Earnings Highlights: AAP, BYI, BHP*, BAK*, CACI, CCJ*, EJ*, HRS, HNP*, JASO*, LDK, M*, NTES, PGR, & SLE

Scrolling Headlines From Yahoo in Play

BHP

MELBOURNE, Australia (TheStreet) – BHP Billiton(BHP Quote), the world’s largest mining company, said profit for the year ended June 30 fell 62% to $5.88 billion from $15.39 billion a year earlier as revenue fell 16% to $50.2 billion.

The profit decline follows a drop in metal prices and demand amid the global economic downturn.

“Over the past financial year the global economy deteriorated rapidly as a result of a significant decline in consumer demand stemming from the financial crisis,” BHP said. “Any assumption of a quick return to historical trend growth may be premature.”

The company added that “structural economic problems will take time to correct and may hold back growth over the medium term,” BHP said.

BHP said it was raising its full-year dividend by 17% to 82 cents a share.

Net operating cash flow for fiscal 2009 rose 6% to a record $18.86 billion, BHP said in a statement Wednesday.

BHP also said it was forming a Western Australia iron ore production joint venture with rival Rio Tinto(RTP Quote).

BAK

Once these most recent quarterly results are finalized, they will be run through TheStreet.com Ratings’ model and our ratings will be adjusted accordingly. To keep up to date on all of our ratings, visit TheStreet.com Ratings Screener.

On March 5, 2009, Braskem S.A.(BAK Quote), a petrochemicals company, reported that it fell to a net loss in Q4 FY08, hurt by the negative impact of foreign currency translation. Net loss for the quarter stood at Brazilian Reais (R$) 2.11 billion, or R$4.15 per share, compared to a profit of R$101.00 million, or R$0.23 per share, in the prior year’s quarter.

Net revenue for the fourth quarter dropped 13.9% to R$4.11 billion from R$4.77 billion a year ago due to lower sales across markets. Revenue from the domestic market slipped 15.5% to R$3.16 billion from R$3.73 billion. Additionally, revenue from the export market dipped 7.9% to R$957.00 million from R$1.04 billion in the year-ago quarter. Revenue from both markets decreased due to lower revenue across business units.

Braskem recorded EBITDA of R$633.00 million in Q4 FY08 compared to R$721.00 million in Q4 FY07. Moreover, EBITDA margin improved to 15.40% from 15.10% in the same quarter of the last year.

During the quarter under review, Braskem approved the merger of Ipiranga Petroquimica (IPQ), Petroquimica Paulinia S.A. (PPSA) into the company and the spun off a portion of Ipiranga Quimica (IQ). The company also approved the investment of R$488.00 million to build the Green PE plant at the Triunfo Petrochemical Complex.

For FY08, total revenue decreased 4.4% to R$17.96 billion from R$18.79 billion in the previous year. Moreover, the company fell to a net loss during the year which stood at R$2.49 billion, or R$4.91 per share, compared to a profit of R$642.00 million, or R$1.43 per share in FY07.

Looking forward, the company is projecting growth in thermoplastic resin sales volume to be in the range of 3.0% and 5.0% in FY09.

CCJ

SASKATOON, SASKATCHEWAN–(Marketwire – 08/12/09) – Cameco Corporation (TSX:CCO – News) (NYSE:CCJ – News) today reported second quarter 2009 net earnings of $247 million ($0.63 per share diluted), $97 million higher than net earnings of $150 million ($0.42 per share diluted) recorded in the second quarter of 2008. For the six months ended June 30, 2009, net earnings were $329 million ($0.85 per share diluted), $45 million higher than net earnings of $284 million ($0.79 per share diluted) recorded in the first half of 2008.

Second quarter 2009 adjusted net earnings(1) of $140 million ($0.36 per share adjusted and diluted) were 1% higher than in the second quarter of 2008. This was due to higher earnings in the fuel services and electricity businesses, partially offset by lower results in our uranium and gold businesses.

Adjusted net earnings(1) for the first half of 2009 were 20% lower than in 2008 due to lower earnings in the uranium and gold businesses, partially offset by higher results in the fuel services and electricity businesses.

In our uranium business, higher costs of sales adversely affected uranium profits in the second quarter and for the first half of the year. However, these costs for the year, excluding costs for purchased uranium, are still expected to be within our prior guidance (increasing by between 5% and 10%). Overall costs of sales are forecast to rise by 20% to 25% as we expect to purchase additional uranium at prices substantially higher than our costs of production to support our sales activities, including higher trading volumes.

Our gold business was impacted by lower gold production and higher operating costs during the quarter and for the first six months of the year.

In our electricity business, an increase in the realized price led to stronger results in the quarter and for the first half of the year. The increase was due largely to revenue recognized by BPLP under its agreement with the Ontario Power Authority (OPA). In addition, an increase in generation contributed to the improved results for the first six months.

Results in our fuel services business were positively impacted by higher realized prices both during the quarter and for the first half of the year. In addition, during the quarter an increase in sales contributed to the stronger quarterly results.

“Cameco has delivered strong financial results complemented by good performance at the company’s operations during the first half of 2009,” said Jerry Grandey, Cameco’s president and CEO.

EJ

SHANGHAI, Aug. 12 /PRNewswire-Asia-FirstCall/ — E-House (China) Holdings Limited (“E-House” or the “Company”) (NYSE: EJ – News), a leading real estate services company in China, today announced its unaudited financial results for the fiscal quarter and six months ended June 30, 2009.

    Financial and Operating Highlights

    -- Total gross floor area ("GFA") of new properties sold reached 2.7
       million square meters in the second quarter of 2009, an increase of
       183% from 1.0 million square meters for the same quarter in 2008. Total
       value of new properties sold was $3.0 billion in the second quarter of
       2009, an increase of 172% from $1.1 billion for the same quarter in
       2008.

    -- Total revenues were $63.5 million for the second quarter of 2009, an
       increase of 48% from $43.0 million for the same quarter in 2008.

    -- Net income was $19.3 million, or $0.24 per ADS, for the second quarter
       of 2009, an increase of 65% from $11.7 million, or $0.14 per ADS, for
       the same quarter in 2008.

    -- Net income excluding share-based compensation expenses (non-GAAP) was
       $21.4 million, or $0.27 per ADS (non-GAAP), for the second quarter of
       2009, an increase of 68% from $12.7 million, or $0.15 per ADS
       (non-GAAP), for the same quarter in 2008. (See "About Non-GAAP
       Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results"
       below for more information about the non-GAAP financial measures
       included in this press release.)

"I am pleased to report a solid second quarter in which E-House delivered
strong growth in both revenues and profits," said Mr. Xin Zhou, E-House's
chairman and chief executive officer. "We have long believed that E-House's
business model and strategy will make us one of the earliest and biggest
beneficiaries when China's real estate sector begins a recovery, and our
second quarter results validate this belief. As real estate transaction volume
staged an impressive rebound across the country since the start of the spring,
we have continued to outperform the market with strong growth in both primary
agency and secondary brokerage segments. Moreover, our information and
consulting segment continues its solid growth, and our new advertising segment
has started to make meaningful contributions to our revenues. Overall, our
business is firing on all cylinders."

Mr. Zhou continued, “Looking forward to the second half of 2009, we are confident in the Chinese government’s continued commitment to stimulate economic growth and maintain stable development of the real estate industry. As in the past, E-House is very well positioned to take advantage of the favorable market conditions given our strong project pipeline, brand recognition and execution capabilities. We are confident that we can build on the solid results of the first half and continue strong revenue growth in the second half of 2009. Furthermore, we believe that our revenue increase, coupled with effective cost control, will result in even better profit growth and higher profit margin.”

Mr. Li-Lan Cheng, E-House’s chief financial officer added, “Our second quarter results clearly reflect the strong recovery of the Chinese real estate industry, but also demonstrate our ability to leverage the favorable market conditions to deliver better results. The growth in our transaction volume again outstripped market average, indicating our continued rise in market share. Also, we were able to achieve revenue growth while keeping our cost base relatively stable, allowing us to deliver improved net profit margin compared to the second quarter of 2008. Given our projected revenue growth and higher average commission rate in the second half, we can expect further improvements in our profit margins.”

Financial Results for the Second Quarter of 2009

Revenues

Second quarter total revenues were $63.5 million, an increase of 48% from $43.0 million for the same quarter of 2008. For the first half of 2009, total revenues were $96.3 million, an increase of 26% from $76.2 million for the same period in 2008.

Primary Real Estate Agency Services

Second quarter revenues from primary real estate agency services were $41.2 million, an increase of 46% from $28.3 million for the same quarter of 2008. This increase was mainly due to a 183% increase in total GFA and a 172% increase in total transaction value of new properties sold, partially offset by a lower average commission rate of 1.4% in the second quarter of 2009, compared to 2.6% for the same period in 2008. (See “Selected Operating Data” below for more details on total GFA and total transaction value of new properties sold.) For the first half of 2009, revenues from primary real estate agency services were $58.6 million, an increase of 17% from $50.1 million for the same period in 2008. Total GFA and transaction value of new properties sold increased by 160% and 137%, respectively, for the first half of 2009 compared to the same period of 2008, partially offset by a lower average commission rate of 1.3% compared to 2.7% for the same period of 2008. The Company expects its average commission rate to gradually increase in the second half of 2009 as higher transaction volume and value will result in more bonus commissions being recognized upon achieving specified sales targets.

HNP

BEIJING, Aug. 11 /PRNewswire-Asia/ — Huaneng Power International, Inc. (the “Company”) (NYSE: HNP; HKEx: 902; SSE: 600011) today announced the unaudited operating results for the six months ended 30 June 2009.

For the six months ended 30 June 2009, the Company and its subsidiaries recorded consolidated operating revenue of RMB33.61 billion (equivalent to approximately USD4.92 billion), representing an increase of 9.07% as compared to the same period of 2008. The profit attributable to equity holders of the Company was RMB1.87 billion (equivalent to approximately USD274 million), representing an increase of 443.94% as compared to the same period last year. The earnings per share was RMB0.16, and the profit per American Depositary Share (ADS) amounted to RMB6.21 (equivalent to approximately USD0.91).

During the first half of 2009, under the macroeconomic control policies of “promoting domestic demand, maintaining growth and readjusting structure”, the national GDP grew at a rate of 7.1%, indicating that the national economy began to pick up steadily. However, the outlook of the international economy is still uncertain and so the external environment for the PRC’s economic development is still severe. The Company actively coped with the new changes of the national and international economic situations and achieved new developments in various aspects including production safety, cost control, energy saving, environmental protection, project development and capital operation.

Power Generation

During the first half of 2009, the Company’s power plants within China achieved a total power generation of 86.107 billion kWh based on a consolidated basis, a decrease of 5.84% over the same period of last year. The decrease in power generation was mainly due to the following factors: the declining power demand in the domestic power market due to the impact of the international financial crisis; and a negative growth of the Company’s power generation due to the reduction of average power generation utilization hours for a majority of areas in the PRC as a result of the continued commencement of operation of new generating units. As at 30 June 2009, Tuas Power Ltd. in Singapore achieved a total power generation of 4.723 billion kWh, representing a decrease of 6.32% compared to the same period of last year.

