Sunday, May 31, 2009
Saturday, May 30, 2009
Silver breaks the psychological level of $15 price
Today move has certainly caught many of you off guard. As I am typing, silver price stands at $15.65. Considered by many as the key resistance and psychological level, $15 price hasn't been seen since last August or so. Just before the current recession really got going. There are two
contradictory forces currently driving the price of silver. The first one is the safe heaven buying by those who think silver coins and bars will become real money, and please, you can call them what you want - I affectionately call them silver bugs, but don't discount their numbers and purchasing power. As our government prints dollars which sooner or later will inevitably flood the system, silver is becoming a stable value alternative which will hold its value compared to the lower value of each dollar. To put it simply, it will cost much more dollars to buy an ounce of silver. Consider it a cheaper and more liquid safe haven alternative to gold.
read the entire article :
contradictory forces currently driving the price of silver. The first one is the safe heaven buying by those who think silver coins and bars will become real money, and please, you can call them what you want - I affectionately call them silver bugs, but don't discount their numbers and purchasing power. As our government prints dollars which sooner or later will inevitably flood the system, silver is becoming a stable value alternative which will hold its value compared to the lower value of each dollar. To put it simply, it will cost much more dollars to buy an ounce of silver. Consider it a cheaper and more liquid safe haven alternative to gold.read the entire article :
Friday, May 29, 2009
Home Price Stabilization Key to Recovery
May 29 (Bloomberg) -- Nicolas Retsinas, director of housing studies at Harvard University, talks with Bloomberg's Deirdre Bolton about the need for home prices to stabilize before the U.S. housing market can begin to recover.
Retsinas also discusses housing data released this week and the implications of rising foreclosures. (Source: Bloomberg)
Bob Chapman on The Alex Jones May 29 2009
Bob Chapman with Jason Bermas on The Alex Jones Channel talking about the Dollar Gold and silver , countries stsrt dumping the dollar while the FED is keeping on printing more ...
Oil extends gains to $66
Oil extends gains to $66By Chris Flood
Published: May 29 2009 11:59 | Last updated: May 29 2009 17:16
Crude oil prices were on course on Friday for their strongest monthly rise in more than 10 years following this week’s Opec meeting where the oil producers’ group delivered a surprisingly upbeat assessment of demand.
Nymex July West Texas Intermediate hit a seven-month high of $66.47 on Friday befor
e easing to trade 92 cents higher at $66 a barrel, up 7 per cent this week.
US crude prices have risen 29.1 per cent in May, on track for their best monthly performance since March 1999.
ICE July Brent gained 76 cents to $65.15 a barrel, up 7.2 per cent this week.
Abdalla El-Badri, Opec’s secretary-general, said oil prices could rise to $70-$75 a barrel by the end of the year.
“The outlook is improving,” said Mr El-Badri, who also conceded that the market’s fundamentals were “still weak”.
Gold hit the $980
Gold hit the $980-a-troy ounce level yesterday before easing back to $979.90, up 2.2 per cent on the day and gaining 2.5 per cent this week. It was helped by concerns about rising levels of government debt.
Silver rallied 6.4 per cent to $15.56 this week and was on course for a gain of 26 per cent in May, its best monthly performance for 22 years.
Source FT
Dollar continues its decline and Slips to $1.41 per Euro on Economy
Dollar Slips to $1.41 per Euro on Economy, Higher-Yield Demand
By Oliver Biggadike and Anna Rascouet
May 29 (Bloomberg) -- The dollar declined beyond $1.41 against the euro for the first time this year as evidence the global recession is easing sent investors in search of assets with higher returns.
The U.S. currency also headed for its biggest monthly drop versus the euro in 2009 and fell today against major counterparts including the Australian and New Zealand dollars as South Korea said its state pension fund plans to hold fewer Treasuries. The U.S. securities were poised for a second month of declines on concern debt sales will overwhelm demand.
“It’s a fundamental dollar-down trade,” said James McCormick, global head of foreign exchange and local market strategy at Citigroup Inc. in London. “The truth is that countries like the U.S. with handicapped banking systems, with overextended fiscal policy, are going to see very shallow recoveries.”
The dollar weakened 1.3 percent to $1.4128 per euro at 2:44 p.m. in New York, from $1.3941 yesterday, bringing its decline this month to 6.4 percent, the biggest since December, when it dropped 9.2 percent. The dollar depreciated 1.8 percent to 95.10 yen from 96.85. The yen advanced 0.5 percent to 134.38 per euro from 135.04 yesterday.
Sterling increased as much 1.6 percent to $1.6198, the highest level since Nov. 5, and headed for a 9.3 percent monthly gain, the biggest since 1985. Nationwide Building Society said U.K. house prices unexpectedly jumped 1.2 percent in May, and the market researcher GfK NOP reported consumer confidence matched the highest level in almost a year
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Thursday, May 28, 2009
New Rules of Post Credit Cards
Consumers will gain more rights when it comes to their credit cards, with CNBC's Carmen Wong Ulrich and John Ulzheimer, Credit.com
Gold May Test $1,200 in Months
Gold is probably on the verge of a fairly sizable breakout to the upside, says Matt Zeman, trader at Lasalle Futures Group. He tells CNBC's Karen Tso that the precious metal may test $1,200 in the coming months.
Wednesday, May 27, 2009
Credit card reform leaves small biz out
Washington's credit card crackdown applies only to personal cards, leaving some small businesses unprotected.
NEW YORK (CNNMoney.com) -- When the Senate passed its credit-card refor
m bill on Tuesday, Senator Christopher Dodd called it "a great day for consumers." But what will it mean for small business owners who've been struggling with inflated rates and unexpected fees on their credit cards?
That depends on how your small business is incorporated, and what kind of card you have.
The Credit Card Accountability Responsibility and Disclosure Act that Obama will sign Friday outlaws several card policies that have provoked public outrage in recent months, including retroactive rate increases on existing balances for cardholders in good standing; hiking rates for new charges without at least 45 days' notice; "double-cycle billing," which allows fees to be charged for balances that were already paid off; and "universal default," which applies rate hikes if a customer is late with payments on unrelated bills.
While some of these provisions were already put in place by the Federal Reserve last December, they weren't scheduled to kick in until July 2010. Instead, the 45-day notice will now go into effect in mid-August of this year, with the rest of the changes being implemented next February.
For small businesses, however, there's a catch. Because the new law amends the Truth in Lending Act, which only governs consumer loans, it doesn't apply to corporate cards.
What this means is if you use your personal card to make business purchases, you'll be covered by the new protections. Likewise, business cards based on your personal credit - as is often the case for sole proprietors - should be covered as well.
But for limited liability corporations and other companies that use traditional corporate cards, the same old rules will continue to apply. An amendment proposed by Senators Mary Landrieu, D-La., and Olympia Snowe, R-Maine, to extend protections to any businesses with 50 or fewer employees was defeated in the Senate last week; instead, the final bill directs the Federal Reserve to conduct a study of credit-card use by small businesses.
Buying vs Renting a home
When it makes sense to rent :
(Money Magazine) -- In 2004, Tim Jones bought a little piece of the American dream: a modest three-bedroom home in Bend, Ore., that went for $218,000. Three years later he married and was ready for phase two of the dream: trading up. But instead of buying, he and wife Elise pocketed the $100,000 profit from the sale of their house and rented bigger digs.
Smart move. Today Jones, 36, estimates their old place would sell for only $230,000. Meanwhile, he and Elise, 37, have been paying $1,250 a month for their rental, the same as their total costs for the smaller house. "I'm not building equity, but nobody around here is," says Jones.
With home prices expected to continue falling in most areas this year and to flatline for several years after that, many people are joining the Joneses in rethinking the merits of home ownership - for now.
