“QE Lite”.

Baltic Dry Index. 2212 +98

LIR Gold Target by 2019: $3,000.

One CEO lamented, “New ventures and new venture funding are basically non-existent”.

They came from all over America, they met behind closed doors far from public scrutiny, and then the most exclusive elderly white men’s club in the world sent up a cloud of white smoke. After studying the chicken entrails of the US economy for several hours, the gurus of the temple of Mammon announced QE Lite. Another new low in our disintegrating world of the Great Nixonian Blunder. After two years and 2 trillion dollars of frantic pump priming, the American patient is relapsing according to his Federal Reserve witch doctors. He never recovered, say everyone else. Below, Dr Bernanke insists QE lite will work this time, honest it will. Call me an old fashioned cynic, but if two trillion of pump priming didn’t work over 18 months, I fail to see why two to three hundred billion more of pump priming over the next 12 months will work. Stay long precious metals, from what I can see from far away London, it’s just another two to three hundred billion to add to the great vampire squid’s bonus pot. And yes, the Telegraph below, keeping up its new found tradition of amusing errors, does get its millions confused with its billions. For more on the Telegraph’s new traditions click on the link below.

http://londonirvinereport.blogspot.com/p/intraday-news.html

“In February 1777, he forged a bond for £4,200 in the name of his former pupil, Lord Chesterfield, to clear his debts. A banker accepted the bond in good faith, and lent him money on the strength of it.”

William Dodd, “the Macaroni Parson” was publicly hanged at Tyburn for it on June, 27^th 1777.

US Federal Reserve starts 'QE-lite' to placate markets

America's central bank attempted to reinvigorate the country's fading economic recovery by starting what has been dubbed "Quantitative Easing-lite" by one economist.

By James Quinn, US Business Editor Published: 8:45PM BST 10 Aug 2010

The US Federal Reserve, confirming a marked slowdown in the world's largest economy in recent months, said it plans to buy long-dated US Treasuries in an attempt to keep alive growth and maintain the vast amounts of money it pumped into the US economy during the financial crisis.

But rather than allocating new funds to the effort, the central bank said it will use the proceeds from its first $1.7 trillion (£1.1 trillion) quantitative easing (QE) cycle to buy the government bonds "in order to help support the economic recovery in a context of price stability". The proceeds are estimated to be $200m to $300m over the next 12 months, allowing it to keep its balance sheet at close to its present $2.06 trillion.

Paul Ashworth, of Capital Economics, called the decision a "symbolic gesture" designed to allow the Fed to measure the exact extent of the country's economic woes while reassurring investors.

The Fed's Open Markets Committee (FOMC) – which held its base interest rate at a range of 0pc-0.25pc for the 17th meeting in a row – however cautioned that recent data showed "the pace of recovery in output and employment has slowed in recent months".

---- The 10-member FOMC committee used very bleak language to describe the US economy, calling investment in commercial property "weak" and noting employers "remain reluctant to add to payrolls".

It followed a glut of negative economic data in recent weeks, not least second-quarter growth slowing to an annualised level of 2.4pc from 3.7pc in the first quarter, and the loss of 131,000 jobs in July.

However, there was a lone voice of dissent with FOMC member Thomas Hoenig, president of the Kansas City Fed, arguing that the economy is "recovering modestly".

Nonetheless the Fed's decision was largely viewed by economists as a stop-gap measure to buy time.

"It doesn't represent a new phase of QE at this stage," said Tom Higgins, chief economist at Payden & Rygel. "It's just maintaining the size of the balance sheet.

Jeremy Cook, of World First, who described the Fed's measure as "QE-lite" said: "If the ship doesn't correct itself by the beginning of the fourth quarter, then a full-blooded period of QE will come."

More.

http://www.telegraph.co.uk/finance/economics/7937724/US-Federal-Reserve-starts-QE-lite-to-placate-markets.html

Below, the bad economy is all the media’s fault, says Wayne Gorel, CEO of Gorell Enterprises. My thanks to reader Ian in Toronto for sending along the article. I think Mr. Gorel needs to get out more, perhaps buy a newspaper, and give up watching CNBC.

“I just wish the media would get out of the way.”

Lloyd Blankfein, with apologies to Wayne Gorel.

CEO Confidence Index July 2010 CEO Confidence Falls Dramatically

Chief Executive magazine’s CEO Confidence Index, the nation’s only monthly CEO Confidence Index, fell one-third (33.2%) in July, to 79.8. All five components of the index fell significantly, with the Current Confidence Index showing the largest percentage decrease of 60.4% -- dropping to 52.0. One CEO stated, “Not much confidence anywhere right now... most people are in a "hunker-down" mode”. Wayne Gorel, CEO, Gorell Enterprises, blames the media for contributing to the continued economic woes, “The media is saying how terrible things are, and the consumer is starting to believe them again. Things were starting to improve until this blitz about how we may be going into a double dip recession or even a depression like one headline story [stated] this week. The economy is growing at 3-4%, not great, but much better than last year. I just wish the media would get out of the way.” The Investment Confidence Index fell by 40.8% to 79.0. Fully 24% more CEOs rated investment opportunities as “bad” in July than in June. One CEO lamented, “New ventures and new venture funding are basically non-existent”. The Business Condition Index lost 31.9%, falling to 83.5. The Employment Confidence Index dropped 26.4% to 76.6. Job creation remains a significant hurdle to economic recovery. http://chiefexecutive.net/ME2/Audiences/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=E4E389AA5DBA4D9085AF4099310CE9A9&AudID=F242408EE36A4B18AABCEB1289960A07

We end today’s time shortened update with good news from Bolivia and Repsol. Well it’s good news for Bolivia if a new Teddy Roosevelt doesn’t pull a Panama with Rio Grande. Sadly with America buried in Iraq and Afghanistan, and readying itself to take on Iran, there’s no one home in Foggy Bottom, ready to get bold in South America. Bolivia’s gas is Marxism’s gain.

Foreign policy: “the exercise of intelligent forethought and of decisive action sufficiently far in advance of any likely crisis"

Theodore Roosevelt.

Repsol find 1 trillion cubic feet of natural gas in Bolivia

LISBON Petroleumworld.com, Aug 10, 2010

Repsol YPF SA , Spain's biggest oil company, found a new deposit in Bolivia's Rio Grande area that it estimates has 1 trillion cubic feet of natural gas.

The discovery was made in the RGD 22 well and production tests indicate a flow of 6 million cubic feet of gas a day, Repsol said. The Madrid-based company made the discovery as a partner in the YPFB Andina venture, in which it owns a 49 percent stake while the Bolivian government holds 50 percent. This field has been in production since 1968, Repsol said.

