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Posts tagged ‘Wells Fargo’

Your mortgage documents are fake!

By  

If you know about foreclosure fraud, the mass fabrication of mortgage documents in state courts by banks attempting to foreclose on homeowners, you may have one nagging question: Why did banks have to resort to this illegal scheme? Was it just cheaper to mock up the documents than to provide the real ones? Did banks figure they simply had enough power over regulators, politicians and the courts to get away with it? (They were probably right about that one.)

A newly unsealed lawsuit, which banks settled in 2012 for $95 million, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake documents because they could not legally establish true ownership of the loans when trying to foreclose.

This reality, which banks did not contest but instead settled out of court, means that tens of millions of mortgages in America still lack a legitimate chain of ownership, with implications far into the future. And if Congress, supported by the Obama administration, goes back to the same housing finance system, with the same corrupt private entities who broke the nation’s private property system back in business packaging mortgages, then shame on all of us.

The 2011 lawsuit was filed in U.S. District Court in both North and South Carolina, by a white-collar fraud specialist named Lynn Szymoniak, on behalf of the federal government, 17 states and three cities. Twenty-eight banks, mortgage servicers and document processing companies are named in the lawsuit, including mega-banks like JPMorgan Chase, Wells Fargo, Citi and Bank of America………………………

full article at source: http://www.salon.com/2013/08/12/your_mortgage_documents_are_fake/

Comment:

104

By Thomás Aengus O Cléirigh

To all mortgage holders in Ireland this article should inspire you to contact your bank and demand a total review of all you mortgage documents and If you are in trouble it would be advisable to have the conveyancing documentation checked, as a good solicitor pal of mine  has told me that quite a lot of mortgages do not have the proper paperwork  because the banks were in such a hurry to finalize the mortgage transactions and in many cases they took “undertakings” from the other side to send on the proper paperwork and in most cases this never happened because of holdups  from other parties engaged in other transactions !At the very least get your bank to prove that they are the owners of the debt!

So we have here a cascading effect, hence a lot of mortgages are in fact not legally binding! This doesn’t take into account the shady practices of the corrupt bankers themselves, knowingly pumping up property prices to gullible homebuyers and then the same banks now telling the same homebuyers that their homes are worth less than half what it was only a few years ago but the hapless mortgage holder must still pay the full price as the banks dismiss any share of responsibility! What a great system for the corrupt banks! Looking at the latest headlines in the property market in Dublin we are again been subjected to the spin that the property prices have turned a corner and we are on the Up and Up and |UP again,

“Happy days are here again”

and all is well so get on the property ladder now

Remember this!

Now who do you think is behind this engineered recent uptick in the Dublin property market?

There is no property market in Dublin or elsewhere the market is totally manipulated by the vested interests, stay away! With 65,000 people leaving the country every year who do you think is going to buy these overpriced shoeboxes again??

When are we going to see the gangsters in the Banks brought to justice and when are we going to see all their political backers exposed and brought to the people’s justice ?????

ANGLO Irish Bank could be wound up in three or four years

By Laura Noonan

Monday August 29 2011

ANGLO Irish Bank‘s management believe the nationalised lender could be wound
up in as little as three or four years, the Irish Independent has learnt.

The news comes days after its chief executive, Mike Aynsley, revealed that up
to €4bn in capital could be handed back to the State when Anglo pulls the
shutters down for the final time.

The collapsed lender is due to be wound down over a 10-year period, but
management now believe that the final phase of Anglo’s life could be
significantly shorter.

Successful bidders have been identified for
Anglo’s $9.5bn (€6.5bn) US loan book and newswire Bloomberg reports that Wells Fargo, JP Morgan and Lone Star Funds will buy the loans for
80pc of their face value by the end
of October.

That will leave Anglo with just €16bn of its own loans, plus about €2bn of
loans from Irish Nationwide, meaning the bank is no longer “systemically
important”.

source:http://www.independent.ie/business/irish/anglo-could-be-wound-up-within-three-or-four-years-2860185.html

Comment :

What the people of Ireland want to know is how soon we can
expect to see the gangsters who destroyed our country be brought to trial. Why
are we still employing over 1000 people at the ridiculous salaries they were
getting in the so called boom years. Why are we still paying pensions to the
same directors and top managers who are refusing to help the Gardai with their
enquires??

If the megabanks are so big on lending, why do their loan books keep shrinking?

