Sunday, July 08, 2012

Sunday Night Special
Are we over-medicalized?
Reuters health editor Ivan Oransky warns that we’re suffering from an epidemic of preposterous preconditions -- pre-diabetes, pre-cancer, & many more .. shows how health care can find a solution - by taking an important lesson from baseball .. Ivan Oransky is the executive editor of Reuters Health, and has done pioneering work .. OOB .. 11 minutes
Europe Is Unraveling 
& Headed For Collapse 
"Nothing has been solved .. this bailout fund, this European Stability Mechanism, which is supposed to have firepower of up to 700 billion euros, it doesn’t actually exist. It’s imaginary. Before it’s even setup, we have a legal challenge in Ireland. We have a legal challenge in Germany, through their Constitutional Court. We have the Estonian Finance Minister saying that it contradicts their constitution, and therefore will need a change in their Parliament to their law. This thing is all over the place. I think that not just the credibility of the institutions and the mechanisms, .. they have no credibility, internationally, at all. They have no respect within the euro itself. I’ve just got this feeling that as we come up to the Parliamentary recess, for the whole of August everything will be closed, and I’ve just got a feeling we’re in for a long hot summer on the market."
- Nigel Farage, European Union Parliament Member
Special Presentation
On Monetary Policy
At Bank Of France
Formerly of Pimco, Paul McCulley, presented the following paper at a meeting held at France's central bank .. it addresses the question - Does Central Bank Independence Frustrate the Optimal Fiscal-Monetary Policy Mix in a Liquidity Trap? .. McCulley concludes: "Monetary policy is ineffective in a liquidity trap and fiscal policy is effective. However, at a time of elevated public debt levels, attempts to increase public borrowing meet fierce opposition .. Cooperation between fiscal and monetary authorities for a period of time can fix these problems. By the monetary authority breaking with orthodoxies and openly encouraging and monetizing fiscal expansion, the government’s concerns over elevated debt levels, Ricardian equivalence and rising rates would be allayed, and the transmission mechanism of monetary policy would be restored by the presence of a willing borrower – the government ... In the topsy-turvy world of liquidity traps, adherence to fiscal and monetary orthodoxies can be costly, and acting irresponsibly relative to orthodoxy can work." .. [NNOO! In fact, our best guess, as to McCulley no longer being with Pimco, is that the rest of Pimco believes we are at the Keynesian endpoint. McCulley insists that a Keynesian response is what is needed to fix the economy. Cliff welcomes ideas & debate & is not certain that McCulley's solution wouldn't help (for a while), but it is like letting a gambler (on a losing streak) bet everybody else's money on one big bet. A sensible system would never have let it get to this point.]   .. Click on "McCulley Presentation At Bank Of France" to download the presentation (may have to provide your own email address), or hit "View Fullscreen" far below next to the 'S' icon to enlarge the viewing.
McCulley Presentation At Bank Of France
The Solution Is Sound Money
"Fractional reserve lending is at the very heart of the debt crisis. That is what enables banks to conjure up credit at will. The solution is not free money and not more government intervention into free markets, but rather sound money and less government interference, coupled with the end of fractional reserve lending."
- Mish Shedlock (AE)
Central Banks Say
"Start Your Engines"
Lauren Lyster interviews economist Reggie Middleton on central banks & money printing .. The European Central Bank (ECB) cut its benchmark interest rate to a historic low, the Bank of England (BOE) agreed to more money printing, China’s central bank unveiled a surprise interest rate cut, the Danish Central Bank went one step further and entered NIRP territory (negative interest rate policy) .. explains why no amount of money printing can create wealth. .. 1/2 hour
Courtesy of Christopher Weyant,
click to enlarge
Will Derivatives Cause
Financial Mass Destruction? 
MGI Securities' David Chapman writes on The $289 Trillion Problem .. America’s ‘big five’ banks (Bank of America; Citigroup; Goldman Sachs; JPMorgan Chase; Morgan Stanley) have $289 trillion of derivatives on their books - they are exposed at a rate of 331% to their risk-based capital .. these banks know the U.S. government can not afford to let interest rates go higher because it will mean trillions more in interest payments on the national debt .. so what do they do? well of course, borrow at 0% from the Federal Reserve & buy U.S. Treasury bonds well above 1% on the 10-year bond & longer .. these banks also know the Fed Funds rate is fixed near 0% through 2014, because Fed Chairman Ben Bernanke said so .. but if interest rates rise even a little bit, America's banks could then trigger a derivatives meltdown which would overwhelm the world's ability to handle it .. "It is the ultimate in carry trades. Their derivative portfolios could be at risk if interest rates were to rise even a little bit. Could that be the reason interest rates keep falling as the IRS [interest rate swaps - about 80% of all derivatives worldwide] market is being used to help push down interest rates? But what if the game suddenly came to an end because of an event beyond their control? Then what? It is a $289 trillion problem."
