RJK1

Michael Pettis thinks Beijing is getting complacent even as trade tensions escalate: "I am not sure Chinese policymakers fully understand how vulnerable China is to trade war. This is perhaps because the 'success' of the stimulus package has convinced them that they are less vulnerable to external demand than they originally thought. But this would be a serious misreading..." (ETFs: FXI, PGJ)

The leaders of China have played their hand well to this point. They've lured new manufacturing investment , invested huge sumes of money into infrastructure, unfairly manipulated their currencies and set such lax environmental, health and safety requirements to insure that Chinese business, cost wise, remains competitive vs western businesses.
Having worked in China for years, the Chinese are actually a lot like Americans in that they want it all now. The centralized government may have a long term plan although my guess is that their plans are more directed towards keeping their industries running at all costs than enacting some super masterplan.
I think the author way underestimates the advanced state of technology and manufacturing capability. They perhaps lack a long term history in many areas but they are on the verge of being every bit as advanced as any western nation and in many ways are far more advanced than the USA today. They have more heavy industry, electronics, pharmaseutical R & D centers...by any measure they have what we have, only newer, with lower labor rates, minimal environmental controls, etc. What they lack in expereince, they acquire via western consultants. If they truly do get aligned with Japan, then they'd have acess to everything.
Trust me, they aren' geniuses nor are they idiots. They are people like you and me.

'We're on the Path for Fireworks in 2010'

The issue we have in front of us is simple in basic definition...we have spent money we didn't have, used it to delusionally prop up a lifestyle that in reality was getting worse because we were giving away the engine of our economy ( our manufacturing base because it was dirty and hard work). Communist China was only too happy to soak up all this investment and to continue to loan us the money to continue to delude ourselves that we could maintain a lifestyle without manufacturing . See the auto-catalytic downward spiral? The Chinese kept this drug-dealer like scheme firmly in place by pegging their currency to the dollar and we were only too happy to get cheap drugs (Cheap goods) back. Now the Chinese Government (Crack Dealer) is acting like an unknowing and innocent victim. Its clear that we (The USA) gave it away and they (The Chinese) were only too happy to enable it.

All of this was enabled by the Financial Powers that be who now own the very government we think we elected. They made trillions

We have to accept that there is no "painless" way out of this mess and figure out how we get an economy that can provide for its citizens and start growing again or at some point in the near future, we will become a lawless third world country as people will have little to lose and we won't even be able to afford policemen and women to enforce the laws.
Businesses don't want to operate in those types of environments and so we have to have a leader that clearly articulates a PLAN, with a beginning a middle and an END clearly defined that lays a groundwork so we all understand why we will have to suffer through high taxes, a lowered living condition to dig ourselves out of this hole. The plan must exclusively link this pain to a fix as I don't want to pay for Socialism.
Right now, I have ZERO faith in my government. They've ignored the constitution numerous times, transferred private debt to taxpayers, allowed these broken financial institutions to continue acting in a grossly irresponsable manner including record bonuses, have not dealt with the catastrophic derivatives mess, have not re-instituted anything remotely approaching Glass-Stegall all while growing the size and wages of government.

Clinton started this ,Bush II then doubled the size of government to continue to hide unemployment problems, and now Obama has accelerated it. He's the perfect , clueless lackey who doesn't even seem to know that he did nothing to earn the Nobel Peace Prize and that the Banksters own him.

We are running out of time and the Democrats and Republicans are the problem not the answer. I wish I could see a way that we could unite and try to fix this mess. Our kids are going to inherit a disaster and we can't let that happen

Bankers, Economists Say Gold Is a Bubble: Here's Why You Should Ignore Them

Mr. Kim

Good article.

The support for gold being a bubble usually has a couple of sophist examples:

- since there are companies on TV wanting to BUY your gold, it must be a bubble (Note they never seem to notice these companies only want to BUY, not sell)

- People in America having GOLD parties. (I honestly don't know of anyone that's had a gold party so I must be missing something)
It is my own personal assessment (Meaning me using my own eyes and ears) that 99% of the populace is completely unaware of the incredibley dangerous position we are in fiscally and they have no gold or silver and if they had discretionary money, they'd invest it elsewhere. So this so called gold euphoria is, as you say, a creation of the powers that be.