Stingy megabanks swimming in cash

Posted by Colin Barr

April 21, 2011 6:17 am

The biggest U.S. banks tell us they have spent the past quarter writing loans, renewing credit lines and generally being upstanding economic citizens. Bank of America (BAC) says it provided consumers and businesses with $144 billion in credit in the first quarter, Wells Fargo (WFC) ponied up $151 billion and JPMorgan Chase (JPM), swinging for the PR fences, claims to have lent out an improbable-looking $450 billion.These guys are our economic heart?Yet loan balances actually shrank from a year ago at all three banks in the first quarter, just as they did at their old pal Citi (C). This at a time when the too-big-to-fail four are being drenched with new deposits (see chart, right).All told, average loans outstanding at  the fearsome four dropped 7% from a year earlier – a decline of $210 billion — even as deposits rose 5%.If this is what the bailed-out captains of the financial sector call supporting the recovery, no wonder the economy is going nowhere fast.

The banks, of course, protest that there are good reasons that their loan balances are dropping even as they wrap themselves in the flag of credit extension.

Good customers aren’t exactly banging down the door demanding loans, they say, and won’t till the recovery really gets rolling. And making loans for the sake of it doesn’t pay off, as we may have learned during the financial meltdown.

“We got to where we are today by making good loans and making sound credit decisions,” Wells Fargo’s chief financial officer, Tim Sloan, said in an interview Wednesday.

And yes, even with all that shrinkage there are pockets of loan growth at the banks. JPMorgan Chase says loans to midsize companies rose every month last year, and Wells points to strength in auto dealer and commercial lending, along with the oft-questioned commercial real estate sector. “We love that business,” says Sloan.

But mostly, loans are shrinking. That’s partly because banks must put the worst mistakes of the bubble era in the rearview mirror, by taking losses on bad loans and letting other low-quality portfolios run off. Both those moves lead to lower loans outstanding. All four banks are taking their lumps on that front. BofA is running off loans from the beyond-lax Angelo Mozilo era at Countrywide, JPMorgan is dealing with the sales-at-any-cost (see a shining example, below right) mindset of Kerry Killinger & Co. at Washington Mutual, and Wells Fargo is trying to rid itself of the worst Pick-a-Pay dross it picked up in its acquisition of Wachovia. Citi, of course, has its own issues.How to make bad credit decisions

Still, it’s clear the banks are not lending quite as freely as their press release claims would have you believe. And the declines are all the more striking because they come when the banks, like their perk-addicted CEOs, are swimming in cash.

Average deposits at the four biggest banks rose by $154 billion over the past year, with Bank of America breaking $1 trillion in deposits for the first time and JPMorgan falling just $4 billion short of that mark.As a result, all the big banks now have at least $1.06 in deposits for every dollar in loans outstanding. At this time a year ago, only JPMorgan was above $1 in deposits for each dollar in loans.There is something to be said for banks having a lot of cash on hand, of course. As everyone but Dick Fuld learned from the crisis, running out of money makes it hard to persuade others of your firm’s franchise value. And of course it is hard to grow a business without reaching out to new users.

“We are glad to have a highly liquid balance sheet,” says Sloan. “Deposit growth gives us a chance to bring in new customers and cross-sell our products.”

Given the banks’ penchant for cooking up rosy-looking credit creation numbers at a time when their loan books are actually shrinking, maybe those products should come with a grain of salt.

source: http://finance.fortune.cnn.com/2011/04/21/stingy-megabanks-swimming-in-cash/?section=magazines_fortune

Comment:

I still expect to see the high for the Dow this year about 1000 points away from where we are right now at least and then see a full retracement all the way down to 9750 at least .Euro Dollar, Well we have reach my expected 1.4250 target and now I am looking for the 1.50 BAC I am hedged and so I don’t real y care. If we get to 10.90 I will again buy .Citi I am hoping to tack on some more stock at 4.00$ or under but I am not so sure it will get down there .

Housing Starts in U.S. Decreased in December to One-Year Low

Builders began work on fewer homes than projected in December, a sign the industry that triggered the recession continued to struggle more than a year into the U.S. economic recovery.

Housing starts fell 4.3 percent to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 550,000 rate. A jump in building permits, a proxy for future construction, may reflect attempts to get approval before changes in building codes took effect at the beginning of this year.

