www.washingtonpost.com/wp-dyn/articles/A47913-2002Aug5.htmlPartial:
Briefing Depicted Saudis as Enemies
Ultimatum Urged To Pentagon Board


By Thomas E. Ricks
Washington Post Staff Writer
Tuesday, August 6, 2002; Page A01


A briefing given last month to a top Pentagon advisory board described Saudi Arabia as an enemy of the United States, and recommended that U.S. officials give it an ultimatum to stop backing terrorism or face seizure of its oil fields and its financial assets invested in the United States.

"The Saudis are active at every level of the terror chain, from planners to financiers, from cadre to foot-soldier, from ideologist to cheerleader," stated the explosive briefing. It was presented on July 10 to the Defense Policy Board, a group of prominent intellectuals and former senior officials that advises the Pentagon on defense policy.

"Saudi Arabia supports our enemies and attacks our allies," said the briefing prepared by Laurent Murawiec, a Rand Corp. analyst. A talking point attached to the last of 24 briefing slides went even further, describing Saudi Arabia as "the kernel of evil, the prime mover, the most dangerous opponent" in the Middle East.

The briefing did not represent the views of the board or official government policy, and in fact runs counter to the present stance of the U.S. government that Saudi Arabia is a major ally in the region. Yet it also represents a point of view that has growing currency within the Bush administration -- especially on the staff of Vice President Cheney and in the Pentagon's civilian leadership -- and among neoconservative writers and thinkers closely allied with administration policymakers..."

Note: Just what we need ...more declared enemies....is this a warning shot to Saudis ...or plain idiocy...or both

I still hold that Iraq oil fields are what Bush & Co are after ...if Saudis fall (and we can push as we did Shah of Iran) then we will "have to protect" our national interests...get Sadam & oil in one shot...of course Saudi oil fields would be good too but it appears the populace of Iraq would likely be more pro American than the strong fundamentalists in Saudi Arabia

They are "popping the clutch" this morning with the predictable short covering rally.

400 up one day
700 donw the next five

So it goes.

Paper Avalanche

If it was predictable, why didn't someone predict it?

RP: "Are you saying that big companies and/or banks use the value or worth of their companies (as determined by share price and bond ratings) as margin instead of cash??"

MK: This is a house of cards built on credit ratings. I didn't know about it until the Enron affair, but there are automatic loan call provisions within the various counterparty, or bank loan, agreements. What struck me in the Baritoromo interview is that this is an issue with JP Morgan. Until I saw that interview, I was unaware that JP Morgan's credit rating was in direct jeopardy. THIS IS A BIG ISSUE!! If JP Morgan is forced to make principle payments through loan trigger clauses, liquidations of primary assets will follow. This may be what already happened in the drop of gold from $325 to $305. It could have been JP Morgan liquidating gold accounts in the London market to cover loan calls based on their credit rating dropping. And if its happening its just a start. As we saw with Enron, this is a slippery slope which might lead to eventual bankruptcy. I'm more than one analyst is concerned about the very same thing. The question becomes to what extent the Fed is willing to play lender of last resort if someone like JP Morgan goes to the wall. We are not talking about a sacrifical lamb like Enron here. We're talking about the entire banking system and one of its flagships. What we are seeing is a 21st century version of the Rollover Threat where you have one entity, Enron, causing the weakening of a second entity JP Morgan (and possibly Citibank), who in turn get downgraded by Moody's, etcetera, on down the line. . . . . . . .The question is can the Fed stop it. There's no question it will try in that this -- and not managing the interest rate -- was the real reason for establishing the Fed in the first place.

One of the issues Kevin Phillips brought up in the Russert interview was the lack of oversight and regulation in the financialization process. It was his contention that these things cycle, and we pay the price eventually for the excesses in the way of a gut-wrenching correction, which leads to a new host of regulations, and the whole nine yards. I believe that the greatest mistake that Greenspan made in his otherwise stellar Fed chairmanship was turning a blind eye to the growth of the derivatives' markets both here and overseas. His public position was that such regulation was an intrusion on the free market for financial instruments. In reality, the over-use of derivatives turns out to have been an imposition on the free market -- in fact diminishing the free market. He (and we) will pay the price for this overight (if not blunder). Some will say that it was not his responsibility to carry the standard for derviatives' regulation, but in my mind, he was the only individual capable of pulling it off. Therefore, I view it as his personal responsibility. Greenspan is much too shrewd to have missed the significance and dangers. After all, he recognized the dangers of excesses in the stock market long before most on Wall Street and stated so publicly with his "irrational exhuberance" declaration. If he had been in the private sector, I believe he would have broken ground on the issue -- because he truly does believe in the free market. Unfortunately, the free market is now going to have its retribution and the dangers to the system as a whole are much worse than if financial leaders had acted against the derivatives' cancer much earlier. It was the use of derivatives that shaded the financial world and made it possible to pursue the balance sheet excesses we all know about at this juncture -- including the ones now threatening the larger banking institutions. Rumors spread that JPM, Citibank and BankAmerica are all in trouble. . . .and maybe that's why Fed chairmen and Presidents decide to have a power breakfasts.

I'll ask the question Wall Street is afraid to ask: What will be the national policy on the building financial crisis? Or are we just going to let it happen and pretend that the mid-term elections and Iraq are proper preoccupations?

"I'm more than one analyst is concerned about the very same thing."

Should read:

"I'm certain more than one analyst is concerned about the very same thing."

yesterday pg&e was given waviers from the credit calls that where due, due to its stock price and credit downgrades. so they can and will make the rules up as they go along. look for more waviers as things unravel.
by the way today we mourn the use of the nuclear bomb in /on japan!

From Black Blades post of yesterday, quoting the Greenman, thanks BB.


Of course, notional values are not meaningful measures of the risks associated with derivatives. Indeed, it makes no sense to talk about the market risk of derivatives; such risk can be measured meaningfully only on an overall portfolio basis, taking into account both derivatives and cash market positions, and the offsets between them.

I'm just back from finishing yesterday's readings and see more here addressed to me. Thanks. I'm already tardy in doing today's chores and have to go. Please allow me to catch up when life's daily necessary work is done.
Rich

www.emol.com Chilean Government Studies Issuing New Bonds


SANTIAGO (Dow Jones)--The Chilean government is studying the possibility of issuing new sovereign bonds, El Mercurio reports, citing Finance Minister Nicolas Eyzaguirre. Chile might need to issue fresh debt to finance a probable budget deficit in 2003, Eyzaguirre was quoted as saying.

this lil hobits question is would issuing new debt at this point be an attempt to forestall the domino effect that other countries currencys might be having in chile?
or if they truely have a budget deficit why not just cut services? see thats the problem, living large off of borrowed money! when will the world wake up and live within its means? live small get your house in order and be sure to operate below the frost line. : i liked that line. got gold?

Are we since 1971 still on a standard or on no standard at all ? A standard being a Universal accepted "reference". If we accept and act on a paper dollar standard, the dollar-paper still needs to be referenced to something tangible. Crude Oil is supposed to have replaced Gold. And we have wars in the process against or for those two references, Gold and Oil. Both manifesting a very different price volatility. POO more volatile than the relative stable POG.
A standard or reference is imo, rather stabilizing than volatile. Why is the US$ more volatile against the oil-reference in function, rather than volatile against Gold, *supposedly* out of function ? HEHE !

Third possibility : We are on no standard at all and create an ongoing financial standard at the ruler's convenience ?
And is it here we have to frame the coming ME-wars into ?

Remembering Ari's "personel standard"...I'll keep on accumulating when succesfull in generating more standardless confetti. If nobody cares about a standard anymore, w'll create our own. Ask the latinam's, why it's better to be prepared.

US and Euroland's financial stock values (banks/insurances/funds) were (still are) imploding AND artificially resussitated/oxygenated, today. They went under the frost line (goodie). JPM/C bookvalue at 21$ as Deutche bank quoting at 54� with bookvalue 50�. It is not JPM/C alone that is freezing and risks to be re-rated.
Not only the FED, but also the ECB is urged to play its role as lender of last resort. FED plus ECB are trying to stop it "together" and therefore have an armistice on their currency war (temporary though).

Greenspan can't hide behind the excuse of non intervention into the (false) Free Market. He is only the front of the financial brotherhood. A brotherhood it is. In analogy with the alliances against the ME. Stop and sorry for my brusk intervention!

...and When did he know it?Below, you wrote:

"I believe that the greatest mistake that Greenspan made in his otherwise stellar Fed chairmanship was turning a blind eye to the growth of the derivatives' markets both here and overseas."

Credible evidence will be presented in the coming weeks that Mr. Greenspan not only turned a blind eye but KNEW derivatives would expand to gargantuan dimensions because he was one of a few that CAUSED them to grow as part of a "Master [of the Universe] Plan".

An attempt for contributing to the answer on this question.
Banks and other financial institutions are creating derivatives on underlying papers of wich they have a great degree of certainty, where and in what price-zone they will be at the maturing of the derivatives. Imagine CPM having a telephone line, telling him where POG will be at what date.
Banks (and corporations) are doing this with their own shareprice. Now, what happens when those left to make free choices, spoil the whole, almost certain, set ups ? The derivatives are in danger and the creators (sellers) of those derivatives have the positions turned against them.

354$/ounce is a critical point where the free participants in the less free market get strong buy signals, and could therefore disturb the managed POG and the underlying derivative masses. We started to realize that much of this derivative action is played into the unreported dark boiler-rooms. Not the slightiest idea of the REAL magnitude of these derivatives. Only that 354$/ounce is a major trigger point for unwelcome Gold guests/buyers. The hyperconcentration of so much confetti in brotherhood's hands, made this market more and more un-free. One day, enough free marketers wan't play anymore and leave. This is happening now imo. Liquidity will dry up and all towels are to be thrown into the ring. Schultze and Sinclair, certainly have more details on the outstanding derivatives (mine forward sales) and confirms this 354$ critical POG point with the chartist's opinion/interpretation.

As an aside : For what exactly is aid-money used in Latinam ? Has Turkey already turned things around after its latest debacle and massive aid ? The fraud is systemic and on a bigger and bigger scale as if there were no tomorrow.

Speaking of B of A, I have my 401K thru them and their web page for referencing one's account data has been inaccessable since Thursday, August 1 ????????

One other note...Since no one has mentioned it here today, I heard a CBSmktWATCH commentator yesterday on KCBS (San Fran) being interviewed. He said he has word that the Fed is going to lower interest rates again, possibly (3) ea 1/4 point increments thru the end of this year, with the first being announced next week. My take is that the dollar and the SM going ballistic due to this (as yet) unannounced news. Seems they want to keep the housing bubble going and risk foreign investment pull-out.

IOSDAN

"Treasure chests throughout history
have been filled with gold, and not by idle choice."

-- R. Strauss

Iosdan - why should another rate cut push up the stock market, except temporarily - Greenspan has already cut 400bp, we've had our 12-month lag for these to start working - and how much good has it done equity prices?

On Brazil rescue package - as I mentioned before, the interesting thing has been the commercial market rate moving to a 10% premium to the black market rate (it normally trades at a 5-10% discount) - this suggests corporates trying to withdraw funds/pay down dollar debt that they cannot renew. It wouldn't surprise me either if US banks with big exposure here (C/JPM/Boston) are sending cash home from their Brazilian subsidiaries. Presumably the IMF package is going to help cover the banks' asses rather than (as O'Neill suggested) go straight to the Swiss bank accounts of corrupt politicians (I wonder about him, he doesn't seem to understand how corruption works).

In any case, I wonder whether such repatriation isn't behind the rally in the US$ - if so, it might be close to the end.

iosdan (8/6/02; 11:48:27MT - usagold.com msg#: 82388)
Golden Bear - B of A Post
Speaking of B of A, I have my 401K thru them and their web page for referencing one's account data has been inaccessable since Thursday, August 1 ????????
===
Makes one happy to be able to HOLD your YELLOW in your OWN hands -- YES ?
<;-)

More on the removal of savings deposit insurance in JapanYomiuri Shimbun

The government may require financial institutions to set up settlement accounts for individual customers, Financial Services Agency Commissioner Shokichi Takagi said in an interview with The Yomiuri Shimbun on Monday.

The plan is part of an effort to stabilize the transaction-settlement system before the freeze on the so-called payoff system is completely lifted in April, he said.

Takagi defined a settlement deposit as a fund to be used to settle transactions by transfer, bills or checks. The basic example of such an account is a current deposit account with no interest, he added.

His remarks likely will spark an outcry from financial institutions as many of them, especially major banks, insist they should be free to choose to introduce such accounts.

The remarks follow the government's recent decision to postpone lifting the freeze on the deposit payoff system.

Following the lifting of the freeze, the deposit protection scheme would only guarantee each depositor up to 10 million yen, plus accumulated interest, in the event that a financial institution fails.

The freeze of the payoff system on time and saving deposits already was lifted in April. Full protection of liquid deposits--ordinary and checking-account deposits--was scheduled to end next April. But the government plans to continue protecting settlement accounts of corporations.

"Financial institutions' business settlements are a significant part of economic infrastructure," Takagi said. "It's in the public interest that the process is protected by all means."

Takagi said the government wanted to study the introduction of personal settlement accounts to avoid confusion over individuals' settlement.

However, he said the deposit insurance system would be the basic financial source used to fully protect those deposits. "Public funds will never be used," he stressed.

"These new accounts won't have any interest rate," he said. "So I have doubts about a plan to charge holders of such accounts handling charges, because it doesn't seem compatible in the age of financial liberalization."

"A bill to revise the deposit insurance law has to be submitted at an extraordinary Diet session scheduled to open in October," he said. "We have to make preparations as quickly as possible."
+++++++++++++++++++++++++++++++++++++++++++

Hmmm, new bills in their currency, no more deposit insurance, favored deposit insurance for treatment for corporations...will the little guy in Japan get the shaft?

Only if he has failed to replace his/her paper with metallic assets.

5,000 to 15,000 share blocksThis week someone is nibbling. Maybe they know something.

Whatever they may or may not know I have made an aggressive plea to the senior management there to hedge their $124 million cash position with repurchase of metal or their own stock.

The dollar is volatile and a conservative upper mgmt will sit back and recognize they have corporate risk in holding dollars.

Like us all.

Bloomberg08/06 13:03

By Andrew Pratt

Trenton, New Jersey, Aug. 6 (Bloomberg) -- New Jersey Attorney General David Samson will hire outside counsel to pursue lawsuits against companies over losses in the state's $73 billion pension funds.

The state has identified at least $1 billion in pension losses that may be due to mismanagement or misleading information provided by companies whose stock was held by the funds, said Peter Aseltine, spokesman for the attorney general's office.

Outside counsel will determine if the state can sue to recover some of those losses and will be asked to concentrate on companies that are already the targets of class-action suits over mismanagement or malfeasance, Aseltine said. The state has identified 26 companies that are the subject of such suits and have caused the state at least $10 million each in investment losses, Aseltine said.

He would not name the companies the state is targeting. One company alone cost the state $250 million in investment losses, he said.

``The state has incurred huge losses that can be attributed in many instances to corporate mismanagement, misconduct or greed,'' Samson said in a statement.

Samson ordered an audit of state pension investments last month. Aseltine didn't say which attorneys the state would hire as outside counsel.
+++++++++++++++++++++++
My, my, my! Those Attorneys General...isn't politics GREAT!

Unfortunatly, Wall Street has yet to see the begining of their troubles. The average 401K holder is just now getting their July statements.

How will we know the "Bottom" has arrived? When the following names are history:

CNBC
Merrill Lynch
Goildman Sachs
JP Morgan
CitiBank

None, except short term "soma" fix for the herd. You answered my premise yourself...it's only temporary. I was pointing out the action...not the re-action/result. That silver-tongued devil Jim Puplava laid it out much more succintly and eloquently than I can in his Monday column:

***********************************************

Double Dipping

<<<<<
Consider this--for some time now it has been the belief of many that when the Fed cuts rates the markets will rebound. Will that happen this time around? With rates currently at 1.75%, what effect is lowering it going to have? The markets could very well react positively to a rate cut. Surely the media is going to pump it up and convince everyone that what the Fed is doing is right for your portfolios. What they won't tell you is that by cutting rates further, they are running the risk of further alienating foreign investors in the U.S. markets. Without foreign investment dollars the market is unable to support itself. Henceforth, the rally will, no doubt, be brief and many people will just use it as an opportunity to eliminate positions and the market will continue in the general trend downward.>>>>>>

iosdan

People around the world stripped of their assets -- their SAVINGS. Americans think it's MEANT to happen to others, and of course, "It can't happen here." Borrow and play on, dudes. Some serious karma there.