Thanks for a good commentary
-

Wall Street Breakfast: Must-Know News

Good Update Sir

These Banks that "re-pay" the Tarp monies also need to take the crap securities back from the FED and then account for them via true mark to market. Then they can figure out their supposed "bottom lines". Clearly they would be insolvent.

To think that Obama and the rest of the government have allowed this in broad daylight is just another sign that our society can't even discern right from wrong anymore. They steal from us, tell us they are doing it for "us" and then will send us a bill for their efforts.

I saw two interesting numbers from an interview with Steve Keen that helps to dimension the scope:

Every man, woman and Child in the USA (330 million of us) would have to contribute $57 to cover the Goldman Sachs year end bonus.
(Does it really surprise anyone that GS was selling bad loans then betting against their performance? )

$11 trillion dollars is enough to have paid off every mortgage and every credit card balance in the USA . (Obama has already committed more than this). I'm not saying this would have been sound fiscal policy but it would have at least impacted a broad range of citizens rather than spending the$11 + Trillion to "save the bank shareholders ....oh I'm sorry the official line is save the financial system).

Now the private debt is still $11 Trillion and we have to pay $11 trillion + to cover forced Government wealth transfer to the financial industry.

Just where is this money going to come from?

Thank you Sir Alan Greenspan, Robert Rubin, Larry Summers, Phil Grahmm, George Bush, Barack Obama and the rest of the folks that have placed their own interests above their country's.

Gold: The Glenn Beck Indicator

Great Insight!
The dollar has devalued from $1.20 on the USDX to $0.75 over the past year and you think we're all fools because we can't see that the dollar has bottomed?!. Why do I say the dollar and not the gold price? Because the major gold investors are not Joe Cab driver, their central banks, hedge funds and the like and the purchases are not occuring due to some supply / demand scenario or due to it beng trendy as you infer, gold is going up because its a safe haven asset that is insulated (historically) from the dynamic devaluation of a currency during an economic collapse.
Yes, Felix, you are smarter than the rest of us idots who just want to keep from losing more money.
I'm looking forward to your next article where you advise us that the banking system is looking like a great place to invest in.

Chinese Oil Demand Prospects in 2010

If you take a close look at China today, a few things stand out. China is:

1) dependent on CAPEX investment for growth
2) quite a ways from being a consumer economy capable of consuming their own goods
3) mature in their industrial base
4) portraying themselves as growing largely through stimulus injections
5) in the midst of a real estate bubble of their own in most major urban areas
6) struggling to balance the promise of continued industrial growth to the substanence farmers who've left their rural areas in search of industrial jobs


I don't personally think China can afford to rock the boat with regards to the dollar as they are not as flush with reserves as most think and as a result, I don't think they can continue capital injections via stimulus for much longer. As such, I'd expect GDP growth to be significantly overstated at 8% and wouldn't be surprised to see GDP growth flat in the 2nd half of 2010.

All of this would portend lower demand for oil by china than forecast, and lower oil prices.

I don't expect oil to shoot to the moon from a demand/supply perspective until price drops to a point where capacity comes off line unless their is significant turmoil in the middle east (Definitely possible) or elsewhere in the world.

I'm certainly no Oracle at Delphi but that's how I see it and would be interested in others views

Bunning vs. Bernanke

The Roots of Violence: Wealth without work, Pleasure without conscience, Knowledge without character, Commerce without morality, Science without humanity, Worship without sacrifice, Politics without principles”

Mahatma Gandhi

Any of this sound a chord with folks?

Taleb goes berserk on the upcoming Bernanke reappointment: "I cannot believe that we... can accept living in such a society. I am not blaming Bernanke (he doesn't even know he doesn't understand how things work or that the tools he uses are not empirical); it is the Senators appointing him who are totally irresponsible."

Liberty is rarely forceably seized. It is generally given away to the resounding applause of the masses. As went Rome, so to shall we implode from the inside, whilst the general populace is ignorant of the importance of whats transpiring in Washington and how it will affect them.
Now if you declared that we'd have to restrict NASCAR events or discontinue televising NFL games, then the indignation would sweep the land like a Tsunami.
We need change. We need a future again. We need hope and a clear explantion of where we are going and what the plan is. We need to cut the size of government to 1/2 or more of what it is now. We need to live within our means which means sacrifice.We need to break up the banks and break the grip of the financial elites on our government. We didn't elect them, they don't care about us and yet they control the government and by default you and me. This is the real fight. Make no mistake as its far more important to the republic than any terrorist threat from abroad.
Wake up America.!