Companies like KB Homes and Lennar Corp. project demand will be slow to rebound as elevated unemployment and mounting foreclosures discourage buyers. While low borrowing costs and falling prices are helping revive sales from last year’s post tax-credit slump, Federal Reserve policy makers are concerned housing may undermine the economic expansion.

“With sales still near record lows and a lot of unsold properties in the market, there’s very little reason for builders to add more homes to the supply,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who had forecast starts would drop to a 527,000 rate. “Housing remains a key downside risk to the economy.”

Bank Earnings

Stock-index futures held earlier losses after the report as Goldman Sachs Group Inc. and Wells Fargo & Co. reported earnings that failed to beat analysts’ estimates. The contract on the Standard & Poor’s 500 Index maturing in March fell 0.2 percent to 1,291.8 at 8:44 a.m. in New York. Treasury securities were little changed.

For all of last year, starts rose 6.1 percent from 2009 to 587,600, the second-fewest in records dating back to 1959.

The Bloomberg survey forecast was based on a poll of 72 economists. Estimates ranged from 510,000 to 588,000. November’s pace was revised to 553,000 from a previous estimate of 555,000.

Permits jumped 17 percent to a 681,000 annual rate in December, the report showed.

Building code changes took effect on Jan. 1 in California, Pennsylvania and New York, the Commerce Department said. Permits surged by 81 percent in the Northeast and by 44 percent in the West. They rose 3.3 percent in the Midwest and dropped 7.6 percent in the South.

Single-Family Houses

Construction of single-family houses decreased 9 percent to a 417,000 rate in December from the prior month, the fewest since May 2009. Work on multi-family homes, such as townhouses and apartment builders, rose 18 percent to an annual rate of 112,000. It marked the first increase in four months.

Three of four regions dropped last month, led by a 38 percent decline in the Midwest.

Weather also played a role. Last month was the seventh snowiest December in a century’s worth of records for the contiguous U.S., based on satellite observations, according to the National Climatic Data Center. About 55 percent of the country had snow by Dec. 27th. It was the third wettest December on record in the West.

Builders had little incentive to take on work when house purchases slumped in mid-2010 following the expiration of a tax incentive of as much as $8,000, which required contracts to be signed by April 30 of 2010 and closed by the end of September.

Fed Policy

Fed policy makers plan to go ahead with a second round of quantitative easing that will pump another $600 billion into financial markets by June in a bid to keep borrowing costs low and spur growth.

Boston Fed President Eric Rosengren is among central bankers concerned growth won’t exceed 4 percent this year because the housing recovery is likely to be weaker than usual, given the tightening of lending standards and high vacancy rates.

“If housing-related growth is not going to boost the recovery this time around, we may need policy — particularly monetary policy — to continue playing a stimulative role,” Rosengren said in a Jan. 14 speech.

Foreclosures may further discourage construction and hurt prices. The number of homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures, RealtyTrac Inc. said this month.

Builder Concern

KB Home, a Los Angeles-based builder that targets first-time homebuyers, on Jan. 7 said cost cuts helped it achieve a fourth- quarter profit, and it is “cautious” about this year.

“Entering 2011, housing market conditions remain difficult,” Jeffrey Mezger, chief executive officer, said in a statement. While “the overall economy has started to recover, the lack of improvement in employment and consumer confidence is likely to continue to hinder a sustained housing recovery.”

Developers’ confidence stagnated in January, reflecting a lack of credit that threatens to hold back construction. The National Association of Home Builders/Wells Fargo sentiment index held at 16, the same as the past two months, figures showed yesterday. Readings less than 50 mean more respondents said conditions were poor.

Home prices have declined each month from August to October, the last month reported, according to the S&P/Case-Shiller index of property values, which tracks 20 U.S. cities.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Wall Street up-date from Thomas Kee

By Thomas Kee

LA JOLLA, Calif. (MarketWatch) — In recent months, Wall Street has used the prospects for quantitative easing to influence buying decisions, then they used the probabilities of a Republican-controlled Congress, and then of course, earnings.

No one can argue with the strong earnings season, even banks like Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 11.56, +0.11, +0.97%)  , Wells Fargo & Co. /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 26.06, +0.12, +0.46%)  , Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 4.19, +0.02, +0.48%) , and J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 37.63, +0.12, +0.32%) were able to beat earnings from moving money out of reserves, but everyone knows that domestic growth will curtail unless the economy gets on track, and that is why the FOMC is trying to inflate our way to growth.