(Oh, BTW, I'm seriously stuck in many/most aspects of the U.S. paper/B.S. world, too. LOTS to work on! Trying to use my "knowledge" of what lies ahead to pull myself up out of old habits. As per our discussion of Winston with Rock last week, the battle is always INSIDE yourself. Be firm, be gentle, make a bit of progress each day. It's coming, but not as fast as you fear. You won't ever be completely "ready", but a healthy state of mind will get you the last mile...)

Should I change my name to "Jeremiah"? (One of my favorite OT guys.)

Just heard on CNBC that Greenie just got crowned "Sir" by the United Kingdom! GAG!
Peace!
- Gr�fin

*DJ Fed: Greenspan Pleased At Honorary Knighthood From UK

It is really no big deal. The Brits hand those titles out like candy at Halloween. Heck, I think just about every Brit rock star has that title. It has become so common that there is really no great special honor to the title anymore. I think that other Brit titles (ie. Earl, Duke, etc.) can actually be purchased. Greenspan a knight - that is funny though.

- Black Blade

Thanks for posting that "Saudi's are our enemy" story link, snippits, and comments. Do wonders ever cease? Watch for this to become political/military rhetoric and to grow and grow. Now this is getting interesting, because we have conflicting accounts as to US plans towards Iraq, that now seem clearer. After the next major terrorist strike, which officials like Rumsfeld assert to be inevitable, Al-Quada in Saudi Arabia could be targeted. Oil prices will rise here, especially if war, terrorism, blockades, and/or embargoes escalate.

Moody's Changes Belize's Outlook To Neg
Following is a press release from Moody's Investors Service:
New York, August 06, 2002 -- Moody's changed its ratings outlook to negative for Belize's Ba2 foreign-currency ceiling for bonds and notes, and for the Ba3 foreign-currency ceiling for bank deposits.
The rating agency noted that the change of outlook reflects the significant increase reported in Belize's foreign currency debt in recent years, as well as indications that the external debt indicators are likely to continue to deteriorate for at least one more year.
Additional financial pressures are also expected to arise from the government's decision to increase external borrowing at commercial terms, in contrast with Belize's longstanding practice of relying on official financing at concessional terms.
Moody's noted that while Belize's external debt remains manageable, an upward trend in the external debt burden poses additional credit risks and could eventually raise concerns about medium-term sustainability, if corrective measures are not implemented.
Since budget imbalances have become an important factor behind Belize's increased external indebtedness, restoring the conditions that validate a stable outlook will require resolute government actions over an extended period of time in order to strengthen the fiscal accounts, Moody's said.

That is funny and true. The title seems like the honorary US university degrees given away to the chosen worthies. Perhaps their purpose with Greenspan was to, for once, make him speechless.

Bond Market. From the perspective of the principle invested this is surely close enough call it THE top. You gonna just stand there and what, admire the view? Pack up your profits and climb down before the mountain comes down with you caught in it.

Gold. Get you some.

Philosophy. Don't just think life. Do life. Keep it real.

On that note, it's been great to see all the good economic analysis coming from the forum's heavy hitters these past days. I hope the many readers will see it for the fine socio-political assessment that it is and join me in a solid course of action. Again,,,

Gold. Get you some. --- Aristotle

Well he could never be a Sir on this forum ...though I think we could arrange to crown him...and grant the honorary title of scullion

He must be the Lord of the Castle in slingshot's story. I think he needs to change his handle before somebody recognizes him and goes to find a treasure chest to dump on his head!

It's really amazing to think, that so much of our nation's financial dealings and commitments are decided upon the lifting of a telephone, or the click of a computer mouse.

How many people bagging groceries at Safeway, instead of playing golf or visiting grandchildren, will be plagued the rest of their lives with the thought "All I had to do was lift the phone -- why didn't I?"

Most of the world's people, and many hard-working Americans, have no trouble distinguishing real labor from artificial financial gains. The paralysis that comes with a life of relative ease.

It's hard to take money (stored future labor) off the table, because it's hard to shift the framework of thinking that quickly.

(Let's admit it -- us, too -- you and I have probably been excessive bears most of our lives, right? By seeing through the artificialities around us, we thought that they could not continue for long, right? We underestimated at every inflection point the power of human self-delusion, because we did not want to believe that others could be so very different from ourselves.) N'est-ce pas?

http://www.businessweek.com/magazine/content/02_32/b3795039.htm

Snippit:

Corporate profits were much weaker than first believed. They've been revised down a total of $143 billion, or 6%, for the three years from 1999 to 2001. While the revisions were concentrated in telecom, utilities, and business services, the problem went well beyond a few bad apples such as Enron Corp. and WorldCom Inc. Profits, rather than peaking in 2000 as everyone thought, actually hit their high point in the third quarter of 1997, and have been bumping lower since, especially outside the financial sector. Instead of going towards profits, the benefits of faster productivity growth flowed out the door to workers and managers as higher wages and lucrative stock options.

Black Blade: As the August 14th deadline approaches, more corporations have been revising downward. Even forward looking guidance has been pathetic. It should get "interesting" to see who has to surprise with ugly earnings.

I guess we will have to be more respectful of him now and refer to him as Sir Greenie...

http://www.businessweek.com/bwdaily/dnflash/aug2002/nf2002086_5288.htm

Snippit:

Fundamentally, there are plenty of reasons to explain why the rally may be flaming out. Even as the market was spiking in late July, weak economic news was pouring in. First came reports of slipping consumer confidence, then durable goods orders fell and an index of manufacturing activity disappointed, indicating that capital spending could be stalling.

A preliminary reading of gross domestic product (GDP) growth for the second quarter came in on Aug. 1 at a bleak 1.1%, as earlier quarters' growth was revised down. A weak employment report on Aug. 2 put a final exclamation point on the week of discouraging news. Good grief!

Bernie Schaeffer, chairman of Schaeffer's Investment Research, says a combination of bearish technical indicators, weakening fundamental measures, and hopeful investor sentiment indicate that the bear market is far from over. "The possibility of major additional damage before the ultimate bottom is far from remote," he wrote to clients in August.


Black Blade: Personally I think that there's a lot of "entertainment" in store with plunging markets, corporate bankruptcies, scandals, declining earnings, "bone Pile" growth, lost consumer confidence and crashing currencies.

BTW, the XAU moved solidly higher today even though Gold sank a bit lower. Don't despair, as Gold shares tend to lead the physical. This is good news. Also be sure to check out the positive view of the Gold market on the Daily Gold Market Report. Gold is going remarkably well for this time of year and soon we could see a lot of renewed interest.

Off to the gym!!!

Late NY Access Market (or "Twilight hour") is moving UP nicely ...now 308 with a few small spikes above...more often than not, market follows the trend set here....just maybe $310+ tomorow? !!

Indeed, though it's usually Sir Alan of somewhere or other -has this location been revealed, or is this a classified state secret.

Are "they" different or, are we different? There is a difference. Which perspective is right or wrong? Can either find contentment in absolutist thinking however (un) clear?

Thanks for the thoughts in 82379.

In 82382 I quoted from Alan Greenspan concerning the value or notional value of any derivatives position. I believe Mr. Greenspan is saying exactly what I had been thinking, namely that derivatives' value is constantly changing and must be marked-to-market whenever their "worth" or risk is determined. Many of these positions are hedges for other such positions and, in the case of held options (bought in full when purchased), these may sometimes be viewed as insurance. Fire insurance on a home is similar in that no one really wants to collect for damage. As an example, if one bought (one time premium payment- with no further risk) a December silver 460 Put, then the December silver future could be bought at $4.60 or lower and with the right to sell at 460 insured by the Put, there is no downside risk on the future's position. Obviously, the holder would prefer the POS to climb to make a profit on the sale of the Dec. silver while the Put expires worthless. So, if POS falls to $4.00 is the future position down $3,000? Yes, but it is covered by the Put which may have cost much less. Stating that JPMC's derivative position has X number of dollars of risk would be an enormous undertaking to determine. The final number would be correct for only that instant in time.

I also wonder about the notion of notional risk having a breaking point simply because they are derivatives. If, indeed, the real risk is the lowering of credit ratings or bond ratings that trigger margin or loan calls that can not be made, then this is a risk that could cause default on any obligation whether derivative in nature or not. As you mentioned with Enron, this clearly, combined with the interrelatedness of different banks, corporations and perhaps national currencies, creates great risk. Corporate bankruptcies posing systemic risk before just before the return of "bigfloat"? I believe we have a fairly good reason to insure with something impervious to this risk.

One last thought. As Greenspan mentioned in BB's quote, most of this is OTC, non-transparent risk as opposed to the regulated, open futures' markets. Settlements for actual delivery of the underlying commodity may be substituted by a fiat settlement but I don't foresee default even if the OTC contracts are lost. However, certainty mentions death and taxes, no investments of any kind are guaranteed. Such is life.
Rich

http://WWW.GLOBALSECURITY.ORG/military/facility/al-udeid-imagery2.htmWhat an age we live in! Sat Pics of the buildup for the coming war. You used to have to be a highly placed person with all levels of national security to see this kind of intel, not anymore. The handwriting is on the wall, and pictured on the ground. Sadam has been weighed and found wanting. Iraq soon to be the 51st state. How about an oil rig crossed by two missles as thier new state flag? (Trying to make light of a soon coming event that God only knows where this trail will lead our country and the world.)

Hear Ye ! Hear Ye !!
To all those who read from this website!
Listen well to the wisdom offered within. Dare to begin to think that reality is not to be found on bubblevision. Act to protect your and yours. Blackblade sums it up often with his exortation to prepare.

Oh yeah, one more thing. Got Gold?

http://www.msnbc.com/news/790453.asp?0si=-&cp1=1Let's see, I trust,
Big banks of Wall St to act responsible and ethically.
Wall Street Brokers to keep me informed with honest information and advice.
CEO's of large corporations to faithfully administer correct and true accounting of the ledgers.
Sir Knight Greenspan to apply judicial amounts of restraint to the dollar printing press.
US Government to protect my well being and bank account.
OJ Simpson to take my daughter on a date.

It's sad, but I have to check the box, None of Above.

Sir Iosdan,

I'm not even sure we get the temporary bounce you are talking about, since a) the relationship between rate cuts and new money flows to the corporate sector is a tenuous one, particularly when the latter's credit rating is rotten, b) a rate cut after so many others will be taken as a confirmation of a double dip - unless you believe that the rest of the world is as hopeless as the American Indians selling their lands for firewater, and can't do without their fix of paper dollars (I would forgive if you did, but I don't), I would expect them to stay out of US assets. After all, when the Euro was trading in the mid-80s, a slump in the currency was always blamed on weak European economic growth, I presume the same logic applies to the US.

Obviously, I may be wrong and we may get the 14th 'Buy the semiconductors, cyclicals lead the recovery, etc.' call (actually I've lost count) from Wall Street, together with CNBC's exclusive showing of 'The Mummy Returns Yet Again' starring Abby Joseph Cohen.

PS - these may be famous last words, but gold seems to be doing quite a good job of holding its own against a strengthening dollar. Fingers crossed...

Bush knows the economy and financial sector are going down. He's buying time with market interventions that create an economic circus atmosphere like the Roman games of yore. He's created awareness of an "Evil Axis" to lay groundwork for military intervention. He's building Congressional bi-partisan support for military intervention. Now it seems that he's building a case for adding Saudi Arabia to the Evil Axis. It looks like a plan.

I suppose its just coincidence that the "Evil Axis" has the oil and the gold that will needed to extricate the US from its decades long spending binge.

Lord of the CastleAlan Greenspan is the Lord of the Castle, in my story Siege Engine. Alan is now in the Great Hall. Trapped. How will it end for him?

Who Is The King with No Name?
Slingshot------------------<>

Aragorn, you had previously commented on unpresidential behavior for GWB to discuss punishment for corporate crime. Now, by golly, he's talking about child molestors!!! Comments?

For a 230+ day for the DJIA, someone is sure concerned about Freddie Mac and Fannie Mae. Both closed down enough to take note on about double daily volume for them both.

When the real estate bubble bursts and serves as the encore to the equity market deflation where will people turn to ensure that they are able to preserve thier savings?

The metal of kings - gold.

Paper Avalnche

http://money.iwon.com/jsp/nw/nwdt_ge.jsp?section=news≠ws_id=reu-n06365348&feed=reu&date=20020806&cat=USMARKETSnip:

Tuesday August 6, 5:06 PM EDT

CARACAS, Venezuela, Aug 6 (Reuters) - Venezuela's Central Bank on Tuesday moved to crack down on currency traders trying to manipulate the price of the dollar in the local market, a measure analysts said would be difficult to enforce.

In its resolution the central bank prohibited traders from participating in collusion, auctions or deals that deliberately distort the market or the pricing process, according to an official government newsletter.

Central Bank officials can sanction those who fail to comply with the resolution with fines. The resolution covers currency and gold trading, the bank said.

"There are different sanctions; the principal ones are financial sanctions, that is a fine which can be equal to the amount of the participation of the trader in the currency market," Central Bank director Domingo Maza said.



Maza told local Union Radio that the measure aimed to stop traders forming illegal deals to manipulate the price of the dollar in the local market.

The resolution comes amid government attempts to stabilize the exchange rate as Venezuela struggles with spiraling inflation and a steep devaluation of its bolivar currency.

According to Reuters calculations, the bolivar has lost about 44 percent of its value against the dollar so far this year. The bolivar closed Tuesday trading at 1,348.75 to the dollar.

Some traders said they believe the measure would be difficult to enforce while other traders said the move could prove dangerous as it appeared ill-defined.

*************

Misetich

Venezuela's Chavez has been a thorn for the US

Got gold?

http://digitalmass.boston.com/news/wire_story.html?uri=/dailynews/218/economy/U_S_Treasury_Secretary_sees_ec:.shtmlSnip:

By Bill Cormier, Associated Press, 8/6/2002 19:32
BUENOS AIRES, Argentina (AP) U.S. Treasury Secretary Paul O'Neill met with President Eduardo Duhalde and business executives Tuesday to discuss the general unraveling of Argentina's economy, including its debt default, currency devaluation and 22 percent unemployment rate.

As O'Neill arrived from Uruguay where he praised that country's medicine for its banking crisis about 1,500 demonstrators marched through the Argentine capital, Buenos Aires, holding signs saying, ''Yankees, get out of Latin America!'', and burning an American flag.

.............
''We resent O'Neill and we resent the politicians of the United States and the world coming to our country,'' unemployed 22-year-old Patricia Vergara said while holding a sign reading, ''O'Neill go home!''.

She added, ''They are responsible for the repression of our people. Capitalism needs to go.''

Others, however, blame corruption and government bungling for Argentina's worst recession on record.

..............
During their 35-minute meeting, Duhalde told O'Neill that Argentina needs international financial aid as soon as possible, Duhalde spokesman Eduardo Amadeo said, adding that O'Neill ''had a cordial response.''

O'Neill's four-day South American trip reflects Washington's concern about the region's widening economic troubles. He opened the trip on Sunday in Brazil and spent three hours in Uruguay on Tuesday before arriving here just before sundown.

The angry chants of Argentine demonstrators differed from the reception O'Neill received in Uruguay. There, President Jorge Batlle thanked him for Monday's $1.5 billion emergency U.S. loan that rescued Uruguay's banking system from a run on deposits.

On June 30, Uruguay shut its banks for four days, reopening them Monday after the U.S. Federal Reserve wired the loan. The country's reserves plunged from about $3 billion in January to $655 million in July after massive withdrawals by depositors.

The Uruguay loan was the first time the Bush administration has provided direct economic support to a country in financial crisis.

Asked in Montevideo why Uruguay qualified for a loan and neighbors like Argentina did not, O'Neill responded: ''Why Uruguay? Because Uruguay is a country that has followed very sound economic policies.''

He added, ''Even countries that are close by each other are very different and, therefore, we think the circumstances of each country have to be evaluated differently.''

Alberto Bernal, a Latin America expert at the IdeaGlobal think tank in New York, said the Bush administration went out of its way to help Uruguay for fear that Argentina's economic calamity could spread.

But he said the Bush administration remains adverse to even short-term loans like the one to Uruguay which must be repaid, with interest, after International Monetary Fund assistance comes through within days.

''O'Neill is very uncomfortable about this whole trip but he has to do it anyway,'' Bernal said. ''He's uncomfortable because his philosophy of the future of capital markets, his basic view, is that bailouts are not efficient.''