The Government Bubble that's Driving Gold

FlyBy

You hit it on the head for the most part. What's shocked me is that there is clearly a group of Mega-Power brokers that own the Democrats and Republicans , vis-a-vis the ridiculus campaign finance rules + not so covert grafting that occurs to our politicos. I'm waiting for the day an honest news reporter decides to track avg net worth of politicians going into government vs their current net worth or post government service net worth.
Whats worse is that this self serving financial whoring is legal and people seem to accept it as an unavoidable consequence of "the system".
I believe in the people of the United States. We certainly have our problems but I still am holding out the belief that we will wake up and cleanse this corruption out of governement, roll up our sleeves and start getting back to the business of making things and creating value for ourselves and the rest of the world. We need low taxes, people that have read the constitution and understand it and a return to personal accountability.
Lastly, people need to figure out that the Stock Market is essentially the most elaborate Casino ever invented and like any good casino, the odds favor the house. In this casino, the house sees your cards, controls the payouts and changes the rules on the fly when necessary to protect the till. The people that make money are those in the slipstream of the casino owners, whether they realize it or not.
The reason that Gold is rising is that people are beginning to figure some of this out. I hope we figure it out soon , for the worlds sake.

In his weekly radio address, President Obama said too many small businesses are still finding it difficult to get loans: "These are the very taxpayers who stood by America's banks in a crisis - and now it's time for our banks to stand by creditworthy small businesses, and make the loans they need to open their doors, grow their operations, and create new jobs."

When will President Obama outline his plan for getting the US out of the massive debt he is loading onto us? I realize he is not the only president to do this (GW Bush was also a disaster) but certainly Obama has taken our levels of debt to unfathomable extremes. The mere fact that the press isn't hounding him for this plan is the clearest evidence of their complicity in engineering what future historians will no-doubt refer to as the collapse of the United States. I am still surprised by the absolutely overt way he's moved private debt to the public (i.e you and me), completely hidden which entities got what (this lack of transparency is there to protect the guilty) and then allowed recipients of TARP monies to put the screws to the public. Bonus to failed bank management. Credit card companies got TARP monies (Don't get me started on how wrong that is) and now have risen rates to 30% in some cases. Obama and Congress have sold us out and we need to flush the lot of them by whatever legal means we can. The only way they can deal with this is to continue to print money until the value of the dollar drops to nothing. They may even devalue the dollar via a one time adjustment. Protect yourselves, because the collapse is coming.

"They're treating taxpayers as if they're infants. Human infants in the early months of their life figure out that if you throw a blanket over something, it doesn't really disappear," cash flow analyst Janet Tavakoli tells Max Kaiser (video, 10 min.). "Our meltdown risk today is greater than it was in 2007." (via)

The apparent disinterest in enforcing the laws, not to mention the apparent disinterest in re-instating prudent fiscal reform (Glass-Stegal type legislation, reinstatement of uptick rule, etc) leads to only one conclusion....The parties involved are worried about incriminating their benefactors . The system is rotten . And we have become a nation of largely disenfanchised people, worried only about our own particular circumstances because we all are so pre-occupied and damn busy with our two jobs, running the kids to soccer, etc, that we don't have time to think. Most of us think we are seemingly removed from the actions of the outside world (Wall Street and Washington). Well its about to be brought home quickly , America, cause we're losing our jobs, our homes and control of our own lives...All because of greed , apathy and a lost sense of values on so many levels. We need to get more engaged, hold those responsable for their transgressions and start anew. This time with smaller government , more checks and balances on regulation, and an emphasis as a nation of producing things of value that the rest of the world wants.

Community First Bank of Prineville, Ore., becomes the year's 72nd bank failure, at an estimated cost to the Deposit Insurance Fund of $45M.

The government needs to a) find a group of trustworthy bankers (Probably coming from smaller regional banks that acted responsably with minimal sub-prime loans and minimal CDS exposure and include Paul Volker in the Bunch), b) nationalize all the banks that don't meet some reasonable capital/debt hurdle after true mark to market accounting including and especially CITIBANK, GOLDMAN SACHS, MERRIL LYNCH , JP MORGAN etc c) take the stock values of these banks to zero, d) reinstitute controls like Glass-Steagall, etc d) Null and void all the derivatives in these banks portfolios (Including in Fannie Mae and Freddie MAC) e) honor legitimate financial transactions in those portfolios , f) windfall profits tax the banker's bonuses at 99% and g) jail the SOB's for putting their self interest above the interest of the USA. We the People, need to take back control of our government at the next election, kick out the Democrats and Rupublicans and have a moderate third party that ignores the special interests/lobbiests and acts fiscally responsable.