In this article, I will discuss my proprietary longer-term economic model, The Investment Rate. I will broadly explain its projections, and offer insight to future economic conditions. It is not about next week, or next month, but projects by years and decades.

The recent weakness in the dollar was caused by the prospects for quantitative easing, or QE2. By now, everyone recognizes this, and stock market investors are happy. Everything considered, earnings were great, and now investors expect earnings to be great next time too.

The immediate concern is, regardless of economic conditions, that margins will be squeezed because corporate America finds it very difficult to pass on higher costs to a consumer base that is suffering from so much unemployment. Some people will be able to pay higher prices, but most will not. Therefore, the weak dollar, because of QE2, influences commodity prices higher and puts a squeeze on corporate margins that reduces the outlook for earnings growth going forward. The smart ones hedge their costs prudently, but those hedges eventually expire as well.

/conga/story/2010/11/trading-strategies.html 1The immediate prospects for corporate earnings are tightening, not only because of higher commodity prices due to what some think is a positive effort by the FOMC, but also to a fundamental shift in our economy as that relates to The Investment Rate. The Investment Rate is a tool that tells us the rate of change in the amount of new money slated to be invested into the economy by U.S. consumers over time.

It is this new money that moves the markets and the economy. Only new investment dollars can allow the market to grow; we cannot churn old money and expect positive results. One asset class may outperform another in that case, but the overall market cannot grow without the infusion of new money. The Investment Rate tells us the rate of change in the amount of new money every year.

I have been using The Investment Rate as a leading indicator since I developed it in 2002. It was then a bullish indicator because it told me that the amount of new money available to be invested into the economy every year between 2002 and 2007 would also increase every year during that time span. In 2007 I warned everyone that The Investment Rate was at a turning point in that demand had peaked and a transition lower would begin soon. On CNBC, I was nicknamed the Grim Reaper. The IR had turned bearish. Well, the Grim Reaper is back.

The third major down period in U.S. history began in 2007. It is nowhere close to over. During periods of weakness, akin to the Great Depression and the stagflation period of the 1970s, bounce backs are normal. In fact, we were long from March of 2009 until April of 2010. Admittedly, the past two months took me by surprise, but my longer-term outlook remains firmly intact. The recent increase is doing nothing to influence the longer-term trend. This is a bounce higher within a longer term down period. The only way earnings growth will continue is if it is focused solely overseas, and even with that, margins are still going to tighten given high commodity costs.

The strategy for November is straightforward. If the Dow industrials /quotes/comstock/10w!i:dji/delayed (DJIA 11,118, +4.54, +0.04%)  remain below 11,220 buy ProShares UltraShort Russell 2000 /quotes/comstock/13*!twm/quotes/nls/twm (TWM 15.84, -0.19, -1.19%) , iPath S&P 500 VIX Short-Term Futures ETN /quotes/comstock/13*!vxx/quotes/nls/vxx (VXX 13.10, +0.05, +0.36%) , ProShares UntraShort Real Estate ETF /quotes/comstock/13*!srs/quotes/nls/srs (SRS 19.69, -0.04, -0.20%) , and ProShares UltraShort Financials /quotes/comstock/13*!skf/quotes/nls/skf (SKF 19.05, +0.03, +0.16%) and expect to squat on them for a while. On the other hand, if the market breaks above 11,220 buy ProShares Ultra Dow 30 /quotes/comstock/13*!ddm/quotes/nls/ddm (DDM 49.95, +0.13, +0.26%)   and let it ride. If it breaks and then reverses back conversion strategies are necessary — 112220 is longer term resistance, and it needs to be respected.

I expect continued weakness in the U.S. economy, and the declines could even become severe after the FOMC decision, the election, and quantitative easing. Sell the news is a high probability, and should influence near term direction. My longer term forecasts suggest a Greater Depression is an equally high probability over time too.

source http://www.marketwatch.com/story/the-grim-reaper-is-back-2010-11-01

Comment

Keeping an eye on the US is essential when looking for insights as to where the Irish economy in going

we need a strong US economy!