Cost Control

Since 2009, coal supply tended to be eased from a tight situation. There were slight price fluctuations in the domestic coal market, and coal prices were clearly lower than those of the same period of last year. International demand for coal was weak and prices continued to fall. Under the circumstance that key contracts have not been signed up, the Company adopted various measures including optimizing the coal supply structure, increasing imported coal purchase volume and rationalizing inventories arrangements according to production requirements, with an aim to reduce average coal purchase prices. The unit fuel cost for the domestic business of the Company for the first half of the year was RMB220.82/MWh, representing a decrease of 2.63% compared to the same period of last year.

Energy Saving and Environmental Protection

The Company attaches great importance to energy saving and environmental protection work. All the newly built generating units are equipped with flue- gas desulphurization facilities and the Company has strengthened renovation of environmental protection facilities on the existing generating units. As at 30 June 2009, the installed desulphurized generating units of the Company accounted for approximately 93% of the installed capacity of the existing coal-fired units of the Company.

Project Development and Construction

To date, three projects of the Company have obtained the approval of the National Development and Reform Commission, namely, two 300MW-level co- generating units at Yingkou Co-generation Power Plant Project, one 200MW generating unit at Ganhekou Second Wind Power Plant Project and the second 600MW coal-fired generating unit of Jinggangshan Power Plant Phase II Project. The Company has made smooth progress on its construction projects and preparation work of other proposed projects.

Capital Operation

On 21 April 2009, the Company entered into the Yangliuqing Co-generation Power Plant (“Yangliuqing Co-generation”) Equity Interest Transfer Agreement and Beijing Co-generation Power Plant (“Beijing Co-generation”) Equity Interest Transfer Agreement (“Transfer Agreements”) with China Huaneng Group (“Huaneng Group”) and Huaneng International Power Development Corporation (“HIPDC”), respectively. According to the Transfer Agreements, the Company will be transferred a 55% equity interest in the registered capital of Yangliuqing Co-generation and a 41% equity interest in the registered capital of Beijing Co-generation. The transfers were approved at the shareholders’ meeting of the Company on 18 June 2009. Currently, the transactions are waiting for the approval by the State-owned Assets Supervision and Administration Commission. After the completion of the transfers, the Company’s operating scale and service areas will be enlarged and its profitability will be increased, thereby further consolidating the position of the Company as one of the largest independent power generation companies in the PRC. The Company’s installed capacity will be increased by 1,006.45MW on an equity basis.

In the second half of 2009, the national economy will continue to grow at a relatively fast pace, thus providing a favourable external environment for the Company. The State will continue to deepen electricity tariff reforms, gradually improve the pricing mechanism of on-grid electricity tariffs, electricity transmission and distribution tariffs and electricity selling tariffs, and timely rationalize the contradiction between coal and electricity, thereby creating the conditions for easing the operating pressure of the Company.

Meanwhile, the Company still faces various difficulties and challenges in its operation. Given that there is an increase in the number of newly operated generating units nationwide in 2009, the power supply and demand situation will be further eased, the utilization hours of coal-fired generating units nationwide will continue to decline, and internal competition of the power generation industry will intensify, thus further increasing the operating pressure of the Company. Coal prices will still hover at high levels and annual key contracts have not been signed up, and these uncertain factors will, to a certain extent, affect the production safety and profitability of the Company. Meanwhile, with the continued strengthening of environmental protection by the State, environmental protection standards are upgraded continuously, which will exert pressure over the control of the production and operating costs of the Company. Lastly, the State is in the process of adjusting the energy structure by focusing on the development of clean energy and renewable energy, thus putting forward stricter requirements for the development of new projects of the Company in the future.

While the Company will fully leverage its own advantages in terms of resources, scale, geographical coverage and costs, it will actively expand the room for development, strengthen marketing work, strive to fulfill the annual power generation plan, strictly control costs, endeavour to control unit fuel costs and increase the Company’s profitability.

The major tasks of the Company for the second half of 2009 include: to strengthen safe production and management and to ensure stable operation of its generating units; to strengthen the sales force and to endeavour to increase the power output of the Company; to use the best endeavours to ensure a safe, stable and effective fuel supply and to strive to enlarge fuel supply channels and effectively control fuel purchase prices; to promote energy saving and emissions reduction work in full force and to actively carry out detailed management of energy consumption indices and an optimized operation of generating units; to strengthen internal management and to effectively control production costs; to actively push forward preliminary work of projects; to seize the opportunities of the State’s adjustment of energy and transport strategy deployment by further optimizing power plants structure and adjusting their deployment; to strengthen the management of infrastructure construction, and to ensure safe, stable and economical operation of newly operated generating units whilst meeting the requirements of energy-saving and environmentally friendly generating units; to actively explore financing channels so as to ensure funding support for the scale development of the Company.

Huaneng Power International, Inc. wholly owns 17 operating power plants, and has controlling interests in 13 operating power companies and minority interests in 5 operating power companies in the PRC. The Company’s power plants are extensively located in 12 provinces and 2 municipalities. In addition, the Company wholly owns one operating power company in Singapore. Currently, the Company has a controlling generation capacity of 40,939MW and a total generation capacity of 39,203MW on an equity basis and is one of the largest listed power producers in China……

JASO

Q2 net loss of 18 cents per share

* Shares fall 7 percent in premarket trade

NEW YORK, Aug 11 (Reuters) – China’s JA Solar Holdings Co Ltd (JASO.O) reported on Wednesday a wider quarterly net loss, as tight credit markets have cut demand for renewable power and sent prices on solar panels into a tailspin.

The second-quarter net loss was $28.5 million, or 18 cents per share, compared with a loss of 1 cent per share a year earlier.

Revenue slid 51 percent to $88 million. Analysts had been expecting revenue to fall as low as $66.7 million, according to Reuters Estimates.

Earlier this month, JA Solar unexpectedly said its chairman, Baofang Jin, would take on the role of chief executive. Former CEO Samuel Yang is now vice chairman, reporting to Jin.

Shares in JA Solar fell 7 percent to $4.88 per share in premarket trade. (Reporting by Matt Daily, editing by Gerald E. McCormick)

M

NEW YORK (AP) — Macy’s Inc. posted a second-quarter profit and beat analyst expectations even as the department store chain’s results were weighed down by costs for consolidations and store closings.

The chain says it is boosting its outlook as it benefits from the cost-cutting.

Macy’s earned $7 million, or 2 cents per share. That compares with profit of $73 million, or 17 cents per share, a year ago.

Excluding charges, profit came in at 20 cents per share, beating analysts’ projections of 15 cents.

Revenue was $5.16 billion, down almost 10 percent.

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This is not childs play

Introduction

While there is much talk of a recovery on the horizon, commentators are forgetting some crucial aspects of the financial crisis. The crisis is not simply composed of one bubble, the housing real estate bubble, which has already burst. The crisis has many bubbles, all of which dwarf the housing bubble burst of 2008. Indicators show that the next possible burst is the commercial real estate bubble. However, the main event on the horizon is the “bailout bubble” and the general world debt bubble, which will plunge the world into a Great Depression the likes of which have never before been seen.

Housing Crash Still Not Over

The housing real estate market, despite numbers indicating an upward trend, is still in trouble, as, “Houses are taking months to sell. Many buyers are having trouble getting financing as lenders and appraisers struggle to figure out what houses are really worth in the wake of the collapse.” Further, “the overall market remains very soft […] aside from speculators and first-time buyers.” Dean Baker, co-director of the Center for Economic and Policy Research in Washington said, “It would be wrong to imagine that we have hit a turning point in the market,” as “There is still an enormous oversupply of housing, which means that the direction of house prices will almost certainly continue to be downward.” Foreclosures are still rising in many states “such as Nevada, Georgia and Utah, and economists say rising unemployment may push foreclosures higher into next year.” Clearly, the housing crisis is still not at an end.[1]

The Commercial Real Estate Bubble

In May, Bloomberg quoted Deutsche Bank CEO Josef Ackermann as saying, “It’s either the beginning of the end or the end of the beginning.” Bloomberg further pointed out that, “A piece of the puzzle that must be calculated into any determination of the depth of our economic doldrums is the condition of commercial real estate — the shopping malls, hotels, and office buildings that tend to go along with real- estate expansions.” Residential investment went down 28.9 % from 2006 to 2007, and at the same time, nonresidential investment grew 24.9%, thus, commercial real estate was “serving as a buffer against the declining housing market.”

Commercial real estate lags behind housing trends, and so too, will the crisis, as “commercial construction projects are losing their appeal.” Further, “there are lots of reasons to suspect that commercial real estate was subject to some of the loose lending practices that afflicted the residential market. The Office of the Comptroller of the Currency’s Survey of Credit Underwriting Practices found that whereas in 2003 just 2 percent of banks were easing their underwriting standards on commercial construction loans, by 2006 almost a third of them were relaxing.” In May it was reported that, “Almost 80 percent of domestic banks are tightening their lending standards for commercial real-estate loans,” and that, “we may face double-bubble trouble for real estate and the economy.”[2]

In late July of 2009, it was reported that, “Commercial real estate’s decline is a significant issue facing the economy because it may result in more losses for the financial industry than residential real estate. This category includes apartment buildings, hotels, office towers, and shopping malls.” Worth noting is that, “As the economy has struggled, developers and landlords have had to rely on a helping hand from the US Federal Reserve in order to try to get credit flowing so that they can refinance existing buildings or even to complete partially constructed projects.” So again, the Fed is delaying the inevitable by providing more liquidity to an already inflated bubble. As the Financial Post pointed out, “From Vancouver to Manhattan, we are seeing rising office vacancies and declines in office rents.”[3]

In April of 2009, it was reported that, “Office vacancies in U.S. downtowns increased to 12.5 percent in the first quarter, the highest in three years, as companies cut jobs and new buildings came onto the market,” and, “Downtown office vacancies nationwide could come close to 15 percent by the end of this year, approaching the 10-year high of 15.5 percent in 2003.”[4]

In the same month it was reported that, “Strip malls, neighborhood centers and regional malls are losing stores at the fastest pace in at least a decade, as a spending slump forces retailers to trim down to stay afloat.” In the first quarter of 2009, retail tenants “have vacated 8.7 million square feet of commercial space,” which “exceeds the 8.6 million square feet of retail space that was vacated in all of 2008.” Further, as CNN reported, “vacancy rates at malls rose 9.5% in the first quarter, outpacing the 8.9% vacancy rate registered in all of 2008.” Of significance for those that think and claim the crisis will be over by 2010, “mall vacancies [are expected] to exceed historical levels through 2011,” as for retailers, “it’s only going to get worse.”[5] Two days after the previous report, “General Growth Properties Inc, the second-largest U.S. mall owner, declared bankruptcy on [April 16] in the biggest real estate failure in U.S. history.”[6]

In April, the Financial Times reported that, “Property prices in China are likely to halve over the next two years, a top government researcher has predicted in a powerful signal that the country’s economic downturn faces further challenges despite recent positive data.” This is of enormous significance, as “The property market, along with exports, were leading drivers of the booming Chinese economy over the past decade.” Further, “an apparent rebound in the property market was unsustainable over the medium term and being driven by a flood of liquidity and fraudulent activity rather than real demand.” A researcher at a leading Chinese government think tank reported that, “he expected average urban residential property prices to fall by 40 to 50 per cent over the next two years from their levels at the end of 2008.”[7]

In April, it was reported that, “The Federal Reserve is considering offering longer loans to investors in commercial mortgage-backed securities as part of a plan to help jump-start the market for commercial real estate debt.” Since February the Fed “has been analyzing appropriate terms and conditions for accepting commercial mortgage-backed securities (CMBS) and other mortgage assets as collateral for its Term Asset-Backed Securities Lending Facility (TALF).”[8]

In late July, the Financial Times reported that, “Two of America’s biggest banks, Morgan Stanley and Wells Fargo … threw into sharp relief the mounting woes of the US commercial property market when they reported large losses and surging bad loan,” as “The disappointing second-quarter results for two of the largest lenders and investors in office, retail and industrial property across the US confirmed investors’ fears that commercial real estate would be the next front in the financial crisis after the collapse of the housing market.” The commercial property market, worth $6.7 trillion, “which accounts for more than 10 per cent of US gross domestic product, could be a significant hurdle on the road to recovery.”[9]

The Bailout Bubble

While the bailout, or the “stimulus package” as it is often referred to, is getting good coverage in terms of being portrayed as having revived the economy and is leading the way to the light at the end of the tunnel, key factors are again misrepresented in this situation.