As a renter, you won't wind up throwing away money on eroding equity. And there's plenty of inventory to choose from, as owners who can't sell seek to rent their condos and single-family homes.
You'll pay less for the same space too. U.S. rents dipped in the fourth quarter of last year, according to the Census Bureau, and real estate research firm Property & Portfolio projects they will fall again in 2009.
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Pervan Says Silver, Palladium, Platinum `Look Cheap'
Pervan Says Silver, Palladium, Platinum `Look Cheap'
Credit-Card Consumer Protection Law May Reduce Purchasing Power
By Alexis Leondis
May 22 (Bloomberg) -- Jack Krupansky declared bankruptcy three and a half years ago. Now he worries the credit-card legislation Congress passed this week will make his banks, including Barclays Plc, penalize him as a riskier borrower.
“This legislation could boomerang and hurt the same people it’s designed to help during the credit crunch,” said Krupansky, 55, a freelance software developer in New York.
The “bill of rights” that U.S. President Barack Obama signed today is intended to protect cardholders from excessive fees and last-minute contract changes. It also may prompt banks to slash available credit by as much as $90 billion to avoid risk, said Robert Hammer, chief executive officer of R.K. Hammer Investment Bankers, an adviser to card companies.
That reduction could choke off a consumer-led recovery and hurt retailers struggling amid the longest recession since the 1930s, said Andrew Caplin, an economics professor at New York University. Consumer spending accounts for 70 percent of the U.S. economy.
“The bill may stop various forms of abuse, but it will also stop some various forms of credit,” Caplin said. “If the economic recovery is going to rely on consumer spending, it will be a long wait.”
In 2007, purchase volume on all U.S. consumer and commercial credit cards equaled $2.11 trillion, up 8.4 percent from 2006, according to the Nilson Report, the Carpinteria, California-based newsletter.
Cardholders Spend More
“When people walk into stores with credit cards instead of cash, 90 percent of them spend more,” Britt Beemer, founder of America’s Research Group, said in an interview. “Apparel, which is in the dumpster already, is going to be hurt the most. Nonessential, big-ticket items like TVs and electronics could certainly be impacted a lot.”
Gold Climbs in New York as Dollar Pares Gains; Silver Advances
May 27 (Bloomberg) -- Gold prices rose in New York, reversing an earlier loss, on increased demand for the metal as a store of value while the dollar pared gains. Silver advanced.
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, climbed 1.9 percent to 1,118.76 metric tons as of May 22, the first gain in seven sessions, the company’s Web site shows. Gold assets held by Zuercher Kantonalbank’s exchange-traded fund jumped to a record 4.603 million ounces last week, the bank said today.
“Investors took advantage of intraday weakness by adding to their long positions,” Tom Pawlicki, an analyst at MF Global in Chicago, said by e-mail.
Gold futures for August delivery rose $4.50, or 0.5 percent, to $959.60 at 12:21 p.m. on the New York Mercantile Exchange’s Comex division. The metal fell as much as 0.7 percent earlier today. Futures for June delivery, the most-active contract until today, climbed $4.30, or 0.5 percent, to $957.60 an ounce on the Comex.
Bullion for immediate delivery in London climbed 0.6 percent, to $957.95 an ounce. The metal rose to $949.50 an ounce in London’s morning “fixing,” used by some mining companies to sell their output, from $945 in yesterday’s afternoon fixing.
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Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, climbed 1.9 percent to 1,118.76 metric tons as of May 22, the first gain in seven sessions, the company’s Web site shows. Gold assets held by Zuercher Kantonalbank’s exchange-traded fund jumped to a record 4.603 million ounces last week, the bank said today.
“Investors took advantage of intraday weakness by adding to their long positions,” Tom Pawlicki, an analyst at MF Global in Chicago, said by e-mail.
Gold futures for August delivery rose $4.50, or 0.5 percent, to $959.60 at 12:21 p.m. on the New York Mercantile Exchange’s Comex division. The metal fell as much as 0.7 percent earlier today. Futures for June delivery, the most-active contract until today, climbed $4.30, or 0.5 percent, to $957.60 an ounce on the Comex.
Bullion for immediate delivery in London climbed 0.6 percent, to $957.95 an ounce. The metal rose to $949.50 an ounce in London’s morning “fixing,” used by some mining companies to sell their output, from $945 in yesterday’s afternoon fixing.
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Tuesday, May 26, 2009
Perez-Santalla: Gold To Fall $200/Ounce !!!
Mike Norman and Perez-Santalla give another perspective on gold claiming that it will fall by $200 an ounce
Santella says : " So in the short term, I could see gold in December coming down to around $700, and at that level the jewelry market will pick up again, so it will buoy it and hold it up between 700 and 800. In the longer term, it should come off, or if there’s inflation, maybe it will hold up around there. Those are harder things to see of course, so I’m just guessing.
as to the three industrial precious metals, which are silver, platinum and palladium. Silver consumption has been brisk and remains brisk, and part of that, I believe, is the jewelry sector, which is that people have turned to silver to buy jewelry. So there’s a lot of jewelry sales in silver, so silver remains brisk at these levels … even right now it’s trading above $13. It can remain there for a while, though I think silver will also trade down because it follows gold a lot of times, as there is also a percentage of people that buy for investment purposes.
Platinum and palladium are being held up by investment money at the moment, but their primary demand is industrial. Once people realize they’re not going to get any earnings if the metals stay stagnant in the price level, they will abandon it, and so I think platinum and palladium can still come off a bit." he added
Santella says : " So in the short term, I could see gold in December coming down to around $700, and at that level the jewelry market will pick up again, so it will buoy it and hold it up between 700 and 800. In the longer term, it should come off, or if there’s inflation, maybe it will hold up around there. Those are harder things to see of course, so I’m just guessing.
as to the three industrial precious metals, which are silver, platinum and palladium. Silver consumption has been brisk and remains brisk, and part of that, I believe, is the jewelry sector, which is that people have turned to silver to buy jewelry. So there’s a lot of jewelry sales in silver, so silver remains brisk at these levels … even right now it’s trading above $13. It can remain there for a while, though I think silver will also trade down because it follows gold a lot of times, as there is also a percentage of people that buy for investment purposes.
Platinum and palladium are being held up by investment money at the moment, but their primary demand is industrial. Once people realize they’re not going to get any earnings if the metals stay stagnant in the price level, they will abandon it, and so I think platinum and palladium can still come off a bit." he added
Gold Battle Lines Drawn at $1,000 Again
By James West
MidasLetter.com
Monday, May 25, 2009
Here we go again. The forces of legitimate money versus the incumbent purveyors of the candy floss economy squared off at the $1,000 an ounce line over which yet another battle will be fought. Arrayed against either side are formidable new elements and tried and true old ones. As usual, the first volley has been catapulted over the walls of the hucksters by the defenders of the essential timeless truth of gold’s naturally stored value against the counterfeit paper currencies.
The liabilities of the enemy have increased, and the short positions in the COMEX market are sufficiently stacked that the big bank defenders simply cannot allow gold to win decisively. G7 governments are allied against gold to a man, while emerging economic behemoths China and Russia stand in opposition.
In particular, China’s revelations that it has been in a continuous accumulation mode for the last several years and is now the fifth largest sovereign reserve of gold has created an impetus in the gold camp that has been seen lacking in the past. Institutional and sovereign investment entities now perceive a floor in the gold price based on this information, and one must beg the question as to why China would make such a revelation when it threatens to undermine the value of its $2 trillion in U.S. debt holdings.
China has also been careful to avoid buying gold on the international market, for fear, it says, of creating a stampede into the precious metals that would immediately increase the cost of its stated intention to continue accumulating gold towards the backing of the yuan (renmibi) as a global reserve currency.
