Important News - Nov. 23

• 1) Gold gains as investors lose faith in US dollar

“”Many nations in the West are already bankrupt (the US, the UK, Spain, Iceland and Ireland). For example, America’s total debt is over $60 trillion (and rising) and there is no way the US can ever hope of repaying it in today’s money,” says Puru Saxena, CEO of Hong Kong-based Puru Saxena Wealth Management.

The way out for countries with massive debts is “to print money to repay”, says George Cooper, author of The Origin of Financial Crises: Central banks, credit bubbles and the efficient market fallacy. “As that process continues, the value of paper money will deteriorate, a reason why people are holding gold.”

“Nobody wants to hold the US$ because of the fiscal and monetary policies of the US administration and structural problems. But nobody wants to hold the Euro or the yen either. So they hold gold as a bet against currencies. It is the default choice,” explains Das.”

• 2) Bullard Says Fed Should Keep Asset Purchase Program Past March

“Nov. 23 (Bloomberg) — Federal Reserve Bank of St. Louis President James Bullard said the central bank should retain the flexibility to respond to any weakening in the economy by extending beyond March its authority to buy mortgage-backed securities and agency bonds.”

…….2A) Dollar suffers on rate view after Fed comments

• 3) Foreign PE investors back yuan as reserve currency

“The yuan should become an international reserve currency in five to 10 years to prevent the country from paying for the mistakes of US economic policies, a London-based private equity (PE) manager said in an interview Sunday in Beijing.”

• 4) Gold Fears Hinge On Unfettered Fed, US Spending (Wall Street Journal)

“Too much debt

The U.S government in hock — that’s the second main reason gold is likely to keep rising, some gold advocates say. They point to a long list of countries where high deficits led to inflation and currency depreciation. Germany between the two world wars, and a slew of emerging markets, from Argentina to Zimbabwe, are the most extreme examples.

“Historically, the countries that suffer the highest inflation rates and steepest declines in currencies are countries whose governments were in fiscal difficulties amounting to insolvency,” said David Ranson, president of H.C. Wainwright Economics, a forecasting firm.

“We’re in the very early stages in the U.S.,” he said. “It’s simply that the government has spent and is planning to spend vastly more than it can actually raise in the form of taxes.”

• 5) Iran gained $5bn on shift from US dollar

“TEHRAN // Iran has gained $5 billion through its policy of shifting away from the US currency in favour of the euro, state television reported on Monday, citing Central Bank Governor Mahmoud Bahmani.

Since 2007, Iran has received 85 percent of its oil income in currencies other than the US dollar, Iran’s English-language Press TV reported on its web site.

“Iran has considerably reduced the total of U.S. dollars in its currency basket,” Mr Bahmani said.”

• 6) Gold Jumps to Record as Slumping Dollar Spurs Investment Demand

“Sales of American Eagle gold coins by the U.S. Mint almost doubled in the year’s first 10 months to 1.07 million ounces, data on its Web site showed. The mint has sold 99,500 ounces of the coins so far this month. The U.K.’s Royal Mint last week said it quadrupled output of gold coins in the third quarter.”

• 7) WEF: radical change to prevent future crises

“Governments have failed to fix the sources of the economic crisis and will need radical new mechanisms for international co-ordination to solve them, participants at the World Economic Forum’s (WEF) meeting in Dubai said yesterday.

The WEF’s three-day Summit on the Global Agenda ended yesterday with a series of recommendations. Among them were: expanding alternatives to the dollar as the world’s reserve currency; strengthening international oversight of the financial industry; and creating global agencies to monitor financial risks and other threats including weapons of mass destruction, climate change and pandemics.”

• 8)  NIA’s ‘The Dollar Bubble’ Coming This Week

“FORT LEE, N.J., Nov. 23 /PRNewswire/ — The National Inflation Association’s new 30 minute documentary, ‘The Dollar Bubble,’ is almost complete and expected to be released this holiday week. The Dollar Bubble is the sequel to NIA’s critically acclaimed ‘Hyperinflation Nation,’ which has now received over 310,000 views since June 28th.

The Dollar Bubble is the most informative and comprehensive documentary ever produced on the Federal Reserve’s destructive monetary policies and the upcoming collapse of the U.S. dollar. This Thanksgiving, the best way to give thanks to those you care about is to have them watch The Dollar Bubble. It will help them survive and prosper during the real economic collapse we are rapidly approaching.”

• 9) sovereign funds are buying up property and commodities betting on inflation

“On Friday Reuters reported that Sovereign wealth funds are investing more in property and commodities to hedge against currency devaluation following the massive bail-outs and residual debt level of Western governments.

“There is quite a lot of interest in real estate and other long-term hedges against inflation,” said David Smart of Franklin Templeton in a Reuter’s interview on Friday.”

• 10) New Gold Bugs Taking Gold Mainstream (Wall Street Journal)

“Gold has long been favored by a fringe of the investment world, but this year some of the world’s leading hedge-fund managers have loaded up on the precious metal amid concern government efforts to avoid another Great Depression that could undermine major currencies and fuel rampant inflation.

“I have never been a gold bug,” Paul Tudor Jones, chairman of hedge-fund giant Tudor Investment Corp., wrote in an Oct. 15 letter to investors. “It is just an asset that, like everything else in life, has its time and place. And now is that time.”"