“As the Rio Grande area already has the necessary infrastructure, these resources can be put into production in a short period of time,” Repsol said in an e-mailed statement. “With this discovery, YPFB Andina consolidates its position as the largest hydrocarbon producer in Bolivia.”

The Spanish company is investing in exploration in Brazil 's offshore Santos Basin, Bolivia and elsewhere to increase reserves and output, while trying to reduce exposure to mature fields in Argentina . Bolivia has the second-biggest natural-gas reserves in South America.

-----Repsol on April 29 said it forecasts annual production growth of as much as 4 percent through 2014 as projects in Brazil and Peru come on stream. The company plans to invest 28.5 billion euros in the period. It will develop projects such as the Guara and Piracuca fields in Brazil, Kinteroni in Peru, Cardon IV in Venezuela and Margarita-Huacaya in Bolivia.

http://www.petroleumworld.com/storyt10081002.htm

“I want to share something with you: The three little sentences that will get you through life. Number 1: Cover for me. Number 2: Oh, good idea, Boss! Number 3: It was like that when I got here.”

Homer Simpson.

At the Comex silver depositories Tuesday, final figures were: Registered 51.30 Moz, Eligible 58.66 Moz, Total 109.96 Moz.

+++++

Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Today, an ex Goldman Sachs VP writes that the banksters have already gamed the new clearing system of exchange cleared derivatives. The only game in town is derivatives casino gambling, also known as “prop trading.” Commerce, manufacturing, mining, and agriculture be dammed, if you want to make millions or hundreds of millions in bonuses, gigantic gambling is it. Don’t worry, if it all goes wrong the taxpayer and central bank covers the loss. Way too complicated for the masses to understand, sadly the next Lehman already exists, like a LNG tanker with a hidden fire beneath the decks, hiding losses, using every accounting dodge in the book, and already fatally impaired. Our impaired, dying, fiat currency bankster system is still heading full speed for the rocks, the banksters know it, which is why they pay out telephone number bonuses as fast as they can before the whole rotten system crashes down with the next Lehman. Stay long precious metals. The great vampire squids are still cashing out via obscene bankster bonuses, if they thought our gambling system would survive they’d be acting very differently. God’s work, apparently, consists of grab it and run.

Facts are meaningless. You could use facts to prove anything that’s even remotely true!

Homer Simpson.

The Murky Realm of (Derivatives) Clearing

Monday, 08/9/2010 - 10:32 am by Wallace C. Turbeville

For clearinghouses to work, we must have regulation that challenges the way we think about them.

Matt Taibbi’s latest article in Rolling Stone appropriately characterized the financial reform act as neither an “FDR-style, paradigm-shifting reform, nor a historic assault on free enterprise.” While generally describing the act as a “cop out,” he identified the Fed audit requirement and the Consumer Finance Protection Bureau as positive developments. But he viewed the requirement that many derivatives be cleared as “the biggest win of all.” Alas, Matt may have been too generous, or at least premature.

Mandating clearing was a convenient and simple approach for Congress. The idea was to shift the basic derivatives trading risks in an appreciable percentage of the market away from the banks to reduce systemic risk. The problem is that very few people are equipped to understand just how the mandate might work in practice.

How much of the market? What are the consequences? I have not seen evidence that anyone on the government’s side can answer these questions effectively.

---- Clearing theory is complicated and arcane. It was always a backwater of finance and was taken care of by people at the clearinghouses and in the back offices of the banks. Clearinghouses were largely allowed to regulate themselves through a process of self certification. This limited the Commodity Future’s Trading Commmison’s practical involvement with the markets.

Then clearing became the centerpiece of derivatives reform. We decided to concentrate the most dangerous financial risks in the galaxy in a couple of organizations.

As fate would have it, I am one of the few people around who knows something about the clearing business and theory and is not employed by an investment bank or clearinghouse. At the end of my career on Wall Street, I was hired to perform a financial autopsy of the special purpose derivatives clearinghouse set up by California as part of an innovative power market structure. It had failed in the state’s power crisis of 2001-02. Observing the tremendous systemic risk generated by using conventional clearing techniques for all but straightforward derivatives, I embarked on a seven year quest. I formed a company that designed a mathematical, IT and legal structure to provide a transparent and orderly system to manage the risks of those derivatives which shouldn’t be cleared conventionally.

Imagine my surprise when the banks decided against using the system. They preferred taking advantage of the opaque and chaotic bi-lateral derivatives market. The profit potential of the shadowy chaos outweighed efficiency, transparency and sensible risk management. At least I can claim to have been ahead of the times.

There are two dangerous forces at work in the endeavor to push derivatives into clearinghouses:

More.

http://www.newdeal20.org/2010/08/09/the-murky-realm-of-derivatives-clearing-16862/#respond

"If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."

Lloyd Blankfein. CEO Goldman Sachs. November 8, 2009

The monthly Coppock Indicators finished July:

DJIA: +264 Down. NASDAQ: +427 Down. SP500: +275 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. July seems to have confirmed June’s reversal and end of the bull market.

Technorati Tags: QE2,QE-lite,the Fed,double dip,Goldman Sachs,Bolivian natural gas,global cooling,mining stocks,gold and silver.

The Double Dip?

Baltic Dry Index. 1700 -09

LIR Gold Target by 2019: $3,000.

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

J. K. Galbraith

Are we on the cusp of a new recession? From London, it has looked for some time that we probably are. Other than resurgent stock markets, where program trading and manipulation are the only games in town, there’s been almost nothing positive to write about for some time. The BDI has fallen 60% since May 26^th, never a sign of health in global trade. Now the Fed seems to be acknowledging the same thing. Below, The Telegraph covers the surprisingly downbeat Fed.

You will find that the State is the kind of organization which, though it does big things badly, does small things badly, too.

J. K. Galbraith

Fed's volte face sends the dollar tumbling

Rarely before have a few coded words in the minutes of the US Federal Reserve caused such an upheaval in the global currency system, or such a sudden flight from the dollar.

By Ambrose Evans-Pritchard, International Business Editor

Published: 8:52PM BST 15 Jul 2010

The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing.

Usually the dollar serves as a safe haven whenever the world takes fright, and there was plenty of sobering news from China and other quarters on Thursday. Not this time. The US itself has become the problem.

"The worm is turning," said David Bloom, currency chief at HSBC. "We're in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, then violently swings towards another. People thought the euro would break-up. Now we're moving into a new phase because we're hearing alarm bells of a US double dip."

Mr Bloom said a deep change is under way in investor psychology as funds and central banks respond to the blizzard of shocking US data and again focus on the fragility of an economy where public debt is surging towards 100pc of GDP, not helped by the malaise enveloping the Obama White House. "The Europeans have aired their dirty debt in public and taken some measures to address it, whilst the US has not," he said.