Yet that is precisely what has happened. Ostensibly, the justification for tipping their hand exists in the fact that they’ve resigned themselves to the fact that selling poison toys and pet foods to Americans in exchange for a currency that loses value like light into a black hole is an acceptable if imperfect transaction. With $50 billion a year in interest payments from the U.S., they can hedge the risk buy using it to buy gold.
With the perceived floor arguably at $850, downside risk is limited in gold far more so than in U.S. treasuries, which, if mainstream media is to be taken as remotely credible, is the current favorite of safe haven investors.
‘Safe Haven’ is about to get painted with same fragrant brush as ‘AAA-rated’ investments.
Goldbugs are salivating at the prospect of vindication, but seasoned veterans of the war know that the governments and central banks arrayed against gold are not fair fighters. Since the largest players in the futures market occupy both sides of the contract, and never take delivery of the physical gold, they can orchestrate a perpetual negative sentiment towards gold by driving the future price downward by simply amping up the short positions, thus making gold appear poised for a sell-off. This has been standard operating procedure for the last decade, and it is interesting to note that ever-bigger short positions are having less influence over shorter durations before the bulls shrug off the flimsy performance and take gold higher.
Critics and observers of this U.S. Dollar image management program point to the fact that such activity, while shoring up demand for U.S. Dollar debt in the short terms, effectively undermines the entire global economy, and is among the fundamental causes of financial crises such as the housing collapse and the whole current global financial fiasco.
Proponents of this manipulation, who are increasingly legion in number, correctly predict an inevitable bursting of the damn catalyzed by investment demand overwhelming the short positions, forcing them to buy and cover to limit losses, which will, in itself, stimulate the gold price even further.
With the limited oversight and feeble reporting standards of the CFTC, the ploy is facilitated by complicit (or ignorant) regulators who ensure data is obfuscated and disclosure limited. It has been this collective effort on the part of the Dollar Defenders that continuously defeats gold’s advances, repeatedly castrating the bulls and sending them whimpering to lick their wounds and regroup.
But China is now leading the charge, and the bet is that they’re willing to forgo the lost value of their USD holdings to decisively undermine the global reserve currency once and for all and replace it with the Yuan, a move that would effectively mark the beginning in the shift of the global balance of power from west to east.
The United States, overextended militarily across the Middle East and Asia, with new fronts threatening to open in Iran and Pakistan, is perilously close to an international nervous breakdown. China’s opportunity is to ride to the rescue bearing smiles and steamed pork buns while dividing up what is left of the American industrial asset pool.
Our leadership of the last decade (or more accurately, absence thereof), eager to lubricate the workings of multinational financial interests, have inadvertently played into the patient hands of their biggest creditor by prostituting the national currency shamelessly to the point where every nation in the world can see what used up piece of spent jet trash the old USD has become.
While mainstream media dismisses the idea of the Yuan replacing the dollar as the international monetary standard, those of us who have tuned out at the perception management program on CNN recognize the event as halfway accomplished.
The truly explosive moment for gold will occur when the Chinese, at their discretion, decide to spring the trap, and abandon USD completely in favor of gold, suddenly spiking the price of gold straight north in tandem with the complete collapse of the U.S. dollar.
Don’t pay any attention to the second rate hacks trying to claim credit for predicting the fall…its been predicted repeatedly throughout history from Nostradamus to Roubini. Any student of economic history with 20/20 vision could see this coming, and here it is. “I told you so” is a waste of time. Who’s offering a solution?
Whether or not this particular battle at the Great Wall of $1,000 an ounce is the mother of all battles remains to be seen. Desperate times call for desperate measures, and while G7 governments collude to retain power, the unforeseeable is the greatest threat to gold.
That being said, veteran observers are optimistic, to say the least.
According to Bill Murphy, intrepid soldier of gold wars and standard bearer for the Gold Anti-trust Action Committee,
"The Gold Cartel is giving it all they have no, as evidenced by the sharply rising gold open interest on the Comex ... up some 23,000 contracts on Wednesday and Thursday. They are doing all they can to counter new spec buying.
My hunch is the next time we see $1,000, and that could be very soon, gold ought to take off from there, giving us more upside dynamic daily moves. The reasons to own physical gold are off the charts ... HUGE investment demand, shrinking visible central bank supply (unrelated to the cabal), shrinking mine supply, shrinking dollar, concerns over sovereign wealth debt, a horrible US economy, and a US printing press that is going flat out and will have to for some time to come.
In my opinion, all gold has to do is to stay over $1,000 for a few days, and then all kinds of bells and whistles go off."
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Saudi warns of $150 oil within three years
By Giulia Segreti and agencies in Rome
Published: May 25 2009 18:59 | Last updated: May 25 2009 18:59
Saudi Arabia warned oil prices could spike to beyond the near $150 record high of 2008 within three years as it joined other energy leaders on Monday to call for more investment to boost production over the long term.
Energy ministers and officials at the Group of Eight energy summit wrapped up the two-day meeting by urging the industry to pump money into projects to expand capacity despite the credit crisis, which has put the brakes on investment.
Saudi Arabian Oil Minister Ali Naimi said the world was heading for a fresh spike after the current phase of faltering demand and lower prices, which he said reflected the economic downturn rather than being an indicator of things to come.
”We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions,” he said in prepared remarks at the summit.
”However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 200
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Published: May 25 2009 18:59 | Last updated: May 25 2009 18:59
Saudi Arabia warned oil prices could spike to beyond the near $150 record high of 2008 within three years as it joined other energy leaders on Monday to call for more investment to boost production over the long term.
Energy ministers and officials at the Group of Eight energy summit wrapped up the two-day meeting by urging the industry to pump money into projects to expand capacity despite the credit crisis, which has put the brakes on investment.
Saudi Arabian Oil Minister Ali Naimi said the world was heading for a fresh spike after the current phase of faltering demand and lower prices, which he said reflected the economic downturn rather than being an indicator of things to come.
”We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions,” he said in prepared remarks at the summit.
”However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 200
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Hamptons Home Sales Drop Most on Record, Prices Decline
Hamptons Home Sales Drop Most on Record, Prices Decline
May 22 (Bloomberg) -- Bloomberg's Su Keenan reports on the housing market in the Hamptons of Long Island, New York. Sales have declined the most in the 27 years that broker Town & Country Real Estate has kept records for the Long Island beach towns about 100 miles east of Manhattan. The first-quarter median price fell 23.5 percent from a year earlier to $675,000, according to Miller Samuel.
May 22 (Bloomberg) -- Bloomberg's Su Keenan reports on the housing market in the Hamptons of Long Island, New York. Sales have declined the most in the 27 years that broker Town & Country Real Estate has kept records for the Long Island beach towns about 100 miles east of Manhattan. The first-quarter median price fell 23.5 percent from a year earlier to $675,000, according to Miller Samuel.
Housing Hitting Bottom Means Fewest Starts Since 1945
By Kathleen M. Howley
May 26 (Bloomberg) -- The slump in the U.S. housing market that caused the median value of homes to decline 24 percent since 2006 may bottom next month without any prospect of a rebound for another year, according to estimates from chief economists at Fannie Mae and Freddie Mac, the Mortgage Bankers Association and national realtors and homebuilder groups.
Existing home sales probably won’t reach pre-boom levels until the third quarter of 2010 and housing starts won’t surpass 1 million until 2011, a barrier last broken six decades ago, the economists said.
“There are very few V-shaped recoveries in the history of real estate, and this one is likely to be even slower because of the size of the bubble,” said Robert Shiller, the Yale University professor who, with economist Karl Case, created home price indexes in the 1980s now used by Standard & Poor’s.
