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Bill Bonner: When Gold Will Really Start to Glitter

"After telling readers how awful it was, now the mainstream press is back to neutral on gold. Barron's recently ran an article titled 'Gold Regains Its Glitter'. Markets make opinions. Gold is up about 17% from its June low. Opinions on it are becoming more favourable. But you ain't seen nothin' yet. The central banks of the major developed economies are engaged in massive debt monetization (aka 'QE'). If they all start to taper their bond buying, they risk resurrecting the calamity they're trying to avoid - a deflationary depression (at least in their minds). So, they've got to keep going. The markets...and the economy...depend on it. You wanna see something really glitter? Just wait! " Continue reading →

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Goldman Sachs Buys Gold; Tells Public to Sell

"Gold declined sharply in early April. That’s when Goldman Sachs issued a “sell” signal Then Goldman began quietly to buy shares of GLD, the ETF for gold. It now owns 3.7 million shares. It looked like a great call. The rubes who believed the report shorted gold. They made money. Briefly. Gold continued downward, bottoming at $1192 in on June 28. Meanwhile, Goldman was buying gold all the way down. Now gold is around $1400, and Goldman is sitting on a pile of shares of GLD, bought at rock-bottom prices. Watch what they do, not what they say." Continue reading →

Continue ReadingGoldman Sachs Buys Gold; Tells Public to Sell

Morgan Stanley execs mocked value of securities before sale to Taiwan bank

"Financial services giant Morgan Stanley may be facing charges it perpetrated a massive fraud in the sale of mortgage-backed securities, but no one can accuse the firm of lacking a sense of humor about it. Last month, e-mails surfaced in a 2010 New York civil fraud case showing that the firm’s executives sold the instruments to a Taiwanese bank for hundreds of millions of dollars knowing the impending collapse of the US housing market made the securities a hazardous investment – and they laughed about it." Continue reading →

Continue ReadingMorgan Stanley execs mocked value of securities before sale to Taiwan bank

Blackstone rental bonds revive fears of mortgage-backed crisis

"The private-equity firm Blackstone and Deutsche Bank are considering selling the first bonds backed by home-rental payments. The new security shows Wall Street financial engineering, blamed for deepening the financial crisis, has become more creative. Blackstone is among the firms that have spent billions buying homes out of foreclosure, helping to bolster demand and strengthen the US housing market, the WSJ reports. The private-equity giant has spent $5.5bn buying more than 30,000 houses to rent out. It is now working with Deutsche Bank to create securities tied to about 1,500 of the properties to form a rental bond deal worth up to $275 million." Continue reading →

Continue ReadingBlackstone rental bonds revive fears of mortgage-backed crisis

S&P calls US lawsuit retaliation for stripping AAA rating

"Standard & Poor's on Tuesday blasted a $5 billion fraud lawsuit by the U.S. government as retaliation for its 2011 decision to strip the country of its AAA credit rating. The McGraw Hill Financial unit was the only major credit rating agency to take away the United States' top rating and the only one sued by the Department of Justice for allegedly misleading banks and credit unions about the credibility of its ratings before the 2008 financial crisis. In a filing with the U.S. District Court in Santa Ana, Calif., S&P said the lawsuit attempts to punish it for exercising its First Amendment free speech rights under the U.S. Constitution but also seeks 'excessive fines' in violation of the Eighth Amendment." Continue reading →

Continue ReadingS&P calls US lawsuit retaliation for stripping AAA rating

America’s Energy Boom and the Rising U.S. Dollar

"The petrodollar regime--that oil is bought and sold globally in U.S. dollars--is easy to understand. It boils down to these two principles: 1. Petroleum is the lifeblood of the global economy. 2. Any nation that can print its own currency and trade the conjured money for oil has an extraordinary advantage over nations that cannot trade freshly created money for oil. This is why many analysts trace much of America's foreign policy back to defending the petrodollar regime. In the normal course of things, anyone printing money in quantity would soon find the conjured currency bought fewer and fewer barrels of oil." Continue reading →

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Upside-Down Economic Reporting: Higher Oil Prices Are Good.

"I see. A war looms. Oil will rise in price. The world will pay more to oil-exporting national governments. This is proof of good times ahead. The rising trade deficit (an excess of imports) is good because it will lead to more exports. 'At the same time, a strengthening U.S. expansion is helping companies in the European Union and China boost sales, which will stabilize global growth and, in turn, improve prospects for American exports.' I see. Rising imports mean rising exports. Later. One of these days. Real Soon Now. And so it goes. Economic education marches forward." Continue reading →

Continue ReadingUpside-Down Economic Reporting: Higher Oil Prices Are Good.

Bill Bonner: A Personal Appeal to Barack Obama

"We don’t share the common fantasy of central bankers: that they can know better than the market what interest rate, employment rate and inflation rate the country should have. We mention the three because the Fed sets short-term interest rates through its conventional monetary policy. And it tries to keep a lid on long-term Treasury yields through its 'unconventional' QE programs. And it does so, it claims, to adjust two other important rates: employment and inflation. Every candidate for the top post at the Fed – except us – believes it is his right and duty to do these things. Which means none should be allowed anywhere near the Fed." Continue reading →

Continue ReadingBill Bonner: A Personal Appeal to Barack Obama

A Regional FED President Says the FED Is Not Inflating Enough.

"This statement was Big News. It was such Big News that the Wall Street Journal ran a story on it. Why? Because when a regional Federal Reserve Bank president says the obvious is Big News, it means that he is opposed to tapering. It means that he thinks the counterfeiting of a trillion dollars of digital money a year is for wimps. What should the rate of counterfeiting be? He did not say. They never say. Their lips are sealed. This is what is known at the Federal Reserve as transparency. Opaqueness is when an official says something incoherent, which everyone in the media knows is incoherent, and they dutifully report as meaningful." Continue reading →

Continue ReadingA Regional FED President Says the FED Is Not Inflating Enough.

Bill Bonner: It’s a dangerous time of year

"A stream of income – either from a stock or a bond – is a promise. The value of it depends on how much you trust the promisor and his money. That is the problem. As much as we like Ben Bernanke as a human being, we find grave fault in him as a god. Only a god could know more than the sum of all the knowledge held by all people who are active in the world economy. Only a god could select an interest rate better than the one they select for themselves. And only a god-awful economist could claim to do such a thing with a straight face. The galling thing is that he may be able to keep the whole shebang going for many years more." Continue reading →

Continue ReadingBill Bonner: It’s a dangerous time of year