The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.

"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.

"The Fed is throwing in the towel," said Gabriel Stein, of Lombard Street Research. "They are preparing to start QE again. This was predictable because the M3 broad money supply has been contracting for months."

The Fed minutes amount to a policy thunderbolt, evidence of how quickly the recovery has lost steam. Just weeks ago the Fed was mapping out withdrawal of stimulus.

Goldman Sachs said it expects the euro to rise to $1.35 by the end of the year. The yen will appreciate to ¥83, through the pain barrier for most of Japan's big exporters. The new twist is that SAFE, China's $2.4 trillion fund, has begun buying record amounts of Japanese bonds, a shift in reserve allocation away from the dollar.

The signs of a deep and sudden slowdown in the US are becoming ever clearer as the "sugar rush" from the Obama fiscal stimulus wears off and the inventory boost fades. California, Illinois and other states are cutting spending, tightening US fiscal policy by 0.8pc of GDP.

Thursday's plunge in the Philadelphia Fed's July index of new manufacturing orders to –4.3 suggests that the economy may have buckled abruptly, as it did in mid-2008. The Economic Cycle Research Institute's ECRI leading indicator has tumbled, reaching –8.3pc last week. This points to a sharp slowdown or recession within three months.

http://www.telegraph.co.uk/finance/currency/7893238/Feds-volte-face-sends-the-dollar-tumbling.html

With the Fed apparently about to restart quantitative easing, aka monetization, the dollar as a long term store of value is compromised. In fact if a double dip recession does hit in the US, the Fed will go out to try to generate deliberate inflation in the economy to prevent deflation turning the double dip recession into the first US depression since the 1930s. This has forced money managers to start the logical process of trying to protect against dollar value destruction. Below the Houston Chronicle covers one attempt at protecting the long term value of funds. My guess is that this is only the start of a multi year process.

"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

Higher education fund buys gold over economic worries

By R.G. RATCLIFFE and JEANNIE KEVER Copyright 2010 Houston Chronicle July 14, 2010, 9:40PM

AUSTIN — Fearing unstable international financial markets and the possibility of high inflation, Texas' higher education investment managers have bought more than $500 million in gold.

The gold purchases represent only 3 percent of the University of Texas Investment Management Co.'s $22.3 billion in investment funds, but it indicates how deeply the fund managers are concerned about the global financial future.

With the state's endowment funds designed to generate a 5.1 percent distribution each year to the University of Texas and Texas A&M University, it is rare for the investment managers to put large sums of money into a commodity whose value usually only grows through inflation.

"Recently, we've added 3 percent, 3 percent of our portfolio, into gold as a protection against inflation, but even more as a lack of confidence in financial markets due to extraordinary government fiscal and monetary stimulus," UTIMCO CEO Bruce Zimmerman told the University of Texas board of regents Wednesday. "I wish I could tell you the future looked rosy. Unfortunately, that's not our view. At best, we believe the future is uncertain."

Other executives suggested the endowments have begun to recover from the staggering losses of 2008 and 2009.

http://www.chron.com/disp/story.mpl/business/7108909.html

The article didn’t cover the specifics of how UTIMCO made their gold purchase. I can only hope that they arranged to take allocated physical delivery in a secure international vault, at an institution that’s not hopelessly short paper gold. As the fiat currency system unravels in a world of casino capitalism and unrestrained derivatives gambling, I fully expect to see a Comex default of the gold and silver contracts, and to hear of serious problems at some of the precious metals ETFs and their custodians. I have serious doubts that all of the custodian’s metals really exist, or haven’t been pledged to more than one entity.

We end for the day watching weather events in S.E. Asia, where Vietnam’s rice crop is in danger of failing. As the second largest rice exporter in the world, any failure there will have a big impact on rice prices and through them much of Asia’s quality of life for those who haven’t yet made it up to the comfortable middle class. As is now usual in our dumbed down 21^st century world, a good article on a seriously disturbing problem gets the full global warming treatment by the “Staff Writers.” Below that, Accuweather covers the latest typhoon heading into already saturated China, that didn’t bring much in the way of relief to Vietnam.

Salty water, parched earth: Vietnam's Mekong paddies dry up

by Staff Writers
Que Dien, Vietnam (AFP) July 14, 2010
The rivers that should nourish his thirsty rice paddies are too salty, and the rains are late this year. Dang Roi does not know if he will be able to salvage anything from this spring's crop.

Vietnam is the world's second-biggest rice exporter and the Mekong Delta, where Roi farms, accounts for more than half of its production.

But Roi's paddy fields in Ben Tre province are burning up during a drought which meteorologists say is the worst in decades.

The dry season should have ended already, but in the yard of Roi's house in Que Dien commune, barrels that collect rainwater for his family's cooking and washing show the desperate situation. They are half-full, or empty.

Experts say Vietnam is one of the countries most threatened by climate change, whose effects are seen in worsening drought, floods, typhoons, exaggerated tides, and rising sea levels.

The country is planning for a one-metre (three feet) rise in sea levels by 2100, which would flood about 31,000 square kilometres (12,400 square miles) of land -- an area about the size of Belgium -- unless systems such as dykes are strengthened, said a UN discussion paper released last year.

It said the threat of floods is greatest in the Mekong Delta, where 17 million people live.

-------Over the past 50 years the sea level has already risen by 20 centimetres (eight inches) along Vietnam's coast, according to the increasingly worried communist government.

While delta farmers cope with drought, they are also challenged by sea water intrusion, which experts also link to climate change.

There is little water in the rivers near Roi's fields "and it's salty so we can't pump it" for irrigation, he says.

Recalling easier times on his 1.2 hectares (three acres), Roi says, "The rice fields weren't dying like this."

The Vietnamese government emphasises the role of climate change in disrupting its agricultural environment, but experts do not rule out an effect from dams upstream in China. That impact could be worsened by the opening of more dams further south in Laos and Cambodia, they say.

"The Chinese dams have made the system fragile, but the impact of the downstream dams will be cumulative," said Marc Goichot, of the WWF.

------China has eight planned or existing dams on the Mekong River, but rejects activists' criticism that the hydropower dams contribute to low water levels downstream.

There are proposals for another twelve dams in the lower Mekong countries.

Vo Tong Xuan, a leading Vietnamese rice expert, said the flow of the Mekong River -- whose long journey ends at the delta -- is "extremely reduced" this year.

He is concerned about the impact of Chinese dams, but also blames Vietnam's increasingly intensive methods of rice growing.

As the delta's population has expanded, farmers have gone from planting one to two and sometimes three rice crops

http://www.seeddaily.com/reports/Salty_water_parched_earth_Vietnams_Mekong_paddies_dry_up_999.html

Conson Aims for South China after Hammering Manila

Jul 15, 2010; 6:45 PM ET

Conson, having dealt Manila a drubbing, will now aim for a late-week landfall in south China.