At the end of March of 2009, Bloomberg reported that, “The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year.” This amount “works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.”[10]

Gerald Celente, the head of the Trends Research Institute, the major trend-forecasting agency in the world, wrote in May of 2009 of the “bailout bubble.” Celente’s forecasts are not to be taken lightly, as he accurately predicted the 1987 stock market crash, the fall of the Soviet Union, the 1998 Russian economic collapse, the 1997 East Asian economic crisis, the 2000 Dot-Com bubble burst, the 2001 recession, the start of a recession in 2007 and the housing market collapse of 2008, among other things.

On May 13, 2009, Celente released a Trend Alert, reporting that, “The biggest financial bubble in history is being inflated in plain sight,” and that, “This is the Mother of All Bubbles, and when it explodes […] it will signal the end to the boom/bust cycle that has characterized economic activity throughout the developed world.” Further, “This is much bigger than the Dot-com and Real Estate bubbles which hit speculators, investors and financiers the hardest. However destructive the effects of these busts on employment, savings and productivity, the Free Market Capitalist framework was left intact. But when the ‘Bailout Bubble’ explodes, the system goes with it.”

Celente further explained that, “Phantom dollars, printed out of thin air, backed by nothing … and producing next to nothing … defines the ‘Bailout Bubble.’ Just as with the other bubbles, so too will this one burst. But unlike Dot-com and Real Estate, when the “Bailout Bubble” pops, neither the President nor the Federal Reserve will have the fiscal fixes or monetary policies available to inflate another.” Celente elaborated, “Given the pattern of governments to parlay egregious failures into mega-failures, the classic trend they follow, when all else fails, is to take their nation to war,” and that, “While we cannot pinpoint precisely when the ‘Bailout Bubble’ will burst, we are certain it will. When it does, it should be understood that a major war could follow.”[11]

[youtube:http://www.youtube.com/watch?v=BUC7Nu76VFM 450 300]

However, this “bailout bubble” that Celente was referring to at the time was the $12.8 trillion reported by Bloomberg. As of July, estimates put this bubble at nearly double the previous estimate.

As the Financial Times reported in late July of 2009, while the Fed and Treasury hail the efforts and impact of the bailouts, “Neil Barofsky, special inspector-general for the troubled asset relief programme, [TARP] said that the various US schemes to shore up banks and restart lending exposed federal agencies to a risk of $23,700bn [$23.7 trillion] – a vast estimate that was immediately dismissed by the Treasury.” The inspector-general of the TARP program stated that there were “fundamental vulnerabilities . . . relating to conflicts of interest and collusion, transparency, performance measures, and anti-money laundering.”

Barofsky also reports on the “considerable stress” in commercial real estate, as “The Fed has begun to open up Talf to commercial mortgage-backed securities to try to influence credit conditions in the commercial real estate market. The report draws attention to a new potential credit crunch when $500bn worth of real estate mortgages need to be refinanced by the end of the year.” Ben Bernanke, the Chairman of the Fed, and Timothy Geithner, the Treasury Secretary and former President of the New York Fed, are seriously discussing extending TALF (Term Asset-Backed Securities Lending Facility) into “CMBS [Commercial Mortgage-Backed Securities] and other assets such as small business loans and whether to increase the size of the programme.” It is the “expansion of the various programmes into new and riskier asset classes is one of the main bones of contention between the Treasury and Mr Barofsky.”[12]

Testifying before Congress, Barofsky said, “From programs involving large capital infusions into hundreds of banks and other financial institutions, to a mortgage modification program designed to modify millions of mortgages, to public-private partnerships using tens of billions of taxpayer dollars to purchase ‘toxic’ assets from banks, TARP has evolved into a program of unprecedented scope, scale, and complexity.” He explained that, “The total potential federal government support could reach up to 23.7 trillion dollars.”[13]

Is a Future Bailout Possible?

In early July of 2009, billionaire investor Warren Buffet said that, “unemployment could hit 11 percent and a second stimulus package might be needed as the economy struggles to recover from recession,” and he further stated that, “we’re not in a recovery.”[14] Also in early July, an economic adviser to President Obama stated that, “The United States should be planning for a possible second round of fiscal stimulus to further prop up the economy.”[15]

In August of 2009, it was reported that, “THE Obama administration will consider dishing out more money to rein in unemployment despite signs the recession is ending,” and that, “Treasury secretary Tim Geithner also conceded tax hikes could be on the agenda as the government worked to bring its huge recovery-related deficits under control.” Geithner said, “we will do what it takes,” and that, “more federal cash could be tipped into the recovery as unemployment benefits amid projections the benefits extended to 1.5 million jobless Americans will expire without Congress’ intervention.” However, any future injection of money could be viewed as “a second stimulus package.”[16]

The Washington Post reported in early July of a Treasury Department initiative known as “Plan C.” The Plan C team was assembled “to examine what could yet bring [the economy] down and has identified several trouble spots that could threaten the still-fragile lending industry,” and “the internal project is focused on vexing problems such as the distressed commercial real estate markets, the high rate of delinquencies among homeowners, and the struggles of community and regional banks.”

Further, “The team is also responsible for considering potential government responses, but top officials within the Obama administration are wary of rolling out initiatives that would commit massive amounts of federal resources.” The article elaborated in saying that, “The creation of Plan C is a sign that the government has moved into a new phase of its response, acting preemptively rather than reacting to emerging crises.” In particular, the near-term challenge they are facing is commercial real estate lending, as “Banks and other firms that provided such loans in the past have sharply curtailed lending,” leaving “many developers and construction companies out in the cold.” Within the next couple years, “these groups face a tidal wave of commercial real estate debt — some estimates peg the total at more than $3 trillion — that they will need to refinance. These loans were issued during this decade’s construction boom with the mistaken expectation that they would be refinanced on the same generous terms after a few years.”

However, as a result of the credit crisis, “few developers can find anyone to refinance their debt, endangering healthy and distressed properties.” Kim Diamond, a managing director at Standard & Poor’s, stated that, “It’s not a degree to which people are willing to lend,” but rather, “The question is whether a loan can be made at all.” Important to note is that, “Financial analysts said losses on commercial real estate loans are now the single largest cause of bank failures,” and that none of the bailout efforts enacted “is big enough to address the size of the problem.”[17]

So the question must be asked: what is Plan C contemplating in terms of a possible government “solution”? Another bailout? The effect that this would have would be to further inflate the already monumental bailout bubble.

The Great European Bubble

In October of 2008, Germany and France led a European Union bailout of 1 trillion Euros, and “World markets initially soared as European governments pumped billions into crippled banks. Central banks in Europe also mounted a new offensive to restart lending by supplying unlimited amounts of dollars to commercial banks in a joint operation.”[18]

The American bailouts even went to European banks, as it was reported in March of 2009 that, “European banks declined to discuss a report that they were beneficiaries of the $173 billion bail-out of insurer AIG,” as “Goldman Sachs, Morgan Stanley and a host of other U.S. and European banks had been paid roughly $50 billion since the Federal Reserve first extended aid to AIG.” Among the European banks, “French banks Societe Generale and Calyon on Sunday declined to comment on the story, as did Deutsche Bank, Britain’s Barclays and unlisted Dutch group Rabobank.” Other banks that got money from the US bailout include HSBC, Wachovia, Merrill Lynch, Banco Santander and Royal Bank of Scotland. Because AIG was essentially insolvent, “the bailout enabled AIG to pay its counterparty banks for extra collateral,” with “Goldman Sachs and Deutsche bank each receiving $6 billion in payments between mid-September and December.”[19]

In April of 2009, it was reported that, “EU governments have committed 3 trillion Euros [or $4 trillion dollars] to bail out banks with guarantees or cash injections in the wake of the global financial crisis, the European Commission.”[20]

In early February of 2009, the Telegraph published a story with a startling headline, “European banks may need 16.3 trillion pound bail-out, EC document warns.” Type this headline into google, and the link to the Telegraph appears. However, click on the link, and the title has changed to “European bank bail-out could push EU into crisis.” Further, they removed any mention of the amount of money that may be required for a bank bailout. The amount in dollars, however, nears $25 trillion. The amount is the cumulative total of the troubled assets on bank balance sheets, a staggering number derived from the derivatives trade.

The Telegraph reported that, “National leaders and EU officials share fears that a second bank bail-out in Europe will raise government borrowing at a time when investors – particularly those who lend money to European governments – have growing doubts over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back.”[21]

When Eastern European countries were in desperate need of financial aid, and discussion was heated on the possibility of an EU bailout of Eastern Europe, the EU, at the behest of Angela Merkel of Germany, denied the East European bailout. However, this was more a public relations stunt than an actual policy position.

While the EU refused money to Eastern Europe in the form of a bailout, in late March European leaders “doubled the emergency funding for the fragile economies of central and eastern Europe and pledged to deliver another doubling of International Monetary Fund lending facilities by putting up 75bn Euros (70bn pounds).” EU leaders “agreed to increase funding for balance of payments support available for mainly eastern European member states from 25bn Euros to 50bn Euros.”[22]

As explained in a Times article in June of 2009, Germany has been deceitful in its public stance versus its actual policy decisions. The article, worth quoting in large part, first explained that:

Europe is now in the middle of a perfect storm – a confluence of three separate, but interconnected economic crises which threaten far greater devastation than Britain or America have suffered from the credit crunch: the collapse of German industry and employment, the impending bankruptcy of Central European homeowners and businesses; and the threat of government debt defaults from loss of monetary control by the Irish Republic, Greece and Portugal, for instance on the eurozone periphery.

Taking the case of Latvia, the author asks, “If the crisis expands, other EU governments – and especially Germany’s – will face an existential question. Do they commit hundreds of billions of euros to guarantee the debts of fellow EU countries? Or do they allow government defaults and devaluations that may ultimately break up the single currency and further cripple German industry, as well as the country’s domestic banks?” While addressing that, “Publicly, German politicians have insisted that any bailouts or guarantees are out of the question,” however, “the pass has been quietly sold in Brussels, while politicians loudly protested their unshakeable commitment to defend it.”

