Selected Links from Martenson

Here are today’s suggested readings from Chris Martenson’s site. To go to full links for articles, click here

Economy

The Odd Couple (SolidSwede)

As the world begins recovering from the worst financial crisis in 70 years, an odd couple of winners have emerged: stocks and gold. So far this year, the Dow Jones Industrial Average, a bet on economic recovery, is up 14%. Gold futures, a bet on calamity, are up 19%. The reason: Low interest rates and heavy government stimulus have poured cheap money into financial markets, helping both the economy and stocks. But the creation of all that money, together with the Federal Reserve’s maintenance of near-zero benchmark interest rates and the prospect of heavy government borrowing to fund deficits, threatens to weaken the dollar and fuel inflation and economic volatility later.

Dangerous Side Effects of Ultra-Easy Money (pinecarr)

In order to engineer a 180-degree turnaround in trader psychology, from the chronic fear of meltdowns last year, to the opposite side of the spectrum – the euphoric illusions of V-shaped recoveries, the “Group-of-20” have committed $12-trillion of taxpayer money, equivalent to a fifth of the entire globe’s annual economic output. The G-20’s largesse has been used to fund capital injections into banks, soaking-up toxic assets, guaranteeing financial company debt, and flooding the world credit and stock markets with ultra-cheap liquidity.

Gold Market Reaching The Breaking Point (pinecarr)

On October 29, 2008, the TOCOM added a ‘physically backed commodity ETF’ as a possible physical for EFP (Exchange of Futures for Physicals) transactions at the exchange. An exchange for physicals (EFP) transaction is when a client gives an IOU for a physical commodity to a broker and that broker opens a short position on the futures exchange in that commodity. Normally, Exchange for physicals is the legitimate process used by producers to sell futures against their future production. However, if the IOU portion of the EFP is not from a commodity producer (ie: borrowed a GLD Ishares), then you have a problem.]

China and Brazil trade in yuan (saxplayer00o1)

China and Brazil have started to trade in yuan, Kazakhstan Today agency reports citing the Russian information resource NEWSru. According to NEWSru, China and Brazil established international payments in national currency of the Peoples Republic of China. Geli Corporation has already received from San Paolo a few million yuans. According to Vice President of the Brazilian branch of Bank of China, all formalities required by the local bodies of control have been met

Ravitch Says States Face Total Deficits of $500 Billion in 2011 (saxplayer00o1)

Oct. 28 (Bloomberg) — New York Lieutenant Governor Richard Ravitch predicted states across the U.S. would face deficits totaling as much as $500 billion in 2011 after the federal government stops paying them economic stimulus grants. Ravitch, 76, a real estate developer and former chairman of New York’s Metropolitan Transportation Authority, said the looming nationwide fiscal crisis would first become apparent as states’ credit ratings falter, making it more expensive to borrow money

Moody’s May Downgrade Mortgage Bonds With New Outlook (saxplayer00o1)

The company will boost its loss projections for prime- jumbo, Alt-A, option adjustable-rate and subprime mortgages backing bonds issued between 2005 and 2008 after seeing higher losses per foreclosure than expected, Moody’s said today in a statement

Common Currency Weighs on Airbus (saxplayer00o1)

Since 2001, when Air France agreed to buy ten of the world’s biggest passenger jets, the euro has strengthened by more than 60% against the dollar. That means Airbus, which translates all its finances into euros, is pocketing significantly less revenue per plane than it initially expected. And since Airbus books most of its costs in euros, the currency swings go straight to its bottom line. “This situation is critical for a company like EADS, which has costs in euros and sales in dollars,” EADS Chief Executive Louis Gallois recently told a French parliamentary committee. EADS estimates that a 10-cent drop in the dollar against the euro wipes €1 billion off earnings.

Why The Foreclosure Crisis Is Unsalvagable (M.W.)

States that have been devastated by unemployment are seeing dramatic increases of foreclosures that are much harder to salvage because those people have no income and no federal loan program will help. The demographics of the foreclosure crisis are changing and affecting people who were blue collar and entry to midlevel white collar. If you’re unemployed, you don’t qualify for a loan modification. The first wave {of foreclosures] was caused by bad loan products, while the second will be driven by unemployment. Right now, we’re at the beginning of wave two.

U.S. Home Vacancies Rise to 18.8 Million on Defaults (Vinny A.)

About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September. The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report today. The record high was in the first quarter, when 18.95 million homes were vacant. The homeownership rate, meaning households that own their own residence, stood at 67.6 percent.

Malpass Says U.S. Economy Will Slow, Enter ‘Gloomy Period’ (Vinny A.)

Economic growth in the U.S. will slow after the rebound in the third quarter and enter “a very gloomy period” of high unemployment, said economist David Malpass, president of Encima Global in New York. “We are moving into this very gloomy new normal” of 2 percent growth and a “very high unemployment rate,” Malpass said today in an interview on Bloomberg Radio. As a result, “Washington will reach around and thrust around desperately” for new programs to boost growth.

Long Live The Gold Basis (Claire H.)

According to some reports independent auditors, at the insistence of parties holding expired forward purchase contracts to deliver gold, are descending on ETF’s and check their vault’s contents against their books. The noose is tightening around the neck of fraudulent banksters caught in the short squeeze.

The Right Way To Break Up With Your Credit Card (M.W.)

It’s a frequent question for American consumers these days. Half of all account holders say they’ve been hit either with a higher rate or a lower limit in recent months. While consumers are customarily given the choice to decline the new terms and close the account, doing so flies in the face of all standard advice from personal finance experts because closing credit cards usually has a negative impact on credit scores. So which bad choice is right for consumers? The answer is perhaps even more maddening than the question: “It depends” and “there’s no surefire way to know ahead of time.” But there are some clear guidelines that can help and strategies for minimizing the negative impact once you do so.

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