As of Thursday evening, EDT time, the center of Conson was located over the South China Sea about 200 miles southeast of Hainan Dao, China.

Conson is currently a typhoon with 80 mph winds and stronger gusts. It's possible the storm will strengthen slightly over the next 12 hours.

Conson is predicted to make landfall on Hainan Dao by Friday night, local time. A landfall here would bring flooding rain and damaging winds.

The cyclone had weakened into a tropical storm while moving over southern Luzon, the main island of the Philippines. As of Thursday afternoon, the maximum sustained winds were close to 65 mph with gusts to 80 mph.

---- AccuWeather.com meteorologists say that Conson may contribute, at least indirectly, to further rains and ongoing flooding in the Yangtze River basin of central and eastern China. Here, in the provinces of Anhui, Jiangxi and Hunan, rainfall has already been 100 to more than 300 percent of the normal July amount leading to severe flooding.

The flooded area will continue to have locally excessive rain for at least the next week with rainfall next week potentially getting a boost from dissipating Tropical Storm Conson.

http://www.accuweather.com/blogs/news/story/33963/conson_may_unleash_disastrous.asp

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

At the Comex silver depositories Thursday, final figures were: Registered 52.47 Moz, Eligible 59.34 Moz, Total 111.81 Moz.

+++++

Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

The cost of God’s work, $550 million. Barely the price of a top squids annual bonus. Today, it’s the Great Vampire Squid again, paying a mere $550 million to make America’s out of their league SEC go away. The cost of “God’s work?” A puny 14 days worth of profits, and less that the stock price surged on news of the settlement. It didn’t take Ebenezer Squid long with his Abacus to see that at 550 million it was easily the bargain of the new century. Besides, what’s 550 million when it ends all the paranoia among friends? Maybe now the top squids can stop wearing wires and trying to record each other. Below, the Journal covers the Squids giving back what for them amounts to just another cost of business. One tiny unseemly detail that was buried in the minutiae, the great vampire squid seems to have to help the SEC serve up Frenchman Fabrice Tourre’s head on a plate. One other minor detail, the SEC apparently gives up pursuing Goldman Sachs on “other mortgage related CDOs” according to MarketWatch. Bernie Madoff must be wondering where he went wrong. Below the Journal coverage, did someone at Goldie or the SEC game the settlement’s announcement near the close? The Fed’s NY fix-it desk perhaps? They wouldn’t do that, would they?

"I'm doing God's Work."

Lloyd Blankfein. CEO Goldman Sachs. November 8 2009.

JULY 16, 2010

Goldman Settles Its Battle With SEC

$550 Million Deal Ends Showdown That Shook Street

In one of the largest penalties in Wall Street history, Goldman Sachs Group Inc. agreed to pay $550 million to settle civil charges that it duped clients by selling mortgage securities that were secretly designed by a hedge-fund firm to cash in on the housing market's collapse.

But the agreement with the Securities and Exchange Commission ends a showdown that had deeply shaken America's most powerful financial firm at a cost that outside observers deemed a bargain.

Goldman conceded it made "a mistake" by not disclosing the role of Paulson & Co. to investors for a deal dubbed Abacus 2007-AC1. The firm vowed to toughen oversight of mortgage securities, certain marketing materials and employees who create or pitch such securities.

Criminal prosecutors still are looking into whether Goldman or its employees committed securities fraud in connection with its mortgage trading, according to people familiar with the matter. Goldman hasn't commented on the criminal probe.

Yet Goldman walked away with several victories that raise questions about the strength of the SEC's case. The company wasn't forced to sacrifice any top executives, including Chief Executive Lloyd C. Blankfein, as some executives had feared. The changes it agreed to won't weaken its profits or standing as Wall Street's mightiest firm. The record-setting penalty is equivalent to just 14 days of profits at Goldman in the first quarter.

"That is a steal," said Michael Driscoll, a visiting professor at Adelphi University and a senior managing director at firm Bear Stearns Cos. before that firm collapsed in 2007. Analysts had expected Goldman to pay at least $1 billion as part of the deal.

Goldman shares surged late in the day on expectation of a pact, and continued to rally in after-hours trading. The stock was up $6.16, or 4.4% to $145.22 in New York Stock Exchange trading in regular hours, and then another $7.13, or 4.9%, to $152.35 after hours.

The firm's traders, investment bankers and other employees expressed relief that the three-month legal ordeal, which erased nearly $20 billion of the company's stock-market value, was over. Executives believe the $550 million payment is tiny compared with the business Goldman could have lost if the case dragged on. Goldman brass told managers to make sure the reaction inside the firm was subdued, fearing that cheering or other celebration would further taint the firm's reputation.

The settlement must be approved by U.S. District Judge Barbara S. Jones in New York.

The SEC said the Goldman settlement represents the largest penalty it has ever extracted from a Wall Street firm. In 1988, Drexel Burnham Lambert Inc. agreed to pay $650 million in fines and restitution, but about half the total went to satisfy civil claims of investors and clients defrauded by Drexel.

----The SEC said Goldman agreed to cooperate in the investigation of Fabrice Tourre, the Goldman trader accused by the SEC of being "principally responsible" for piecing together the bonds and touting them to investors.

Mr. Tourre faces a Monday deadline to respond to the allegations by the SEC in its April lawsuit or seek an extension. Mr. Tourre, who still works at Goldman but is on paid leave, plans to file a response Monday and continue trying to clear his name, according to a person familiar with the matter.

----The settlement includes a $535 million civil penalty and the handover of $15 million in profits Goldman made on the Abacus deal. Goldman will pay $250 million to investors in the Abacus deal, including $150 million to IKB Deutsche Industriebank AG, a German bank that invested the same amount in a slice of the mortgage securities. The U.S. government gets the remaining $300 million.

http://online.wsj.com/article/SB10001424052748704682604575369382547871788.html?mod=WSJEUROPE_hps_LEFTTopWhatNews

Thursday, July 15, 2010

Is the SEC Going to Investigate Insider Trading on Goldman Settlement News?

Goldman’s stock was trading at $140.15 at 3:26 PM today.

It moved more than 4 points in the next ten minutes.

I got wind that the settlement announcement was set for 4:45 PM at around 4:00 PM. I pinged a journalist at a major financial media outlet to find out whether there had been an announcement to the media earlier. His impression was also that the news had hit the wires at 4:00 PM (thus presumably intended for the close of trading).

