Archive - Sep 3, 2011

Tyler Durden's picture

"Black Friday" - The Great Gold Crash...Of 1869





When one thinks of gold crashes, one typically visualizes a trading floor from the 1980s onward, predicated by Nixon's nixing of Bretton Woods 40 years ago, which removed gold from the list of accepted currencies and converted it into a government-manipulated pariah, whose core function was to be suppressed in an ongoing (failed) attempt to make the dollar the undisputed reserve currency (something even China comprehends). Well, readers may be surprised to discover that one of the first, and probably biggest on a relative basis, documented gold crashes was not 3 weeks ago, nor back in October 2008, nor any time since the advent of Nixon, or even the Federal Reserve, but over 140 years ago, on September 24, 1869 when a massive gold price manipulation scandal created a financial panic. That day, also known as "Black Friday", was the culmination of an attempt to corner the gold market following the latest, however brief, termination of the gold standard, when during the reconstruction period following the US Civil War, the US dollar was backed not by gold, but simply by credit (sound familiar). The result was a surge, and then collapse in gold.

 

Tyler Durden's picture

Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree





Wondering why gold at $1850 is cheap, or why gold at double that price will also be cheap, or frankly at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status. Putting that into dollar terms is, therefore, impractical at best, and illogical at worst. We have a suspicion that the following cable from the US embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24 karat pool. The only thing that matters from China's perspective is that "suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB." Now, what would happen if mutual and pension funds finally comprehend they are massively underinvested in the one asset which China is without a trace of doubt massively accumulating behind the scenes is nothing short of a worldwide scramble, not so much for paper, but every last ounce of physical gold...

 

Tyler Durden's picture

Game Over? Senior IMF Official - "I Expect A Hard Greek Default This Year"





While the US was panicking over a double zero jobs report, things in Europe just fell off a cliff. As both the WSJ and Reuters report, it seems that the second Greek bailout, following repeated and consistent disappointments by Greece which has resolutely refused to comply with the terms of its fiscal austerity program, has just collapsed.And with the US closed on Monday: long a counterbalance to European risk pessimism, this week (especially with the news fro the latest FHFA onslaught against global banks) may just be the one that "it" all comes to a head. But back to Europe, and more specifically Greece, which it now appears is doomed. From the WSJ: "I expect a hard default definitely before March, maybe this year, and it could come with this program review," said a senior IMF economist who is keeping close tabs on the situation. "The chances for a second program are slim." It is not only Greece - Italy also thought it would sneak by with getting quid pro no and continue leeching off of Europe, or specifically Germany, indefinitely, at least until the ECB said that absent Berlusconi taking austerity seriously that implicit ECB support for Italian bonds would be yanked, sending the second most indebted country in the world into a toxic debt tailspin. And so it comes that after 2 years of waffling, Europe finally realizes that the piper always eventually gets paid. Alas, it is now far too late.

 

Tyler Durden's picture

Obama Teleprompter Quits, Will Still Write Comedy But In Hollywood





Where does one start with this one. The WaPo reports that Jon Lovett, an Obama speechwriter and the reigning champion of official Washington’s stand-up comedy circuit, is quitting his job as the teleprompter's telepronpter. "In mid-September, Lovett, 29, plans to leave the administration to write for television out West. “It’s always been a dream of mine to write comedy and be creative,” said Lovett, who insisted that the current West Wing woes had nothing to do with his timing. “I would like to be able to write in my own voice.” Uhm, Lovett may not have noticed, but his work over the past 2 years has directly created some of the most profoundly hilarious comedy in the history of the "free world."

 

Tyler Durden's picture

Guest Post: The United States Of Deceit: 1968-2011





Although I am not as convinced as Stefan that the US government has brought about all our economic ills through deceit, I give it ample credence; but also give a good share of the blame to a citizenry at large vested with waste and greed. On my drive back, ruminating on that blame placed on the government as the mastermind and source of deceit I thought of my friend back in Portland. Was he really the victim of deceit, or did he really invite deceit by his own self-deceit? By entering into a romantic relationship two years before with a woman less than half his age with a compromising polyamorous background, one which was not much different from that which she is exhibiting, and blamed for, today!? Is it really economic, political or romantic deceit we are sometimes victims of, or is it more often than not a case of unfulfilled wishful thinking, of self-deceit?

 

Tyler Durden's picture

Weekly Event Summary And A Look At Europe's Upcoming "Lehman Moment"





Whille the past week was full of economic news, most of them decidedly negative, it is next week that the house of cards could finally come unhinged. In what will be the event of the week, Germany's Constitutional Court is set to rule on the legality of the seemingly endless bailout pledges made by Merkel. If they rule against the bailouts, that would be Europe's version of a Lehman moment. Next on the docket you have Italy which has recently been softening its austerity program. Berlusconi needs to show increased leadership by solidifying his pledge towards consummate austerity in an effort to improve his country's finances. Financial markets have recently taken notice of these negative developments. Investors knew that the jobs report wouldn't be pretty, however, yesterday's large selloff was actually due to renewed euro zone jitters. If the Eurozone does blowup, all bets are off.

 

rcwhalen's picture

Sol Sanders | Follow the money No. 82 -- India: a perfect storm





But largely ignored -- what with the dramatic Euro crisis and a threat of double-dip American recession –   is the more important emerging economy, India, now slipping back into its traditional morass.

 

Tyler Durden's picture

TARPed, RETARPed, And Then DETARPed





To sum up today's mass bank lawsuit news: first the taxpayers were asked to save Freddie and Fannie, then they were asked to save the banks, now when it is politically expedient to do so, the first entity which is still being saved ($200B of taxpayer funded capital injections later) is suing the second saved entity. In the interim, on a day when job growth in this country was essentially ZERO, we are going to lose another 30,000 private sector jobs. Finally, it is worth mentioning that these lawsuits are suggesting that Fannie Mae and Freddie Mac were semi-clueless when it came to the mortgage securitization process. Something that may be a tad difficult to prove given that they were major players in the mortgage markets. If readers are confused, they are not alone.

 
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