While in Brazil Tuesday, O'Neill called South America's largest economy a good place to invest, bidding to boost its jittery markets and sagging currency.

''I have thought for a long time, since I have direct responsibility for investing billions of dollars, Brazil is a good place to invest,'' O'Neill said Tuesday morning in Brazil.

But analysts said that vague praise was unlikely to assure investors
***********

Misetich

IMF "assistance" has not helped Turkey, Argentina etc. - it will not help Latin America either -

Lets stay on the Latin America HOT TRAIL

Got gold?

http://www.corpwatch.org/issues/PID.jsp?articleid=3328Snip:

By Jim Vallette
Special to CorpWatch
August 1, 2002



WASHINGTON -- Senators continue to grill private financial institutions over their roles in Enron's rise and fall. However, the investigation could soon spill from the private to the public sector, where U.S. taxpayer-financed institutions engage in a dangerous tango with Enron's overseas ambitions. These public financial institutions have doled out over $7 billion towards Enron-related projects since 1992. And some who have examined the scope and structure of Enron's overseas operations say that federal agencies, and even the World Bank, could soon face the congressional inquisitors.
.........
Enron "the future way that American companies would be run" was the ultimate expression of the global economic model that the U.S. government, and later, the World Bank, has been pushing since the dawn of Reaganomics in the early 1980's. Enron's rise accompanied heavy-handed efforts by U.S. and World Bank officials to pry open developing countries' energy sectors to foreign corporate control.

...............
Misetich

Enron "the future way that American companies would be run" -

What a scary thought ! How many more Enrons are out there?

Got gold?

Good question -- the crowd, like a good Ponzi, is the ultimate self-validator. All reality is made relative -- to the whim of the crowd. It makes itself right, until it runs into some physical or mathematical impossibility. And then its unanimity vanishes in panic.

Most people feel comfortable in that company, and they get along just fine, for most of the time. They just don't look outside, to the referents that will smack the crowd upside the head tomorrow, or the next day.

We, I suspect, don't feel comfortable running with the crowds, because we've already seen what those external limits are (Dow 36,000 ridiculous; not enough youngers with enough money to even buy it all from us at 10,000). But our bearish sense of time is telescoped, such that we (I, in this instance) fail to take advantage of the tides of human psychology.

I include in this my buying into gold "too soon", despite FOA's reassurances about "giants" patiently accumulating as far back as 1997. It appears that the overall financial meltdown is proceeding (so far) along more predictable avenues -- i.e., stocks going down, dollar starting down, corporate bankruptcies, etc.

The gold market did not get out of hand before this point (probably at great cost in "deep storage" bullion), but in A/FOA's defense, it was a possibility at any point, IMO, since the LTCM collapse in late '98. Merely political juggling and decisionmaking determining the spike point.

(And LTCM -- about which there's been time to write books -- was my confirmation of systemic risk. How they've warded off a second instance this long will be the subject of even more fascinating books.)

I'm glad to have been insured for this interval -- that's worth something -- but I have missed opportunities because of my excessive bearishness on the system. That said, it is not time to reverse our positions, but the window of waiting has shortened. (Of course, it has ALWAYS looke short to me ;) )

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APU.j3RRvVS5TLiBF
Snippit:

Thousands of college graduates this year entered a job market in which U.S. companies planned to hire 36.4 percent fewer than in 2001, the National Association of Colleges and Employers found in a survey. Unemployment had risen to the highest level since 1994, and salaries fell. It was the second year in a row that college hiring declined, and the outlook for the recruiting season that starts this September hasn't improved. ``The job market is much tougher to break into than two years ago,'' said Patricia Rose, director of career services at Penn, one of the eight Ivy League institutions. ``Fewer companies are recruiting on campus, fewer companies are coming on campus to make presentations, and there are fewer postings for jobs.'' U.S. companies have eliminated 1.71 million jobs since the recession began in March 2001, and job creation hasn't picked up as the economy slowly recovers. ``Companies have to pay off debt before we see an increase in hiring,'' said Christopher Low, chief economist at FTN Financial, an arm of First Tennessee National Corp. in New York.


Black Blade: As long as you can say "would you like fries with that", there will always be a job according to the BLS. Health care and government appear to be the only growth industries left. Meanwhile the "Bone Pile" grows in spite of bogus BLS statistical massage. Even those who have found new jobs are often paid much less or are laid off again as the economy continues to retract � the only difference is that this time they do not qualify for benefits and therefore are not considered unemployed by the BLS. "Interesting Times"

http://www.nationalinvestor.com/leaked_gold_report_reveals_troub.htm

Snippit:

You didn't hear about this on the national news, CNBC, or in your local newspaper. After all, most of these controlled/scripted sources of "news" are still trying to keep us all believing that all is well with the world, even as the stock market and economy show new cracks. For all its obvious faults, "the system"�i.e, the fractional reserve monetary system administered by the Federal Reserve�is still sound, according to these pundits. Thus, and in spite of the rally in gold and gold stocks in 2002, the press will usually go out of its way to dismiss gold as either a viable investment alternative or as having any relevance to today's financial and monetary structure.


Black Blade: If you want to read the entire report by John Embry to the Royal Bank of Canada, then click on the link (report is about half way down the page).

Me too.

http://cbs.marketwatch.com/news/story.asp?guid=%7B1D8F89AF%2DFF0C%2D42AC%2DB481%2D2A2273A8EFB2%7D&siteid=mktw
Fate of stock market is this summer's central drama

Snippit:

SAN FRANCISCO (CBS.MW) -- "I lost a Mercedes-Benz playing this market, and I've never even owned a Mercedes," the cab driver was saying. That's what happens when $8 trillion of wealth heads for the hills. The U.S. stock market is showing all the signs of a false bottom. Coupled with the illusion of a market turnaround are powerful one-day rallies that move hopeful investors to throw good money after bad. The fate of the stock market this summer is bigger drama than any baseball race or Hollywood movie. Professionals on Wall Street are more confused than ever - and more cynical than ever -- about which way the ailing stock market will turn come autumn. Most of the professional traders, technical analysts and strategists, and the folks they serve on Main Street, are enduring their worst summer vacation since the hedge-fund and Russia blow-ups of the late '90s.


Black Blade: Hope against hope, the sheep are being whip-sawed as some are lured in by the suckers rallies and they soon find themselves on the kill floor to be cut up into mutton chops. This is a brutal market where trying to catch falling knives is a fools game.

http://www.reuters.com/news_article.jhtml;jsessionid=HAETKOSWIMVGGCRBAELCFFA?type=businessnews&StoryID=1297868

Snippit:

NEW YORK (Reuters) - Stocks scored hefty gains at midday on Tuesday as investors swept into the market after days of declines on hopes the Federal Reserve will fire off another interest-rate cut to pump up the economy. "We are getting some talk of further rate cuts by the Fed, and that is certainly helping the market," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Banking, which oversees $7 billion. "People are hoping additional rate cuts are going to help the economy and save us from going into another recession."


Black Blade: Why anyone would want to jump back into these shark infested waters because of a rumored Fed rate cut is beyond me. The 11 previous rate cuts did absolutely nothing to help the stock markets though they did stimulate a growing real estate bubble. There will be a lot of disappointed investors if they think that a couple of quarter point cuts will do much � just look at Japan.

When it come to JPM's Derivatives, The Shells are Whirling Very Fast as Mr. Harrison Pleads on CNBC "We're No Crooks" "We didn't Do Anything Wrong"You wrote below:

"Stating that JPMC's derivative position has X number of dollars of risk would be an enormous undertaking to determine. The final number would be correct for only that instant in time."

Using industry norms to assess JPM's derivatives is a losing effort because their derivatives aren't what they seem. Using their 2001 Annual Report one finds that they have achieved a .21% derivative receivable to notional ratio...10 times better that other players in the field. There are two possibilities to explain this wide disparity (1) JPM has discovered a kind of "Holy Grail" of derivatives science...a "New Modeling Technique or (2) JPM is engaged in out right fraud with possible hidden taxpayer backing from the Fed.

Given that JPM is a two-time loser in the fraud department [Hamanaka, Sumitomo copper 1993 and Enron's Mahonia and Yosemite], one would not be out of line with the assumption that number two is closer to the truth.

BTW Harrison's "We're no crooks" speech last night was eerily like that of Richard Nixon's.

http://www.nytimes.com/2002/08/06/business/06DRUG.html?ex=1029297600&en=7078ef86454d1c7f&ei=5006∂ner=ALTAVISTA
Snippit:

Martha Stewart's stockbroker ordered his assistant to tell her that the founder of ImClone Systems was selling large amounts of stock in late December, the assistant, Douglas Faneuil, has told prosecutors, according to a person briefed on the situation. Mr. Faneuil has told prosecutors that he objected to the order but that the stockbroker, Peter E. Bacanovic, insisted. In addition, he told prosecutors that an explanation for Ms. Stewart's sale of nearly 4,000 ImClone shares on Dec. 27 was concocted after the fact, this person said. A phone log from Ms. Stewart's office, however, shows a call from Mr. Bacanovic that day alerting her that the price of ImClone was likely to drop.


Black Blade: It appears that there is someone ready to cut loose and is already talking to prosecutors. Looks like Martha will be decorating prison cells for a while.

Also, tonight we learn that Disney is likely to be downgraded by Moody's. Disney shares are already down to about $14 a share, and a downgrade will put more pressure on the shares. CEO Michael Eisner is one of those grossly overpaid corporate executives that has caught the eye of irate investors.

http://www.iht.com/articles/66930.html
For many investors, U.S. currency still holds allure of safety

Snippit:

LONDON The dollar, in retreat for much of this year, is making a tentative comeback, helped by its allure as a bulwark of safety in turbulent times. Though analysts say the danger of a renewed recession in the United States is growing, potential political and financial hazards outside America are piling up even faster. That is giving nervous American investors cold feet about their international exposure. As a result, the U.S. currency, which fell nearly 15 percent against the euro from January through mid-July, has bounced back roughly 5 percent since then, with a big jump Tuesday as U.S. stocks rose sharply. "For the time being, the dollar's enjoying a certain reprieve," said Neil McKinnon, chief economist at ECU Group, a London-based currency debt management group. "There's a much higher degree of risk aversion in the marketplace."
.
Analysts warn that the rebound in the dollar could quickly fizzle if Brazil manages to avoid a default on its debt or the tension over Iraq eases. By most estimates, the U.S. currency is still overvalued, despite its decline in the first half of the year. In that case, currency markets might shift their focus back to the factors that undermined the strong dollar earlier this year: concerns about the strength of the U.S. economy and the bulging current-account deficit. Those worries have grown in recent days, as a series of reports suggest the economy is in a delicate balance between a slow but steady recovery and a "double-dip" recession.
.
That does not mean the dollar has to weaken immediately, however. The European economy shows signs of flagging as well, with weak employment numbers reported Tuesday, for instance. And Asia, in particular, is highly dependent on exports to the United States, demonstrating the important linkages that could turn an American double dip into a renewed global downturn. "It's not as if the economic data coming out of those two areas have been anything to write home about," McKinnon said. Analysts say the capital flows into the U.S. that are fueling the current dollar rebound are driven more by U.S. investors pulling back from positions abroad than by any renewed optimism in the U.S. economy from foreign investors. That means the dollar rally could be short-lived.
.

Black Blade: I agree that the grossly overvalued US dollar will fall much further. However, it is uncertain whether the dramatic rise is so much as investor bring dollars home to America. I still think that other currencies are just crap and everyone knows it. I still remain unconvinced of the viability of the euro which I think was a stupid idea to begin with, and the yen is �. well �.. the yen. The yen has always been a joke on par with the old Mexican peso. It just may be more of a situation where all currencies are weak and the difference is only "relative strength". At some point the price of Gold could break loose of currency restraints and soar higher due to its internal intrinsic value.

ANNANDALE, Va. (CBS.MW) -- Have our politicians in Washington no shame? Given the shenanigans they employ to manipulate the federal budget, they should be among the last to criticize corporate America's accounting methods.

Perhaps our elected representatives are hoping that if they divert our attention to how corporations are cooking their books, we might not notice what a mess they've made of the federal government's books.

According to Bill Frenzel, who himself served in Congress between 1971 and 1991 and who now is a guest scholar at the Brookings Institution, one of the only differences between the accounting methods used by some corporations and the Federal government is that criminal sanctions do not apply in the latter case.

This situation has led a number of investment newsletter editors to throw up their hands in disgust.

This past Friday, after the stock market was driven down even further by yet more evidence of malfeasance on the part of both corporations and the federal government, Sy Harding of Sy Harding's Street Smart Report pleaded: "Will someone please give investors a break?"

Imagine, if you will, how the Feds would react to a publicly traded company that:

* Does not employ accrual accounting
* Frequently changes the definitions used to classify revenue and expense
* Regularly places expenses "off budget," while nevertheless declaring as current income any associated revenues
* Rarely, if ever, accounts for any of the insurance that it underwrites or guarantees

Our politicians would fall over themselves in righteous indignation. Yet these are just a few of the methods that for years they themselves have been employing to make the federal budget look better than it really is.

The government's budget mess is not the only federal government offense that upsets Harding. He also is shocked by the poor quality of economic data released by the government. The latest example is the Labor Department's monthly reporting of the unemployment data, which he concludes is "almost unbelievable."

Here is Harding's opening statement for the prosecution:

"In early March the Labor Department reported that 66,000 new jobs were created in February, a surprising reversal of the long stretch of monthly declines in jobs creation. It was taken as a sure sign the economy was growing again, and the stock market rallied strongly.

"A month later came more good news, that 58,000 new jobs were created in March. But whoops -- the numbers reported the previous month for February were wrong. Instead of 66,000 new jobs being created as previously reported, there had actually been a loss of 2,000 jobs. So apparently the turnaround in the employment picture did not begin in February as investors had been told -- but at least it had begun in March.

"The following month came the good news that 43,000 new jobs were created in April, - but whoops -- the numbers reported the previous month for March were wrong. Instead of 58,000 new jobs created in March as previously reported, there were actually 21,000 more jobs lost."

Tongue firmly in cheek, Harding muses: "I'd hate to think it's the same kind of self-serving on the part of Washington that Wall Street firms and corporations have been guilty of, trying to make investors (and voters) think that everything is better than it actually is."

Harding concludes: "Rather than dragging more CEOs off to jail right now for previous problems, Washington might do investors a bigger favor by investigating why the government itself is misleading investors with incorrect information."

http://www.goldminingoutlook.com/"SUMMARY: My current outlook for gold and gold mining shares has improved substantially to MODESTLY BULLISH."

So the state is going to sue,ha ha what are they going to do if the corruption leads them to thier own Senator Corzine !!!
former head of Goldman Sucks.hehe

South China Morning Post Publishers Ltd
Retail sales slump by 7.7pc
The value of Hong Kong retail sales plunged by a worse-than-expected 7.7 per cent year on year in June, adding to the economic gloom caused by record unemployment and a faltering global recovery.
===
AT LEAST, they are honest in reporting numbers !
<;-)

You may have noticed that he missed the entire rally in gold (up 18% year to date). Did you happen to notice his investment portfolio? He must have been slaughtered. Anyway, I do not see focusing on the COT positions as being necessarily all encompassing for precious metals investment considering the wide range of variables that cannot be accounted for by a limited feature of technical analysis. It certainly did not work out as a predictive indicator for the last two and a half year advance in gold prices. Oh well.

Of course I did jump in and out of some minor gold share positions taking advantage of the volatility and reallocating shares over concerns of stock dilution and the SA mining charter draft even though the outlook for precious metals remains strong. Still I am glad to have a nice accumulation of phyical precious metals as insurance. The rest is just a game.

- Black Blade

http://quote.yahoo.com/m2?u
On the heels of the US suckers rally, the Asian markets are blindly following along. Earnings announcemnets in US markets have been nothing to crow about. Even Cisco has a 19 cent loss after options are expensed, though they won't admit it publicly. The USD is higher though. The yen continues to be a joke of a currency and now the governmnet plans to redesign the yen for - get this - to stimulate the business of upgrading vending machines. OK, so they did say something about making the yen counterfit proof as if anyone would want to. Meanwhile the Nikkei 225, Nikkei, and Taiwan Weighted are rockin and rollin tonight. Gold is actually improving against the higher USD and dubious stock market strength. Should continue to be "entertaining" tonight.