“Commodity Super Cycle”

 

This is an excellent article by Gary Dorsch January 6, 2010

Taken from http://www.financialsense.com/fsu/editorials/dorsch/2010/0106.html

“Anybody interested in the current position of the world’s economy should and must read this article” TC

The colossal V-shaped recovery of the global stock markets in 2009 was indeed, the most remarkable feat, ever engineered by the “Plunge Protection Team,” (PPT). Step by step, the Federal Reserve, the US Treasury, and its key allies in the “Group-of-20” nations,rescued the world’s top financiers from their own greedy mistakes. The staggering size of the G-20’s rescue package, totaling about $12-trillion, was equal to a fifth of the entire world’s annual economic output.

The G-20 bailout included capital injections pumped into banks in order to rescue them from collapse, the cost of soaking up so-called toxic assets, guarantees over debt, and liquidity support from central banks.Tossing aside all arguments of “moral hazard,” the PPT utilized all the weapons in its arsenal, to prevent another “Great Depression,” including accounting gimmickry, and the “nuclear option” of central banking – “Quantitative Easing,” (QE), to rescue the global economy.

History will show that the US stock markets reached bottom on March 10th, when Fed chief Ben “Bubbles” Bernanke and influential members of Congress, exerted heavy pressure on FASB to water-down rule #157, thus, allowing American bankers to once again, value their toxic mortgages, at their own discretionary judgment. The switch-back to “mark-to-make-believe” accounting was the most expedient tool allowing the banking elite to essentially cook their books, – concealing losses, and using discredited models to inflate their balance sheets.


Soon after, a spate of better-than-expected earnings reports by US-banking giants, Goldman Sachs, JP-Morgan, Citigroup, Bank of America, and Wells Fargo began to elevate the stock market higher. On March 15th, 2009, Fed chief Bernanke told CBS’s 60-Minutes, “The green shoots of economic revival are already evident. Much depends on fixing the banking system. We’re working on it. I think we’ll get it stabilized, and see the recession coming to an end this year,” he said. Asked if the United States had escaped a repeat of the 1930’s Great Depression, Bernanke replied, “I think we’ve averted that risk.”

In order to fuel a V-shaped recovery for the stock market, the Fed unleashed the most powerful weapon in its arsenal, – “nuclear QE,” – by pumping $1.75-trillion into the coffers of Wall Street Oligarchs, such as Goldman Sachs and JP-Morgan, through the monetization of Treasury notes and mortgage bonds. In a very short period of time, a tidal wave of liquidity began to flow into high-grade corporate and junk bonds, and whetting the speculative appetite for equities.


Wall Street Oligarchs utilized trillions in US-taxpayer bailout money and guarantees, to bolster their balance sheets and generate profits, by speculating in turbulent financial markets. Since March 6th, what’s evolved is a rising US-stock market and inflated bank profits, which in turn, conjures-up hopes that banks will start lending again, to free-up capital for business investment. Angling for the so-called “wealth effect,” the PPT is hopeful that household spending will also rebound.

Many investors were skeptical of the “Green-Shoots” rally, and preferred to call it a “bear-market” suckers’ rally, – destined to fizzle-out and unravel. Yet last year’s bargain hunters saw an “once-in-a-lifetime” buying opportunity, and were guided by the sagely advice of Sir John Templeton, “Bull-markets are born in pessimism, grow on skepticism, mature on optimism, and die of euphoria.” Most of all, “Bubbles” Bernanke restored the market’s love affair with the Fed’s printing press.

Beijing holds keys to World Economy, Commodities,
The V-shaped recoveries in the global commodity and stock markets could not have succeeded however, without the aid of China, which accounted for half of the world’s growth in output last year, and is expected to surpass Japan, as the world’s second largest economy in 2010. Beijing went on a buying spree for industrial commodities, especially for crude oil, and base metals, stockpiling the raw materials used for its 4-trillion yuan ($586-billion) spending plan on infrastructure projects.

The People’s Bank of China (PBoC) ordered its banks to power a V-shaped recovery, through an explosion of credit – a record 10-trillion yuan ($1.5-trillion) in new loans, – or double the 2008 total. Roughly a quarter of the new loans were channeled into the Shanghai red-chips and property markets, designed to inflate their values.


The combined fiscal and monetary stimulus, – equal to 45% of China’s GDP, spurred the juggernaut economy to an estimated +10% growth rate in the fourth-quarter, up from +6% growth in the first-quarter. China’s economic growth is set to return into the double-digits in 2010, with booming factory activity driving its Purchasing Managers’ Index (PMI) to a reading of 56.6 in December from 55.2 in the previous month. South Korea, Asia’s fourth-largest economy, said its exports to China were 75% higher at $54.2-billion, over the first 20-days in December.