The rebound will be so anemic that 2009 building starts will total about 496,000 homes, the lowest since the end of World War II in 1945, according to the economists’ forecasts. Foreclosures on pay option adjustable-rate mortgages and a backlog of bank-owned properties will slow any revival and keep housing from playing its traditional role of boosting economic recovery.
Residential construction and home sales led the way out of the previous seven recessions, with housing starts improving an average seven months and resales gaining strength about four months before the economy picked up.
‘Green Shoots’
The world’s largest economy probably will grow 1.9 percent next year, according to the average estimate of 56 analysts surveyed by Bloomberg. After each of the last seven contractions, it expanded more than 3 percent on average in the first year of recovery.
Federal Reserve Bank of Dallas President Richard Fisher said earlier this month that the U.S. is on the verge of rebounding with “healthy signs -- the stirrings of what I call green shoots.” So did former Fed Chairman Alan Greenspan, who cited “seeds of a bottoming” in housing during a May 12 speech at a National Association of Realtors conference in Washington.
“If you are looking at prices relative to income and rents, you could argue that we are at the bottom, and I’m cautiously optimistic that we may be,” said Thomas Lawler, a former Fannie Mae economist in Leesburg, Virginia. “It’s possible, however, that we could have a second wave of foreclosures and the very small amount of support the economy might have gotten will turn into the reverse.”
Prices Fall
Data released today showed foreclosures are still weighing on the housing market. Home prices in 20 major metropolitan areas fell 18.7 percent in March from a year earlier as foreclosures rose, according to the S&P/Case-Shiller index. Economists forecast the index would drop 18.3 percent.
The recession started after U.S. banks and Wall Street firms securitized mortgage loans made to the riskiest borrowers to earn fees only to see homeowners default, prices fall and the value of the bonds dwindle.
Three of the biggest investment banks were brought down by home loan-related investments. The U.S. government committed $29 billion to engineer the takeover of Bear Stearns Cos. in March 2008 by New York-based JPMorgan Chase & Co. Six months later, Lehman Brothers Holdings Inc. filed the largest bankruptcy in U.S. history after becoming the biggest underwriter of mortgage- backed securities as real estate prices peaked.
Subprime Losses
Bank of America Corp. of Charlotte, North Carolina, bought Merrill Lynch & Co. in January after Merrill recorded more than $50 billion in losses and write downs tied to subprime home loans.
Freddie Mac announces multifamily funding program
By: AFX | 26 May 2009
NEW YORK, May 26 (Reuters) - Freddie Mac said on Tuesday it will expand its multifamily mortgage funding by $1 billion under a new debt issuance program to investors. The sale of 'K Certificates' is expected to settle in June and is backed by 62 newly originated multifamily mortgage loans. (Reporting by Caryn Trokie; Additional reporting by Patrick Rucker in Washington; Editing by James Dalgleish) Keywords: FREDDIEMAC MORTGAGES/ANNOUNCEMENT (caryn.trokie@thomsonreuters.com; Tel: +1 646-223-6318; Reuters Messaging: caryn.trokie.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.
NEW YORK, May 26 (Reuters) - Freddie Mac said on Tuesday it will expand its multifamily mortgage funding by $1 billion under a new debt issuance program to investors. The sale of 'K Certificates' is expected to settle in June and is backed by 62 newly originated multifamily mortgage loans. (Reporting by Caryn Trokie; Additional reporting by Patrick Rucker in Washington; Editing by James Dalgleish) Keywords: FREDDIEMAC MORTGAGES/ANNOUNCEMENT (caryn.trokie@thomsonreuters.com; Tel: +1 646-223-6318; Reuters Messaging: caryn.trokie.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
An outlook on where crude is heading next
Crude Realities
An outlook on where crude is heading next, with Stephen Schork, The Schork Report editor and Joe Petrowski, Gulf Oil CEO.
Dollar Gains as North Korean Tests Spur Demand for Safety
By Anna Rascouet and Yasuhiko Seki
May 26 (Bloomberg) -- The dollar and yen rose against the euro on increased safety demand as Yonhap News reported North Korea carried out a missile experiment a day after conducting a nuclear test that drew international condemnation.
The U.S. currency advanced versus all of its major counterparts after the news agency said Kim Jong Il’s government test-fired two missiles. The euro fell for the first time in seven days against the dollar after Britain’s Daily Telegraph cited a German banking regulator as saying bad debt at the nation’s biggest lenders may increase.
“The market is still digesting the news from North Korea,” said Jeremy Stretch, a senior currency strategist at Rabobank International in London. “The dollar is holding up, and the yen is also having reasonable gains. The defining factor is broad risk metrics.”
The euro fell 0.7 percent to $1.3918 at 9:04 a.m. in New York, from $1.4017 yesterday. The 16-nation currency depreciated 0.9 percent to 131.70 yen from 132.92. The dollar slid 0.2 percent to 94.60 yen from 94.83.
The dollar remained lower against the yen after a report showed home prices in 20 major metropolitan areas fell in March more than economists forecast. The S&P/Case-Shiller home-price index dropped 18.7 percent from a year earlier following a similar drop in February. The median forecast of 26 economists surveyed by Bloomberg was for an 18.3 percent decrease.
Norway’s krone fell against all of the 16 most actively traded currencies tracked by Bloomberg as oil prices fell and the central bank said the country’s financial institutions need to keep building up capital to weather the financial crisis.
The krone declined as much as 1.2 percent to 8.9780 per euro, its weakest level since March 31, from 8.8694 yesterday. It dropped as much as 2.2 percent against the dollar before declining 1.8 percent to 6.4430.
South Korea’s Won
South Korea’s won lost 1.1 percent to 1,262.88 against the dollar as the nation’s benchmark stock index slumped for a fourth day after Yonhap reported North Korea was preparing further nuclear tests.
“This kind of news may trigger a knee-jerk reaction among those short-term players who wanted to buy Asian currencies,” said Taisuke Tanaka, managing director and foreign-exchange strategist in Tokyo at Nomura Securities Co., a unit of Japan’s largest securities broker. “But given the fact that most Asian countries enjoy huge current-account surpluses, this type of event won’t change the overall international capital flow.”
The euro slid versus the dollar as the Telegraph quoted Jochen Sanio, president of the German regulator BaFin, as saying debt levels of banks will blow up “like a grenade” unless they participate in the government’s bad-bank plan.
German Debt
“The report over the German debt situation isn’t helping sentiment toward the euro,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., part of the world’s largest interbank broker. The comments sound “fairly dire.”
German banks have 200 billion euros ($280 billion) of bad debt, Sanio said last week, according to the Telegraph. Write- offs may reach 816 billion euros, the newspaper reported, citing an internal memo from the regulator’s office. In an interview with Bloomberg News last week, Sanio said Germany is “more than able” to cope with the 200 billion euros of toxic assets that its banks still hold.
Government bond sales this week may renew concern that a record supply of Treasuries will jeopardize the U.S.’s AAA credit rating, analysts said.
Ten-year Treasuries fell the most since June 2008 last week as the U.S. prepared to resume debt auctions after a two-week pause. The U.S. will increase debt sales to $3.25 trillion in the fiscal year ending Sept. 30, according to Goldman Sachs Group Inc., as President Barack Obama borrows record amounts to try to snap the recession in at least 50 years.
Standard & Poor’s lowered its outlook on the U.K.’s AAA credit rating on May 21 to “negative” from “stable,” raising concern that the same may happen to the world’s biggest economy.
“Given growing concerns about U.S. creditworthiness, capital outflows from the dollar-denominated assets may gain further momentum,” said Kengo Suzuki, manager of the foreign bond trading department in Tokyo at Mizuho Securities Co., a unit of Japan’s second-largest banking group.