- Black Blade

http://biz.yahoo.com/djus/020807/200208070035000027_2.html

Snippit:

Tyco International Ltd. (TYC) may have spent over $135 million to benefit L. Dennis Kozlowski, the former CEO who resigned in June before being charged with tax evasion, Wednesday's Wall Street Journal reported. Tyco secretly wiped clean $25 million in loans in 1999. In 1998, Mr. Kozlowski moved into a new home in Boca Raton, Fla.: a 15,000- square-foot, Mediterranean-style, waterfront mansion complete with pool, tennis court and fountain. Although Mr. Kozlowski was one of America's best-paid corporate executives, he didn't have to reach into his own pocket to finance the lavish spread. Instead, he paid for it with a $19 million, no-interest loan from Tyco. Two years ago, Tyco quietly forgave the entire loan as part of a "special bonus" program, according to people familiar with the company. To cover Mr. Kozlowski's income taxes on the forgiven loan, these people say, the company kicked in an extra $13 million. Not a penny of these deals was disclosed to Tyco shareholders.


Black Blade: So where was the board of directors during the pillage and plunder? They are the ones who should be looking out for the shareholders interests. Unfortunately boards of directors across the nation have been negligent. Consider the board of directors at Enron. Perhaps legislation to hold these charlatans accountable is needed as well.

http://www.dailyrecord.co.uk/news/page.cfm?objectid=12093543&method=full&siteid=89488
Defence exercise signals Iraq move

Snippit:

THE world edged closer to war yesterday as Britain sent the aircraft carrier Ark Royal to the Med. Officially, the 1000-crew vessel is on exercises, but defence analysts believe it will be preparing to join a US strike against Iraq. And in America, George Bush's government added to speculation that they were gearing up for an invasion by announcing they were building up oil reserves. Iraqi dictator Saddam Hussein was also said to be preparing for conflict - by buying off his deadly enemies the Kurds with bribes to stay out of the coming fight. In London yesterday, US Energy Secretary Spencer Abraham urged oil-consuming countries to review their plans to ensure energy supplies, although he denied it was directly linked to Iraq.

Defence experts in Washington are also concerned at the reports from spies in Iraq that Saddam is bribing the Kurds. Iraq's four million Kurds hate Saddam and the US was counting on their whole- hearted support to help overthrow him. But they have been badly let down twice by the west when they asked for help. The first time was in the 1980s when Saddam's forces killed thousands of Kurds with poison gas after they made a doomed bid for independence. They renewed their appeal in 1991 after the Gulf War, but no help came. Despite Britain and the US maintaining no-fly zones in northern Iraq to protect Kurds, Saddam's forces invaded their region in 1996 and executed scores of opposition leaders. CIA agents operating in Iraq fear the letdowns mean the US cannot now count on their support.


Black Blade: Yet another prediction of war. Of course the article is correct about the Kurds, the US did abandon them in their time of need. That is a common theme of American politics. It also happened when the US made promises to the Montonyards in Vietnam and then promptly reneged on promises by abandoning them as well. It is no wonder that the US has few friends left. I don't blame the Kurds one bit for giving the US the one finger salute.

http://www.businessreport.co.za/html/busrep/br_frame_decider.php?click_id=335&art_id=ct20020806203045454P360869&set_id=60Are gold bars worth prison bars?
Is $14.9 million in gold bars, coins and other property worth more than two years in prison? For Martin Armstrong, once one of the world's largest silver traders with an office overlooking Tokyo's Imperial Palace, it is money he says he just doesn't have.
Bloomberg reports that Armstrong, the ex-chairman of Princeton Economics
International, is accused of an $800 million swindle and has been behind bars since January 2000 for refusing to surrender the $14.9 million.

http://www.minesite.com/archives/features_archive/2002/Aug-2002/diggers060802.htmHe then pre-empted his friend Chris Thompson by announcing that Newmont is working with the new boss of the WGC to produce a new gold instrument which would take anything from 500 to 1000 tonnes of gold off the market each year. Thompson is actually visiting London this week and may well have been planning to combine a comment on this with the announcement of his new CEO who will be someone very well known, but from outside the gold industry. The fact that Lassonde and Thompson are working together on this certainly means that some fireworks can be expected at the World Gold Council in the next few months.

http://biz.yahoo.com/ap/020807/south_america_asia_replay_1.html
Snippit:

WASHINGTON (AP) -- The conventional wisdom has been that South America 2002 is not Asia 1997-98 when financial crises spread like wildfire from country to country, toppling 40 percent of the global economy into recession. "Let's face it. The dominoes are falling again," said David Wyss, chief economist at Standard & Poor's in New York. "Before we thought Latin America would not be a replay of Asia and now we are hoping it is only Asia in 1997-98 and not something worse."


Black Blade: This mess will sweep throughout South and Central America in a replay of the Mexican Peso Crisis and the Asian Contagion. The effects will probably spread north into Mexico and the US. Already major US banks have taken a big hit in Argentina. Just wait until Brazil goes under. The US taxpayer will subsidize several bailouts in the process.

http://www.mrci.com/qpnight.asp
The US market futures are soaring high this morning with the DOW at 105, Nasdaq at 20, and the S&P at 13. Some analysts are trumpeting the end of the bear market. It appears that some are even willing to put up cash behind the market index futures this morning. Yet no one can explain why the markets should have bottomed except that all hopes are on a quarter point Fed rate cut, so this could get rather interesting after the markets open on Wall Street. Meanwhile Gold is higher by about a buck, petroleum prices are falling fast, and the USD index is pulling back.

- Black Blade

http://biz.yahoo.com/ap/020807/germany_jobless_1.html

Snippit:

BERLIN (AP) -- The number of Germans out of work climbed above the politically sensitive 4 million mark in July, according to official figures released Wednesday, less than seven weeks before elections in which the government's economic record is a key issue. The rate moved up to 9.7 percent from 9.5 percent.


Black Blade: The German "Bone Pile" is rising. It looks like they need the BLS to massage the data so the unemployment rate will fall. No recovery in Germany either. In a word � "Grim".

http://www.mises.org/journals/scholar/shostak.PDF
A working paper about our present fiat paper standard system by Frank Shostak.

Spot gold is up $2.70 this morning just about $308 an ounce. I wonder how it will do in NY. Hmmm...

- Black Blade

Are you headed to Sturgis this year?

It appears that AngloGold is still smarting with underwater hedge books and are scared sh##less of gold's current strength. At the Diggers and Dealers mining conference in Kalgoorlie in Australia this week, AngloGold executive Steve Lenahan told the conference there was little evidence to support a rising bullion market. Lenahan said suggestions that gold prices would trade higher were "overoptimistic". At the same time, AngloGold, the world's third largest gold producer, is in agreement with others producers in strategy, trying to reduce its hedge book to give it more exposure to higher gold prices. Many of you remember the battle between mega-hedger AngloGold and Newmont-Franco over Aussie producer Normandy. It was a critical turning point for AngloGold which they lost. Now in the mad scramble to unwind losing hedge positions the company is working to talk down gold even though most every other producer has a bright outlook for the precious metal. They are obviously trying to buy more time and with the leaked mining charter draft they are even in a deeper quagmire. The day of the hedger is over.

- Black Blade

I don't think that I will be going this year. My friends are not coming out this time so I will just kick back, consume some cold ones and slay some fish. I have seen a lot of bikers heading in that direction though. Then who knows, I just might get as far as Hullett for the "Ham and Slam" if I can get away. But it isn't likely this year. Cheers!

- Black Blade

http://www.guardian.co.uk/international/story/0,3604,770197,00.html
Snippit:

Officials are trying to decide who owns a solid gold cauldron found in a lake that is believed to have been made for the Nazis, Bavarian finance ministry spokesman Bernd Schreiber said yesterday. The cauldron, which weighs 10.5kg (23lb) and contains gold worth around �100,000 (�63,000), was recovered last year by a diver from Chiemsee lake in Bavaria.

Archaeologists have been examining it and officials are considering whether the 50cm (20in) cauldron is "discovered treasure", which would give the diver equal ownership rights with the state government, Mr Schreiber said. But the diver would have no claim if it can be established that it belonged to the Nazis, as all such items are considered state property, he added.


Black Blade: What's to decide if it's only a barbarous relic? Hmmm�

http://www.businessreport.co.za/html/busrep/br_frame_decider.php?click_id=345&art_id=ct20020806203045454P360869&set_id=60

Snippit:

Is $14.9 million in gold bars, coins and other property worth more than two years in prison? For Martin Armstrong, once one of the world's largest silver traders with an office overlooking Tokyo's Imperial Palace, it is money he says he just doesn't have. Bloomberg reports that Armstrong, the ex-chairman of Princeton Economics
International, is accused of an $800 million swindle and has been behind bars since January 2000 for refusing to surrender the $14.9 million.

His lawyer says he has spent more days in prison for contempt than anyone in a white collar fraud case. Judge Richard Owen, presiding over the government's civil suit, can keep him in jail indefinitely on the contempt holding. The missing gold bars and coins are sought by federal officials to help offset what they say are proceeds of his fraud.


Black Blade: I guess the judge doesn't buy into the "barbarous relic defense". Hmmm� Indefinitely incarcerated without benefit of a trial eh? Interesting.

BTW, Gold is now up $3.50 an ounce before the NY open.

http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Stock%20Market%20World&tp=ad_uknews&T=news_storypage99.ht&ad=world_stocks&s=APVCeUBRaTW9yZ2FuThe big boys have implemented the full court press in the media. Buy Stocks NOW !! With only one cup of coffee down this morning I can only think of one word to respond. Perverted. Will the public buy the spin?

Newmont CEO is scheduled to be on CNBC's Squawk Box this morning. Hey, maybe they will actually talk about Gold. Hmmm...

- Black Blade

http://story.news.yahoo.com/news?tmpl=story2&cid=568&ncid=749&e=3&u=/nm/20020807/bs_nm/energy_enron_report_dc_1Snip:
NEW YORK (Reuters) - Federal investigators appear to have widened an inquiry into U.S. energy trader Enron Corp, probing whether the company or its executives committed accounting fraud by borrowing $1 billion in a last-minute bid to stave off bankruptcy, the Wall Street Journal reported.
..............
The paper said the investigators were trying to determine if Enron improperly used two of its publicly-regulated pipeline subsidiaries to secure the loans and then transfer the money to Enron's accounts, with no plans to repay the companies.

An Enron spokesman defended the transactions to the Journal as "common" and "an acceptable practice," and said they were fully disclosed at the time. He declined to discuss the loans or their accounting treatment in detail.

***************
Misetich

Common and acceptable practice - common yes, acceptable by whom? Were this practices disclosed to shareholders? would be shareholders? would be bond holders?

Common and acceptable translates - most of the apples are rotten

Got gold?

http://story.news.yahoo.com/news?tmpl=story2&cid=1106&ncid=1106&e=5&u=/ft/20020806/bs_ft/1028185560935Snip:
According to e-mails and other documents cited by the Federal Bureau of Investigation, Mr Fastow's involvement in the scheme was seen as essential by the bankers from the beginning.

............
A Fastow-led partnership named Southampton, in which the three NatWest bankers had a financial interest, would buy the shares and quickly sell them again at a true market price, enabling the bankers to pocket $7.3m. "Between approximately March 2000 and July 2000, Mulgrew, Darby and Bermingham executed a scheme to purchase and then profit hugely from the lion's share of what should have been NatWest's beneficial interest," said testimony from FBI ( news - web sites) special agent Deanne Simpson.
****************

Misetich

Investment bankers - probably some more common and acceptable practice -

Got gold?

http://story.news.yahoo.com/news?tmpl=story2&cid=1106&ncid=1106&e=5&u=/ft/20020806/bs_ft/1028185560935Snip:
According to e-mails and other documents cited by the Federal Bureau of Investigation, Mr Fastow's involvement in the scheme was seen as essential by the bankers from the beginning.

............
A Fastow-led partnership named Southampton, in which the three NatWest bankers had a financial interest, would buy the shares and quickly sell them again at a true market price, enabling the bankers to pocket $7.3m. "Between approximately March 2000 and July 2000, Mulgrew, Darby and Bermingham executed a scheme to purchase and then profit hugely from the lion's share of what should have been NatWest's beneficial interest," said testimony from FBI ( news - web sites) special agent Deanne Simpson.
****************

Misetich

Investment bankers - probably some more common and acceptable practice -

Got gold?

http://www.forbes.com/newswire/2002/08/07/rtr688462.htmlSnip:

NEW YORK, Aug 7 (Reuters) - Americans, enticed by
historically low mortgage interest rates, filed a record number
of mortgage applications last week for refinancing and home
purchases, a U.S. industry trade group reported on Wednesday.
..........
The Mortgage Bankers Association of America (MBA) said its
weekly barometer of mortgage application activities rose to a
record high of 1,066.9 for the week ended Aug 2, up 6.2 percent
from the prior week. The latest reading surpassed the previous
high of 1,055.5 set the week ended Nov. 9, 2001.

The group's seasonally adjusted mortgage refinancing index
rose to 5,097.3 last week, up 7.3 percent from the prior week.
This was fourth highest level of the refinancing index and the
first time this year that it broke the 5,000 threshold.
************
Misetich

More refinancing to come as interest rates head lower - it will be fun to watch this in a few years

Got gold?

http://www.businessweek.com/bwdaily/dnflash/aug2002/nf2002086_5288.htmSnip:

Hill says it is now pretty much inevitable that analysts will have to lower earnings forecasts for the third quarter and fourth quarter of 2002. Analysts predict third-quarter earnings will be up 12% (already sharply lower than their July 1 consensus of 16%), but Hill thinks the actual growth will be more like 5% to 8%. "It's hard for the market to go up when analysts are slashing their numbers," he says.
............

Misetich

It will be much worse than expected.

Got gold?

http://www.forbes.com/forbes/2002/0812/062.htmlSnip:

Securitization describes a form of financing in which a bank or other lender wraps up a package of assets--car loans, for example, or mortgages or credit card receivables--and issues securities against that package. (The securities are traded as bonds; hence the "securitizing.") Investors such as money market funds and pension plans buy those securities. That provides cash that lenders can recycle in another round of car loans, mortgages and credit card charges.

Such financial alchemy keeps America's buy-now-pay-later consumers swimming in credit. It helps explain why, despite two years of layoffs and 401(k) disasters, people are buying cars and houses at a furious pace. Securitized lending has its antecedents in Ginnie Mae, created in 1968 to package home mortgages. In the past decade it took off, having climbed to a staggering total of $6 trillion, most of it to finance consumers. For comparison, all household debt in the U.S. totals $7.7 trillion.

With the right attention to detail, the lender securitizing its book of car loans or credit card balances gets both the stream of income from assets (that is, the consumer loans) and virtually all the liabilities (the securities issued to investors) off its balance sheet. The investors are thrilled with the arrangement. They can look to a predictable stream of consumer loan repayments to back up the debt securities they have purchased; if the lender gets into trouble, they get first dibs on that cash stream. For lenders, keeping these assets and liabilities buried in footnotes rather than on the balance sheet is vital. Consolidate them and some lenders would look dangerously leveraged.

Securitization is a big business for some finance companies. Citigroup (nyse: C - news - people ) has $204 billion of asset-backed debt outstanding, J.P. Morgan Chase (nyse: JPM - news - people ) $75 billion. Credit-card issuer MBNA (nyse: KRB - news - people ), a master of the art, has $73 billion--compared to on-balance-sheet assets of $45.4 billion and a comparative sliver of shareholders' equity, $7.8 billion. Ford Motor Credit (nyse: F - news - people ) was able to save several hundred million dollars over the past 18 months using off-balance-sheet financing. GMAC is another big player. Without securitization you might not see as many 0% car loans.

What could stop this happy arrangement? Enron-wary reformers are agitating to have some or all of that $6 trillion consolidated on the balance sheets of lenders. Some lenders are fighting this tooth and nail. It would force a lot of them to raise the price of consumer credit or drastically cut back on it. It could, if you believe the people lobbying against the reform proposal, stop the economic recovery in its tracks.
...............
Andrew Smithers, chairman of Smithers &Co., economic consultants in London, warns, "If they have to put the debt back on their balance sheets, it will violate the debt covenants of leading banks." If banks' balance sheets lard up with the extra debt, "banks will have less propensity to lend in similar size and pricing. It will diminish the return on equity," says Michael Malter, head of asset-backed securities at J.P. Morgan Chase.

The Financial Accounting Standards Board, which is set to decide on the rule change in the fourth quarter, dismisses all the hand-wringing. "We're trying to increase transparency and disclosure on the financial statements. If the markets or regulators think that consolidating all the debt is being overleveraged, I can't control that," says Edward Trott, a member of the seven-person board.