So….it’s insider trading only if you are an insider…but who let the cat out of the bag at 3:30 PM, and were they an insider? This sort of thing happens all the time, but it’s particularly brazen when it involves and SEC announcement. But how likely is it that the SEC will turn over this rock to see what crawls out from under it?

http://www.nakedcapitalism.com/2010/07/is-the-sec-going-to-investigate-insider-trading-on-goldman-settlement-news.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

“I am not a crook.”

Ebenezer Squid. With apologies to Richard Nixon.

Another weekend and the British Open battles the winds, rain and sun of the links of St Andrews. In the Gulf of Mexico, BP finally seems to be close to a permanent solution to its Macondo blowout. The next 36 hours should tell whether the well’s integrity below the blowout preventer is still sound. More at the weekend and hopefully all good news. Have a great weekend everyone.

"In economics, hope and faith coexist with great scientific pretension."

J. K. Galbraith.

Technorati Tags: Federal Reserve,QE,BDI collapse,fiat currency default,gold and silver.,Vietnam drought,rice,Goldman Sachs,great vampire squids,missing sunspots,global cooling

Volcanic Ash Cloud – North America Cut Off.

Baltic Dry Index. 2966 +38

LIR Gold Target by 2019: $3,000.

http://www.londonirvinereport.blogspot.com/

“The repercussions of the Laki Volcano eruption in Iceland resonated throughout Europe for the next few years. The summer of 1783, having been turned to winter was followed by an extreme, harsh winter in 1784, even in North America where it was reported as one of the coldest on record.

The Laki Volcano eruption in Iceland can also be said to have contributed significantly to the French Revolution. After several years of extreme weather in Europe caused by the Laki eruption, the ensuing destruction of crops and livestock brought famine and poverty that built up in France, triggering the Revolution which began in 1789.”

We open today with the news that the North American continent has been cut off from air travel with Great Britain and civilization, by a 7 mile high volcanic ash cloud from Iceland. Probably with Europe too, which is scary given continental Europe’s inclination to rush off into inexplicable wars in the absence of US troops to end them. Don’t you just love Iceland, they can’t or won’t pay off their banksters debts yet send free useless ash to everyone in Britain instead. Supposedly, the cut off is to end a 1 pm BST later today, which should be enough to prevent total panic descending on North America, once the realization of their eastern isolation sinks in. Hapless Americans headed for the watering holes of Great Britain and Europe are advised instead to head off to Las Vegas, where many fine scaled down replicas of some of Europe’s finest buildings and drinks have been replicated. Distressed Brits unable to withstand the wait to reach North America are advised to check in at the Heathrow Dude Ranch and retirement home for seaside donkeys, nestled in the picturesque bucolic rolling fields between the M4/M25 interchange and Heathrow Airport’s Perimeter Road.

Below, the Journal covers the growing catastrophe for North America. I suspect, given the Icelandic track record above, returning to normality by 1 pm BST might prove to be slightly optimistic.

APRIL 14, 2010
FAA Says Most North Transatlantic Flights Hit by Volcano Danger

U.S. authorities said Wednesday that they had frozen most transatlantic flights because of the danger posed by a volcanic ash cloud drifting south from Iceland.

The Federal Aviation Administration said it was keeping some Europe-bound aircraft on the ground at U.S. airports, while carriers such as Continental Airlines Inc. opted to cancel services until the situation was resolved.

The volcanic eruption in Iceland sent an ash cloud drifting south across the main airline corridor for transatlantic services. The particles reduce visibility and can even cause aircraft engines to shut down.

FAA spokeswoman Laura Brown said "essentially all traffic" had been halted on the affected routes, with authorities expecting the disruption to run through between 0700 and 1200 GMT, the peak-time for arrivals to the U.K. from North America.

A Continental spokeswoman said it had cancelled eastbound flights from Newark to Glasgow, Edinburgh and Manchester, though anticipated normal operations on other services, albeit with potential air traffic control delays.

The Houston-based carrier operates one of the largest transatlantic networks, and said on its website that westbound flights "will most likely be rerouted around the ash cloud", with the move causing delays because of fuel stops.

U.K. airlines including Easyjet PLC adearlier warned travelers of potential disruption.

"Following the eruption of a volcano in Iceland earlier today, the Met Office have advised airlines that the ash plume may reach U.K. air space overnight. As a result this may cause significant disruption to flights departing the U.K. [Thursday]," the airline said in a statement.

The U.K air traffic control authority, NATS, earlier Wednesday said it was "restricting flights within the area affected by the ash cloud generated by the Icelandic volcanic eruption -- at present, this is the northern region of Scotland but is expected to move south."
http://online.wsj.com/article/SB10001424052702303348504575184930036984968.html

In other news yesterday, the Fed’s big man of Dallas Texas, spoke out yesterday against the semi official central banks actual owners. Mr Fisher thinks that banks that are too big to fail, are banks that are too big to run or supervise. I suspect that Mr. Fisher is probably looking for a career change. My money is on Mr. Blankfein and his chilling threat below.

"If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."

Lloyd Blankfein. CEO Goldman Sachs. November 8, 2009

Big banks should be broken up, Fed's Fisher says
Too-big-to-fail is too-big-to-manage or supervise
NEW YORK (MarketWatch) -- Large financial institutions should be dismantled before their risky behavior creates another financial and economic crisis, a top Federal Reserve official said Wednesday.

The largest banks and pseudo-banks are too big to supervise and they are too big to manage, said Richard Fisher, president of the Dallas Federal Reserve Bank. The costs imposed by these banks are greater than the benefits society gets from having them.

"The risk posed by coddling TBTF [too-big-to-fail] banks is simply too great," Fisher said at a conference about creating a new financial structure. "A truly effective restructuring of our regulatory system will have to neutralize what I consider to be the greatest threat to our financial system's stability" -- large financial institutions.

At some point, large banks don't have efficiencies of scale, Fisher said, but "disefficiencies of dysfunctionality."

"There are limits to size and to scope beyond which global authorities should muster the courage to draw a very bright, red line," Fisher said. "I think the disagreeable but sound thing to do regarding institutions that are TBTF is to dismantle them over time into institutions that can be prudently managed and regulated across borders."

"The existence of institutions considered TBTF exacerbated a crisis that has cost the world a substantial amount of potential output and a whole lot of employment," Fisher said. The world has lost more than $60 trillion in output because of the 2008 crisis, he said.

It would be better to have "an international accord to break up these institutions into ones of more manageable size," Fisher said, but "if we have to do this unilaterally, we should."
Fisher spoke at a conference sponsored by the Levy Economics Institute of Bard College in honor of economist Hyman Minsky, who taught that an unfettered financial system would inevitably create asset bubbles and subsequent financial crises. Markets are efficient only at creating crises, he said.