Rising debt levels may jeopardize the AAA credit rating of the U.S. in the next three years, New York University economist Nouriel Roubini told Il Sole 24 Ore in an interview. “The situation may become risky in two, three years’ time,” Roubini told Sole. “The evolution of the crisis requires paying attention to this matter too.”
Australian Dollar
The Australian dollar fell for a second day, losing 0.9 percent to 77.54 U.S. cents and paring a gain from a five-year low of 60.09 cents reached in October to 29 percent.
Analysts are raising forecasts for the Australian dollar faster than any other major currency on optimism for a global economic recovery.
The median year-end Aussie forecast in monthly Bloomberg surveys rose 14 percent this year, the biggest increase among major currencies against the dollar, and is now 3 cents shy of the current price, half the gap in January. Strategists at BNP Paribas SA, Wells Fargo & Co. and 21 other companies raised estimates in May on speculation China’s demand for Australian exports, from iron ore to wool, will rebound.
“The bears are throwing in the towel, and the Aussie is undervalued,” said Paresh Upadhyaya, who helps manage $21 billion in currency as a Putnam Investments senior vice president in Boston.
Source Bloomberg.com
Monday, May 25, 2009
A New Day for Credit Cards
Card industry consultant Robert Hammer sees the new credit card rules reducing card issuer revenues by 10 percent next year. CNBC's Bertha Coombs has the details.
Sunday, May 24, 2009
Impact of US dollar fall on stock and commodity prices
The dollar drops, commodities like oil and gold rise, and they are seen as a value against future inflation. (Market Week)
A useful round-up from Bloomberg on the fall of the US dollar last week and what this has meant for commodities and commodity stock prices. Note the 11 per cent bounce in gold stocks.
A useful round-up from Bloomberg on the fall of the US dollar last week and what this has meant for commodities and commodity stock prices. Note the 11 per cent bounce in gold stocks.
U.S. Dollar Falls to 2009 Low on Ratings Worries
The dollar dropped to its lowest level this year Friday and was on track for its biggest weekly fall in two months on concerns about the AAA-rating status of the United States.
Growing worries about the U.S. sovereign rating after Britain's outlook was downgraded the previous day triggered heavy selling in U.S. assets, although U.S equities opened higher on Friday.
A rise in U.S. stocks and more upbeat views of the recession-hit global economy also encouraged risk-taking by investors, helping the euro break above $1.40, while sterling hit a 6 1/2-month peak versus the dollar.
"The general theme today is clearly broad-based U.S. dollar weakness, largely triggered by mounting concerns over the U.S. government debt triple-A rating," said Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington.
"At this point, the market is kind of in a sell dollar state of mind."
In early New York trading, the ICE Futures U.S. dollar index a gauge of its value against six major currencies, was down 0.5% on the day after hitting 79.914, a fresh 2009 low.
The dollar index was on track for a 3.6% drop this week, and a more than 5% decline so far in May, one of its steepest monthly declines over the last 25 years.
The euro was up 0.6% at $1.3980 , after hitting a session peak of $1.4029.
Moody's Investors Service on Thursday said it is comfortable with its Aaa sovereign rating on the United States, but the rating was not guaranteed forever.
A test of investor appetite for dollars and dollar assets will come next week when the U.S. Treasury auctions $101 billion of two-, five- and seven-year paper.
The dollar's broad slide took it to a two-month low against the yen after Japanese Finance Minister Kaoru Yosano said on Friday the country is not thinking about intervention in the currency market.
The dollar was down 0.4% at 94.08 yen after dipping to 93.86 yen, according to Reuters data.
Sterling was up 0.3% at $1.5892 , after rising as high as $1.5947, its strongest since early November. Cable is up 4.7% on the week so far, on track for its best weekly performance since early February.
How to pick a Mortgage
Understanding mortgage graphs and interest only house loans is important when buying a house.
Gold Manipulation by Central Banks
Bill Murphy of GATA.org and LeMetropoleCafe.com discusses the economy and the gold and silver markets with Mike Maloney
Saturday, May 23, 2009
Will Credit Card Debt Crush American Households?
Will Credit Card Debt Crush American Households? The chart of American credit card debt is not pretty.
However, we disagree with negative tone of many market pundits on the increasing amount of American credit card debt. In our view, increasing credit debt level is not as worrisome as long as the total household debt as % of total net-worth of US households is still small and manageable. It appears to be the case as of end of 2008:
- US Household assets as a whole: $65.7 trillion, unadjusted for inflation.
- US Household liabilities: $14.2 trillion.
- Net worth of US/American households (assets minus liability) was $51.5 trillion.
(Source: The Federal Reserve)
This means the total household liabilities (not just the credit card debt) as % of total net-worth of US households is still 27.5%...very reasonable still.
Hence, we argue that US households in general on aggregate are still able to absorb and withstand higher debt levels. This is a surprising fact but fortunately true.
Source :
Gold Poised for Third Weekly Gain as Dollar Slumps Against Euro
Glenys Sim
Bloomberg
Friday, May 22, 2009
Gold traded near the highest in two months, set for a third weekly increase, as the dollar fell against the euro, boosting the appeal of the precious metal as an alternative investment.
The Dollar Index, a measure of the greenback against six major currencies, has lost 3.2 percent this week on speculation that the U.S. government’s creditworthiness may be weakening, after Standard & Poor’s yesterday cut its outlook on the U.K.’s AAA credit rating to “negative” from “stable.”
“Investor interest in gold was bolstered by the declines in international equity markets and the soft tone of the U.S. dollar,” David Moore, chief commodity strategist at Commonwealth Bank of Australia, said in an e-mail today.
Immediate-delivery gold was little changed at $952.45 an ounce at 12:27 p.m. in Singapore after touching $956.55 yesterday, the highest since March 23. The metal has climbed about 7.2 percent this month and is about 19 percent higher than this year’s low of $802.59 an ounce. Silver, which dropped 0.2 percent to $14.49 an ounce, is still up 3.5 percent this week.
Bill Gross, co-chief investment officer of Pacific Investment Management Co. in Newport Beach, California, said yesterday that the U.S.’s top AAA credit rating will “eventually” be lost. “The markets are beginning to anticipate the possibility of” a downgrade, Gross said.
Thursday, May 21, 2009
Gold May Test $1,200
Gold is beginning to gain investors' interest given all the debt funding we are seeing around the world, notes Frank Holmes, CEO & CIO of U.S. Global Investors. He tells CNBC's Martin Soong & Amanda Drury that gold may test $1,200.
Escaping Credit Card Debt !!!
John Ulzheimer, of Credit.com, and Carmen Wong Ulrich help viewers get out of credit card debt.
Depressed America No Longer The Safe Harbor It Was For Investment
excuses from Wall Street and Washington DC, we have not hit the bottom with job losses, Currency crisis coming in the fall, IMF a creditors cartel, we find ourselves faced with major growing unemployment, falling wages and via inflation and ever lower purchasing power, Most major banks and brokerage houses are insolvent, Finances at the state and local levels are a mess.
The excuses coming out of Wall Street and Washington are truly mind-boggling. We wonder how the public swallows them. One of the latest is that for one-week applications for jobless benefits had fallen. That is good, but we’d need a number of weeks of reduction for the fall to be meaningful. Anything to keep the market from falling. This has been followed by a long line of liars telling us we had bottomed out in the economy. The same litany we’ve been hearing for 22 months. Unemployment is a lagging indicator thus; the increases have yet to end. The latest bogus unemployment figures are 8.9% short term, including the birth/death ratio. That is phantom jobs created by the government supposedly by small and medium sized companies. That 8.9% supposedly matched up with the worst of the 1974 recession. That is not true, because the formula in 1974 was far different than today’s monstrous lies. The 1974 figures did not include the birth/death ratio, those working reduced hours and those in part-time employment seeking full-time jobs, which now makes up 2.6% of the workforce. Then there is the 1% plus that is discouraged and have left the workforce and probably won’t return.