*****************
Misetich

Off balance sheet items - what a scam ! Lets stay on this TRAIL - as to whether or not FASB rule change passes (doubtful) the risks increase nevertheless and will hit sooner than later

Got gold?

http://www.kitco.com/charts/livegold.htmlSpot jumping up $6.00 at the moment.

There has been some great discussion these past few days! Thanks guys for all your work and thanks MK. With all the fuss about Greenspan being a knight I though I would like to point out something that some folks here might of missed in the book. �Gold Wars� by Ferdinand Lips. In the notes on page 226 note #76 Ferdinand Lips describes the encounter that he had with Allan Greenspan:

"I had my own particular encounter with Mr. Greenspan. It happened when I was a managing director of the Rothschild Bank AG, Zurich, and Mr. Greenspan was still with his consulting firm of Townsend-Greenspan. I was so fascinated with his essay "Gold and Economic Freedom" that I showed it to all my clients. For one of them, a very wealthy German industrialist, who did not speak English, I translated it into German. Some time later, a U.S. brokerage firm sponsored a speech by Mr. Greenspan in Zurich. At the prestigious Hotel Baur au Lac, he spoke on the U.S. economy to the Zurich financial community. A representative of the U.S. brokerage firm and a friend of mine, introduced me to Mr. Greenspan in the hope he would be pleased to hear that a Swiss banker had taken the time to translate his essay into German. To our surprise Mr. Greenspan did not seem happy. He grimaced, turned his back on us abruptly and briskly walked away without saying a word."

Classic example of what happens when light meets darkness. The darkness walks away. I wonder how history will remember Mr.Greenspan? It is honest bankers like Mr. Ferdinand Lips who deserve the recognition and praise for their work, not a turncoat like Alan Greenback. Perhaps Sir Slingshot's story could finish with the chairman in handcuffs? Or at least the lot of them running around with their asses on fire?

The book �Gold Wars� is such a good read, even the notes are great! You can purchase a copy from amazon.com. Do it now.

Russell

http://www.morganstanley.com/GEFdata/digests/20020807-wed.html#anchor0Snip:

In my post-bubble vision of the US economy, a purging of the excesses of the 1990s is vital before America can resume a more sustainable and vigorous economic expansion. The consumer is the key sticking point in that regard. With record debt loads, low saving rates, steep losses in equity portfolios, and looming retirement obligations, I continue to believe that a long overdue retrenchment of the American consumer is a necessary ingredient of the post-bubble purging process that lies ahead.
............
But the real sticking point for a post-bubble US economy is that this government-sponsored increase in personal saving does little to advance the purging process that America so desperately needs in order to clear the decks for a sustainable and vigorous expansion. To the contrary, the recent massive swing in the federal government's fiscal balance -- from surpluses of nearly 2% of GDP in 2000 to an estimated 1.5% deficit this year -- underscores the price that may eventually have to be paid in order to reliquefy the American consumer. Barring a spontaneous reduction in the US consumer's marginal propensity to spend, it may well be that the federal budget deficit would have to rise into the 3% to 5% range in order to inject enough income to restore personal saving to its historic norms. Yet that would be the height of folly -- in effect, swapping one imbalance for another. Sadly, such an outcome would not be unlike the post-bubble experience of Japan, where the budget deficit and public sector borrowing have expanded dramatically in recent years.

All this underscores the obvious. The only way out for the post-bubble US economy is a long overdue purging of the excesses of the American consumer. The personal saving rate is one metric that can be used to gauge progress on that count. But any improvement in this gauge cannot be built on a path of fiscal profligacy. That "fixes" one problem at the risk of compounding another -- in effect, doing nothing more than rearranging the deck chairs. Instead, there must be a legitimate increase in the preference for national saving. Until that happens, I fear America will find it exceedingly difficult to extricate itself from this post-bubble quagmire.

***********
Misetich

US current budget deficit for example is projected at $165 billions is understated by 40 to 60 billions - add off-budget items, interest costs being omitted etc - and you get to over $500 billions annually

Got gold?

http://www.latimes.com/business/la-fi-rup7.1aug07.story?coll=la%2Dheadlines%2DbusinessSnip:

Sales at U.S. chain stores slipped 0.4% in the four weeks ended Saturday compared with the same period in the previous month, Instinet Research said.

A separate measure by Bank of Tokyo-Mitsubishi and UBS Warburg showed a 0.1% rise for the week ended Saturday after a 0.4% decline the preceding week.

***********
Misetich

The SM correction occurred in the last week of July - Consumers appear to being tapped out.

Got gold?

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1028185568210&p=1012571727204Snip:

By Jenny Wiggins in New York and Aline van Duyn in London
Published: August 7 2002 5:00 | Last Updated: August 7 2002 5:00

New fears that the US may be teetering on the edge ofa "double-dip" recession that may hurt the sales of manufacturers have led some investors to sell the debt securities of vehicle makers Ford and General Motors.

Spreads on Ford Motor Credit's 10-year bonds have widened more than 70 basis points since August 1 to be bid yesterday at 395bp over Treasuries. Similar maturity bonds of General Motors Acceptance Corp (GMAC) have widened by around 35bp to be bid at 295bp over.

The widening in spreads occurs as worry mounts over the failure of the US economy to bounce back from the downturn. Last week's disappointing second-quarter GDP report, in which growth was just 1.1 per cent, as well as declining consumer confidence have prompted many economists to call for a further cut in interest rates.

*************
Misetich

and lets not forget unfunded pension plans - ouch!

Got gold?

If they are live quotes at the ino.com site....for several minutes while I was observing, Spot was at 314 and all the futures prices corresponding at that time were well below the spot price.... from 308 for august to 313 for Dec. Perhaps this was a glitch in time .....or maybe it is a sign .... Aug 14 rapidly approaches

It's doing it a gain ...SPOT IS HIGHER NOW ON AN ONGOING BASIS THAN THE FUTURES MARKETS>>>>>THIS SHOULD SET OFF A WAVE OF PHYSICAL BUYING>>>>>I think FOA has tipped us off to what this scenario is indicating

Saudi Arabia Won't Let US Use Saudi Soil In Iraq Attack

JIDDAH, Saudi Arabia (AP)--Saudi Arabia has made clear to Washington - publicly and privately - that the U.S. military will not be allowed to use the kingdom's soil in any way for an attack on Iraq, Foreign Minister Prince Saud said Wednesday.
Saudi Arabia, a longtime ally of Washington whose contribution to the U.S. war on terrorism has been praised and sharply criticized by Americans, has no objections to the U.S. continuing its decade-old monitoring of Iraqi skies from the U.S. air control center in the kingdom, Saud said.
But as to using the center or any Saudi soil to attack Iraq, he said in an interview with The Associated Press: "We have told them we don't (want) them to use Saudi grounds."
"We are against any attack on Iraq because we believe it is not needed, especially now that Iraq is moving to implement United Nations resolutions," Saud said. "... For the government of Iraq, the leadership of Iraq, any change that happens there has to come from the Iraqi people. This is our attitude."
Under U.N. Security Council resolutions, sanctions imposed after Iraq's 1990 invasion of Kuwait, which led to the Gulf War, cannot be lifted until U.N. inspectors certify that its biological, chemical, and nuclear weapons have been destroyed along with the long-range missiles to deliver them.
Last week, Iraq invited U.N. chief weapons inspector Hans Blix to Baghdad for technical discussions that could lead to a resumption of the inspections, more than 3 1/2 years after inspectors left Iraq and were barred from returning. U.S. President George W. Bush has said he is committed to a regime change in Iraq and war rhetoric is running high. Washington has dismissed the Blix invitation as a ploy.

Saudi Arabia invited U.S. troops to the country for the 1991 Gulf War to help defend the oil-rich nation against Saddam Hussein's forces. As speculation has grown Iraq would become the next U.S. target in its war on terrorism, reports have said the Saudis were saying one thing in public, but privately telling U.S. officials they would support a strike on Iraq.
Saud, speaking in English, denied that the private line to Washington was any different than the public remarks: "We couldn't have made our position more clear, our leaders have said this and everybody responsible in the kingdom has said this."
(END) DOW JONES NEWS 08-07-02

JPM and all the other boys, being just a tad bit short on paper gold, running frantically from office to office gathering rings, watches, and any other golden trinkets.

Where are those darn wheelbarrows anyway???

Big Smile.

Pizz

As short as they are, probably should just head to Ft. Knox. Hope it's not empty. Might want to bring along MWD from what I hear.

The rumor mills are whirling this morning...

The(physical)CoinGuy

When the President of Newmont was grilled by Mark Haines on CNBC this am, he was hit with the statement that wasn't all gold that was ever mined above ground and available?

Too bad he wasn't a little quicker (obvious that he wasn't prepped for the question, since Haines was getting his questions over the earpiece). I would have loved to hear him comment, "well, yes and no, cause it seems that the US has put all their's in deep storage, and we haven't figured out just why, but they must have a good reason, and that in itself is bullish going forward."

CoinGuy: I'll bet the rumors are flying, since the mainline news seems verrrrrry quiet this morning. Almost as if the govmint boys are running around with rolls of duct tape. Makes you knid of wonder if maybe we warmed up a few too many jet engines in the ME at the same time.

Whatever it was, somebody lost a wad trying to push the markets up this am. Gold stocks are almost all right below major resistance, and I'd have to believe there are a few buy stops right above the current market.

Interesting day ahead.

Pizz

http://www.futuresource.com/news/news.asp?story=i4276833466435436864But not good enough!

In searching the Web trying to get some idea of what caused the spike in gold this morning, I came across this comment from another site. It sounds like someone's feathers have been successfully ruffled.


Date: Wed Aug 07 2002 10:21
TheFatMan (GOLDEN CHEESEHEAD @ Kudlow & Cramer) ID#374435:
Copyright � 2002 TheFatMan/Kitco Inc. All rights reserved
hey GC, with 15-20 minutes to go in their show last Monday, which was followed by the disappointing interview of JPM's CEO Harrison by Maria, Larry Kudlow said, "I like rumors....one rumor coming out of the chat sites is that JPM has made a bad bet on gold." Cramer followed with a scurrlious attack on USAGOLD by saying something to the effect, "they're a cesspool." I was outraged. Call Burrelle's 1-800-777-8398 for tape. 43 bucks! no transcripts for this show

Kind of like the septic tank calling the cesspool stinky, eh?

Saudi Arabia's action of denying the U.S. access to its land for launching an attack against Iraq could be seen as substantiating the view that they are an enemy of the U.S. That might increase the probablility that such concept could became an official policy of the U.S. government, in which case the chances of a larger war would be likely.

IMF Warns Ireland About Deteriorating Fiscal Outlook
WASHINGTON (Dow Jones)--The International Monetary Fund warned Wednesday that Ireland's flagging medium-term fiscal outlook could endanger the country's economy after a decade of rapid growth.
IMF directors expressed concern over "the marked deterioration in the medium-term fiscal outlook, which, unless checked, could risk Ireland's growth prospects." They recommended the government target a balanced budget over the medium term, rather than current projected deficits of about 1% of GDP.
In its "Article IV" assessment, a nearly annual report on individual member countries, the IMF praised the Irish government for sound economic policies and an investor-friendly environment that supported average real GDP growth of more than 7% annually during the 1991-2001 period.
The IMF is projecting real GDP growth will fall to 3.2% this year from 5.9% in 2001, in the wake of the global economic slowdown and the bursting of the high-tech bubble. It said growth over the medium term is likely to trend down owing to a limited labor force and moderating foreign direct investment.
IMF Web site: http://www.imf.org

We should give credit where credit is due -- Charlie Munger, co-chairman of Bershire Hathaway said at their shareholders meeting "Calling wall street a sewer is an insult to sewage." I agree -- and it includes the talking head cheerleaders.

Flextronics Announces 527 Job Cuts At Five Swedish Plants
STOCKHOLM (AP)--Electronics company Flextronics International Ltd. (FLEX) said Wednesday that it will lay off 527 employees at five manufacturing plants in Sweden due to weak demand in the telecommunications sector

OPEC and Russia do get along very well as to determine together what the "ideal" price is for their (the) crude.
Norwege and Mexico are on the same frequency. Crude Oil has *** Pricing Power ***. A very exceptional privilege these days. The POO and the threat against Iraq are a nice excercise in geopolitical balance. It is clear by now that the "barril" dictates, how much $ confetti it must generate and not the other way around. If the US$ should use excessive force and pressure the barril's pricing power...crude oil could counter-threathen with euro for oil ! All this as the bottomline above or regardless off, official declarations of friendship. If the love affair between the US and Saudi Arabia should break up...it would mean an acceleration of the above possible process.

A two day close above 26$ for POO, means staccato up. POG = 16 x POO as a normal balanced proportion : 25$ x 16 = 400$ per ounce ?
POO has a high volatility :
1999/2001 : 10$ > 34$ > 340%
2001 : 34$ > 17$ > 50%
2001/2002 : 17$ > 26$ > 53%
POG's volatility non existant '99 > '02 : 253$ > 330$ = 30%. And a $/� exchange rate volatility of 30% so far.
All this in comparaison with a USTB-10 yrs yielding 4,20% at the 9/11 bottom - vol. 30%.
Is this evidence for crude's importance and ongoing struggle ? I think it is.
These wildly fluctuating variables are a strong indication for global increasing in-stability. A result of the financialization and de-economization. One day we will be forced to create and agree on a new * stabilizing * standard. The euro can probably serve as a blueprint.

Euroland (Germany) will encounter budged deficits (unemployment). POG will benefit. Another attempt to 317$ > 330$ and...354$ ?

Why don't you call a couple of your friends over at JPM, you know, those are the guys that like to throw around the term "transparent", and have them open up their derivitives book?

What, are they afraid someone might steal their business model and lose all that business? Right now, I'd venture to say that they'd probably do somewhat, no, a lot better than just giving away their gold derivatives.

Make a few calls, I'm sure you can find a few takers for a few billion naked gold shorts.

Pizz

http://www.shopnetdaily.com/store/item.asp?ITEM_ID=851Here's more of the description of the video "Red Gold Rising" that I mentioned the other day. Lawrence Kudlow is a commentator in the video!

"Red Gold Rising"

"A fascinating story about how Red China is using Swiss banks to launder gold just like Nazi Germany did before World War II, and for a similar purpose...to generate laundered money to corrupt the American political system and thus assist their planned imperialism....

"In America, however, this story is being suppressed, the most reasonable explanation being the political allegiance of our journalists. See the story they do not want you to find out about. American Investigator follows the money and gold trail, and reveals which politicians in America are benefitting. Filled with information on how both the Nazi and Red Chinese gold operations work. Includes interviews with Wall Street expert Lawrence Kudlow, who sees significant danger to our financial markets in this scandal.

"Not only is Red China using money to corrupt American politicians as the Nazis did before World War II, they are also using Wall Street to assist this operation. Famed Nazi-hunter Marty Mendelson is interviewed. He is mainly responsible for the recent scandal over Nazi gold by proving that the Swiss still had $2 billion worth of Nazi gold stolen from Jews. He also tells how he got some of it back to the victims."

http://biz.yahoo.com/rc/020807/economy_argentina_o_neill_2.htmlO'Neill urges fast Argentine IMF deal in U-turn
By Simon Gardner and Anna Willard

(Updates with details of soup kitchen visit in paragraphs 14-16)

BUENOS AIRES, Argentina, Aug 7 (Reuters) - U.S. Treasury Secretary Paul O'Neill on Wednesday urged a speedy IMF pact for Argentina in an abrupt U-turn after suggesting just 10 days ago that fresh aid to the region could wind up in Swiss bank accounts.

On the last stop of a four-day tour to assess troubled Argentina, Brazil and Uruguay, O'Neill said he supported moving "as quickly as possible" to an IMF deal Argentina desperately needs to clamber out of its worst ever economic crisis.

The International Monetary Fund, in which Washington has the biggest vote, cut off aid to Argentina last December and months of tortuous talks have failed to restart aid.

As O'Neill spoke at the heavily guarded economy ministry, crowds outside waved banners with anti-O'Neill slogans. His arrival on Tuesday met protests by thousands of unemployed and leftists who blame Washington and the IMF for helping to sink the economy through ill-advised policies.