• 11) Will sovereign debt be the new subprime? (Financial Times)

“But could this flight to the “safety” of government bonds in itself be creating subtle new dangers? Government debt, after all, has soared to levels not seen in peacetime for centuries, if ever, in many countries, not least the US and UK. Fiscal deficits are swelling across the western world. And the level of political commitment to curbing those deficits remains uncertain - not least because with yields currently so low there is less pressure on politicians to push through reform.

That does not necessarily mean an outright default looms any time soon; indeed, default seems highly unlikely. However, it is easy to imagine that some countries will end up eroding the value of their bonds by debasing their currencies in the coming years, printing money and stoking inflation.”

• 12) Dollar Slump Persisting as Top Analysts See No Bottom (Bloomberg)

“Nov. 23 (Bloomberg) — The most accurate dollar forecasters predict the world’s reserve currency will continue sliding even when the Federal Reserve begins to raise interest rates, which policy makers say is an “extended period” away.”

• 13) Wave of Debt Payments Facing U.S. Government (NY Times)

“Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.”

….13A) NYT: The Government Will Get Creamed When It Has To Refi Its Debt

• 14) CDS Volumes Spike As Traders Bet The U.S And U.K. Will Default

“Trading volumes have spiked for credit default swaps that insure against default by developed nations such as the U.S., U.K., and Japan according to The Financial Times.”

• 15) Another California crisis: Unemployment fund facing $7.4 billion deficit

“SACRAMENTO — Already grappling with one multibillion-dollar budget deficit, cash-strapped California now is facing a crisis in its unemployment insurance fund — source of the tens of millions paid each week to jobless residents.

Amid record unemployment, the fund will likely finish the year $7.4 billion in the red, according to the latest projections from the state’s Employment Development Department. Just to keep checks coming, California has had to reach into Uncle Sam’s pockets for some $4.7 billion to date.

The state must return what it borrows by 2011 — or face hundreds of millions in interest payments that would come at the expense of funding for schools, parks and social services.

But with unemployment expected to remain high as the economy slowly turns around, officials fret they won’t be able to pony up on time. And to prevent the fund’s shortfall from ballooning even further in the next two years, Gov. Arnold Schwarzenegger and the Legislature face a nettlesome dilemma: Cut back on benefits, raise taxes on employers or do both.”

• 16) State tax collections in steep drop

“Tax revenue dropped by 11% in 44 states in the third quarter according to the Rockefeller Institute.”

• 17) IMF warns second bailout would ‘threaten democracy’

“Dominique Strauss-Kahn told the CBI annual conference of business leaders that another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy.

“Most advanced economies will not accept any more [bailouts]…The political reaction will be very strong, putting some democracies at risk,” he told delegates.”

• 18) Commodities Surge As Copper,Gold Attract Investors (Wall Street Journal)

“Investment flows into commodity markets have come in at levels never seen before, with Barclays Capital estimating that some $55 billion has entered the asset class year-to-date. This exceeds the previous record of $51 billion achieved in 2006.

“The wall of money floating around in the financial system continues to benefit commodities as a way of diversifying portfolios and in order to shield investments from a non-negligible risk of a U.S. debt and currency crisis,” said Ole Hansen, Manager for Futures and Fixed Income at Saxo Bank.”

• 19) Tribes teeter on financial brink

“A newly paved road winds its way to the plastic-shrouded shell of the Mohegans’ new tribal office and community center. Construction equipment is scattered about, but work on the facility stopped months ago.

It’s a stark and unmistakable symbol of the financial crisis within Connecticut’s multibillion-dollar Indian gaming empire.

After making and spending billions over the last decade, the Mohegans and their nearby neighbors, the Mashantucket Pequot Indians, are teetering on the brink of a financial meltdown.”

• 20) Michigan jobless crowd state aid offices

“Michigan’s welfare system is gorged with new clients who often wait hours in crowded state offices to get food stamps and medical care.”

“The last 12 months have been tough on Michigan: Food-benefit and Medicaid cases increased by nearly half a million from a year ago; many people receive both. Individual caseworkers sometimes juggle as many as 900 cases and face threats from angry, frustrated clients. Some blame a new computer system for delays.

“You can only do so many cases in a day,” said Doug Williams, director of Oakland County DHS.”

• 21) CalPERS rate hike delayed a year

“CalPERS is delaying a contribution rate hike for local governments and schools a year, pushing back the impact of huge investment losses in the stock market crash last year.

The change puts even more distance between the historic crash and the higher annual payments from employers needed to make up for the losses, which will not fully kick in until five or six years later.

If the critics are right and the current level of retirement benefits are “unsustainable” for future employees, the financial crunch may not be a sudden rate shock but instead a kind of slow-motion train wreck over a number of years.”

………..How’s that U.S. dollar doing today?

• 21) 10 Costly Job Interview Blunders To Avoid (M.W.)

The U.S. Bureau of Labor Statistics calculates that there are 6.3 job hunters for every available job. That’s three times the average that prevails in a healthy economy. The competition is tough enough without giving potential employers reasons not to hire you. Here are the most common errors career coaches see — and how to fix them.

• 22) Wall Street Squeezing American Cities For Every Last Dime (M.W.)

Taxpayers are taking another hit as strapped local governments fork over billions in fees on investments gone bad Wall Street is squeezing America’s weakest cities for every penny it can.

- Saxplayer00o1