Once unemployment has bottomed it could take a year or more before employers begin to rehire. They have to be sure increased demand exists and that the economy is recovering.
Today job losses are not only blue-collar, but white-collar as well. Due to free trade, globalization, offshorting and outsourcing those jobs won’t come back. They could return if Congress passed legislation implementing tariffs on goods and services. All those manufacturing jobs will never return unless Congress acts. If they do not act the economy is permanently doomed. Presently as many white-collar jobs as blue-collar are being lost. Mechanics cannot easily work in healthcare and the wages are a little more than one-third of what they were earning.
In 16 months the government admits that 5.7 million jobs have been lost. In the previous 8 years we lost over 5 million. Just to show you how serious this is, in 8/1981 to 12/1982, we lost 2.8 million jobs. In 3/2000 to 5/2002 we lost 2.2 million. Over 9 years we have lost 10.7 million jobs “officially.” We’ll never know what the real figure was. Can you imagine all the lost wages that left America to pay people in China, India and Mexico, etc.?
In addition, we haven’t even addressed the new people entering the workforce. Students with degrees who owe $60,000 or more for their education and cannot get jobs, because elitist transnational corporations have shipped their jobs to low wage countries. You are witnessing mass suicide of an entire country - up until now the leading country in the world.
We are looking at layoffs as far as the eye can see and that means no recovery and at the very best a flat no growth economy.
Americans, professionals and investors have to eventually come to grips with officially sanctioned bogus accounting. That includes FASB rule changes to accommodate Washington, bank and Wall Street. Then there are the Credit Value Adjustments used to elevate corporate earnings statements. This is when banks write down credit losses, then claim they can now be bought back and booked as gains, as the SEC looks the other way. These are losses claimed as gains. This is fraud, yet, nothing is done about it. This has been rife at the SEC since its inception. The big illuminist firms are left alone. The SEC pursues small and medium securities firms and brokers and newsletter writers. The SEC is an integral part of the elitist Wall Street cabal, part of a major criminal enterprise.
Read the entire article
Wednesday, May 20, 2009
Senate Approves Credit-Card Bill of Rights
By Jeff Plungis
May 19 (Bloomberg) -- A credit-card “bill of rights” that would curb fees and limit contract changes won approval from the U.S. Senate, as lawmakers pledged to restore “balance” between consumers and companies.
The Senate’s 90-5 vote sends the bill to the House of Representatives, which approved a similar measure last month. The House may give final approval as soon as tomorrow. President Barack Obama said he’d like to sign a bill into law by the May 25 Memorial Day holiday.
The Senate legislation would require lenders to apply payments to balances with the highest interest rates first. It would prohibit increasing a consumer’s rate on existing balances based on late payments to another lender, a practice known as “universal default.”
Senators said they had been flooded by complaints from constituents with clean payment histories whose rates were increased or borrowing limits were slashed.
“The statistics are just overwhelming about what’s happening to people,” said Banking Committee Chairman Christopher Dodd, a Connecticut Democrat. “It needed to change. This bill tries to bring a sense of balance back.”
General Electric Co. Chief Executive Officer Jeffrey Immelt told investors at a conference in Florida today that the legislation wound up as “equal to or better than what our expectation was.” GE is the biggest private-label credit card issuer in the U.S.
The American Bankers Association, representing companies such as Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc., opposed the bill.
Banks Opposed
Banks will be prevented under the legislation from pricing for risk, Edward Yingling, president and chief executive officer of the American Bankers Association, said in a statement.
“What has been a short-term revolving unsecured loan will now become a medium-term unsecured loan, which is significantly more risky,” Yingling said. “It is a fundamental rule of lending that an increase in risk means that less credit will be available and that the credit that is available will often have a higher interest rate.”
Most credit-card stocks fell. Bank of America dropped 48 cents to $11.25 in New York Stock Exchange composite trading at 4:15 p.m., a 4 percent decline. JPMorgan was off $1.45, or 3.9 percent, to $35.81. MasterCard Inc. lost $6.67, or 3.9 percent, to $166.73, and Visa Inc. declined $1.61, or 2.4 percent, to $64.80.
Gold Demand Still Strong
Investors are still flocking to gold, according to the World Gold Council's first-quarter Gold Demand Trends Report. Rozanna Wozniak from World Gold Council considers the outlook.
U.S. Cities With The Most Underwater Mortgages
The Most Underwater Mortgages
For individual homeowners, being “underwater” on a mortgage – when a home is worth less than outstanding debt, or has “negative equity” – is one of the worst positions to be in, short of foreclosure.
Zillow.com, a firm that compiles US real estate and mortgage information, has put together a list of the 163 largest metro areas that includes statistics on median home values, market changes and the proportion of homes with negative equity. Also included is data on short sales, which occur when real estate sells for less than the value of outstanding debt on the property.
Included in the data is the “Zillow Home Values Index,” which represents the median measure of home valuations. According to Zillow’s most recent report, the median US home price is $182,378, down 14.2% from a year earlier. Almost one in five - 21.9% - of US homes are underwater.
So, which metro areas have the highest proportion of homes underwater? Click ahead for the results.
By Paul Toscano
Posted 15 May 2009
For individual homeowners, being “underwater” on a mortgage – when a home is worth less than outstanding debt, or has “negative equity” – is one of the worst positions to be in, short of foreclosure.
Zillow.com, a firm that compiles US real estate and mortgage information, has put together a list of the 163 largest metro areas that includes statistics on median home values, market changes and the proportion of homes with negative equity. Also included is data on short sales, which occur when real estate sells for less than the value of outstanding debt on the property.
Included in the data is the “Zillow Home Values Index,” which represents the median measure of home valuations. According to Zillow’s most recent report, the median US home price is $182,378, down 14.2% from a year earlier. Almost one in five - 21.9% - of US homes are underwater.
So, which metro areas have the highest proportion of homes underwater? Click ahead for the results.
By Paul Toscano
Posted 15 May 2009
Tuesday, May 19, 2009
American Express Will Slash 4,000 Jobs
By Hugh Son and Ari Levy
May 18 (Bloomberg) -- American Express Co., the largest U.S. credit-card company by purchases, will cut about 6 percent of its workforce as cardholders squeezed by rising unemployment fail to pay debts.
American Express will take a charge of $180 million to $250 million in the second quarter, mostly tied to severance and other costs from eliminating 4,000 positions, the New York-based company said today in a statement. Additional reductions will be made in marketing and travel costs and consulting services.
The cuts, in addition to 7,000 job eliminations announced in October, may save about $2 billion in expenses this year, the company said. American Express has had to set aside more reserves for failed loans as surging U.S. unemployment makes it harder for customers to pay debt. The jobless rate reached 8.9 percent in April, a 25-year high.
“Credit is a big issue and the spending volume on the cards is a concern as well,” said Jason Arnold, an analyst at RBC Capital Markets in San Francisco, who recommends selling American Express shares. “They’re taking the right steps in this environment.”
American Express rose $1.90, or 7.8 percent, to $26.13 at 4 p.m. on the New York Stock Exchange today, trimming its loss for the past year to 46 percent. The stock dropped 13 cents to $26 in extended trading after the announcement.
Read entire article:
May 18 (Bloomberg) -- American Express Co., the largest U.S. credit-card company by purchases, will cut about 6 percent of its workforce as cardholders squeezed by rising unemployment fail to pay debts.
American Express will take a charge of $180 million to $250 million in the second quarter, mostly tied to severance and other costs from eliminating 4,000 positions, the New York-based company said today in a statement. Additional reductions will be made in marketing and travel costs and consulting services.