[Cliff Note: This is why the Federal Reserve will continue to print money to keep interest rates low. Their system dies if rates rise too much. The 99% must pay to help the Federal Reserve keep their system alive & in control. The 'ways' that the 99% are made to pay are not generally understood. Our Notes will try to reveal the 'ways' we are made to pay.]
LINK HERE to the essay
One person on this panel of 'experts' 'gets it'. Can you figure out who it is?
Special Report
Gold in Inflation & Deflation
This is a special report commissioned by the World Gold Council & developed by Oxford Economics [Note: We caution readers to understand the World Gold Council is an 'official' source & official sources can have an 'agenda'.]. An analysis of gold behavior in periods of inflation & deflation .. it is about a year old but still very relevant .. "We find that while other assets outperform gold in the baseline scenario, gold performs relatively strongly in a high inflation scenario and also does comparatively well in a deflation scenario derived from a wave of defaults in the peripheral eurozone countries. This is because such a deflation scenario includes a sharp rise in financial stress. The scenario analysis confirms gold's properties as a hedge against extreme events; properties that may be especially valuable given the considerable uncertainties still facing the world economy." .. Click here to download the report .. Click on "Oxford Economics Report On Gold" to download the report (may have to provide your email address), or hit "View Fullscreen" far below next to the 'S' icon to enlarge the viewing.
Oxford Economics Report on Gold
9 Reasons To Stay Bullish 
On Stocks And The Economy
"China Has More To Fear 
Than U.S."
Burton Malkiel, Princeton University economist .. on China’s GDP & economic growth .. emphasizes China's economy is slowing down .. 5 minutes
Courtesy of RJ Matson,
click to enlarge
Thomas Jefferson’s Betrayal 
Bill Moyers essay on how it’s important to remember that, behind the July 4th holiday, are human beings who were as flawed as they were inspired .. 4 minutes
"Inflate or Die" 
Chris Martenson interviews bond expert Paul Brodsky .. the problem with the world is too much debt - there is now a chasm between total credit & the money that can service it .. how will it be resolved? money printing & lots of it .. "It all comes back to the banking system. We found it very interesting watching yesterday’s testimony by Bob Diamond and the vitriol that the politicians .. seem to be throwing at the banking system. We think that is the beginning of what we have been calling for where you are going to start to have a food fight among the banking systems and governments and policy makers; not monetary policy makers but fiscal policy makers. They are going to start to fight for control over how their economies work."
LIBOR Scandal 
Implicates the Government
Goldmoney essay on how the LIBOR scandal is now implicating the British government .. "The scandal has not only attracted fines, but it exposes the banks concerned to customer refunds and civil actions of amounts potentially in multiples of their core capital. It lends support to the view that banks have lost sight of their responsibilities to their customers .. The likely result of LIBOR-gate is that banking itself is in decline. Bureaucracy is driving out talent and banks are becoming less profitable. The British Government, which is dependent on the banking system for funding and underwrites the whole system, will be the ultimate loser."
Will The Financial Markets Go
Much Lower Within 
The Next 12 Months? 
Dr. Marc Faber (AA) discusses his thoughts on CNBC Indian TV ..  from a few days ago but still relevant .. Faber has recently bought some depressed stocks in some of the distressed European countries .. "The U.S. dollar is the least ugly currency for the time being." .. 6 minutes
LIBOR Primer
The Globe and Mail has an easy to understand article explaining what LIBOR is ..  "LIBOR is the London interbank offered rate. Unless you’re in finance, you probably first heard of Libor early in the financial crisis. It’s a 'reference rate' – that is, it’s a number based on the average interest rate demanded by major banks for short-term loans to other banks in the London market. That makes Libor a thermometer for measuring anxiety in the global financial system. When banks feel good, LIBOR is low because banks will lend to each other over short periods (such as one or three months) very cheaply. But when confidence wanes, as it did during the financial crisis, Libor spikes." The author misses the point that, although your borrowing rates might not be higher because of the scandal, bankers have used the manipulation to extract more money from the system than they could if we had free market capitalism. It is a marvellous scam if you can be the recipient. Everyone pays so little that they don't notice & probably don't care - but on trillions it adds up to a lot.  
LINK HERE to the article
Is China's Economy Decelerating 
Faster Than Expected?
There are many signs that China's economy is decelerating faster than people expected. .. will Germany become more dovish on its monetary policy when China slows down enough to affect its economy? .. 9 minutes
Courtesy of Adam Zyglis,
click to enlarge