August 10, 2011

Futures Rout Accelerates: Emergency Fed Announcement Possible

Zero Hedge | Tyler Durden

The last time we had a modestly comparable collapse in overnight trading, a certain futures trader from SocGen whose gimmickry had been uncovered, caused the Fed to lower its Fed Funds rate in an emergency meeting first thing in the morning. Which is why we wonder, should the ongoing rout accelerate, to an extent driven by the decimation in the Korean Kospi, down -9.5% at last check, but also due to increasing worries the Fed may not announce QE3 tomorrow (or if it does, it will be OT2-like and won’t have any actual LSAP component to it), whether Bernanke will be forced to have an emergency address with market in the morning, around 7 am, in order to prevent what is shaping up to be a market collapse of epic proportions. And certainly not helping matters is either Chinese inflation coming in hotter than expected, (see prior post), nor the fact that in the People’s Daily, PBoC advisor Xia Bin said that China doesn’t rule out “normal market operations” to promotes is own interested when necessary amid the US debt turmoil.

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Iowa Caucus: Bachmann, Romney and Paul on Top

Rasmussen Reports |

In the Iowa caucus race for the Republican presidential nomination, five candidates are in double digits, and many voters are open to changing their mind before caucus day arrives.

The first Rasmussen Reports telephone survey of Iowa’s Likely Caucus Participants shows that Minnesota Congresswoman Michele Bachmann attracts 22% support, while former Massachusetts Governor Mitt Romney earn 21%. Just slightly behind is Texas Congressman Ron Paul at 16%, followed by Texas Governor Rick Perry at 12% and former Minnesota Governor Tim Pawlenty at 11%.

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Ramifications of a U.S. Debt Downgrade

USA Watchdog | Greg Hunter
ww.
he U.S. debt downgrade is really more than a tiny one notch cut in the credit worthiness of the U.S. One talking head on television said yesterday that there was never any question that the U.S. would repay its debt because the country can print money. The talking head is correct but does not take into consideration the future buying power of the repayment dollars. Printing money at the rate the Fed has been doing devalues the currency and, in effect, allows the government to default with dollars with reduced buying power. This is precisely why Bill Gross, head of the world’s biggest bond fund, PIMCO, said recently that people who invest in Treasuries will “get cooked.” In my mind, the debt downgrade by S&P last week was really a downgrade of the U.S. dollar. There are going to be many more downgrades to come.

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Barbara Ehrenreich, On Americans (Not) Getting By (Again)

TomDispatch.com |

It was at lunch with the editor of Harper’s Magazine that the subject came up: How does anyone actually live “on the wages available to the unskilled”? And then Barbara Ehrenreich said something that altered her life and resulted, improbably enough, in a bestselling book with almost two million copies in print. “Someone,” she commented, “ought to do the old-fashioned kind of journalism — you know go out there and try it for themselves.” She meant, she hastened to point out on that book’s first page, “someone much younger than myself, some hungry neophyte journalist with time on her hands.”

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Court Rules That Police Cannot Use Warrants to Obtain Cell Phone Location of Person Who is Subject of Arrest Warrant

The Volokh Conspiracy | Orin Kerr

Imagine the police have an arrest warrant for a crime suspect, and they want to find the suspect to arrest him. They happen to know the suspect’s cell phone number, so they want to go to the phone company and have the phone company tell the police the location of the suspect’s phone. The phone company refuses to let the police get that information without a warrant, so the police police go to a judge and apply for a search warrant based on the probable cause to believe that the location of the phone will help them execute the arrest warrant. Here’s the interesting question: Should the judge sign the warrant application and issue the warrant? Or should the judge deny the warrant application?

On August 3, Magistrate Judge Susan K. Gauvey issued a fascinating opinion on this novel question: IN THE MATTER OF AN APPLICATION OF THE UNITED STATES OF AMERICA FOR AN ORDER AUTHORIZING DISCLOSURE OF LOCATION INFORMATION OF A SPECIFIED WIRELESS TELEPHONE, 2011 U.S. Dist. LEXIS 85638 (D.Md. 2011). Her answer: The Judge must deny the warrant application, as location information is broadly protected by the Fourth Amendment and government cannot use warrants to find out the location of people who have warrants out for their arrest. The timing of the case is extremely unusual, as it seems the case is moot and this is only an advisory opinion. If I understand the timing, Magistrate Judge Gauvey denied the application over a year ago, and the government was able to arrest the suspect some other way in the meantime. Judge Gauvey decided to hand down an opinion on the legal issue anyway, appointed defense counsel to argue for defense interests, and now, a year later, has handed down the opinion on why she denied that application back in 2010.