They burned a U.S. flag and photos and an effigy of O'Neill whose visit to a local plant of U.S. carmaker Ford (NYSE:F - News) was called off for what a company spokesman called "security and schedule reasons" -- after workers threatened to walk out in protest.

comment;
Argentinians just can't get enough of our guy, O'Neill. Too bad they can't.

sir gandalph and other noble knignts. my intention isnt to bombard and spam, rather my intention are to post relevant facts concerning the financial world and there possible combustability to the allready burning paper.
as a lil hobit ill know when ive overstepped my bounds when my posts are taken off. and i wont be hurt ill just know the limit. but i think they are important cause we dont always get to see some of these headlines in the local fishwraps.
Moody's Puts Dresdner Bank On Review for Downgrade
08-07-02 01:27 Pm
PRESS RELEASE: Moody's: Dresdner Bank On Review-Downgrade

Following is a press release from Moody's Investors Service:

London, 07 August 2002 -- Moody's Investors Service placed on review for possible downgrade the Aa2 long-term debt and deposit ratings of Dresdner Bank AG and of its rated subsidiaries as well as the bank's B- financial strength rating (FSR). Dresdner Bank's Prime-1 short-term ratings were confirmed.

Moody's said that the review of Dresdner's Aa2 long-term ratings is initiated in conjunction with the review of Allianz's Aaa ratings (Moody's commented under a separate press release about the rating review for Allianz), which is the owner of Dresdner Bank. Moody's said that one result of the review may be a tighter alignment of Dresdner's and Allianz's ratings to reflect the advanced integration of Dresdner in the Allianz group, especially in asset management and financial services for retail customers.

Moody's said that earlier this year it had downgraded Dresdner's FSR to B- from B. However, further problems in Dresdner's loan portfolio adds pressure on its financial fundamentals. In this context, Allianz's rating review was triggered by the difficulties of Dresdner's performance as a member of the group. Dresdner's performance was especially affected by the downturn in the capital markets and by the weight on its credit portfolio of a limited number of large-scale insolvencies in Germany and ongoing difficulties in Latin America. The review of Dresdner's B- financial strength will focus on the appropriateness of existing loan loss provisioning, addressing also the challenges of Dresdner in improving its modest profitability by additional cost cutting and restructuring initiatives.

The following ratings are being reviewed for possible downgrade:

Dresdner Bank AG: Aa2 long-term deposit and debt ratings; Aa2 MTN programme; Aa3 subordinated debt ratings; B- FSR.

Dresdner Bank AG, New York Branch:Aa3 subordinated debt ratings.

Dresdner Bank Luxembourg SA:Aa3 long-term deposit and debt ratings; A1 subordinated debt rating.

Dresdner Finance NV:Aa2 guaranteed long-term debt rating; Aa2 guaranteed long-term notes under their MTN programme.

Dresdner International Finance plc: Aa2 guaranteed long-term debt rating.

Dresdner Funding Trusts:A1 preferred stock ratings.

Dresdner Bank Ireland: Aa3 deposit ratings.

The following ratings are being confirmed:

Dresdner Bank AG:Prime-1 short-term deposit and debt ratings

Dresdner Bank Ireland: Prime-1 deposit and debt ratings and C- FSR.
Dresdner Bank Luxembourg SA:Prime-1 short-term deposit rating and C+ FSR.
Dresdner Finance NV:Prime-1 guaranteed short-term notes under their MTN programme
Dresdner US Finance Inc: P-1 short term debt rating.
Headquartered in Frankfurt, Dresdner Bank had total consolidated assets of around EUR500 billion as of 31 December 2001.

http://www.usagold.com/ProductsPage.html

Get the Legendary SECURITY of a Swiss Account...

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Call Centennial for Arrangements
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steady (08/07/02; 11:40:17MT - usagold.com msg#: 82485)
bank credit
sir gandalph and other noble knignts. my intention isnt to bombard and spam, rather my intention are to post relevant facts concerning the financial world and there possible combustability to the allready burning paper.
===
You are saving all SURFING time.
Thanks
<;-)

http://biz.yahoo.com/rf/020807/markets_bonds_auction_1.htmlNEW YORK, Aug 7 (Reuters) - U.S. Treasury yields spiked higher on Wednesday after a record $18 billion auction of 10-year notes drew a disappointing reception from investors.

The sale achieved a bid-to-cover ratio of just 1.29, meaning investors bid for just 1.29 times the amount of bonds on offer, a decade low and far beneath the 2.15 seen in the last auction in May. The notes went at a high yield of 4.39 percent, well above expectations....
---------------

What's this? People are not eager to buy a huge boatload of treasuries at the top (i.e., at low yield)???

Call Centennial to understand what a REAL diversification is all about -- gold -- hard assets with supreme liquidity at your command and control.

R.

http://www.whatreallyhappened.com/ifiwere2.htmlHere's another paper along similar lines and thanks for the link and info..."RED WHITE AND BLUE STORM RISING"

"Go GATA"

PS: now lets see if POG can hold over Fri close...somehow I doubt it, unless all the Gold press of late and GATA work is finally starting to cause a squeeze....Seems like another Gold Bull trap by the Cabal as per usual....YGM.

But, the Crystal Ball shows that we may be "APPROACHING" the time of "Lightning in the Night" as portended by KING Aragorn III !!!
<;-)

http://www.gata.org/gibson_s_paradox.htmlHere's a little speculation and some idle thoughts regarding gold derivatives.

I just reread quite a bit on Gibson's paradox (and it deserves a reread every once in a while). If you study the chart of inverse gold vs. real interest rates at the above link, I find it rather interesting that the current diversion, attributed by some to Summers, begins right about the time of LTCM's problems. (and if someone else has made this correlation, I apologise, but I haven't seen or read one).

Now, I have to make a few assumptions, but I don't think they are in any way outlandish. I don't think it takes too much of of an imagination to assume that LTCM may have been involved in the gold carry trade. Even though the Russian default is creditied for the crisis, if LTCM had a short gold position via derivatives, what happened to the portfolio? As LTCM was bailed out by the FED, etc. would it be too much to assume that maybe JPM agreed to take over some gold derivatives as a kind of caretaker/consignment agreement?

It would also not take too much of a stretch of the imagination, since we now know that corporate profits really peaked around 1997, that maybe JPM kind of got into the "short gold" business about the same time?

Recently we've had a few other things happen. The head of JPM's gold trading department being reassigned, rumors (for lack of transparancey on JPM's part) that they reported to the comptroller of the currency a gold deriviatives position but no one can find it on their books (caretaker/consignment????), and the casual comment by Greenspan a few months back that they might even consider buying a gold mine.

Now there are rumors of JPM being in a bit of trouble and rumors the FED may just lower interest rates (a boon to the banks with a lower cost of funds, but a negative for short gold and long dollars).

Now, if I kind of piece all this together, If I were the FED and kind of got a short gold derivatives hedgebook thrown back at me (seems JPM doesn't need quite as large a staff in the precious metals department), or knew I was going to a few months back, and if it had a five year time spread like the report I read that went to the comptrollers office (sorry, can't remember where I read that, but it was recent), I'd be in the market for a mine too, even a partially hedged one.

Now, going back to Gibson's paradox, I really believe that if we could modify back the headonistic CPI numbers used for Gibson's paradox, the real interest rate graph might look a bit more like 78 -80. With the witch hunt going on for creative numbers, my feelings are that the government might just start reporting a little better regarding the CPI, and we probably could use a little bit of inflation news to cure the deflation paranoia, so guess what I think is about to happen to gold?

Up rather dramatically without a huge, armaggeddon spike due to derivatives covering and a major bank going TU.

I like it, hope I'm even partially correct.

Pizz

Thanks for the Treasury auction news.

Now lets see how quick the rumors dry up about a rate cut (and the timing was just coincedental - right!). The bid to cover ratio is pathetic, but then when you consider what you're getting for your money . . . .

If we used the same marketing tactics to sell cars as the boys on Wall Street do to sell paper, we'd be in jail.

Pizz

http://biz.yahoo.com/rf/020807/markets_precious_5.htmlExcerpts:

NEW YORK, Aug 7 (Reuters) - Bulls stampeded back into COMEX gold Wednesday, lifting it to a 15-day high as the dollar slid and the specter of a double-dip recession raised speculation that U.S. interest rates would be lowered again.

As a safe but low-yielding hard asset, gold remains a favorite alternative for investors nervous about U.S. economic growth, accounting scandals, a potential war with Iraq and fears of a repeat terror attack on the United States.

"A lot of buying is coming out of institutional fund managers and they are already looking forward to the possibility of a 1/4-point rate cut, which makes gold cheaper to hold," said George Gero, a veteran trader and director of the International Precious Metals Institute.

With the dollar weak and the stock market plumbing five-year lows, gold was sturdy until a shakeout late last month erased the stale longs held by speculators.

"We cleaned out all the longs, now we've cleaned out all the shorts. That's the way the market works," said Leonard Kaplan, president of Prospector Asset Management. "Now that the specs aren't there we can go higher."

----------(click url for more)----------

A great quote, Lenny. A keeper. All the more reason to go the less stressful and direct route of physical ownership.

Speaking of physical, have another look at the article's opening comment -- "a safe but low-yielding hard asset, gold remains a favorite alternative for investors".

That's a precious change in presentation. It wasn't long ago that the mainstream media would (bogusly) refer to gold as a "risky and sterile (no-yielding) financial asset" -- if indeed they were even willing to give it the benefit of calling it an "asset" at all. It would seem the media is relearning what we've known and said here all along.

Now, the thing to do -- being ahead of the curve -- is further examine and prepare your portfolio for the rest of the wider public to wake up to the benefits of gold ownership. You'll want to have the precious stuff cheaply now against the public wanting to have it in days ahead.

R.

How typical lately, the gold shares give back more than half their gains today, even with the bullion holding on to it's impressive gain. It's almost embarassing to watch the weak hands sell out near the close just to lock in a wee bit of profit. What a bunch of losers.......

According to Bob Pisani, the stock market was manipulated higher by institutional traders buying futures to further the idea that the market has bottomed and hopefully to attract more investors. The idea that they are trying to push is that the volatility is part of a "bottoming process". Of course the traders are the ones creating the volatility. It appears that this head fake rally may draw in a few more people to be taken to the cleaners. Oh well, the August 14th deadline approaches and then the possible flurry of earnings revisions. It could get very "entertaining".

- Black Blade

Examine the big volume trades of the mainstream HUI stocks and one......finds pretty big 5,000 and 10,000 block trades that produce a drop in share price shortly thereafter. These are big sales. Most likely by insider funds trading a wave pattern set up by the rising COMEX pog. They sell the rallys.

In other words the bigger funds know about manipulation holding gold in a range so they buy the metal at its lows and quickly sell the shares as the cabal releases pog back up to the top of the "Cabal Approved range".

It's a kind of mini carry trade.

As if we couldn't predict....late NY Access trade is down

Interesting how the big movers of PM Stock seem to "know" aftermarket ...I guess just coincidence that PM stocks fell late today and access market comes thru down...and vice versa yesterday...they were grabbing every share they could especially late in day... and then 4PM EDT access gold moved way up setting stage for further climb and of course opportunity to sell yesterday's buys at great opening price this morning!

http://www.safemoneyreport.com/home/daily.asp
Snippit:

An extra quarter-percent cut won't persuade companies to borrow more money -- they're already under heaps of debt as it is! In fact, many of them are too worried about paying off existing debts and staving off bankruptcy than to take on another loan.

Black Blade: It should be "interesting" when reality kicks in on Wall Street. The recent rallies have no fundamental basis. Debt is soaring, earnings are down or nonexistent, there are scandals galore, etc. It should be quite "entertaining" to watch the coming carnage.

- Black Blade

Off to the gym!!!

Explosions/Colombia -2: During Uribe's Inauguration

BOGOTA (AP)--Explosions rocked downtown Bogota during the inauguration Wednesday of hardline President Alvaro Uribe, killing at least 10 people, witnesses said.
Three thunderous blasts shook the area around the parliament building minutes before Uribe took the oath of office from Senate leader Luis Alfredo Ramos. Arturo Robles, a cameraman for Associated Press Television News, rushed to the scene and saw at least 10 bodies, barely five blocks from parliament.
The corpses lay in the street and in a heavily damaged house in the poor Cartucho neighborhood, Robles said.


Moody's:Most Financial Institutions Have Rating Triggers

08/07/2002
Dow Jones News Services
(Copyright � 2002 Dow Jones & Company, Inc.)



By Christine Richard
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)-Ratings triggers are a common feature among financial institutions, though they do not pose imminent financial consequences for any issuers, Moody's Investors Service said Wednesday.

That could change, however, for a few institutions with notable triggers if business conditions were to worsen, Moody's said.

"If such rating triggers were activated, it is likely that the institution would experience additional rating stress beyond the original cause of the downgrade," said Laura Levenstein, group managing director for financial institutions at Moody's.

The rating agency's conclusions were the result of a survey of 438 U.S. financial institutions that asked them to privately disclose triggers in financial and operational contracts.

Levenstein declined to cite specific examples of financial institutions that could face downgrade pressure in more adverse business situation due to rating triggers, citing confidentiality agreements.

Moody's does not reference in its reports triggers that have not been publicly disclosed by a company.

It is best practice for companies to disclose the existence of triggers but not a requirement, Levenstein said.


(MORE) DOW JONES NEWS 08-07-02

03:03 PM

=DJ Moody's/Triggers-2: Most Banks Don't Reveal Key Triggers


There weren't any surprises in the types of triggers employed by financial institutions, but "I think the pervasiveness of triggers is surprising for everyone," Levenstein said.

Among U.S. banks, Moody's found that 29% had material triggers which, if activated, could have further negative rating consequences. Yet, 73% of these banks do not publicly disclose their rating trigger information, Moody's said.

Triggers at banks generally were related to derivative contracts, securitizations, asset-backed commercial paper programs, municipal depository agreements, backup liquidity lines, mortgage warehouse facilities, and Federal Home Loan Bank advances, Moody's said.

Among finance companies, Moody's says explicit rating triggers are less common.

At the same time, moderately high credit ratings are critical to competitive funding access and long-term viability of independent finance companies, creating implicit triggers, the rating agency said.

Moody's did uncover one finance company with consequential rating triggers related to asset-backed conduit facilities, but the company had language regarding the triggers changed, eliminating material risk related to the deal. The name of the company was not disclosed.


(MORE) DOW JONES NEWS 08-07-02

03:42 PM

=DJ Moody's Triggers-3: GSEs Have Implicit Below-AAA Trigger


Among real estate finance companies, there are few material rating triggers, Moody's said.

Yet, companies are vulnerable to downgrades because of the impact such rating cuts could have on their ability to act as a counterparty or an intermediary, according to the report.

For instance, the government-sponsored enterprises, including Fannie Mae (FNM) and Freddie Mac (FRE), depend "implicitly on their Aaa ratings, in that they are thereby enabled to intermediate between lower rated institutions and transactions, using their Aaa status to give credit support or to invest," the Moody's report said.

Moody's noted that while this implied rating requirement is well known among market participants, the agencies do not disclose or discuss the issue in their financial statements.

For the property and casualty insurance and reinsurance businesses, Moody's said rating triggers are common but pose no significant or imminent financial consequences to issuers.

The rating agency noted, however, that the industry faces exceptionally tough conditions, which means triggers need to be closely monitored.

Around 70% of companies have exposure to some type of rating trigger, with 16% of the triggers seen as material, or likely to have an impact on ratings in more difficult business conditions or if the company's ratings were at lower levels.


(MORE) DOW JONES NEWS 08-07-02
04:07 PM
=DJ Moody's/Triggers-4:Says Securities Firms Lack Disclosure
In the securities and asset management industries, triggers turned up in contracts including liquidity lines, swaps and other derivatives, asset-backed commercial paper programs and other securitization liquidity support, hybrid securities and warehouse facilities.
Moody's didn't express major concerns with these triggers though it faulted the industry generally for poor public disclosure of the triggers.
Among the financial guarantors, rating triggers don't pose major concerns, according to Moody's, which noted primary insurers face an implicit trigger on a drop below a triple-A rating as the loss of a top credit rating would put these companies at a significant competitive disadvantage.
Levenstein said she expected the greater attention on triggers generally to lead to some renegotiation of existing triggers. While such triggers have allowed companies to borrow at a lower cost in the short-term, they have raised risk to companies in the longer term.
Therefore, attempts to cut back on the use of triggers is seen as positive.
"In this environment of confidence sensitivity and volatility, it's not a negative but a positive change from a rating perspective," Levenstein said.

personally i think these are what many on the inside of the industry fear, and will do whatever it takes to prevent from happening, once it starts it will be hard to controll.> stay above the frost line. hahahahah

Excellent detective work, Pizz! Is that a new technical chart formation, "TU"? ;) (Believe me, BB's vocab is seeping into daily thinking -- I can just hear JPM's floor traders yelling across the pit now "We just went T.U.!"