Minsky's ideas have gained new respect after the collapse of the dot-com bubble and the housing bubble proved how prescient he was. Four other top Fed officials are scheduled to speak at the conference, as well as former Fed Chairman Paul Volcker.
http://www.marketwatch.com/story/big-banks-should-be-broken-up-feds-fisher-says-2010-04-14

Below, another US great vampire squid makes its living by massive prop trading. In JP Morgan’s case it’s all down to “record fixed-income trading,” for the house account. What could possibly go wrong, that yet another taxpayer bailout couldn’t put right? Banksterism, not capitalism still rules.

“Fraud and falsehood only dread examination. Truth invites it.”

Samuel Johnson.

JPMorgan Earnings Increase 55% on Outlook for Economy
April 14 (Bloomberg) -- JPMorgan Chase & Co. said a “broad-based” economic recovery boosted first-quarter earnings 55 percent, surprising analysts with record fixed-income trading revenue and a better-than-expected outlook for consumer credit.

Net income at the second-biggest U.S. bank by assets climbed to $3.33 billion, or 74 cents a share, from $2.14 billion, or 40 cents, in the same period a year earlier and from $3.28 billion in the fourth quarter, the New York-based company said today in a statement. Record fixed-income trading revenue and a reduction in provisions for credit losses helped the bank beat the average estimate of 64 cents per share projected by 21 analysts surveyed by Bloomberg.

“There is clear and broad-based improvement in the economic factors in the United States and around the world,” Chief Executive Officer Jamie Dimon, 54, told reporters on a conference call.
Dimon cited signs including stabilizing U.S. home prices that signal the economy may be poised for a “strong recovery.” Chief Financial Officer Mike Cavanagh said delinquencies for credit cards and mortgages in which the borrower is behind by just one payment also improved in the first quarter, indicating that consumers’ finances are gaining strength after the worst recession in more than 70 years.

“Nobody saw those types of numbers coming,” said Paul Miller, a former examiner for the Federal Reserve Bank of Philadelphia and analyst at FBR Capital Markets in Arlington, Virginia.
JPMorgan’s earnings bode well for Bank of America Corp. and other banks, which report earnings later this month, Miller said. “Credit remains a wild card here, but Jamie talked very, very positive about credit and the consumer,” he said.

----- “China’s growing, India’s growing, Japan is growing, home prices have stopped going down, consumer income is up, consumers are spending, service and manufacturing indexes are up, inventories are still low, I could go on and on,” Dimon said. “This could be the makings of a good recovery. We don’t know for sure, but if you look at those factors, it’s pretty good.”

-----Dimon and Cavanagh didn’t give shareholders immediate hope of restoring the quarterly dividend, which was cut to 5 cents from 38 cents in February 2009.

“We want to see continued sustained improvement in employment, continued sustained improvement in delinquencies” and a better understanding of new bank capital rules before the dividend will increase, Dimon said, reiterating what he told shareholders in his annual letter last month.

Cavanagh said that increasing the payout to shareholders is “going to be down the road a little more.”
http://www.bloomberg.com/apps/news?pid=20601103&sid=a.Zv027iZigM

Below, George Soros is on something of a public campaign against another bankster generated bust. My guess is that it is already too late, with the banksters all trading up a storm of renewed derivatives gambling.

Markets could be derailed again, warns Soros
Apr 14, 2010 07:11 EDT
Railway porter-turned-billionaire financier George Soros delivered a stark warning last night that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis.

The man who ‘broke’ the Bank of England (and who is still able to earn a cool $3.3 bln in a year) said the same strategy of borrowing and spending that had got us out of the Asian crisis could shunt us towards another crisis unless tough lessons are learned.

Soros, who worked as a porter to pay for his studies at the London School of Economics after emigrating from Hungary, warned us to heed the lesson that modern economics had got it wrong and that markets are not inherently stable.

“The success in bailing out the system on the previous occasion led to a superbubble, except that in 2008 we used the same methods,” he told a meeting hosted by The Economist at the City of London’s modern and impressive Haberdashers’ Hall.

“Unless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble.

“We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.”

http://blogs.reuters.com/fundshub/2010/04/14/markets-could-be-derailed-again-warns-soros/

We end for the day with Soc Gen’s Dylan Grice pointing out the troubling fact that Greece was only different in one respect, it’s debt problem was still small enough to be bailed out. The others, the US and UK included, aren’t too big to fail, merely too big to bailout in any meaningful sense of the pre-bailout financial system. Another way of saying Von Mises is all too likely to be right. Stay long precious metals.

Greece – ‘It’s not that different’
SocGen’s Dylan Grice is one person not bored with Greece. In fact, he believes it is the beginning of a wave of government funding crises, not the end.

The reason? The colossal amount of government debt that needs to be issued.

I’m not a bond strategist and I’ve not done anything sophisticated or clever, but by taking Bloomberg’s data for existing debt maturity for each government (red) and using the OECD’s projected 2010 deficits as a proxy for net new issuance (grey) my numbers shouldn’t be too far out. But if my numbers are even roughly right and issuance is the problem, Greece should have had almost the least to worry about!

This concerns Grice because of the unavoidable arithmetic behind debt sustainability, namely; the interest a country pays on its debt must equal the nominal growth rate of that country.
If it does, the incremental government revenue generated by the economic growth will pay for the coupons on the debt. If it doesn’t, a shortfall develops between incremental revenues and incremental coupon payments and in the absence of further austerity, more debt is required to finance the deficit.

This might sound abstract, but it’s exactly what happened in Greece. When the first austerity plan was presented, Greece cut public sector wages by a painful 10% causing angry protest and social unrest, although it saved the government EUR650m. But the same austerity plan assumed Greece’s interest cost would be 4.7% and by late February it was paying 6.25%. According to the WSJ, this has blown a EUR700m hole in its budget, more than offsetting the savage public sector wage cuts already enacted.

Given that everyone is subject to these iron-clad laws of budget sustainability then everyone is vulnerable to a reassessment of sovereign risk by the market, says Grice.

And if you thought Greece was somehow different from the UK, US et al think again, says Grice.
But it’s not just about getting this year out of the way. If it can happen in Greece, it can happen everywhere else too, because Greece just isn’t that different.OK, so it misrepresented the size of its liabilities … but so too do most other governments; its real fiscal problems are hidden off-balance sheet in the enormous welfare obligations it can’t afford to pay and so are most other governments; its debt maturity isn’t notably different from the rest of the OECD’s (at about eight years it’s actually longer than those of the US and of Japan); and its projected budget deficit is lower than those projected in the UK and the US (third chart inside).

So there you have it – if can happen in Athens if can happen anywhere.
http://ftalphaville.ft.com/

Email me for a copy of Mr Grice’s excellent scary report.