However, China’s accelerating economy is also increasing worries among some PBoC think tank economists that the consumer price deflation experienced through most of 2009, will quickly flip to rapidly escalating inflation in 2010. China’s voracious appetite for agricultural commodities, crude oil, base metals, and other industrial raw materials, is transmitting inflationary pressures worldwide, with the epicenter located in China itself and in neighboring India.

The PBoC finds itself far behind the “inflation curve,” and hasn’t yet gone beyond meaningless “open mouth” operations, in order to tame budding pressures lurking beneath the surface. The Dow Jones Commodity Index made a stunning U-turn last year, rebounding sharply from an annualized rate of decline of -52% in July, to an annual inflation rate of +23% in December. With key commodity prices expected to extend their advance in the year ahead, an outburst of escalating inflation lies on the horizon for the Chinese economy.


Fan Gang, an influential member of the PBoC, has warned the markets that the central bank would gear its monetary policy toward dealing with the asset bubbles it created. China’s banking regulator aims to slow

On Jan 5th, China’s central bank chief Zhou Xiaochuan added, “We will keep a good handle on the pace of monetary and credit growth, guiding financial institutions towards balanced release of credit and avoiding excessive turbulence,” he said.
Zhou said forcing banks to put aside more of their deposits on reserve with the PBoC is a key tool for mopping-up cash flowing into the economy.

So far, traders in Shanghai are skeptical of the warnings. Instead, the PBoC’s threat of slower money growth is viewed as a bluff. Last year, Beijing set a growth target of +17% for M2, but instead, expanded it 30-percent. If the 17% target for M2 growth is taken seriously, the PBoC would have to aggressively soak-up yuan thru T-bill sales, or force banks to lend less, in order to contain inflation. Yet if the PBoC doesn’t tighten its monetary policy, consumer price inflation could easily accelerate at a +6% clip in 2010, blowing even bigger asset bubbles caused by excessive liquidity.

PPT Engineers V-shaped Recovery, Inflation

“We came very, very close to a depression. The markets were in anaphylactic shock,” Bernanke told TIME magazine last month. “I’m not happy with where we are, but it’s a lot better than where we could be,” he said. Bernanke and the “Plunge Protection Team,” confounded their skeptics last year, – proving that a central bank can engineer a V-shaped economic recovery, from the depths of the Great Recession, by pumping vast quantities of money in the capital markets.

Since the March 2008 lows, US-listed stocks recouped $5.2-trillion in value, boosting household wealth, and confidence in the fate of America’s $14-trillion economy. Even with foreclosure filings in the US reaching a record 3.9-million last year, sales of existing homes in November rose to a 6.54-million annual rate, the highest level in three-years, although foreclosures accounted for 33% of all sales. The S&P/Case-Shiller index of average home prices was 29% lower in October 2009 from its peak in July 2006, making homes more affordable.

The Dow Jones Industrials ended last year at 10,425, recouping most of its losses from the apocalyptic meltdown since September 2008, when Lehman Brothers went into bankruptcy, and in a domino effect, toppled other Wall Street titans. Nowadays, financial markets are under the constant surveillance of G-20 central bankers and treasury officials, always attempting to influence their direction.

One of the tools of the PPT is “Jawboning,” or brainwashing operations, designed to influence trader psychology and behavior in the markets. Governments have another key tool at their disposal, – the ability to fudge key economic statistics, to achieve the political aims of the ruling parties. Such was the case on Dec 4th, when Labor apparatchiks shocked the markets, saying the US-economy had lost a scant 11,000 jobs, the fewest since the Great Recession started in December 2007.

For extra “shock and awe,” the BLS dropped another bombshell, saying the number of jobs lost in September and October were 159,000 less than originally reported.
Moreover, employers are increasing work hours and hiring temporary employees to meet rising demand, – the first steps before hiring permanent workers. The number of temporary workers jumped 52,400, the largest increase in five-years. These trends are solidifying ideas the US-economy could actually see job creation in the second quarter, and give the Fed enough wiggle room to begin draining liquidity.