The author addressed how in October of 2008:

[…] a previously unused regulation was discovered, allowing the creation of a 25 billion Euros “balance of payments facility” and authorising the EU to borrow substantial sums under its own “legal personality” for the first time. This facility was doubled again to 50 billion Euros in March. If Latvia’s financial problems turn into a full-scale crisis, these guarantees and cross-subsidies between EU governments will increase to hundreds of billions in the months ahead and will certainly mutate into large-scale centralised EU borrowing, jointly guaranteed by all the taxpayers of the EU.

[…] The new EU borrowing, for example, is legally an ‘off-budget’ and ‘back-to-back’ arrangement, which allows Germany to maintain the legal fiction that it is not guaranteeing the debts of Latvia et al. The EU’s bond prospectus to investors, however, makes quite clear where the financial burden truly lies: “From an investor’s point of view the bond is fully guaranteed by the EU budget and, ultimately, by the EU Member States.”[23]

So Eastern Europe is getting, or presumably will get bailed out. Whether this is in the form of EU federalism, providing loans of its own accord, paid for by European taxpayers, or through the IMF, which will attach any loans with its stringent Structural Adjustment Program (SAP) conditionalities, or both. It turned out that the joint partnership of the IMF and EU is what provided the loans and continues to provide such loans.

As the Financial Times pointed out in August of 2009, “Bank failures or plunging currencies in the three Baltic nations – Latvia, Lithuania and Estonia – could threaten the fragile prospect of recovery in the rest of Europe. These countries also sit on one of the world’s most sensitive political fault-lines. They are the European Union’s frontier states, bordering Russia.” In July, Latvia “agreed its second loan in eight months from the IMF and the EU,” following the first one in December. Lithuania is reported to be following suit. However, as the Financial Times noted, the loans came with the IMF conditionalities: “The injection of cash is the good news. The bad news is that, in return for shoring up state finances, the new IMF deal will require the Latvian government to impose yet more pain on its suffering population. Public-sector wages have already been cut by about a third this year. Pensions have been sliced. Now the IMF requires Latvia to cut another 10 per cent from the state budget this autumn.”[24]

If we are to believe the brief Telegraph report pertaining to nearly $25 trillion in bad bank assets, which was removed from the original article for undisclosed reasons, not citing a factual retraction, the question is, does this potential bailout still stand? These banks haven’t been rescued financially from the EU, so, presumably, these bad assets are still sitting on the bank balance sheets. This bubble has yet to blow. Combine this with the $23.7 trillion US bailout bubble, and there is nearly $50 trillion between the EU and the US waiting to burst.

An Oil Bubble

In early July of 2009, the New York Times reported that, “The extreme volatility that has gripped oil markets for the last 18 months has shown no signs of slowing down, with oil prices more than doubling since the beginning of the year despite an exceptionally weak economy.” Instability in the oil and gas prices has led many to “fear it could jeopardize a global recovery.” Further, “It is also hobbling businesses and consumers,” as “A wild run on the oil markets has occurred in the last 12 months.” Oil prices reached a record high last summer at $145/barrel, and with the economic crisis they fell to $33/barrel in December. However, since the start of 2009, oil has risen 55% to $70/barrel.

As the Times article points out, “the recent rise in oil prices is reprising the debate from last year over the role of investors — or speculators — in the commodity markets.” Energy officials from the EU and OPEC met in June and concluded that, “the speculation issue had not been resolved yet and that the 2008 bubble could be repeated.”[25]

In June of 2009, Hedge Fund manager Michael Masters told the US Senate that, “Congress has not done enough to curb excessive speculation in the oil markets, leaving the country vulnerable to another price run-up in 2009.” He explained that, “oil prices are largely not determined by supply and demand but the trading desks of large Wall Street firms.” Because “Nothing was actually done by Congress to put an end to the problem of excessive speculation” in 2008, Masters explained, “there is nothing to prevent another bubble in oil prices in 2009. In fact, signs of another possible bubble are already beginning to appear.”[26]

In May of 2008, Goldman Sachs warned that oil could reach as much as $200/barrel within the next 12-24 months [up to May 2010]. Interestingly, “Goldman Sachs is one of the largest Wall Street investment banks trading oil and it could profit from an increase in prices.”[27] However, this is missing the key point. Not only would Goldman Sachs profit, but Goldman Sachs plays a major role in sending oil prices up in the first place.

As Ed Wallace pointed out in an article in Business Week in May of 2008, Goldman Sachs’ report placed the blame for such price hikes on “soaring demand” from China and the Middle East, combined with the contention that the Middle East has or would soon peak in its oil reserves. Wallace pointed out that:

Goldman Sachs was one of the founding partners of online commodities and futures marketplace Intercontinental Exchange (ICE). And ICE has been a primary focus of recent congressional investigations; it was named both in the Senate’s Permanent Subcommittee on Investigations’ June 27, 2006, Staff Report and in the House Committee on Energy & Commerce’s hearing last December. Those investigations looked into the unregulated trading in energy futures, and both concluded that energy prices’ climb to stratospheric heights has been driven by the billions of dollars’ worth of oil and natural gas futures contracts being placed on the ICE—which is not regulated by the Commodities Futures Trading Commission.[28]

Essentially, Goldman Sachs is one of the key speculators in the oil market, and thus, plays a major role in driving oil prices up on speculation. This must be reconsidered in light of the resurgent rise in oil prices in 2009. In July of 2009, “Goldman Sachs Group Inc. posted record earnings as revenue from trading and stock underwriting reached all-time highs less than a year after the firm took $10 billion in U.S. rescue funds.”[29] Could one be related to the other?

Bailouts Used in Speculation

In November of 2008, the Chinese government injected an “$849 billion stimulus package aimed at keeping the emerging economic superpower growing.”[30] China then recorded a rebound in the growth rate of the economy, and underwent a stock market boom. However, as the Wall Street Journal pointed out in July of 2009, “Its growth is now fuelled by cheap debt rather than corporate profits and retained earnings, and this shift in the medium term threatens to undermine China’s economic decoupling from the global slump.” Further, “overseas money has been piling into China, inflating foreign exchange reserves and domestic liquidity. So perhaps it is not surprising that outstanding bank loans have doubled in the last few years, or that there is much talk of a shadow banking system. Then there is China’s reputation for building overcapacity in its industrial sector, a notoriety it won even before the crash in global demand. This showed a disregard for returns that is always a tell-tale sign of cheap money.”

China’s economy primarily relies upon the United States as a consumption market for its cheap products. However, “The slowdown in U.S. consumption amid a credit crunch has exposed the weaknesses in this export-led financing model. So now China is turning instead to cheap debt for funding, a shift suggested by this year’s 35% or so rise in bank loans.”[31]

In August of 2009, it was reported that China is experiencing a “stimulus-fueled stock market boom.” However, this has caused many leaders to “worry that too much of the $1-trillion lending binge by state banks that paid for China’s nascent revival was diverted into stocks and real estate, raising the danger of a boom and bust cycle and higher inflation less than two years after an earlier stock market bubble burst.”[32]

The same reasoning needs to be applied to the US stock market surge. Something is inherently and structurally wrong with a financial system in which nothing is being produced, 600,000 jobs are lost monthly, and yet, the stock market goes up. Why is the stock market going up?

The Troubled Asset Relief Program (TARP), which provided $700 billion in bank bailouts, started under Bush and expanded under Obama, entails that the US Treasury purchases $700 billion worth of “troubled assets” from banks, and in turn, “that banks cannot be asked to account for their use of taxpayer money.”[33]

So if banks don’t have to account for where the money goes, where did it go? They claim it went back into lending. However, bank lending continues to go down.[34] Stock market speculation is the likely answer. Why else would stocks go up, lending continue downwards, and the bailout money be unaccounted for?

What Does the Bank for International Settlements (BIS) Have to Say?

In late June, the Bank for International Settlements (BIS), the central bank of the world’s central banks, the most prestigious and powerful financial organization in the world, delivered an important warning. It stated that, “fiscal stimulus packages may provide no more than a temporary boost to growth, and be followed by an extended period of economic stagnation.”

The BIS, “The only international body to correctly predict the financial crisis … has warned the biggest risk is that governments might be forced by world bond investors to abandon their stimulus packages, and instead slash spending while lifting taxes and interest rates,” as the annual report of the BIS “has for the past three years been warning of the dangers of a repeat of the depression.” Further, “Its latest annual report warned that countries such as Australia faced the possibility of a run on the currency, which would force interest rates to rise.” The BIS warned that, “a temporary respite may make it more difficult for authorities to take the actions that are necessary, if unpopular, to restore the health of the financial system, and may thus ultimately prolong the period of slow growth.”

Of immense import is the BIS warning that, “At the same time, government guarantees and asset insurance have exposed taxpayers to potentially large losses,” and explaining how fiscal packages posed significant risks, it said that, “There is a danger that fiscal policy-makers will exhaust their debt capacity before finishing the costly job of repairing the financial system,” and that, “There is the definite possibility that stimulus programs will drive up real interest rates and inflation expectations.” Inflation “would intensify as the downturn abated,” and the BIS “expressed doubt about the bank rescue package adopted in the US.”[35]

The BIS further warned of inflation, saying that, “The big and justifiable worry is that, before it can be reversed, the dramatic easing in monetary policy will translate into growth in the broader monetary and credit aggregates,” the BIS said. That will “lead to inflation that feeds inflation expectations or it may fuel yet another asset-price bubble, sowing the seeds of the next financial boom-bust cycle.”[36]

Major investors have also been warning about the dangers of inflation. Legendary investor Jim Rogers has warned of “a massive inflation holocaust.”[37] Investor Marc Faber has warned that, “The U.S. economy will enter ‘hyperinflation’ approaching the levels in Zimbabwe,” and he stated that he is “100 percent sure that the U.S. will go into hyperinflation.” Further, “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”[38]

Are We Entering A New Great Depression?

In 2007, it was reported that, “The Bank for International Settlements, the world’s most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.” Further:

The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.

[…] In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be “cleaned up” afterwards – which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.[39]

In 2008, the BIS again warned of the potential of another Great Depression, as “complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.”[40]

In 2008, the BIS also said that, “The current market turmoil is without precedent in the postwar period. With a significant risk of recession in the US, compounded by sharply rising inflation in many countries, fears are building that the global economy might be at some kind of tipping point,” and that all central banks have done “has been to put off the day of reckoning.”[41]

In late June of 2009, the BIS reported that as a result of stimulus packages, it has only seen “limited progress” and that, “the prospects for growth are at risk,” and further “stimulus measures won’t be able to gain traction, and may only lead to a temporary pickup in growth.” Ultimately, “A fleeting recovery could well make matters worse.”[42]

The BIS has said, in softened language, that the stimulus packages are ultimately going to cause more damage than they prevented, simply delaying the inevitable and making the inevitable that much worse. Given the previous BIS warnings of a Great Depression, the stimulus packages around the world have simply delayed the coming depression, and by adding significant numbers to the massive debt bubbles of the world’s nations, will ultimately make the depression worse than had governments not injected massive amounts of money into the economy.

After the last Great Depression, Keynesian economists emerged victorious in proposing that a nation must spend its way out of crisis. This time around, they will be proven wrong. The world is a very different place now. Loose credit, easy spending and massive debt is what has led the world to the current economic crisis, spending is not the way out. The world has been functioning on a debt based global economy. This debt based monetary system, controlled and operated by the global central banking system, of which the apex is the Bank for International Settlements, is unsustainable. This is the real bubble, the debt bubble. When it bursts, and it will burst, the world will enter into the Greatest Depression in world history.