“Second-half recovery” to become second-half disappointment

I echo Jeff's comments and until we see government do some basic steps to put a decent foundation under this economy, we will continue to spiral inexorably downward in fits and starts. Our congress men and women really ought to wear endorsements on their suits so at least we will know which of the financial powers are controlling them. We ought to have run the damn banks into receivership, unwind the legitimate from the illegitimate financial transactions (like credit default swaps) , not honor the illegitimate financial instruments, close the weaker banks regardless of size , and then put in place a banking plan to never allow a bank to grow beyond a certain point to avoid their influence on the markets. Re-enact a modern Glass-Steagall type act, immediately enact the uptick rule, ban naked short selling and then provide complete transparency to the entire process so the American public would have confidence in the system. There are Trillions unaccounted for, no-one seems concerned to know who is actually getting all these TARP settlements of these OTC derivatives. Our government is transferring what should be private debt to public debt at a time when we can least afford it as a nation. The fact that this seems beyond our elected officials to comprehend should scare the living hell out of everyone. There is nothing more dangerous than corrupt, incompatent leadership proactively leading us in the wrong direction. The incredible burden of debt will sink this country and the absolute lack of credibility of the government will ultimately lead to a currency free-fall event sometime soon where we all wake up one day to find that the US dollar has collapsed and our foreign friends are selling Eurodollars as quickly as they possibly can shovel them out of their vaults. Even the Healthcare plans never mention the biggest single issue in managed care which is the lawyers. There is absolutely no way to get decent quality, lower cost health care in the USA without serious torte reform being a major part of the solution that cuts out all the ridiculous malpractice /libaility insurance that doctors, hospitals, drug companies etc have to hold. Its ironic that 90%+ of the congress are lawyers who's fulcrum point for right and wrong is negotiable, WE ELECTED them and the fate of the country is in their hands. Remember Jefferson's comments about the tree of liberty?

Could an Eliot Spitzer comeback really happen? (Vanity Fair)

My take is different than most of the posters so here it is:
Did Elliott Spitzer use his office for personal gain? - From what I know the answer is "No". Did he proactively take on various, powerful interests for the well being of citizens of the State of New York ? Yes. Did he excercise poor judgement, place his personal life and family at risk and (in the process) break laws in engaging with prostitutes- No question. Did he take accountability, resign, and bear the personal and professional consequences - "Yes". I guess where I get to is that in the main he was probably an egomaniac (All politicians are) but had enough of a moral compass to not abuse the trust of the citizens who elected him in the performance of his duty, where by most accounts he was effective. Let his wife and family deal with his personal transgressions. Compared to the behavior of our current batch of leaders (Paulson with his Goldman Sachs/AIG connections, No investigation of Madoff over 7+ years with substantial evidence, inability of current Obama administration to account for 100's of billions of dollars, waiting 90 days to re-institute the uptick rule after delaying action on that bill for months and Obama and Bush/Paulson actually honoring the CDS/OTC derivitives on taxpayers backs)..It may be that we need to temper and focus our moral outrage into areas that actually impact us. Elliott Spitzer sleeping with a call girl doesn't qualify for me. Paulson/ Geithner and the bankrupting of the United States does. If Spitzer could help the United States get back on firm footing, he'd get my vote tomorrow.

Silver Market Fundamentals Distorted by Bullion ETFs

Jeff

Good article and I believe you are spot on. The ETF's dilute the demand for physical silver thus supressing price of physical buillion. Not being callable for real metal, these paper products supposedly mearly emulate the price of the metal that the rest of the "real" world trades/buys. Much like Banks who , by design, lend out many more dollars than they have in assets. If depositors demanded their savings, the bank would default. If people demanded physical buillion, the COMEX would default and the lie would be exposed. The other net effect of the ETF dilution is the artifical supression of price. This means that the ETF's are subsidizing the aquisition price of the buillion buyers. Once folks see that the COMEX price is way below what they can buy metal for in the marketplace (spot + premium). The run on the COMEX will occur and we'll see that collapse.