“Overheard at Goldman Sachs”:
“We assume that you know what you’re doing,
In this ill-advised trade you’re pursuing,
But the opposite bet
That we place on your debt
May eventually hasten your ruin.”

http://blogs.wsj.com/economics/2010/03/17/celebrate-st-patricks-day-with-some-economic-limericks/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Feconomics%2Ffeed+%28WSJ.com%3A+Real+Time+Economics+Blog%29

At the Comex silver depositories Wednesday, final figures were: Registered 48.89 Moz, Eligible 66.55 Moz, Total 115.44 Moz.


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Crooks & Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Today, more on the race to get into the UK’s House of Crooks. The Tory leaning Telegraph thinks the Conservative Party has a shot at beating a hung Parliament.

"A low voter turnout is an indication of fewer people going to the polls."

George W Bush

General Election 2010: Conservatives lead in 100 key seats, Telegraph poll shows
The Conservatives are on course for a convincing election victory after a new poll for The Daily Telegraph showed the party is leading Labour by 12 points in crucial marginal constituencies.
By Andrew Porter, Political Editor Published: 10:30PM BST 14 Apr 2010

On the eve of tonight’s first ever leaders’ television debate, the most comprehensive survey of swing seats since the campaign began showed David Cameron comfortably ahead.
The poll by Crosby/Textor was carried out in 100 marginal seats; 80 held by Labour and 20 by the Liberal Democrats.

43 per cent of voters questioned said they would vote Conservative, 31 per cent Labour and 20 Lib Dem.

Labour have dropped five points since the 2005 election in these seats, while the Tories have gained seven points, the poll showed.

The results suggest the Conservatives are much more likely to achieve an outright majority at the election than previously thought.

One recent poll indicated that the Tory lead had narrowed to just three points, making a hung parliament the most likely result.

However, it is in the marginal constituencies - where pollsters believe the election will be won or lost - that the Conservatives have concentrated most of their efforts.

This latest poll appears to suggest that the strategy - masterminded by Lord Ashcroft - is paying off.

The new poll also predicts that turnout in the marginals is likely to be better than many have predicted with 65 per cent of those questioned saying they would definitely vote.
http://www.telegraph.co.uk/news/election-2010/7591249/General-Election-2010-Conservatives-lead-in-100-key-seats-Telegraph-poll-shows.html

"Blessed are the young, for they shall inherit the National Debt."

Herbert Hoover


UK General Election polls. – Why a hung Parliament looks increasingly likely.
http://www.ukpollingreport.co.uk/blog/

Below, what a surprise, a UK enquiry into the UK’s University of East Anglia’s dodgy Climate Research Unit’s “climategate” scandal, found nothing of any concern to worry about. Though the US Professor who came up with the infamous “hockey stick” global warming chart, ought to have been more careful in picking his methods. Phew, what a relief, for a moment there we almost thought that a Brit was going to pick on a British institution. With more and more sign of global cooling arriving, the lunatic left are going to carry on with their socialist agenda, promoting man made global warming from CO2. If it wasn’t so serious it would be funny.

“Patriotism is the last refuge of the scoundrel.”

Samuel Johnson.

'Hockey stick' graph was exaggerated
The 'hockey stick' that became emblematic of the threat posed by climate change exaggerated the rise in temperature because it was created using 'inappropriate' methods, according to the head of the Royal Statistical Society.
By Louise Gray, Environment Correspondent Published: 2:52PM BST 14 Apr 2010

Professor David Hand said that the research – led by US scientist Michael Mann – would have shown less dramatic results if more reliable techniques had been used to analyse the data.
Prof Hand was among a group of experts charged with investigating the "climategate" email scandal that engulfed the University of East Anglia's Climatic Research Unit (CRU) last year.

Sceptics claimed that the hacked messages showed scientists were manipulating data to support a theory of man-made global warming.

However the review, led by Lord Oxburgh into the research carried out by the centre, found no evidence of ''deliberate scientific malpractice".

Lord Oxburgh said the scientists at the research unit arrived at their conclusions ''honestly and sensibly''.

But the reviewers found that the scientists could have used better statistical methods in analysing some of their data, although it was unlikely to have made much difference to their results.

That was not the case with some previous climate change reports, where "inappropriate methods" had exaggerated the global warming phenomenon.

Prof Hand singled out a 1998 paper by Prof Mann of Pennsylvania State University, a constant target for climate change sceptics, as an example of this.

He said the graph, that showed global temperature records going back 1,000 years, was exaggerated - although any reproduction using improved techniques is likely to also show a sharp rise in global warming. He agreed the graph would be more like a field hockey stick than the ice hockey blade it was originally compared to.

"The particular technique they used exaggerated the size of the blade at the end of the hockey stick. Had they used an appropriate technique the size of the blade of the hockey stick would have been smaller," he said. "The change in temperature is not as great over the 20th century compared to the past as suggested by the Mann paper."

----The graph used data from hundreds of studies of past temperatures using tree rings, lake sediment, and glacier ice cores and then merged these with more reliable recent temperature records.

Prof Hand said many of the reproductions of the graph do not make clear when these different sets of data are used.

"It is only misleading in the sense they merged two different things," he said.

Prof Hand praised the blogger Steve McIntyre of Climate Audit for uncovering the fact that inappropriate methods were used which could produce misleading results.

"The Mann 1998 hockey stick paper used a particular technique that exaggerated the hockey stick effect," he said.

Prof Mann, who is Professor of Earth System Science at the Pennsylvania State University, said the statistics used in his graph were correct.

"I would note that our '98 article was reviewed by the US National Academy of Sciences, the highest scientific authority in the United States, and given a clean bill of health," he said. "In fact, the statistician on the panel, Peter Bloomfield, a member of the Royal Statistical Society, came to the opposite conclusion of Prof Hand."
http://www.telegraph.co.uk/earth/environment/climatechange/7589897/Hockey-stick-graph-was-exaggerated.html


The monthly Coppock Indicators finished March:

DJIA: +168 UP. NASDAQ: +370 UP. SP500: +196 UP. The great Bull market goes on with the all three continuing higher in positive numbers.

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Help the LIR fight Banksterism, the EU, and for sound money.
If you can, help the LIR stay around and make a difference. Please make a donation at the PayPal link on the website or better still become a sponsor for what looks like an exciting 2010. Capitalism not banksterism. Many thanks to all who have helped.
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Sunspots – A 22 year colder world? (From 2004?)

Spotless Days April 14
Current Stretch: 0 days
2010 total: 7 days (7%)
2009 total: 260 days (71%)
Since 2004: 777 days
Typical Solar Min: 485 days
http://www.spaceweather.com/
The long minimum seems to have ended.