Notes

[1] Barrie McKenna, End of housing slump? Try telling that to buyers, sellers and the unemployed. The Globe and Mail: August 6, 2009:
http://www.theglobeandmail.com/report-on-business/end-of-housing-slump-try-telling-that-to-buyers-sellers-and-the-unemployed/article1240418/

[2] Gene Sperling, Double-Bubble Trouble in Commercial Real Estate: Gene Sperling. Bloomberg: May 9, 2009:
http://www.bloomberg.com/apps/news?pid=20601110&sid=a.X91SkgOd8g

[3] AL Sull, Commercial Real Estate – The Other Real Estate Bubble. Financial Post: July 23, 2009:
http://network.nationalpost.com/np/blogs/fpmagazinedaily/archive/2009/07/23/commercial-real-estate-the-other-real-estate-bubble.aspx

[4] Hui-yong Yu, U.S. Office Vacancies Rise to Three-Year High, Cushman Says. Bloomberg: April 16, 2009:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aegH6dXG8H8U

[5] Parija B. Kavilanz, Malls shedding stores at record pace. CNN Money: April 14, 2009:
http://money.cnn.com/2009/04/10/news/economy/retail_malls/index.htm

[6] Ilaina Jonas and Emily Chasan, General Growth files largest U.S. real estate bankruptcy. Reuters: April 16, 2009:
http://www.reuters.com/article/businessNews/idUSTRE53F68P20090417

[7] Jamil Anderlini, China property prices ‘likely to halve’. The Financial Times: April 13, 2009:
http://www.ft.com/cms/s/0/9a36b342-280e-11de-8dbf-00144feabdc0.html

[8] Reuters, Fed Might Extend TALF Support to Five Years. Money News: April 17, 2009:
http://moneynews.newsmax.com/financenews/talf/2009/04/17/204120.html?utm_medium=RSS

[9] Francesco Guerrera and Greg Farrell, US banks warn on commercial property. The Financial Times: July 22, 2009:
http://www.ft.com/cms/s/0/3a1e9d86-76eb-11de-b23c-00144feabdc0.html

[10] Mark Pittman and Bob Ivry, Financial Rescue Nears GDP as Pledges Top $12.8 Trillion. Bloomberg: March 31, 2009:
http://www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4

[11] Gerald Celente, The “Bailout Bubble” – The Bubble to End All Bubbles. Trends Research Institute: May 13, 2009:
http://geraldcelentechannel.blogspot.com/2009/05/gerald-celente-bubble-to-end-all.html

[12] Tom Braithwaite, Treasury clashes with Tarp watchdog on data. The Financial Times: July 20, 2009:
http://www.ft.com/cms/s/0/ab533a38-757a-11de-9ed5-00144feabdc0.html

[13] AFP, US could spend 23.7 trillion dollars on crisis: report. Agence-France Presse: July 20, 2009:
http://www.google.com/hostednews/afp/article/ALeqM5iuL1HParBuO4WyHJIxw6rlOKdz-A

[14] John Whitesides, Warren Buffett says second stimulus might be needed. Reuters: July 9, 2009:
http://www.reuters.com/article/pressReleasesMolt/idUSTRE5683MZ20090709

[15] Vidya Ranganathan, U.S. should plan 2nd fiscal stimulus: economic adviser. Reuters: July 7, 2009:
http://www.reuters.com/article/newsOne/idUSTRE56611D20090707

[16] Carly Crawford, US may increase stimulus payments to rein in unemployment. The Herald Sun: August 3, 2009:
http://www.news.com.au/heraldsun/story/0,21985,25873672-664,00.html

[17] David Cho and Binyamin Appelbaum, Treasury Works on ‘Plan C’ To Fend Off Lingering Threats. The Washington Post: July 8, 2009:
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/07/AR2009070702631.html?hpid=topnews

[18] Charles Bremner and David Charter, Germany and France lead €1 trillion European bailout. Times Online: October 13, 2009:
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4937516.ece

[19] Douwe Miedema, Europe banks silent on reported AIG bailout gains. Reuters: March 8, 2009:
http://www.reuters.com/article/topNews/idUSTRE5270YD20090308

[20] Elitsa Vucheva, European Bank Bailout Total: $4 Trillion. Business Week: April 10, 2009:
http://www.businessweek.com/globalbiz/content/apr2009/gb20090410_254738.htm?chan=globalbiz_europe+index+page_top+stories

[21] Bruno Waterfield, European bank bail-out could push EU into crisis. The Telegraph: February 11, 2009:
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html

[22] Ian Traynor, EU doubles funding for fragile eastern European economies. The Guardian: March 20, 2009:
http://www.guardian.co.uk/world/2009/mar/20/eu-imf-emergency-funding

[23] Anatole Kaletsky, The great bailout – Europe’s best-kept secret. The Times Online: June 4, 2009:
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article6426565.ece

[24] Gideon Rachman, Europe prepares for a Baltic blast. The Financial Times: August 3, 2009:
http://www.ft.com/cms/s/0/b497f5b6-8060-11de-bf04-00144feabdc0.html

[25] JAD MOUAWAD, Swings in Price of Oil Hobble Forecasting. The New York Times: July 5, 2009:
http://www.nytimes.com/2009/07/06/business/06oil.html

[26] Christopher Doering, Masters says signs of oil bubble starting to appear. Reuters: June 4, 2009:
http://www.reuters.com/article/Inspiration/idUSTRE55355620090604

[27] Javier Blas and Chris Flood, Analyst warns of oil at $200 a barrel. The Financial Times: May 6, 2008:
http://us.ft.com/ftgateway/superpage.ft?news_id=fto050620081414392593

[28] Ed Wallace, The Reason for High Oil Prices. Business Week: May 13, 2009:
http://www.businessweek.com/lifestyle/content/may2008/bw20080513_720178.htm

[29] Christine Harper, Goldman Sachs Posts Record Profit, Beating Estimates. Bloomberg: July 14, 2009:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2jo3RK2_Aps

[30] Peter Martin and John Garnaut, The great China bailout. The Age: November 11, 2008:
http://business.theage.com.au/business/the-great-china-bailout-20081110-5lpe.html

[31] Paul Cavey, Now China Has a Credit Boom. The Wall Street Journal: July 30, 2009:
http://online.wsj.com/article/SB10001424052970204619004574319261337617196.html

[32] Joe McDonald, China’s stimulus-fueled stock boom alarms Beijing. The Globe and Mail: August 2, 2009:
http://www.globeinvestor.com/servlet/story/RTGAM.20090802.wchina02/GIStory/

[33] Matt Jaffe, Watchdog Refutes Treasury Claim Banks Cannot Be Asked to Account for Bailout Cash. ABC News: July 19, 2009:
http://abcnews.go.com/Business/Politics/story?id=8121045&page=1

[34] The China Post, Bank lending slows down in U.S.: report. The China Post: July 28, 2009:
http://www.chinapost.com.tw/business/americas/2009/07/28/218141/Bank-lending.htm

[35] David Uren. Bank for International Settlements warning over stimulus benefits. The Australian: June 30, 2009:
http://www.theaustralian.news.com.au/story/0,,25710566-601,00.html

[36] Simone Meier, BIS Sees Risk Central Banks Will Raise Interest Rates Too Late. Bloomberg: June 29, 2009:
http://www.bloomberg.com/apps/news?pid=20601068&sid=aOnSy9jXFKaY

[37] CNBC.com, We Are Facing an ‘Inflation Holocaust’: Jim Rogers. CNBC: October 10, 2008:
http://www.cnbc.com/id/27097823

[38] Chen Shiyin and Bernard Lo, U.S. Inflation to Approach Zimbabwe Level, Faber Says. Bloomberg: May 27, 2009:
http://www.bloomberg.com/apps/news?pid=20601110&sid=avgZDYM6mTFA

[39] Ambrose Evans-Pritchard, BIS warns of Great Depression dangers from credit spree. The Telegraph: June 27, 2009:
http://www.telegraph.co.uk/finance/economics/2811081/BIS-warns-of-Great-Depression-dangers-from-credit-spree.html

[40] Gill Montia, Central bank body warns of Great Depression. Banking Times: June 9, 2008:
http://www.bankingtimes.co.uk/09062008-central-bank-body-warns-of-great-depression/

[41] Ambrose Evans-Pritchard, BIS slams central banks, warns of worse crunch to come. The Telegraph: June 30, 2008:
http://www.telegraph.co.uk/finance/markets/2792450/BIS-slams-central-banks-warns-of-worse-crunch-to-come.html

[42] HEATHER SCOFFIELD, Financial repairs must continue: central banks. The Globe and Mail: June 29, 2009:
http://v1.theglobeandmail.com/servlet/story/RTGAM.20090629.wcentralbanks0629/BNStory/HEATHER+SCOFFIELD/

Andrew Gavin Marshall is a Research Associate with the Centre for Research on Globalization (CRG). He is currently studying Political Economy and History at Simon Fraser University.

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Prechter

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Asian Markets Move Higher on Speculation

By Shani Raja and Masaki Kondo

Aug. 11 (Bloomberg) — Asian stocks rose for a second day as earnings reports and brokerage upgrades boosted confidence that corporate profits are recovering from the global recession.

Aioi Insurance Co. climbed 4.2 percent in Tokyo on higher profit, even after a magnitude-6.5 earthquake injured more than 40 people in Japan. Golden Agri-Resources Ltd., the world’s No. 2 palm oil producer, jumped 12 percent and Nippon Sheet Glass Co. surged 9.2 percent as brokerages recommended investors buy the shares. Tencent Holdings Ltd., operator of China’s biggest online chat service, rose 5.2 percent in Hong Kong amid analyst predictions the company will report higher earnings tomorrow.

The MSCI Asia Pacific Index rose 0.7 percent to 112.50 at 7:22 p.m. in Tokyo. The gauge has gained 59 percent from a five- year low on March 9 on speculation of a global economic recovery. Stocks in the measure are valued at an average 24 times estimated profit, higher than the MSCI World Index’s 17 times.

“Investor sentiment remains resilient with the global economy and company earnings on the mend,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $89 billion.

Japan’s Nikkei 225 Stock Average added 0.6 percent, while Hong Kong’s Hang Seng Index advanced 0.7 percent. The Taiex Index gained 0.4 percent in Taiwan, where as many as 500 people are feared dead after a typhoon caused a mudslide. The Shanghai Composite Index added 0.5 percent as the statistics bureau said the nation’s retail sales expanded.

Insurance Earnings

JB Hi-Fi Ltd., a discount retailer, rallied 8.7 percent in Sydney and Qingdao Haier Co., a unit of China’s biggest appliance maker, gained 6.4 percent in Shanghai after both companies reported earnings growth. Malaysia’s Bandar Raya Developments Bhd. climbed 5 percent after profit doubled.

Futures on the Standard & Poor’s 500 Index lost 0.1 percent. U.S. stocks fell yesterday, led by commodity producers and retailers, after four straight weeks of gains left the S&P 500 trading at the highest level relative to earnings since 2004. The U.S. gauge declined 0.3 percent yesterday.