BB: "Off to the gym" is not a remark missed hereabouts -- just have that equipment to bolt together now -- one o' these days. If "Spike" would just settle down (maybe they can have a special GoldHearts Treadmill with the INO display?)

Gandalf: It may not be today -- but it will start like today. Just a wiggle upward, that doesn't stop.

steady -- you and all the other news reporters, thanks! -- well, if the media is not reading this site, they're not doing their jobs. But you know lots of them are -- maybe in their PJs late at night. Knowing we're largely right -- somewhere down the road -- and they want to be ready to report the developments. Any other cogent explanations out there?

That TV mention -- Cramer's had more than his 15 minutes of fame -- he's jealous of getting bumped offstage by a story he can't ride for another couple years? -- by contrast gold's time pushed OFFSTAGE (out of 3000 years history) will seem like a mere 15 minutes of "no respect".

Honest money. Honest banking. Honest accounting. Can't move forward without it. The sooner we get started, the better.

I Don't want to get too deep but......It was June 1996 when the long-standing inverse relationship between interest rates and gold was buried by Clinton, Summers, Rubin and continues through today by their successors. The divergence is sharp and unmistakable.

It was then that all the mutated bubbles were born and then fed steroids. It was then that gold's 200 day moving average was reversed to the downside. It was only a few weeks later that Chase Manhattan Bank launched a 225% interest rate derivative growth spurt so Chase was in on the rig from its inception.

LTCM most likely DID trade in gold and the rumored amount they were short was 400 tonnes...tonnage that had to be paid back from Fed sources. In the LTCM bailout: "Not a penny of taxpayer money was used"...Alan Greenspan 1998. But he didn't say anything about 400 tonnes of taxpayer gold did he?

The architect of the "New Economy" was Lawrence Summers. His discovery that there are only three variables involved in achieving economic equilibrium: Interest rates, the general price level and the price of gold must have been secretly hailed in the Oval Office and the Federal Reserve. The Fed already controlled interest rates�if they could somehow manage to control gold too...then they could ALSO control the general price level [Inflation]. And we all could live happily ever after...except for the nations that produce gold...oh well!

Instead of implementing an era of stability with this new macroeconomic finding, they gorged and kept gorging.

Now there seems to be no exit strategy save a devaluation to save the big banks and reduce the crushing debt the greedy bankers have created. Worse, they still face the massive resultant government growth structure that can no longer be serviced because the stock market's cap gains tax revenue is gone forever.

The Japanese have almost the same problem with moribund banks and a looming devaluation either through gradual inflation or a sudden deval.

Since BOTH country's economies are joined at the hip, a gradual simultaneous inflation strategy seems out of the picture. How, exactly, could Tokyo and Washington print together?

A sudden joint devaluation does fit the timing requirements in this suggested rescue strategy.

What about gold? No matter WHAT the Fed does, the shares and the metal will reflect appropriate historical value.

It must gall the Fed to realize that gold bugs may be the only winners in their crime.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APVGF.RSWRW5yb24nSnip:

Citigroup Inc. loaned Transwestern Pipeline Co. $550 million and J.P. Morgan Chase & Co. provided Northern Natural Gas Co. $450 million, money the subsidiaries passed along to their Houston- based parent, according to an audit by the Federal Energy Regulatory Commission.

...............
The probes into the loans, which haven't been repaid, open a new front in the investigation of Enron and its former Chairman and Chief Executive Officer Kenneth Lay. Federal officials have been focusing on off-balance-sheet partnerships that an internal Enron investigation said hid $1 billion in losses and contributed to the company's bankruptcy filing on Dec. 2.

``The belief that (the money) wouldn't be paid back is tantamount to looting the subsidiary,'' said Mark. E. Robinson, a former deputy attorney general in the Reagan administration and now a partner with the Boston-based law firm Bingham McCutchen. ``That's fraud under a raft of federal statutes.''

The Wall Street Journal reported earlier today that the Justice Department and SEC are investigating the loans. Part of the money was used to pay off an earlier unsecured $250 million loan Enron got from Citigroup, the newspaper said, citing lawyers close to the case.

...............
Possible Fraud

``If the bank was complicit in a transaction designed to transfer some of its debt from unsecured to secured, with the understanding that Enron was going into bankruptcy, then you have conspiracy to commit bankruptcy fraud,'' said Mike Simons, a former federal prosecutor in New York specializing in corporate crime.

Under federal sentencing guidelines, Simons said, Enron and the banks may be fined as much as $4 billion, or four times the amount of the loan.

...............
*************

Misetich

Lets stay on the JP Morgan and Citi HOT TRAIL -

Got gold?

Through Unheardoffinancialdistressastheirstockpricedropsbelowtherealrateofreturn.

It's easier to abreviate.

Pizz

PS - Sector -thanks for a bit more backround on Gibson's Paradox.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APVGVXhRbQnJhemlsSnip:

Since early May, Brazil's borrowing costs have surged as its currency, the real, has lost a fifth of its value and the benchmark bond has fallen more than 30 percent.

With half its obligations tied to the dollar, Brazil's interest payments rise $1.4 billion for every 1-percentage-point decline in its currency.

Investors are concerned that once in office the leading candidate in October presidential elections, Luiz Inacio Lula da Silva, would increase government spending and condone a default on Brazil's 1 trillion reais ($329 billion) in debt. Lula said in June he would honor Brazil's obligations.

Cash Flow

Investors said the new aid alone won't resolve the country's cash-flow problems and boost its sagging financial markets. The government has 11.4 billion reais in debt coming due today, and faces almost 100 billion reais in maturing Treasury bills by year- end.

``We are not optimistic in the short term,'' said Vanessa Barata, who helps manage about 1 billion euros ($969.4 million) in bonds for Esaf-Espirito Santos Fundos in Lisbon. ``There are some pressures in the market -- the country's debt load, the political scenario -- that dragged on the real and that hurt bonds, too.''

Brazil has borrowed $14 billion of a $15 billion credit line the IMF approved in September. The government plans to draw down the remaining funds by 2003, when it must begin making $11 billion in IMF payments. Its current IMF agreement expires in December.

............
The loan from the IMF is its third to Brazil in four years. The government by 2003 faces payments on almost 100 billion reais in maturing Treasury bills
...............
Of its total debt, Brazil owes the IMF $14 billion, including $11 billion due in 2003. The new accord is intended to reassure investors the lender of last resort for many emerging economies hasn't abandoned the country as its markets fall prior to the presidential election.

************
Misetich
Lets stay tuned - and watch it unfold - we'll find out IMF's attached strings in the next little while- Just a thought though, what happened to the IMF's September bailout? and what happened to the other 2 IMF's bailouts of Brazil?

Got gold?

http://www.economeister.com/reg/popup/single_story.jsp?prod=114&ts=1028744340000&sn=2&banner=mainwireSnip:

By Mark T. Kuiper

NEW YORK (MktNews) - Corporate bond analysts at Standard & Poor's
Corp. said Wednesday they expect to downgrade JPMorgan Chase debt
ratings should additional adverse news about the beleaguered company
come to light.

"It won't take much more bad news for us to downgrade" the
company's debt rating, maintained Tanya Azarchs, a senior bond analyst
with Standard & Poor's during a teleconference call Wednesday on U.S.
Banks' second quarter operating performance.

"JPMorgan Chase's liquidity is intact ... their (financial)
performance has been mediocre but stable over the last quarter. We
expect that to continue," she added.

The rating agency revised the investment banking institution's
outlook in January to negative from stable, citing rising loan losses
from a string of high profile bankruptcies such as Enron and K-Mart.

Moody's Investors Service changed its outlook on the long-term
ratings of JPMorgan Chase to negative from stable only just this past
month, reflecting Moody's concern about asset quality within its
wholesale banking portfolio.

Of note, the Moody's action came just one day after a JPMorgan
Chase investor conference call, where senior executives expressed strong
confidence that there were no pending adverse rating actions.

"There has been no fundamental impact on our business and the
rating agencies remain unchanged," said William B. Harrison, Jr.,
Chairman and Chief Executive Officer on the conference call on July 24.

Senior bank officials also denied any wrongdoing during the call of
allegations that they hide Enron's debt and looked to increase the
bankrupt energy trader's cash flows

The firm's ability to pay future dividends, also will not be
impacted by its current below book value stock price, as capital ratios
remain "well above targets," Harrison told investors.

The S&P analysts went on to say that they remain uncertain as to
the potential adverse fallout pending Enron-related lawsuits might have
on JPMorgan Chase, as well as the entire investment banking sector.

Thomas Foley of Standard & Poor's Financial Ratings Group,
explained that any adverse impact from Enron-related litigation would
most likely affect the bank's business reputation. Court ordered
financial settlements would be easily absorbed by the banking behemoth,
he said.

Looking at the U.S. banking industry as a whole, the analysts said
that second quarter performance has been flat, and despite widespread
corporate malfeasance, which has roiled credit and stock markets
recently, U.S. bank ratings have remained reasonably stable.

The analysts, however, said they maintain a cautious outlook going
forward as fears of more corporate bankruptcies build and signs the
economic rebound may not be very strong after all.

Overall, and despite the cautious industry outlook, U.S. banking
institutions have cash reserve levels that "more than cover" non
performing assets. The industry has particularly benefitted 40-year low
interest rates and accompanying strong residential mortgage and home
equity loan originations this past quarter.

"Residential mortgage volume will continue strong through the end
of this year," said analyst Victoria Wagner on the call. Mortgage
refinancings, meanwhile, are a tad off their highs of November 2001, she
added.

Wagner cautioned that while the residential market is doing well,
the commercial real estate market has been experiencing high vacancy
rates in all metropolitan areas this year, which will likely negatively
impact the industry going forward.
************
Misetich

Lets stay on this JP MORGAN HOT TRAIL! Who knows where it may lead?

Got gold?
Reprinted in its entirity for fair use and educational purposes

Black Blade:

You've mentioned the August 14th date a few times now - so I'm assuming you place some significance on CEO's having to certify financial statements. You may very well be right, but its significance will really depends upon the language contained in or required by the certification. For the CEO's with something to hide, any permitable language that suggests their right to ignorance (e.g. "to the best of my knowledge") will be used without hesitation.

My question is simple and somewhat rhetorical: Do you think our best and brightest in Washington will be able to limit any certification wiggle room; how will they police CEO compliance; and have they thought about the litigation consequences?

Thanks for all your work - you have certainly earned my respect.

http://www.economeister.com/reg/popup/single_story.jsp?prod=114&ts=1028743440000&sn=1&banner=mainwireSnip:

The market got the jitters just as Aon Corp. (AOC), the world's No.
2 insurance broker, announced it broke even for the second quarter, as
it took charges for writing down bad investments. However, the kicker
was that the U.S. Securities and Exchange Commission had requested
changes in the way it reports certain items in its accounts.
..............
Aon, second only to Marsh & McLennan Cos. Inc. (MMC) in the
insurance brokerage industry, said the Securities and Exchange
Commission questioned it on several items in its accounts, including
unstated investment losses, questionable timing of some costs and a
reinsurance recoverable items, and the decision not to consolidate
certain special purpose vehicles.
************
Misetich

Insurance companies are under severe stress - as their stock and bonds portfolio have taken a kicking and the worst is not over yet-

Got gold?

Let's see, US Treasury funds IMF, IMF loans the money to Brazil, then Brazil pays the multinational banks (interest only of course)including JPM, Citi, etc.

Hmmm. . . .

(Is it a loan if you are aware that there is no intention of repayment ((principle of course)), or default fraud since countries can't go bankrupt yet).

Starting to figure out where the Enron boys learned their trade.

Pizz

http://www.afxpress.com/afxpress2/afx/bn221255.xml.htmlSnip:
WASHINGTON (AFX) - Consumer credit rose a seasonally-adjusted 8.4 bln usd in June from the previous month, the Federal Reserve said.


Consumer credit has risen every month since Jan 1998.

The rise was slightly below expectations. The consensus forecast of Wall Street economists was for consumer credit to rise 7.8 bln usd in June.

Consumer credit rose 9.5 bln usd in May, unrevised from the initial reading.

The Fed said credit for revolving loans -- such as credit card loans -- rose 3.8 bln usd in June, after rising 2.4 bln the previous month.

Non-revolving credit, including auto loans and all other loans not secured by real estate, rose 4.5 bln usd, following a 7.1 bln increase in May.
***********
Misetich

Job losses are continuing - stock and market losses are continuing - yet consumers are borrowing more -
Credit card interest rates are high - wouldn't surprise if additional credit is used to pay existing loans interest costs and monthly minimums

The higher consumer/corporate debt rises the more the odds of a severe credit crunch - and the US $ bubble will burst

Got gold?





Got gold?

Security Climate In Asia Changing
08/07/2002
Dow Jones News Services
Japan's build-up is believed to be the major reason behind the expansion of South Korea's submarine fleet. The German government last year approved the transfer of about $600 million in equipment so that Hyundai can begin building three new HDW Type 214 submarines at its shipyard in Ulsan. The South Korean navy late last year deployed its ninth HDW-designed submarine.
Similar rivalry with a neighbour was widely believed to be a factor in Malaysia's decision on June 5 to sign a contract with France's DCN and Spain's IZAR to take delivery of two Scorpene class submarines by 2008. Kuala Lumpur has also ordered an ex-French navy Agosta submarine for training. The three-submarine deal is reported to be worth over $1 billion.

In March, Singapore took delivery of its second ex-Swedish navy, Sjoormen-class submarine. Another two are on order. However, Malaysian officials have rejected suggestions that an arms race is under way with its tiny but militarily strong neighbour. With Singapore and Malaysia in the submarine club, Thailand is also considering its underwater options. The Thai navy has held talks about the possibility of buying three used Israeli submarines but most regional defence analysts doubt the deal will go through.
When all of these submarines on order come into service, Asia's key waterways could again become as crowded below the surface as they were at the height of the Cold War. "The security climate is changing rapidly as regional governments seek to boost their maritime influence," says Horobin, a veteran of deep-sea hide-and-seek with the Soviets. "It's really quite startling."
(See related sidebar: "The Region -- Malaysia -- Wanna Buy A Sub?" -- FEER Aug. 15, 2002)

"(Is it a loan if you are aware that there is no intention of repayment ((principle of course)), or
default fraud since countries can't go bankrupt yet)."

These "loans" are(?) held by some type of collatoral???
Would love to see one of these IMF agreements in total. Maybe someone here knows more about this.

Your "intention of repayment" or lack thereof reminds me of one of personal home loans where it is interest only. In effect, the loan company/bank will hold/own the title forever and the home "owner" is nothing more than a glorified renter. Actually, worse off than a renter who can simply walk away with a 30 notice in most cases.

Just thinking aloud, my point being the banks will soon hold title to everything from homes to entire countries while they reap huge payments for infinity. Not a bad deal. Following the trend in automobiles, most will have one or more payments for life because of the constant trading in for new models.

The sad thing is most will never own anything. Monthly payments forever. Cell phones, phone lines, cable/sat TV, cars, houses, insurance, etc. I am amazed at the rent to own stores that have popped up everywhere. Obviously many even rent the sofa they sit upon and the fridge that keeps their beer cool. Nation of debtors, YOU BET! Which leads me to a final point. We have probably seen the last generation in this country that will be handed down anything of value from the previous generation. There will no longer be estates consisting of property, homes, land that will be passed to the next generation. I suppose there is hope that profits in the stock market (casino) will leave something for those who follow behind. Good Luck on that one.

Perhaps one of the reasons why those in Control wish ill to Gold. The average person, if aware, can purchase Gold Eagles or like products, and actually leave something of value behind.

************
Let's see, US Treasury funds IMF, IMF loans the money to Brazil, then Brazil pays the multinational banks (interest only of course)including JPM, Citi, etc
***************

When you factor the country's currency devaluation - the debt increases in real terms - which adds additional burden and obligations - servant for life

Hi all, the way I see it one rate cut to any degree isn't going to change the absoute abuse, scandalous and just about every minipulation on you name just to name a few that this economy had to endure. In fact another rate cut will show how desperate the Fed is and its all coming out in the laundry. That which was done is secret for none observe will soon be revaled in the light for all to see. Droppig the interet rate is like trying to put a bandade on a motal womb. It ain't happenng, its not going to work! Meanwhile stay tuned for more sucker rallys and big spikes on prescious metals. The Volcano is getting reay to bust loose so be ready, get gold.