The cuts, in addition to 7,000 job eliminations announced in October, may save about $2 billion in expenses this year, the company said. American Express has had to set aside more reserves for failed loans as surging U.S. unemployment makes it harder for customers to pay debt. The jobless rate reached 8.9 percent in April, a 25-year high.
“Credit is a big issue and the spending volume on the cards is a concern as well,” said Jason Arnold, an analyst at RBC Capital Markets in San Francisco, who recommends selling American Express shares. “They’re taking the right steps in this environment.”
American Express rose $1.90, or 7.8 percent, to $26.13 at 4 p.m. on the New York Stock Exchange today, trimming its loss for the past year to 46 percent. The stock dropped 13 cents to $26 in extended trading after the announcement.
Read entire article:
Housing Bubble Sparks Buyer's Advantage
Housing Bubble Sparks Buyer's Advantage
In the early 2000's acquiring a home was a simple as buying a pair of shoes. A less than perfect credit score with no money down and no closing costs was just enough to secure a loan for a brand new home with up-to-date amenities. At the time, it seemed like the newest trend in home buying was a success, however, fluctuating interest rates and a plummeting economy tanked the housing market faster than the speed of light.
As the saying goes, one man's junk is another man's treasure, and in the case of today's housing market, it's true. If you're looking to purchase your first home, or have the liquid cash to buy up a few foreclosed properties, it can all be done.
Because home values and interest rates have fallen to a record low and inventory has spiked to an all time high, the potential buyer has the advantage. In many cases, home owners are desperately needing to sell their properties knowing they can't compete with today's low values, and as result, buyers can name their price. The only disadvantage is the difficulties of securing a loan. If you have stellar credit, it is still problematic to get that loan without proof of savings, a steady job that you've maintained for at least 18 months, and a down payment of at least 3.5 percent for a Federal Housing Loan (F.H.A.) and 5 percent through a major bank. If you have switched jobs and/or ran into some financial troubles that have been reported to the credit bureaus, don't even try. Spare yourself the time and rejection to secure a job get your credit fixed. Don't worry about time running out, as the current market is predicted to last for at least another 6 years.
If you are a first-time homebuyer, you are in luck because there is an $8,000 tax credit that was extended in February 2009 to all those who qualify for a loan. Another perk is a very low, fixed interest rate in addition to the banks footing the expense of closing costs and accepting down payments as low as 3.5 percent.
Foreclosures are a tricky business because of the hit or miss element. While you might score and find a home for half or less than what's it worth, three possibilities exist. First, you could very well find yourself a foreclosed property for a good price that's been destroyed by the previous owners so badly that the cost to repair the damages trumps what it's worth. Second, you could find a diamond in the rough and acquire a foreclosure with ease, but risk the chance of seeing no return because surrounding property values have fallen too low. Third, if you're trying to flip the foreclosure, the resale of the home could take longer than you have saved to maintain it. The best thing to do is plan to rent out the property or occupy it until it appraises to the desired return and sell.
If you're in the market to buy a home, it can be easily be done at the right time. If possible, start saving a little bit at time and continue to fix or build your credit so you "look good on paper" within the next few years.
Southern California Home Prices Fall on Foreclosures
By Daniel Taub
May 19 (Bloomberg) -- Southern California house and condominium prices fell 36 percent in April from a year earlier as foreclosures accounted for more than half of all sales, MDA DataQuick said.
The median price dropped to $247,000 from $385,000 a year earlier and is now 51 percent below the peak reached two years ago, the San Diego-based research company said today in a statement. Sales rose 31 percent last month from a year ago.
“Whatever price stability is out there is tenuous at best,” said Andrew LePage, an analyst with MDA DataQuick. “It’s going to come down to how much worse job losses and foreclosures are going to get for the balance of the year.”
Sales of foreclosed homes accounted for 54 percent of all transactions involving previously owned properties in April. That marks the seventh consecutive month such properties were more than half of resales, MDA DataQuick said. The median price was down 1.2 percent from March, the research company said.
A total of 20,514 new and existing homes sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, up from 15,615 a year earlier, the company said.
Absentee buyers, including investors requesting that their property-tax bills be sent to a different address, bought almost 19 percent of Southern California homes purchased in April. That’s up from 17 percent a year ago and compares with a 15 percent monthly average since 2000, MDA DataQuick said.
Read entire article
May 19 (Bloomberg) -- Southern California house and condominium prices fell 36 percent in April from a year earlier as foreclosures accounted for more than half of all sales, MDA DataQuick said.
The median price dropped to $247,000 from $385,000 a year earlier and is now 51 percent below the peak reached two years ago, the San Diego-based research company said today in a statement. Sales rose 31 percent last month from a year ago.
“Whatever price stability is out there is tenuous at best,” said Andrew LePage, an analyst with MDA DataQuick. “It’s going to come down to how much worse job losses and foreclosures are going to get for the balance of the year.”
Sales of foreclosed homes accounted for 54 percent of all transactions involving previously owned properties in April. That marks the seventh consecutive month such properties were more than half of resales, MDA DataQuick said. The median price was down 1.2 percent from March, the research company said.
A total of 20,514 new and existing homes sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, up from 15,615 a year earlier, the company said.
Absentee buyers, including investors requesting that their property-tax bills be sent to a different address, bought almost 19 percent of Southern California homes purchased in April. That’s up from 17 percent a year ago and compares with a 15 percent monthly average since 2000, MDA DataQuick said.
Read entire article
Silver more rare than gold, the price will explode
GATA board member Adrian Douglas, publisher of the Market Force Analysis financial letter (http://www.MarketForceAnalysis.com), was interviewed for a half hour yesterday by TheFinancialTube.com about the gold and silver markets, and you can listen to it here:
Monday, May 18, 2009
Swiss Asia's Kiener Expects `Huge Shortage' of Gold: Video
Swiss Asia's Kiener Expects `Huge Shortage' of Gold: Video
May 18 (Bloomberg) -- Juerg Kiener, chief investment officer of Swiss Asia Capital Ltd., talks with Bloomberg's Paul Gordon about the outlook for the gold market.
Kiener, speaking from Singapore, also discusses factors driving gold prices, the metal's use as a currency and his investment strategy for gold stocks. (Source: Bloomberg)
Watch the vide by clicking bellow :VIDEO
May 18 (Bloomberg) -- Juerg Kiener, chief investment officer of Swiss Asia Capital Ltd., talks with Bloomberg's Paul Gordon about the outlook for the gold market.
Kiener, speaking from Singapore, also discusses factors driving gold prices, the metal's use as a currency and his investment strategy for gold stocks. (Source: Bloomberg)
Watch the vide by clicking bellow :VIDEO
Bob Chapman on Gold Seek Radio 16 May 2009
bob Chapman speaks about the Bernard Maddof affair getting curious and he link it to the other CCIE affair in the 80s and other ponzi pyramid CIA run schemes scams as he called them ...excellent interview as always
Mortgage Bubble About to Burst?
Millions of Americans are heavily burdened with first and, in many cases, second mortgages. People reached for "the American dream" of owning their home-but often a home somewhat beyond the reach of their incomes. Additionally, they pulled needed cash out of home equity through refinancing. Who controls these loans? What do creditors receive in return for their money? Are we about to experience a financial restructuring on a world scale with shocking consequences for the United States?
by Melvin Rhodes
The Old Testament book of Deuteronomy warns Israel of the consequences of disobedience to God's laws. The Israelites were given a choice-they could obey God and be blessed or disobey God and suffer the inevitable consequences.