Aioi added 4.2 percent to 477 yen after saying net income more than quadrupled in the three months to June 30. Mitsui Sumitomo Insurance Group Holdings Inc., which reported a 37 percent increase in first-quarter earnings, gained 2 percent to 2,615 yen. Fuji Fire & Marine Insurance Co. surged 15 percent to 138 yen.

Mitsui Sumitomo Insurance said it’s considering its response to today’s earthquake, including creating a task force to gather information and analyze damage.

Quake-Related Shares

The earthquake hit 23 kilometers (14 miles) below the seabed 170 kilometers from Tokyo at 5:07 a.m. local time, shaking buildings in the capital, the Japan Meteorological Agency said on its Web site.

P.S. Mitsubishi Construction Co., which constructs disaster prevention facilities, climbed 5.6 percent to 413 yen. Fudo Tetra Corp., which performs ground improvement works, rallied 5.1 percent to 82 yen.

“Speculators are buying earthquake-related shares for quick returns,” said Masayoshi Yano, a senior market analyst at Tokyo-based Meiwa Securities Co. “The tremor doesn’t have an impact on those companies’ fundamentals and I don’t think their gains will last long.”

Tencent rose 5.7 percent to HK$117.50. The company may post a 61 percent gain in second-quarter profit tomorrow, according to the median of three analysts’ estimates in a Bloomberg survey. Hong Kong Exchanges & Clearing Ltd., which is also due to report results tomorrow, gained 3.8 percent to HK$151.90.

A third of the 443 companies in the MSCI Asia Pacific Index that have reported quarterly results so far have beaten analysts’ profit estimates, while 16 percent have missed, according to data compiled by Bloomberg.

Rising Valuations

Better-than-expected earnings and economic reports worldwide have driven stocks higher since March, lifting the average valuation of the MSCI Asia Pacific’s companies to a four-month high of 25 times estimated profit on July 28.

Data last week showed Australian employers unexpectedly added jobs and pointed to improving manufacturing industries in China, Europe and the U.S.

“We’ve gone up too fast and need to slow down,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Technical indicators show the market is overheating.”

The MSCI Asia Pacific’s 14-day relative strength index, which measures how rapidly prices have risen or fallen, rose to 67 today, three points below the threshold some investors use as a signal to sell.

‘Overweight’ Recommendation

Golden Agri-Resources advanced 12 percent to 47.5 Singapore cents. Morgan Stanley initiated coverage of the stock, with an “overweight” rating and share-price estimate of 50 Singapore cents, saying the industry is “attractive” as crude palm oil prices are likely to increase.

Nippon Sheet Glass surged 9.2 percent to 355 yen, leading gains in shares on the Nikkei. Bank of America Corp.’s Merrill Lynch unit recommended investors “buy” the stock. The brokerage set its price estimate on the stock at 355 yen, saying price increases in Europe will contribute to earnings.

JB Hi-Fi, the best-performing retailer in Australia’s benchmark stock index this year, rallied 8.7 percent to A$17.30 after second-half profit rose 53 percent on sales of video games and flat-panel televisions. Qingdao Haier, which makes air conditioners and refrigerators, gained 6.4 percent to 16.06 yuan after first-half earnings climbed 21 percent.

Bandar Raya, a Malaysian property developer, rose 5 percent to 1.68 ringgit after the company said second-quarter profit more than doubled from a year earlier.

European Stocks Slide With Banks Leading The Way

By Adam Haigh

Aug. 11 (Bloomberg) — European stocks fell for a second day, erasing an earlier advance for the Dow Jones Stoxx 600 Index, as bank shares declined and concern grew that an economic recovery may falter after Chinese exports and new loans dropped.

Lloyds Banking Group Plc plummeted 7.7 percent as the Financial Times reported the U.K. lender may face government resistance to its tentative plans to raise about 15 billion pounds ($25 billion) in a rights offer. Danske Bank A/S dropped 1.9 percent after posting an unexpected net loss.

The Stoxx 600 slid 0.4 percent to 228.76 as of 1:10 p.m. in London. The gauge has soared 45 percent since March 9 as companies from GlaxoSmithKline Plc to Intel Corp. reported better-than-estimated results. The measure is valued at 40.1 times the profits of its companies, the highest level since September 2003, weekly data compiled by Bloomberg show.

Standard & Poor’s 500 Index futures expiring in September slipped 0.3 percent. Federal Reserve chairman Ben S. Bernanke and his four Federal Open Market Committee colleagues, gathering today and tomorrow in Washington, may acknowledge an improvement in the economic outlook while maintaining a pledge to buy as much as $1.75 trillion of bonds, economists said.

China’s exports fell 23 percent in July, while new lending was less than one-quarter the level in June, the nation’s customs bureau and central bank said, raising concern the economy has yet to establish a solid recovery.

Weak Recovery

Bank of Japan Governor Masaaki Shirakawa said any rebound in the world’s second-largest economy is likely to be weak because there’s no guarantee that demand will gain momentum once global stimulus programs fade.

“Even if we have a recovery, I don’t think its strength will be impressive,” Shirakawa told reporters in Tokyo today after his board kept the key interest rate at 0.1 percent. “I can’t be confident about the strength of final demand after inventory adjustments and policy measures run their course.”

Lloyds slid 7.7 percent to 90.38 pence. The bank may face resistance to its tentative plan for a rights offer to reduce reliance on the government and the U.K.’s toxic asset protection program, the Financial Times reported, citing unidentified people familiar with the matter.

Danske Bank slid 1.9 percent to 116 kroner as Denmark’s largest lender said it expects impairment charges to remain high this year after a surge in loan losses at home and in Ireland resulted in a second-quarter loss.

Natixis SA slumped 14 percent to 2.16 euros after the Wall Street Journal said there are no plans to de-list any of the lender’s securities from the market.

Adecco Slips

Adecco SA, the world’s largest supplier of temporary workers, fell 3.9 percent to 50.8 Swiss francs after reporting a net loss of 147 million euros ($208 million) for the second quarter. Analysts surveyed by Bloomberg had predicted net income of 32.8 million euros.

International Power Plc advanced 5.8 percent to 262.8 pence after saying first-half net income rose 50-fold, boosted by sales in Asia and Australia.

Per-share earnings at companies in the Stoxx 600 that reported results since July 8 have slumped 36 percent, while more than half have topped analysts’ projections, according to data compiled by Bloomberg.

Oil trades down Under $71 pb

By ALEX KENNEDY p {margin:12px 0px 0px 0px;}

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Scrolling Headlines From Yahoo in Play

BR

LAKE SUCCESS, NY–(Marketwire – 08/11/09) – Broadridge Financial Solutions, Inc. (NYSE:BR – News), a leading global provider of technology-based solutions to the financial services industry, today reported financial results for fiscal year 2009 with earnings per share slightly above the mid-point of its previously-announced guidance range. In addition, the Board of Directors increased the annual dividend amount for fiscal year 2010 from $0.28 per share to $0.56 per share, and authorized the repurchase of up to 10 million shares of its outstanding common stock.

For the fiscal year ended June 30, 2009, the Company reported net revenues of $2,149.3 million, net earnings of $223.3 million, GAAP diluted earnings per share of $1.58, and Non-GAAP diluted earnings per share of $1.51, which excludes the one-time gain from the purchase and retirement of $125.0 million principal amount of its 6.125% Senior Notes due 2017 (the “Senior Notes”), and the one-time benefit from a state tax credit. This compares with net revenues of $2,207.5 million, net earnings of $192.2 million, GAAP diluted earnings per share of $1.36, and Non-GAAP diluted earnings per share of $1.42, for the previous fiscal year.

Commenting on the results, Richard J. Daly, Chief Executive Officer, said, “Overall, I am satisfied with our fiscal year 2009 results and our ability to meet the Non-GAAP earnings per share guidance we provided last August, before the beginning of the current financial crisis. I am pleased with the growth in recurring fee revenues in all segments, that our earnings increased and that we generated over $250.0 million in free cash flow. Annual closed sales growth of 5% resulted in solid sales performance for the quarter. I am particularly pleased by our recurring fee closed sales growth of greater than 30%. When coupled with our high client satisfaction and retention rates, the record-breaking growth we achieved in recurring fee sales positions us well for the future by creating a higher revenue base from which to grow.”

Mr. Daly added, “The strength of our recurring revenues, particularly in our investor communications business, and the promising large sales opportunities in all of our segments, keeps our business on the right path. I am confident in our ability to extend our market leadership position as we move forward. I believe we are well positioned to create greater shareholder value by increasing our dividend to approximately 35% of our GAAP net earnings, opportunistically repurchasing our stock, and executing our plan to make strategic acquisitions that will leverage the Broadridge brand and distribution channels.”

For the fourth quarter of fiscal year 2009, net revenues decreased 7% to $736.5 million compared to $792.4 million for the same period last year, primarily as a result of lower distribution revenues related to higher adoption rates of Notice and Access, lower event-driven revenues and the unfavorable impact of foreign currency exchange rates.

Net earnings increased 20% to $116.9 million from $97.8 million, primarily due to a favorable revenue mix, less interest expense, the impact of one-time transition costs in the prior fiscal year and favorable tax rates. Diluted earnings per share increased 20% to $0.83 per share on less interest expense and favorable tax rates, compared to $0.69 per share in the fourth quarter of fiscal year 2008.

During the fourth quarter of fiscal year 2009, the Company repurchased one million shares of Broadridge common stock under its share repurchase plan for a total purchase price of $17.7 million, or $17.66 per share. At June 30, 2009, there were no shares remaining for repurchase under this share repurchase plan.

For fiscal year 2009, net revenues declined 3% to $2,149.3 million, due to lower distribution revenues related to higher adoption rates of Notice and Access, lower event-driven revenues and the unfavorable impact of foreign currency exchange rates. Excluding distribution revenues and the unfavorable impact of foreign currency exchange rates, net revenues grew 2%.

Pre-tax margins of 16.1% improved compared to 14.8% in the same period last year, as a result of lower interest expense on long-term debt, an $8.4 million gain from the purchase of $125.0 million principal amount of the Senior Notes, and the $13.7 million impact of one-time transition costs in the prior fiscal year, partially offset by the negative impact of foreign currency exchange rates. Diluted earnings per share were $1.58 for fiscal year 2009, an increase of $0.22 from $1.36 per share for fiscal year 2008, primarily due to lower interest expense on long-term debt, the effect of the one-time tax benefit in the current year and the gain from the purchase of the Senior Notes. For the fiscal year, closed sales were $156.0 million, an increase of 5% above last year’s annual closed sales of $148.7 million.

Analysis of Fourth Quarter Fiscal Year 2009

__________________________________________________________________________________________

MBT

NEW YORK (MarketWatch) — Mobile TeleSystems OJSC /quotes/comstock/13*!mbt/quotes/nls/mbt (MBT 43.80, +0.48, +1.11%) , Russia’s largest mobile phone operator, said Tuesday its net income fell 14.6% to $563 million in the second quarter, down from $659.2 million in the same period a year ago. Revenues declined 23% to $2 billion from $2.6 billion, the company said. MTS said it continues to see sustained macroeconomic volatility in its markets that may impact its financial and operational performance.