Similar to the PBoC’s dilemma, the most worrisome side-effect of the Fed’s ultra-easy money scheme is a revival of inflation, which if left unchecked for too-long, could morph into hyper-inflation. When measured in US$ terms, the Dow Jones Commodity Index is now +25% higher than a year ago, a reliable indicator pointing to higher costs of goods from the nation’s farms and factories.

Ordinarily, a resurgence of inflation would be a worrisome development for stock market operators, out of fear the Fed might tighten the money spigots. However, the Bernanke Fed says it’s content to linger far behind the “inflation curve,” for an extended period of time, preferring higher commodity prices over a deflationary depression. Thus, talk of the Fed’s exit from its ultra-loose QE scheme and draining the liquidity swamp, as telegraphed by the extreme steepening of the Treasury yield curve, is still a bit premature. In any case, government apparatchiks can always skew the inflation statistics, to buy the Fed more time to keep rates low.

Chinese Dragon Gobbles-up Base metals,
Fed officials argue that with so much excess capacity in the industrial sector, tight credit, and a weak job market, that fears over an outbreak of inflation are overblown and imaginary. However, the notion that excess industrial capacity, – with supply outstripping demand, – will contain prices was repudiated in the base metals markets last year. Copper soared 140%, Lead, used in car batteries, doubled to $2,416 /ton, followed by zinc, up 125%, and aluminum, was up 50-percent.

Base metals rocketed sharply higher despite a large build-up of inventories stocked in warehouses in London and Shanghai. Aluminum inventories held at the London Metals Exchange are bulging at near record levels of 4.6-million tons. Global output of aluminum is running at 38.4-million tons /year exceeding demand at 35-million tons. Yet aluminum futures in Shanghai rose to 17,000-yuan /ton, up 60% from a year ago, with Chinese factory output running 19% higher.


Japanese buyers paid premiums of $130 /ton over the spot price for longer-term contracts, after a European trading house bought over 1-million tons from Russia’s Rusal, the world’s biggest aluminum producer. Investment bankers are utilizing new and creative ways of lending money to base metal producers, with nearly 70% of the supply of aluminum sitting in LME warehouses tied-up in such financing deals, and therefore, not available for delivery in the spot market.

Bankers are buying aluminum on the spot market and selling forward at a profit. The metal is stored with a warehouse until delivery. Bankers are financing the deals by borrowing US-dollars in the Libor market at 0.25%, thus creating artificial demand for aluminum. However, there’s always the risk that such quasi “carry trades,” could be unwound in a violent way, when the Fed begins to lift Libor rates.

Still, base metals are buoyed by Chinese demand, absorbing 43% of the world’s supply last year. China imported 1.45-million tons of aluminum in the first eleven months of 2009, up 1,225% from the previous year, and 3-million tons of copper, up 136-percent. The cash price for iron ore doubled from their March lows, to $118 /ton, as Chinese steel mills imported 566-million tons, up 38% compared with the same period of last year. Demand for base metals is likely to get a further boost as factories based in the G-7 nations rebuild their inventories.

Crude Oil Tests OPEC’s Upper Limits,

The Chinese dragon is also blazing a trail under the crude oil market. After sliding to a five-year low under $33 /barrel in December 2008, oil prices staged a steady climb upward to $82 this week, aided by Chinese stockpiling. On Jan 5th, Zhang Xiaoqiang, deputy of China’s National Development commission, said he’s “actively” involved in the global competition for crude oil, natural gas, and minerals to satisfy the country’s thirst for raw materials. Beijing has $2.25-trillion in foreign currency reserves at its disposal, to invest in “infrastructure facilities in key countries which hold resource deposits and have a friendly relationship with China,” Zhang said.

A key component of Beijing’s strategy is to guarantee access to Persian Gulf oil especially from Iran and Saudi Arabia. China is the #1 importer of crude oil and natural gas from Iran, and the two allies are bound by energy deals reaching a total value of $120-billion and growing. China and Japan have been involved in a bidding war over a major pipeline deal to deliver Russian oil from Eastern Siberia.

In Africa, Beijing has invested $8-billion in joint exploration contracts in the Sudan, including the building of a 900-mile pipeline to the Red Sea, which supplies 7% of China’s oil imports. Beijing has also concluded oil and gas deals with Argentina, Brazil, Peru, and Ecuador. But its main interests are focused in Venezuela, and ambitious oil deals in Canada, the #4 and #1 oil suppliers to the United States.