Great Heart

Hope their collateral is better than "the full faith of. . ." that we have on our FRN's. (Went to grab one out of my wallet to get the exact wording, but my last 3 singles and some change went for my morning Mocha).

Let's see, 1 greenback buys about 27% of my morning drive thru coffee fix, but with value added, CPI increased cafeen content, along with the chocolate, plus the better quality reinforced double cup, we may be actually able to show that the equivalent 20oz cup of java that I could buy five years ago for .49 has actually decreased in price. . . . . .

And while I'm on a roll, I think I figured out how to account for loans with negative interest rates. The bank loans us money then pays us interest every month to improve our cash flow, and since the present value of a loan with negative interest is actually higher than the original principle, the bank should be able to book a capital gain on the appreciation, then do an interest rate swap in exchange for a forward, preferred, deferred for an optional 15 years gold contract that is properly hedged with a lease from the Seventh National Bank of Rio de Brazil, who holds the reverse SDR from the IMF . . . gee, I think I just found our collateral.

Simple enough? Think I'll buy some more gold shortly.

Pizz

http://finance.yahoo.com/q?s=@^dji&d=c&k=c1&t=1d&a=v&p=s&l=on&z=m&q=l Notice this!!
This page shows all the 1 day charts for the 30 dow components. Isn't it interesting that so many of them have the same pattern - especially around close? Its as if one entity is buying.

...as of Friday, we might guess......that these guys are thinking long and hard about the consequences of a misstatement.

I tend to think that if there were wiggle room many more would have already availed themselves and signed early.

The absolute disaster situation for the Administration, Congress and the economy happens if the bulk of CEO's refuse to sign on Constitutional Fifth Amendment grounds.

Should such a thing occur, it would only confirm shareholder's worst fears... that a majority of the top 1000 US corporations have something to hide.

One can only imagine the impact on already stressed mutual fund redemptions!

When Lady Waverider and the messenger reached base camp in the forest, Sirs Powell and Gresham were waiting for them. They assisted the messenger off the horse and laid him by the fire. The arrow head had penetrated deeply into the muscle but had not punctured the lung or other vital organs - he had been very lucky. She drew her instruments from their wrapping, and had her assistant, Lady Sweet Sixteen heat the scalpel over the fire. It would be used to extract the arrow head and to cauterize the vessels. Sir Gresham provided a flask of brandy to the messenger to numb the pain, and then placed a piece of saddle leather between his teeth and lay him on his stomach. The two secured the messenger with the full weight of their bodies. The arrow was snapped short and once the knife was hot, it was used to release the arrow head...intact...at that very moment the messenger let out a cry of anguish and collapsed into unconsciousness.

Then she heard it...the distant sound of war drums...she listened...she knew that familiar beat and she knew what it meant. She left the cleansing and bandaging of the wound to Lady Sweet Sixteen - an eager and competent assistant with a thirst for learning. She gathered Ladies Siochaina, Goldentrill, and Leigh and they mounted their horses and headed back toward the battle field. They arrived at the side of Sir Gandalf the White while the brilliant aura still offered a wall of protection. They stood captivated at the scene in front of them and when the aura slowly faded it was apparent that the Knights had secured control of the inner courtyard. The Goldbugs looked to Sir Black Blade for direction and he knew instinctively that the timing was not right to advance upon the last stronghold. The men had fought hard and needed food, rest, recuperation, and the strategy needed to be determined...carefully, methodically, artistically, but most importantly without opportunity for failure.

Lady Siochaina approached Lady Waverider and reported on the number of wounded while Ladies Goldentrill and Leigh attended to the most critical. There would be enough supplies to tend to all of them, but the problem was not with the wounded Goldbugs, it was with the wounded enemy. Suddenly a deep voice echoed through the silence of the moment. Lady Waverider flashed her green eyes to the castle and saw Sir Black Blade sitting high on his horse in the open gate..."Kill them NOW, all the wounded, all the enemy who are still alive" he boomed. One of the enemy was at the foot of Sir Rock's horse and he threw his arms in the air and begged for mercy. No one moved...only the west wind in the trees and the steady swishing of a horses tail could be heard...

Sir Rock dismounted his horse and placed himself between the fallen enemy soldier and Sir Black Blade. He spoke slowly but clearly for all to hear..."This man asks for mercy - he deserves to live." Sir Black Blade responded immediately, "The man is nothing more than a grasshopper...he deserves to die!" "He asks for bread and you would give him a stone?" Sir Rock asked. "He serves The Lord of the Castle...there is no mercy, he deserves to die!" The noon sun sweltered down and Lady Waverider blinked away a dropplet of persperation that had fallen onto her dark eyelash for she dared not move. This was the first time there was confrontation within the rank and the world stood still, and the silence was deafening. Then, with deliberation and authority Sir Gandalf the White spoke...all knew that his word was Law. "THIS is what shall be done with the enemy......

http://www.gold-eagle.com/research/salinasndx.htmli read in the imf by laws that in order to part of the imf u cant go to a gold standard! i wonder why that had to be included in the terms, however as victor hugo salinas states a silver standard might do the trick to break the yoke of the imf over its fiefdom in s.america.got gold....give it a silver lining!

http://www.forbes.com/newswire/2002/08/07/rtr689562.htmlSnip:

NEW YORK (Reuters) - Thirty-six states saw their personal income tax collections fall in the second quarter, hurt by the weak economy and the bear market that sliced tax revenues from capital gains.

Total personal income tax collections for the 36 states fell by 23 percent in the second quarter from the year-earlier period, according to a new survey of the 36 states that provided the Nelson A. Rockefeller Institute of Government with data. The Institute's report was issued on Thursday.

California, which faces a $23.6 billion budget deficit, suffered the biggest blow, with tax collections down 24.7 percent in the second quarter, according to the new survey.

New York saw tax collections dive 19.4 percent. New York, whose economy suffered a blow after the airplane attacks last September, faces a budget gap estimated at as high as $6 billion.
...........
It's really been a horrible fiscal year for revenue collections in most states," Senior Analyst Nicholas Jenny, who wrote the Institute's report, said in a statement.

***************

Misetich

So much for the much heralded US ecomonic recovery we've been hearing from the Bush Economic Team

States need to adjust their budgets accordingly - how?
Lower spending
Cut programs benefits
Increase taxes

Got gold?

http://www.sec.gov/rules/extra/ceocfo.htm

UNITED STATES OF AMERICA
BEFORE THE SECURITIES AND EXCHANGE COMMISSION
File No. 4-460: Order Requiring the Filing of Sworn Statements Pursuant to Section 21(a)(1) of the Securities Exchange Act of 1934
The Commission has commenced an investigation to ascertain facts, conditions, practices and other matters relating to the financial statements and accounting practices of certain large publicly traded companies.

In light of recent reports of accounting irregularities at public companies, including some large and seemingly well-regarded companies, the purpose of the Commission's investigation is to provide greater assurance to the Commission and to investors that persons have not violated, or are not currently violating, the provisions of the federal securities laws governing corporate issuers' financial reporting and accounting practices, and to aid the Commission in assessing whether it is necessary or appropriate in the public interest or for the protection of investors for the Commission to adopt or amend rules and regulations governing corporate issuers' reporting and accounting practices and/or for the Commission to recommend legislation to Congress concerning these matters.

As part of this investigation, the Commission believes it necessary to require written statements, under oath, from senior officers of certain publicly traded companies, identified in the list attached hereto (the "Companies"), with revenues during their last fiscal year of greater than $1.2 billion, that file reports with the Commission pursuant to the Securities Exchange Act of 1934, regarding the accuracy of their Companies' financial statements and their consultation with the Companies' audit committees.

Accordingly, pursuant to Section 21(a) of the Securities Exchange Act, it is:

ORDERED, that the principal executive officer and principal financial officer of each of the Companies shall either (a) file a statement in writing, under oath, in the form of Exhibit A hereto, or (b) file a statement in writing, under oath, describing the facts and circumstances that would make such a statement incorrect. In either case, such statement shall further declare in writing, under oath, whether or not the contents of the statement have been reviewed with the Company's audit committee, or in the absence of an audit committee, the independent members of the Company's board of directors. Such sworn statement shall be delivered for publication in written form to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549 by the close of business on the first date that a Form 10-K or Form 10-Q of such Company is required to be filed with the Commission on or after August 14, 2002.

By the Commission.

June 27, 2002

Jonathan G. Katz
Secretary



Exhibit A
(Corrected) OMB Number: 3235-0569
Expires: January 31, 2003

Statement Under Oath of Principal Executive Officer and Principal Financial Officer Regarding Facts and Circumstances Relating to Exchange Act Filings
I, [Name of principal executive officer or principal financial officer], state and attest that:

(1) To the best of my knowledge, based upon a review of the covered reports of [company name], and, except as corrected or supplemented in a subsequent covered report:

no covered report contained an untrue statement of a material fact as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed); and

no covered report omitted to state a material fact necessary to make the statements in the covered report, in light of the circumstances under which they were made, not misleading as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed).
(2) I [have/have not] reviewed the contents of this statement with [the Company's audit committee] [in the absence of an audit committee, the independent members of the Company's board of directors].

(3) In this statement under oath, each of the following, if filed on or before the date of this statement, is a "covered report":

[identify most recent Annual Report on Form 10-K filed with the Commission] of [company name];

all reports on Form 10-Q, all reports on Form 8-K and all definitive proxy materials of [company name] filed with the Commission subsequent to the filing of the Form 10-K identified above; and

any amendments to any of the foregoing.
[Signature*]
[Name]
[Date] Subscribed and sworn to
before me this ____ day of
___________ 2002.

/s/_______________________
Notary Public

My Commission Expires:


[* Separate statements to be signed by each of the Principal Executive Officer and the Principal Financial Officer.]


Black Blade: There may be some "wiggle room" involved, however, any misstatements will likely invite a lot of unwanted attention and of course anything that is strikingly out of the ordinary will certainly invite an investigation by the SEC. That alone could raise concerns affecting the share price and even lead to litigation and possibly very costly civil lawsuits. With the new accounting regulations and the law recently signed by George W. Bush, we consequences for knowingly lying on these sworn affidavits will likely result in prison time. Obviously nearly every CEO is being very careful these days and consulting with attorneys and in house accountants. As the books are checked and rechecked it is likely that we will see several revisions. So far nearly all earnings and revenue revisions have been lowered. Wall Street so far seems to be somewhat unaffected by the lowered earnings and gloomier outlook as the media and Wall Street analysts/strategists suggest that the market has already "bottomed". It should be quite "interesting" and provide us with what may prove to be a lot of amusing "entertainment" if improved earnings do not materialize.

So far 80 companies have submitted forms and 31 have sworn to the statements in the exhibit A form. Soon after the deadline the SEC is supposed to comb through the financial sheets and compare notes. Meanwhile, the FBI has set up a hotline for any potential "whistle blowers". In fact several investigations are reportly underway and others are planned.

5thWhat do you think if all of us refused to sign our April 15th book keeping on the 5th?
Live small.
RJ

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APVFQZRQHQ3J1ZGUg
Snippit:

New York, Aug. 7 (Bloomberg) -- Crude oil fell after the American Petroleum Institute reported the biggest weekly decline in U.S. refining since early March, signaling reduced demand for oil to make fuels such as gasoline and diesel. U.S. refineries cut processing last week to 93.3 percent of their capacity, down 1.9 percentage points from the week before. Gasoline inventories rose, the report said. The summer vacation season, when gasoline demand rises to an annual peak, will end with the Labor Day holiday early next month. ``Refineries will continue to diminish output,'' said David Becker, manager of energy derivatives trading at Citibank NA in New York. ``Gasoline demand is set to fall soon and there is a lot of heating oil here and plenty in storage in Asia and Europe.''


Black Blade: Obviously the claims of the much touted economic recovery appear to be a bit premature. Declining oil demand suggests that the economy is contracting even more. Actually that is fortunate as there have been few if any preparations for an increase in petroleum supply. Thankfully the US in locked into a deepening recession and that takes the pressure off of the limited energy supply.

http://www.bankindex.com/read.asp?ID=1111Excellent description of money and how it's created and destroyed...

Perfect argument for gold bullion in possession.

http://www.businessweek.com/bwdaily/dnflash/aug2002/nf2002086_1441.htm
Ignore the rallies, warns Nelson Peltz, who says war and corporate scandals will continue to make the market "the place not to be"

Snippit:

With the Dow Jones industrial average surging about 304 to 8384 points as of the middle of the Aug. 6 trading day, the bulls are back on center stage. After three consecutive sessions of pummeling, stocks rebounded: The Standard & Poor's 500-stock index was up about 4%, to 867, and the Nasdaq composite index had risen 4.5% to 1264. Some of the bulls are suggesting that the market is gaining renewed ground based on the Street's growing belief that the Federal Reserve Board will cut interest rates to boost the faltering economic recovery.

The bears, however, are not buying that idea. Whether or not the Fed cuts rates would be immaterial, some of them assert. They believe the market will continue to head south for some time (see BW Online, 8/6/02, "Dancing to the Street's Limbo Beat"). One unrelenting bear is Nelson Peltz, a savvy investor and a prominent dealmaker, who has witnessed and participated in all the big bull and bear markets.


Black Blade: There are just too many negatives to say that the worst is over. The recent runs on the markets appear to be more of reallocation by funds switching out of gains from bonds and into stocks. The thinking is that the run for bonds may be coming to an end and the stock market may have hit bottom or at least will trade sideways for a while. However, mom and pop investors continue to sit this one out as they are not convinced. Neither are most professionals who have lived through past recessions. Many of those jumping in now are those who were talking about "capitulation" not long ago. Too much hope is placed on a Fed rate cut as if the 11 previous cuts did any good. Sentiment can easily go sour as new scandals emerge, earnings have proven to be utterly pathetic, consumers cut back spending and record debt levels are rising (and not likely to ever be repaid in many instances). The resulting carnage should be quite "entertaining".

http://www.forbes.com/markets/newswire/2002/08/07/rtr689249.html
Snippit:

WASHINGTON (Reuters) - The U.S. Mint said Wednesday it is preparing a final plan to buy several million ounces of silver annually to manufacture a collectable silver eagle coin. President Bush two weeks ago signed into law a program allowing the U.S. Mint to buy silver supplies, now that its stockpile is nearly depleted. The law will benefit silver mines in Idaho and Nevada, which are eager to sell the metal to make the Silver Eagle Bullion coin. The industry expects the Mint to begin buying silver early in 2003. "It's a win-win for the silver industry," said Mike DiRienzo, a spokesman for the Silver Institute. "This could provide a boost to the market once the Mint starts purchasing from the open market." The new law also requires the Treasury Department to study the impact on the U.S. silver market and prepare a report for the Senate and House banking committees.


Black Blade: Old news, yet it is finally making its way into the mainstream media.

my income is so low that there can't be anything there to incriminateso I might as well show the IRS mopes how small it is.

On living small:

Finding ways not to spend money has become an obsession Darwin would have applauded.

You used a word that I was not aquainted with "income" so I looked it up...yah me neither. Live small.
RJ

http://www.boston.com/dailynews/219/wash/Americans_hike_their_borrowing:.shtml
Snippit:

WASHINGTON (AP) Americans shrugged off worries about the economy's health and the recent stock market slide and increased their borrowing in June at a brisk pace. The Federal Reserve reported Wednesday that consumer credit rose by a seasonally adjusted $8.4 billion, or at a 5.9 percent annual rate, in June from the previous month. The increase, bigger than the $7.8 billion advance many analysts were forecasting, left consumer borrowing at $1.71 trillion. Economists said that low interest rates, rising home values and extra cash from the refinancing boom are supporting consumer spending. This, in turn, is helping to offset some negative factors, such the volatile stock market, Americans' eroding confidence in the economy, and their shattered trust in corporate leaders following a wave of accounting scandals.


Black Blade: Digging a deeper hole all the time. This certainly not the time to get sucked in to get deeper in debt. Thankfully I am debt free, I am beholding to no man or corporation. Then again refinancing a mortgage if rates go lower and locking in might not be a bad idea if it allows the debt to be paid off sooner. No debt is better than any debt. As always get out of debt, stash enough cash for several months expenses, get Gold and Silver portfolio insurance, and start a storage program of nonperishable food and basic necessities. Freedom is much better than slavery.