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“thinly supported rally courtesy of CNBC”

Many analysts are calling an end to the recession.  No way, we are only in a countertrend bounce in economic activity before the next leg DOWN.  One has to look no further than the incredible bounces of 50% or more in markets halfway to the lows from 1929 to 1933, or in post-bubble Japan since 1989 to see the parallels.  The social welfare states of the G7 and their spawn known as FIAT currency and credit financial systems have just masked the unfolding death of their economies.

As public serpents, er…servants implement their plans for MISERY SPREAD WIDELY, also known as SOCIALISM, which forces more and more desperate voters into their grasp.

The Stock Market is in a thinly-supported rally, courtesy of the CNBS mainstream media PARADE of Patsies and the New York Fed (also known as the Plunge Protection Team), with its allies in corruption known as WALL STREET.  This chart illustrates the thin underpinnings from a recent edition of The Gartman Letter (www.thegartmanletter.com ):

As Dennis commented: “The DOW industrials and volume on the Exchange: If volume is to follow the trend then there is something amiss here; since March, as the market has rallied, the volume has fallen steadily.  This ain’t good.”

In a recent Barron’s, the noted David Rosenberg (former chief economist at Merrill Lynch) remarks:

“The trailing P/E on an operating earnings (adjusted to take out everything that is bad) is now at 24 times, while on trailing reported earnings, the multiple a mere 760-plus!”

“Something tells us”, Dave explains, “that the marginal buyer of equities today at that price may well be the same person who was loading up on REAL ESTATE during the summer of 06.”

And he is correct.  This is a bounce in markets and economy engineered by Washington and Wall Street to FOOL you before the next leg down into depression unfolds.   To get new FOOLS to BUY their TOXIC stock, loans and bond holdings before they decline to their REAL values, making the public and investors their PATSIES once again.  If you or I attempted this, it would be called PUMP and DUMP, and we would be prosecuted for it; when WALL STREET and the Treasury do this it’s a wink and a smile…  Dave goes on to say:

“Consumer spending came in at -1.2% annualized, twice the decline expected by the consensus. This occurred in the face of gargantuan fiscal stimulus and leaves wondering how this critical 70% chunk of the economy is going to perform as the cash-flow boost from Uncle Sam’s generosity recedes in the second half of the year. Imagine, government transfers to the household sector exploded at a 33% annual rate, while tax payments imploded at a 33% annual rate and the best we can do is a -1.2% annualized decline in consumer spending in real terms and flat in nominal terms? What do we do for an encore? In the absence of the fiscal largesse, it is quite conceivable that consumer spending would have shrunk at a 10% annual rate last quarter!”

Undoubtedly, Dave had to leave the banksters of Wall Street before he was FULLY allowed to utter these truths.

Take a look to the left at the Russell 2000 to get another picture of what ORWELLIAN stock valuations have become, courtesy of the www.wsj.com.

WOW, trailing earnings almost 50% HIGHER than any time in the last 30 YEARS; I think my nose is beginning to bleed at these heights.  Buying the S&P 500 or Russell 2000 requires an investor wears a parachute…  When you hear green shoots, consider the source.  It is nothing more than the trillions of printed Quantitative-easing money going somewhere, aided by government manipulation of the markets and the MAIN STREAM media headlines. Risky assets of all types have risen with the stock markets (bonds, etc.), as desperate fiat currency holders seek returns and SHELTER from the hot fire hoses of money ROLLING off the presses.   Maybe this is the beginning of the Zimbabwe Effect.

A Morphine high is the result of printing and injecting TRILLIONS of little pieces of paper known as G7 currencies and calling them capital, when in reality they are nothing more than accounting fictions.  Their citizens, thinking they are receiving money, realize before it’s all over that they are holding nothing in their hands and nothing in their futures.

To fight the economic collapse, most government programs are nothing less than the implementation of political goals of government expansion, as well as government control over everything (also known as fascist socialism), and calling it the solution to practical problems we face today.  The only solution is income growth in the PRIVATE SECTOR, not the demise of it.

To rescue the financial sector, the Inspector General of the TARP program reported that the total outlays and commitments have now EXCEEDED $23 trillion (that is 23 million, million).  He was immediately called into the White house and viciously attacked for saying the truth.  The next day the Treasury and White House VIGOROUSLY DENIED the reports.  And we have heard not a peep from the supposedly independent auditor.  Chicago politics at work….

The STIMULUS Bill and 2009 budget are perfect examples, 11 to 15% actual stimulus and the rest just expands government by 90% IN ONE YEAR.  Only the locusts have not arrived yet, as the government cannot spend and implement their new schemes as fast as they fund them, with dollars printed out of thin air and NEW BORROWING…

Abraham Lincoln once said:

• You cannot help the poor by destroying the rich.
• You cannot strengthen the weak by weakening the strong.
• You cannot bring about prosperity by discouraging thrift.
• You cannot lift the wage earner up by pulling the wage payer down.
• You cannot further the brotherhood of man by inciting class hatred.
• You cannot build character and courage by taking away men’s initiative and independence.
• You cannot help men permanently by doing for them, what they could and should do for themselves.

This is PRECISELY the public policy being implemented today. It is exactly what he warned us not to do, specifically designed to engineer the collapse of income and economies which our PROGRESSIVE, aka Socialist, public servants will use as their excuse to seize power and private-sector money, all to SAVE you.  These are the teachings of SAUL ALINSKY in action. Every policy they implement destroys income in the private sectors, which equates to personal freedom, and INCREASINGLY puts the government in charge of who gets what.  As Alexander Tytler observed in 1775 during the Revolutionary War:

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over a loss of fiscal responsibility, always followed by a dictatorship. The average of the world’s great civilizations before they decline has been 200 years. These nations have progressed in this sequence: From bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependency; from dependency back again to bondage.”

The G7 is firmly in the latter two stages of this observation; private property and the private sectors are SUBSUMED to feed the dependency of the captive victims known as CITIZENS.  Now we know what the progressive Democratic Party and its standard bearer, aka the President, meant when they said they would be the agents of change:

In other words, change means increasingly becoming SLAVES of the GOVERNMENT and FREE MEN NO MORE!

The naked corruption emanating from the capitals of the G7 and their crony capitalist handmaidens is breathtaking in its depth and breadth.  Climate change and health care bills written in a back room, read by NOBODY in the legislature and passed by “paid for” public serpents, er… servants.  They are Benedict Arnolds to their oaths to uphold the constitution and partners in the corruption.

One of the primary missing ingredients is the acknowledgment that wealth is not generated from the GOVERNMENT and PUBLIC sectors; in fact, they are the destroyers of it.

“Government spending cannot create additional jobs.  If the government provides the funds required by taxing citizens or by borrowing from the public, it abolishes on one hand as many jobs as it creates on the other”…

-Ludwig Von Mises

Unfortunately one other CRITICAL difference is also left unsaid, so I will say it:  most of the jobs in the private sector “produce more than they consume” and create wealth (otherwise the business goes bankrupt), and ALL of the jobs created by government “consume more than they produce” and represent a never-ending DESTRUCTION of wealth and capital.  They must continuously be supported by more taxes and borrowing from the producing sectors of the various countries.  One needs look no further than the ETHANOL industry to see this in action.

Such as, reducing the seed corn CAPITAL from the private sector – entrepreneurs require this to create new and innovative businesses which provide “MORE FOR LESS” as rising new competitors put crony capitalists OUT OF BUSINESS.  In the G7, this cannot be countenanced.   What would: GM, Chrysler, Wall Street and the biggest banks, AIG, Fannie Mae and Freddie Mac, Airbus, GE and soon the public health insurance option do if they were not protected by LEGISLATORS? Since 1998, Wall Street and the big banks have contributed OVER $1.8 billion to REELECTION campaigns.  What did they get?  PROTECTION from their own mistakes (privatizing profits and socializing the losses) and new competitors…  They get the profits and their mistakes are paid for by You, Me and our children, better known as the public.

Look no further than the new financial regulation bill, no doubt written in the executive offices of the Big Banks and Brokerages, creating a new class of too-big-to-fail firms, which are NEVER going to be reduced to a size which is not threatening to the public.  This allows them to take even bigger risks, firm in the knowledge that government has ENSHRINED into law that they CANNOT FAIL.  Those financial institutions outside this SAFETY net then become the PREY of the government-supported entities, such as JP Morgan, Goldman Sachs\ and Morgan Stanley. All the while, letting lose a plague of locusts on their smaller competitors (government regulators) so they can no longer be challenged in the MARKETPLACE, as their competitors fall under the brass knuckles of UNCLE SAM.  Bought and paid for on a regular basis…

CORRUPTION
“All political thinking for years past has been vitiated in the same way. People can foresee the future only when it coincides with their own wishes, and the most grossly obvious facts can be ignored when they are unwelcome. Political language… is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.” – George Orwell

Ditto the INVESTIGATION in OIL speculation, lead by a former Government, er…  Goldman Sachs partner; a farce, as they guide the coming boom in the commodity sector into the hands of the CORRUPT big banks and brokers on Wall Street (JP Morgan, Morgan Stanley, r Goldman Sachs) who form a chorus of support.  Isn’t it interesting that not once during this hearing did the fact come up that the dollar has lost half its purchasing power in less than 10 YEARS?

When some of the biggest commodities banks and brokers in the world support this, you KNOW the fix is in!  They are fixing it so their emerging competitors cannot do what they will be allowed to do.  To see how HORRIBLY corrupt and compromised the current residents of Washington D.C. are, take a look at this recent report by Glen Beck:  http://www.youtube.com/watch?v=khGZ3a4zTNU. A press leak occurred during the hearings and they are REWRITING a report from last year by the regulators with ALL NEW POLITICALLY CORRECT conclusions, rather than those presented last year by the Government.  With respect to MONETARY DEBASEMENT, this is nothing less than trying to KILL THE CANARY IN THE COALMINE, just as they have done to GOLD for years…..

Their policies destroy EVERYTHING required to create expanding incomes, new businesses and economies and redirect it to their FRIENDS and SUPPORTERS under the guise of SAVING you.  The fact that the majority of people in the United States and the G7 do not understand this is testimony to the abject failures that the public school monopolies have become.  They teach nothing but ignorance, misinformation and socialism. Although for our socialist masters in G7 governments, this marks the pinnacle of success.  It allows them to operate in the open since their ideas are embraced as COMMON SENSE, rather than based on the absurdity of the ideas they implement and have taught to the ignorant masses and their children.

As billions of G7 and emerging-market currencies are created daily out of THIN air to prop up the dying social-welfare economic systems of the G7.  Nominal market prices skyrocket or plummet to reflect this fiat capital seeking shelter from the next Dollar, Pound or Euro to roll off the presses right behind them, and pushing markets up and down to price in the new realities or rapid monetary debasement practiced on a GLOBAL scale in a vain attempt to preserve what has gone before.  Take a look at global Bond and Interest Rate Markets to see return on risky investments SHRINK, just as it had before the economic crash started in mid 2007, caused by the same phenomenon: RAMPANT money printing forcing people to seek shelter or escape from debasing G7 currencies.  These are HUGE OPPORTUNITIES, learn how to capture them.