New Solar Cycle Prediction
http://science.nasa.gov/headlines/y2009/29may_noaaprediction.htm

Is the Sun Missing Its Spots?
http://www.nytimes.com/2009/07/21/science/space/21sunspot.html?8dpc

Are Sunspots Different During This Solar Minimum?
-----But something is unusual about the current sunspot cycle. The current solar minimum has been unusually long, and with more than 670 days without sunspots through June 2009, the number of spotless days has not been equaled since 1933.

----During the period from 1645 to 1715, the Sun entered a period of low activity now known as the Maunder Minimum, when through several 11- year periods the Sun displayed few if any sunspots. Models of the Sun's irradiance suggest that the solar energy input to the Earth decreased during that time and that this change in solar activity could explain the low temperatures recorded in Europe during the Little Ice Age.

----The same data were later published [Penn and Livingston, 2006], and the observations showed that the magnetic field strength in sunspots were decreasing with time, independent of the sunspot cycle. A simple linear extrapolation of those data suggested that sunspots might completely vanish by 2015.These observations caused researchers to wonder whether the characteristics of sunspots are different now than in other solar cycles.http://www.leif.org/EOS/2009EO300001.pdf

Big freeze could signal global warming 'pause'
The Arctic conditions which have brought Britain to a standstill over the past week could be the start of a "pause" in global warming, some scientists believe.
Published: 9:20AM GMT 11 Jan 2010
http://www.telegraph.co.uk/earth/environment/globalwarming/6965342/Big-freeze-could-signal-global-warming-pause.html

Sunspot cycle 24: Together with sunspot cycle 25, the next two global cooling cycles. The new “Dalton Minimum?” Twenty Nine months now with low sunspots numbers, and counting. March was the 29th month of yet another low number of 15.4 http://en.wikipedia.org/wiki/Dalton_Minimum

Smoothed sunspot numbers (SSN). 2007, Oct. 0.9. The end of cycle 23.

Sunspot cycle 24: Nov 1.7. Dec 10.1. Jan 3.4. Feb 2.2. Mar 9.3 April 2.9. May: 2.9. June 3.1. July 0.5. August 0.5. Sep 1.1 Oct. 2.9. Nov. 4.1 Dec 0.8. Jan 1.5. Feb 1.4. Mar 0.7. Apr 1.2. May 2.9. June 2.6. July 3.5. Aug. 0.0. Sep 4.2. Oct 4.6. Nov 4.2. Dec 10.6 Jan 13.1 Feb 18.6 Mar 15.4.

Sunspots. http://solarscience.msfc.nasa.gov/SunspotCycle.shtml

The count. http://sidc.oma.be/products/ri_hemispheric/

Why a New Minimum. http://sesfoundation.org/dalton_minimum.pdf

The “Carrington Event,” September 1, 1859.
http://science.nasa.gov/headlines/y2008/06may_carringtonflare.htm

Current Space Weather.
http://www.swpc.noaa.gov/

What happened to global warming?
http://news.bbc.co.uk/1/hi/sci/tech/8299079.st

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This week’s featured links: Silver & Gold Miners + Rare Metals.

With US trillion dollar deficits stretching as far as the eye can see, and voodoo economics the order of the day at the central banks, I think it is now time to begin selectively scaling into precious metals companies that mostly meet the following criteria:

Adequate cash reserves. Good management. Strong in-ground reserves or prospects. NAFTA based, or else located in countries with strong rule of law.

Endeavour Silver Corp. TSX: EDR. http://www.edrsilver.com/s/Home.asp

Semafo TSX: SMF http://www.semafo.com/home_company_intro.php

ATW Gold Corp. TSX.V: ATW. http://www.atwgold.com/

US Silver Corp. TSX.V: USA. http://www.us-silver.com/s/Home.asp

Excellon Resources Inc. TSX: EXN. http://www.excellonresources.com/

First Majestic Silver Corp. TSX: FR http://www.firstmajestic.com/s/Home.asp

New Jersey Mining Company. OTCBB: NJMC
http://www.newjerseymining.com/index.html

Atna Resources Ltd. TSX: ATN. http://www.atna.com/s/Home.asp

Barkerville Gold Mines TSX.V: BGM. Formerly International Wayside Gold Mines Ltd.
http://www.barkervillegold.com/s/Home.asp

Shoreham Resources Ltd. TSX-V: SMH
http://www.shoreham.ca/

ATAC Resources Ltd, TSX.V: ATC. http://www.atacresources.com/s/home.asp

Evolving Gold Corp. TSX.V: EVG http://www.evolvinggold.com/

Lydian International Ltd. TSX: LYD. Note: LYD operates in Armenia, a region carrying higher risk than our usual safer picks in NAFTA lands. http://www.lydianinternational.co.uk/

The story of rare earths and metals is mostly one of China producing and exporting, Japan, America and everyone else importing. Vital to our new technologies, and lifestyle, and critical to hybrid and electric cars, Rare Earth Elements and Heavy Rare Earths, are a strategic choke point held in China’s hands. Lately China has been squeezing that choke point. I think that AVL at Thor Lake Canada, has a property of global importance. A property with the ability to offer NAFTA access to REEs and HREs for the decades ahead. As America and the west move to reduce over dependence on oil from unstable regions, we will see demand for rare metals take off.

Avalon Rare Metals Inc. TSX: AVL. http://www.avalonraremetals.com/

We will be adding more REEs as appropriate.

Warning.

Sadly we are all in unexplored territory. The world has never before suffered a severe recession/depression while operating on fiat currency. As is widely apparent, the central banks haven’t a clue and are making up the rules as the flounder along. They never saw it coming they claim, although it was obvious to many fine writers though not unfortunately in the mainstream media, that a giant financialised derivatives gambling economy would always end badly. There are no experts now, for the simple reason that we have never before faced such a sudden synchronised and deep collapse in the global economies.

The unfortunate fact that we are operating on fraudulent currencies is highly likely to mean it all ends many months from now, in a fiat currency revulsion, but only after the monetary authorities have first tried pouring in endless amounts of newly created money. A derivatives gambling world with an estimated quadrillion dollars of face value has to be unwound and the losses absorbed. In this sort of investing environment, cash, gold and silver and tangible assets are favoured over stocks and intangible assets.

As always if thinking about making an investment, it’s important to do one’s own due diligence. No one has more at risk in an investment than you do yourself. In these difficult economic times, there will likely be several false bottoms before the real one arrives and hindsight allows us to confirm that the bottom is in. Even then, a “V” shaped rebound is highly improbable. A double dip recession seems likely. Beware the false "statistical" government subsidised "recovery." It is a "recovery" bought from a future of fiat currency collapse.

Graeme Irvine

London Irvine Report: www.londonirvinereport.com/

Graeme@londonirvinereport.com