One of the blessings for obedience was that Israel would "lend to many nations, but...not borrow" (Deuteronomy 28:12). The reverse would happen if the Israelites disobeyed: "The alien who is among you shall rise higher and higher above you, and you shall come down lower and lower. He shall lend to you, but you shall not lend to him; he shall be the head, and you shall be the tail" (verses 43-44).
America is clearly starting to reap the negative financial consequences of disobedience, as a recent article in The American Conservative shows. Written by San Francisco financial analyst Robertson Morrow, the article is titled, "Living With the Bubble" (Feb. 10, 2003).
"As a percentage of personal income, mortgage debt has risen from 51 percent 25 years ago to over 100 percent today," points out Mr. Morrow. "In the last 5 years, mortgage debt has risen by 60 percent, or $2.2 trillion, an amount roughly the same as the profits of every American corporation for the last five years and twice China's exports to the entire world."
In a society where debt has become a national way of life, does this really matter?
Mr. Morrow says it does. "One problem with borrowing all this money is that people might not be able to pay it back. Another is that, for the foreseeable future, Americans will be spending a large proportion of their income on debt service. This will constrain consumer spending-two thirds of the economy-which will retard economic growth for the remainder of the decade. Slow economic growth will inhibit income growth, preventing us from earning our way out of the hole into which we have dug ourselves."
Housing has been one of the few sectors of the U.S. economy that has been doing well.
Lower interest rates have encouraged new homebuyers, while at the same time those already owning their own homes have refinanced their mortgages, often enabling them to get further into debt with new purchases. This cannot go on, as Mr. Morrow shows.
Refinancing has its limits
"Moreover, at some point, we will exhaust the supply of money available using homes as collateral. In 2001 and 2002, Americans extracted $300 billion in cash from their existing homes through refinancing and home equity loans. This infusion of cash is what has fueled rising consumer spending in the face of recession.
"Why did a rational capitalist society choose to lend people too much money, and why did rational capitalist Americans choose to borrow more than was good for them?
"Three reasons: The first is that the federal government dominates mortgage borrowing. The second is that modern finance has made it easier to succumb to the human temptation to borrow now and worry later. The third is that foreigners have-perhaps naively-been willing to lend Americans whatever we wanted. In short, American capitalism has been corrupted by government subsidies, value-free modern finance, and globalization."
Ominously, Mr. Morrow adds: "As Americans have increased their debt to finance the greatest consumer spending spree in the history of the world, we have become one of the most indebted people on the planet. Near the center of this degeneration is the transformation of the home mortgage from a means of savings to a means of spending."
When the bubble bursts and house values fall, millions of Americans will be in deep trouble. Much of their debt will be owed to foreign nations, America's former debtors turned creditors.
"An indispensable aspect of the debt binge is the willingness of foreigners to lend us the money. Not only is 20 percent of mortgage debt sold to foreign banks and other foreign buyers outright, but modern finance has made all liquid instruments de facto fungible. Even when foreigners buy other American financial assets, they are propping up a market of which mortgages are a part. Take the foreign buyers out of the equation and the whole thing collapses, and plentiful, cheap mortgage debt is no longer available to Americans."
In other words, Americans have become dependent on the willingness of foreign banks to continue their lending to a people already awash with too much debt. Well, Mr. Morrow did say that they were "perhaps naively" continuing to lend.
"Without foreign buyers, the wave of cash-out refinancing and home equity loans would reverse, and we would return to the normal mode of gradually paying down mortgages."
The banker has become the borrower
There was a time when the United States loaned to other nations. During both world wars American banks loaned money to the British and others when they most needed it to continue their war effort. After 1945, the American Marshall Plan helped Europe to recover from the ravages of war. America continued to invest in and loan to other countries.
It was the Vietnam War that began the big debt problem. The unpopular Vietnam War was fought without any increase in taxation at the same time as expanding social programs were introduced by the federal government. The rising costs of both put pressure on the dollar and, by 1971, the United States had to forego the link between the dollar and gold. No longer could people around the world rely on America to back up the dollar with gold on demand at $35 an ounce. For the last 30 years the U.S. dollar has been unredeemable currency, relying solely on confidence to maintain its value, its real worth unsupported by the precious metal.
In recent years, America's foreign debt has increased rapidly, receiving very little attention at home. While concern is expressed about the federal budget deficit-the difference between the amount the federal government receives in taxation and the amount it spends-the growing trade deficit has hardly been noticed. Yet, December's trade deficit was over $40 billion, the highest on record and the biggest trade deficit of any nation in the history of the world.
Ideally, a nation will balance its total trade with other nations. That means it will sell to others goods to the same value as what it buys. Selling more equals a trade surplus, selling less is a trade deficit. As Americans overspend on foreign goods, the money used has to go somewhere. Some is used to buy up American companies or land while a great deal of the rest is simply loaned to Americans, ironically enabling them to refinance their mortgages, spend the money saved and get even deeper into debt.
As Mr. Morrow puts it: "The foreign-debt bubble, and therefore the mortgage bubble, is a necessary consequence of our trade deficits. When we run a trade deficit, foreigners are giving us their goods not in exchange for our goods but in exchange for something else of value. Subject to trivial quibbles, this can only be two things. The first is foreign investment: when we give them a factory in America or a claim on a factory in America. The second is debt."
Simply put: "One necessary consequence of the present trade mess is that America is inexorably becoming a nation of debtors and other nations-principally Japan and her Asian imitators-nations of creditors. What this really means is that an entire society (ours) has become biased in favor of consuming things, while others have become biased in favor of owning things."
This also means that other countries have the power to pull the plug on the U.S. economy. What would be the consequences of this?
Potential global financial restructuring
"The global money market is a fickle lover. Once money stops blowing into a debt bubble, the bubble bursts, and no financial intervention can restore it. Just ask the Malaysians, the Russians, the Argentineans, or the U.S. telecommunications industry."
Bringing it down to the consequences for American homeowners, Mr. Morrow states: "What does this mean for the individual homeowner? The imprudent will suffer. Debt will become harder to assume, housing costs will fall, and consumer spending will sag. Those who refinanced to extract cash, took out a second mortgage, bought more house than they could afford, or failed to save, risk deep financial pain when the housing bubble bursts. Homebuyers depend on their jobs to make their mortgage payments, and the economic contraction caused by a squeeze on consumer spending will put those jobs in jeopardy. Even the prudent will suffer due to the irresponsibility of others: one's financial mistakes are not solely one's own business.
"Risk to the global financial system is even greater. For the first time in financial history, a major debtor nation owes its debt in its own currency. This means that rather than exporting goods to buy foreign currency to repay that debt, we can just print the money. We inflate the dollar to pay off foreigners in money that is not worth very much. Creditors will oppose destroying the dollar, but they lack the political clout of millions of American debtors. This opens the possibility of major inflation or polarization of the American political system between those serving the interests of foreign creditors and those representing American mortgage-holders. Neither is an attractive possibility, for either means the U.S. economy should be prepared to take a bubble bath."
Mr. Morrow may be overly optimistic when he writes, "creditors will oppose destroying the dollar." Since World War II, the U.S. dollar has been the preferred currency of international trade and finance. However, the dollar's recent slide in value against other currencies reflects a lack of confidence in the U.S. currency, partly due to the trade deficit and war jitters. At the same time, the increased value of the euro, the one-year-old European currency, shows increased confidence in the new currency, increasingly in demand around the world.
The bursting of the American debt bubble will impact the major creditor nations adversely along with the United States itself. The creditor nations are "Japan and her Asian imitators." A major reversal in the American economy would naturally affect these other countries first and foremost.
All nations would be affected, but the nations of the European Union would be impacted least. The euro could easily take over from the dollar as the world's major trading currency. By default, Europe would become the only engine capable of pulling the world economy out of recession.
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