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Despite revised production guidance, Silver Wheaton net earnings triple

Mineweb.com | Dorothy Kosich

Silver Wheaton reported adjusted net earnings nearly tripled during the second quarter of this year.

Meanwhile, quarterly silver production was impacted by operational challenges at the Peñasquito mine in Mexico and a one month mill strike at the San Dimas mine, both in Mexico.

Quarterly sales lagged production over the past year, said Randy Smallwood, Silver Wheaton CEO, primarily due to a build-up of concentrate inventories at Glencore’s Yauliyacu mine in Peru and Goldcorp’s Peñasquito mine.

Silver Wheaton has already reduced its 2011 attributable silver equivalent production guidance from 27m – 28m silver equivalent ounces to 25m – 26m silver equivalent ounces including 15,000 ounces of gold.

However, during the second quarter, attributable silver equivalent production increased 5% to 6.2 million ounces (5.9 million ounces of silver and 6,500 ounces of gold).

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‘I can smell QE3, QE4 and many more,’ says Marc Faber

Business Intelligence Middle East |

NTERNATIONAL. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor spoke today about the Standard & Poor’s credit rating downgrade of US sovereign debt, and how the downgrade was long overdue as the ‘junk bond’ was no longer worth of an AAA rating.

He views the downgrade as moderately positive for equities because it shows investors there is a risk in holding government bonds and discusses the conditions that will lead to QE3.

Speaking in an interview from Chiang Mai, Thailand, with Susan Li on Bloomberg’s “Asia Edge” this morning, Faber said a government bond is rated AAA when the issuer is willing to pay the interest in a stable currency. “We are not dealing, in the case with the US Dollar, with a stable currency.”

“The downgrade was overdue,” Faber told Li, adding that the agency “basically downgraded a junk bond because it was no longer an AAA”

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Ignorance, Stupidity or Connivance?

Creators.com | Walter E. Williams

President Barack Obama has called for a luxury tax on corporate jets as a means to generate revenue to fight federal deficits. The president’s economic advisers ought to be fired for not telling him that doing so is unwise and counterproductive. They might have already told him so, only to have the president say, “Look, I know you’re right, but I’m exploiting the public’s envy of the rich!” Let’s look at what happened when Obama’s predecessor George H.W. Bush signed the Omnibus Budget Reconciliation Act of 1990 and broke his “read my lips” vow not to agree to new taxes.

When Congress imposed a 10 percent luxury tax on yachts, private airplanes and expensive automobiles, Sen. Ted Kennedy and then-Senate Majority Leader George Mitchell crowed publicly about how the rich would finally be paying their fair share of taxes. What actually happened is laid out in a Heartland Institute blog post by Edmund Contoski titled “Economically illiterate Obama, re: Corporate Jets” (7/12/2011).

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The Refusal to Think

321Gold.com | William (Bill) Buckler

Early this year, Cornell University in the US did a “study” which was designed to see if Americans equate the money they receive from the US government with government “programs”. They asked a large number of “ordinary” Americans if they had ever used a government program. The findings – as reported by the New York Times in February this year – were astonishing. Forty-three percent of Medicare recipients said NO. Forty-four percent of those on Social Security said NO. Forty-three percent of people on unemployment “benefits” said NO. And to crown the whole study – FIFTY-THREE percent of those getting student loans – likely including Cornell students – said NO.

The Internet postings of participants at “Tea Party” rallies holding signs up saying “Hands Off My Medicare!” have been proliferating for months, to the great glee of the Democrats. In late July as the debt limit circus was ratcheting up by the hour, President Obama mentioned a letter he had recently received from a Medicare recipient. He quoted the letter as follows: “I don’t want government-run health care. I don’t want socialized medicine. And don’t touch my Medicare!”

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Markets collapse, silver static, platinum falls below gold.

Mineweb.com | Lawrence Williams

Realisation has dawned, not before time, on the investment community and the general population, that the global financial problems are, indeed, serious and gold appears to have been the major beneficiary to date. Interestingly, other precious metals have not moved up alongside gold, as has tended to be the norm – indeed they have either fallen back or stuttered. But if one looks at demand for these other precious metals this is not really surprising. Indeed, it is surprising that they have not fallen back as much as might have been expected under the circumstances, particularly in the case of silver.

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