Boosting autos sales has been a key ingredient of Beijing’s stimulus program. China has overtaken America as the world’s #1 buyer of automobiles, not surprising since its population of 1.3-billion persons is more than quadruple that of the US. Roughly 12.7-million cars and trucks were sold in China last year, up 44% from the previous year and far surpassing the 10.3-million sold in the US.

To meet its growing industrial and transportation needs, China’s imported 17.1-million tons of crude oil in November, up 28% from a year earlier, emerging as the world’s #3 importer after the US and Japan. But China’s demand for oil could double in the next 10-years, according to the IEA, if its economy continues to expand at a 10% growth rate. At some point, the growth in Asian and world demand for oil would exceed the available supply, leading to triple digits for oil prices.

On Dec 25th, Saudi Arabia’s King Abdullah told a Kuwaiti newspaper, “Oil prices are heading towards stability. We expected at the beginning of the year an oil price between $75 and $80 per barrel and this is a fair price,” he said. The Saudi kingdom has about 2.5-million barrels per day of excess oil capacity, and could dump more oil on the market, to prevent prices from climbing above $80 /barrel.

However, speculators in the oil markets are putting Riyadh to the test, betting that the kingdom would allow a rally to $85, with a background of a steadily improving V-shaped recovery in global stock markets. Abdullah hinted at this, when he said, “Oil prices might rise reasonably,” keeping pace with other asset markets.

China and PPT knock froth off Gold market,

China has also vaulted ahead of India to become the world’s buyer of Gold, as small investors scrambled to defend their wealth against the explosive growth of the Chinese money supply. Demand for the yellow metal was expected to eclipse the 450-ton mark, while gold imports by India fell in half
to around 200-tons. India used to import around 600-to-800-tons of gold every year, but even now, the United Arab Emirates may have overtaken India in gold imports.
Still, Indians have accumulated 20,000-tons worth over $730-billion of Gold in private hands.

Gold rose for a ninth straight year in 2009, gaining 24%, even after shaving $130 /oz off its all-time high of $1,225 /oz, set on Dec 2nd. Interestingly enough, gold peaked just a few hours after China’s FX chief, Hu Xiaolian, warned traders in Shanghai to be careful of a potential asset bubble forming. “Watch out for bubbles forming on certain assets, and be careful in those areas,” he said.


On Dec 4th, the People’s Daily, the main newspaper of the ruling Communist Party, blasted the Fed’s weak US$ policy, saying it was forcing Asian nations to choose between a “heavy blow to exports” and inflation risks, from “massive liquidity in their own currencies, further inflating asset prices,” it said. Tokyo was also calling on the G-7 central banks to help bolster the US-dollar, as it plunged to a 14-year low of 85-yen, and triggering a death spiral in the Nikkei-225 Index to the 9,000-level.

With America’s two largest creditors complaining bitterly about the weak US$, the PPT was bailed-out by Labor department apparatchiks on Nov 4th, releasing a better-than-expected outlook on the jobs market. The Fed acquiesced to Beijing and Tokyo, by allowing yields on the Treasury’s 5-year note to zoom 70-basis points higher, thus forcing US$ carry traders to cover over-extended short positions. In turn, unwinding of US$ carry trades, knocked the gold market for a nasty shake-out.

Beijing and the “Plunge Protection Team” bought a few extra weeks of precious time for their shell game of currency debasement. However, if talk of an exit from the Fed’s QE scheme, or the PBoc’s threat to slowdown the M2 money supply, adds-up to nothing more than empty rhetoric, – then we’ll witness another parabolic rise in Gold, and the resurgence of the “Commodity Super Cycle” in 2010.


G-20 spin artists are telling the media that inflation won’t get out of control, because excess capacity in the industrial sector can keep factory and farm prices down. However, outside the Ivory Towers of academia, such theories carry little weight in the marketplace. Instead, the message of the US Treasury’s yield curve is signaling a major outbreak of inflation, with the spread between 30-year and 6-month yields steepening to +450-basis points, the widest in three-decades.

Traders are plowing billions of dollars, Euros, and yen into commodities and precious metals, betting on the debasement of all paper currencies. The resurgence of the “Commodity Super Cycle” is kicking into high gear, with G-20 central bankers fueling asset bubbles, by refusing to lift short-term interest rates. “Paper money eventually returns to its intrinsic value – zero,” Voltaire, 1729.

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