This volatility will only increase until these G7 currencies and financial systems meet their final demise in the next 5 to 10 years.  This is a FIAT currency extinction event. This volatility is opportunity to the prepared investor.  “Buy and Hold” is dead until after the final collapse occurs, which will force the social welfare states and corrupt public serpents, er… servants to implement the policies of growth, or face their demise at the hands of their constituents.  Once these constituents lose everything, the stage will be set for the demise of the welfare state.

To see its demise on a small scale, look at the State of California.  It is but the first of dozens of such episodes throughout the G7 in the not-too-distant future.  The bigger the entity that fails, the more public servants will use these failures of their own policies to justify taking more from the private sectors.

What are the policies of growth?  They are the policies which encourage producing more than you consume, small business creation, SOUND money practices and private property rights being restored.  They encourage families being able to accumulate savings without the INVISIBLE saving tax of currency debasement (for example, someone who saved  $100 in 1980 can now only buy what $17 did at that time; at no time did the interest they were paid outperform the compounding of MISTATED inflation),.  These things have been FORGOTTEN in the G7 today, only to return when the final collapse forces these REALITIES back onto the future agendas, as nothing else will restore growth and the ability to save.

Receipts are PLUMMETING and outlays SKYROCKETING at every level of society: public, municipal, state and federal:

This chart can be seen on ALL LEVELS of government and it shows living BEYOND their means and REFUSING to adjust their budgets.  In the meantime, while government as a percentage of GDP is skyrocketing, TAX RECEIPTS are having the biggest drop since 1932; so far, off at an 18% annual rate:  Individuals down 22%, corporate down 57%, and social security receipts could drop for only the second time since 1940, not to mention plummeting sales and real estate taxes.  Most SANE people and businesses would adjust their spending to reflect income and bring the difference to zero.  In the G7, public servants ACCELERATE the outlays, and BORROW and print the money.  This is the definition of INSANITY!!!!

This is called the Policies of Insolvency.  The Jack boot of government will RAISE taxes so they can fund their social welfare states, and their remaining PRODUCTIVE citizens are ROBBED of the ability to pay their own bills at the point of force, also known as the TAXMAN.   Recent Wall Street Journal reports outline how the public sector pension plans are UNDERFUNDED to the tune of almost $1.7 trillion; just another indicator of the complete malfeasance by elected officials, crony capitalist asset management firms and the public-sector labor unions in respect to the public they claim to serve.  You can expect a knock on the door SOON asking you to FILL THEM UP for them to cover their INVESTING MISTAKES.

A government big enough to give you all you want is strong enough to take everything you have….

— Thomas Jefferson

They have passed the spending sides of many of their hopes and dreams; now they need the money.  It used to be that the progressives were TAX and Spend.  It has not changed, only its order has; now it’s spend and TAX, and it is the same thing….

Some of the most extensive research on the effects of taxation and multipliers is found in a paper written at UC Berkeley by Christina D. and David H. Romer (Christina Romer chairs the Council of Economic Advisors of the Ob@ma administration) entitled “The Macroeconomic Effects of Tax Changes,” , which finds that the multiplier is 3, meaning that each dollar of higher taxes will reduce private sector spending by 3 dollars.  These findings are COMPLETELY ignored by the masters of the universe in G7 capitals.  The Gang of 535 is set to raise them over a trillion dollars over the next two years. YOU DO THE MATH….  Can you say “collapsing spending?”  But as all good progressives (liberal Democrats and big-government Republicans) KNOW incentives don’t matter, and they legislate as if they do.

So the reckless Congress and Administration are in the process of raising them to draconian levels for the most productive small businesses and individuals, emulating the egalitarian economic powerhouse of FRANCE:

Tax rates are now higher than the worst welfare states in EUROPE where growth is only a mirage, courtesy of lying statistical agencies and misstated inflation.  Private property and the ability to save are dead.  They will get you one of two ways:  at the point of a gun or by confiscation of purchasing power through debasement.  Recent developments push this tax number now closer to 58 to 62%, depending upon the state in which you live.  And this is before the new levies, which are being concocted for health care NATIONALIZATION and the CAP and TAX hoax of climate change which enables the theft of the energy industry profits and the transfer of its revenues to the GOVERNMENT or their crony capitalists in the GREEN jobs sectors.  Can you say “CONSUME more than you PRODUCE?”

Now in the US, almost 60% of the public NO LONGER PAY taxes, and the top forty percent of taxpayers pay 60%, indentured serfs to those citizens who PAY NOTHING.  Furthermore, this is set to ACCELERATE as the pay-nothings will vote for anything to alleviate the suffering they have endured at the hands of continually debased wages — courtesy of the people leading the charge against the PRIVATE SECTOR’S last vestiges of SMALL BUSINESSMEN.  Look carefully at the list of states and countries; not a lot of economic winners can be seen, most are abject economic LOSERS.

This DOES NOT outline the CORPORATE tax rates, which are almost at 40 %, and the second highest in the world after Japan, an economy that has not grown for almost two decades now.  Citizens and employees are ignorant to the fact that corporations DO NOT PAY taxes; their customers do, through HIGHER prices, and their employees do, through LOWER wages (the government and unions blame the employer when in actuality it is the TAXMAN who keeps their wages down). And if the price is too high, those jobs and businesses move to areas in the world where they are treated better.  This is nothing less than COMMON sense and self-preservation, of which most G7 citizens and their government masters have very LITTLE.

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Ponzi Finance FAILURE

Before the top in 2007, it took 6 dollars of new lending to create 1 dollar of GDP.  Now there is no expansion in lending, so the Ponzi “asset-backed” economies are imploding.  As long as the government fabricates growth through money creation, also known as quantitative easing, which at this point can NEVER be withdrawn, you will have, as Clyde Harrison points out:   “Deflation in everything you own and inflation in everything you use.”

Lending is shrinking, that is one of the reasons quantitative easing (QE) CANNOT be withdrawn.  QE must SUBSTITUTE for credit growth to lift PAPER assets in the absence of new lending.  Take a look at these ugly numbers:

This is the face of DELEVERAGING, and it has only begun.  As these different categories of lending decline, so will the asset values they underpin.  The QE RELEASES the funds from other investment categories needed to buy these paper assets.   This is the face of DEFLATION in bank lending; as it unfolds, lower prices on the different categories of assets can be expected.

Today, reports are detailing that CLO’s, also known as private equity loans, are back trading at almost 90 cents on the dollar.  Woe to the fools that are buying them as they are priced to perfection, and at these prices, the underlying assets DO NOT produce enough to PAY them back.  These are mispriced assets and misallocated capital which have not yet BITTEN the DUST.  Rest assured it will, as will the CMBS, credit card and the unfolding debacle in the housing markets.  The housing problem is far from over; one up month does not signal the end of that trend and any analyst who says so is dreaming.  How are the BIG banks and brokers avoiding the write-offs?

DANGER!  Special Alert by Garrett Jones

Here is a special report – a technical and fundamental analysis of stocks and economic cycles and a possible stock market peak before the next downleg in the economy and the Stock Market.  Click Here.

Emerging Trends Report, part 1 of 6:  Credit and Credibility

This is one of the finest general overviews of the global economy today.  It embodies the majority of what I believe and is heavy reading, but if you really want a big picture and what to think about it then it is a must read.  I want to thank Richard Karn at the Emerging Trends Report for allowing me to share this very special work with you – I highly urge everyone to subscribe to EmergingTrendsReport.com.

A six-chapter work, we will be releasing one chapter at a time over the next six issues of Tedbits.  Here is Chapter One:  Click here.

Health Care REFORM

Nothing epitomizes the brazen deception and corruption rampant in Washington than the recent debate over health care, its details so onerous that all records of the legislation have been removed from public review.   This video outlines some of the lies and deceptions being spoken today, compared to their recent words: http://www.breitbart.tv/uncovered-video-obama-explains-how-his-health-care-plan-will-eliminate-private-insurance/.

An outstanding piece on health care entitled “Utopia vs. Freedom” outlines that health care reform is actually a choice between freedom and slavery; many of the thoughts which should be part of the debate are presented:

http://article.nationalreview.com/?q=NmVlODY0YzFiMzcxNzYwNGE2Nzg2ZTBhZTA2YTU0NjM=

In some excellent work done BEFORE it was taken from public view, here are some of the NASTY details from a doctor in Florida:

Page 16: A provision making INDIVIDUAL private Medical insurance illegal

Page 22: Mandates audits of all employers that self-insure!

Page 29: Admission: your health care will be rationed!

Page 30: A government committee will decide what treatments and benefits you get (and, unlike an insurer, there will be no appeals process)

Page 42:    The “Health Choices Commissioner” will decide health benefits for you. You will have no choice. None.

Page 50: All non-US citizens, illegal or not, will be provided with free healthcare services.

Page 58: Every person will be issued a National ID Health Card.

Page 59: The federal government will have direct, real-time access to all individual bank accounts for electronic funds transfer.

We have truncated the list here to keep the length of this issue as reasonable as possible.

I urge you to please click here to read the remaining items in this list.

Those of us who love freedom cannot tolerate this brazen intrusion into our lives by a President and a party drunk with power.

This puts to bed the OUTRIGHT LIES coming from the supporters of this bill, ignored and unreported by the MAINSTREAM media.  There are over 800 pages to this bill that were not reviewed by the doctor, and I promise you the devil is in every one of the details.  Well done and well said, Doctor.  The bottom line of government healthcare is that if you participate, you have no say over it (they will force you to.)   THEY OWN YOU AND YOUR BODY– LOCK, STOCK and BARREL and slavery has RETURNED to AMERIKA.

The last 300 pages are available to NO ONE, but some of the highlights are NATIONAL ID cards, complete removal of FINANCIAL privacy, euthanasia, rationing, government micromanagement from a manual to guide the new little health czars as they careen through your lives.  Saving money and being more productive is ridiculous; show me one other GOVERNMENT program where this is so.  Medicare, Medicaid, social security, Fannie Mae and Freddie Mac, the US Postal Service, all insolvent, and now they want another program to manage; it will just be the next failure….  Consuming more then it produces.

There are over 9 million words in the tax code; the manual for your healthcare may be longer….. When the Congressional Budget Office announced the REAL tally of new and expected expenses over $1 trillion, The White House summoned this supposedly INDEPENDENT agency into a heated meeting, THE REPORT CHANGED THE NEXT DAY…..  SO MUCH FOR HONEST GOVERNMENT…Chicago-style politics on plain display!

This is the total destruction of the present healthcare industry and a whole new one is being written and DIRECTED by PINHEADS, also known as Bureaurats, er… crats in Washington.   They have NO KNOWLEDGE of the issues involved, other than their desire to NATIONALIZE and control approximately 20% of the US economy and all the opportunities it offers them to sell influence and collect rents, regardless of the welfare of the citizens.  This IS NOT a solution to exploding healthcare cost, it is a recipe for more.  WHAT a laugh or should I say cry.  Think of your life in the hands of a bureaucrat, rather than in your own and your doctor’s.  Not a pretty picture.  The BIG uproar of the cost of this in the media and on Capitol Hill is just to DISTRACT you from the real details which are straight from a horror movie in which you are the next VICTIMS.

In closing: The greatest depression in history is BLOWING into the G7.  Morally and fiscally-bankrupt public serpents, er… servants are INSURING it will be the worst in HISTORY.   Implementing a plan that ATTACKS the most productive 5% of the economy and expecting they will continue to produce and invest in new businesses IS FALSE.  Just ask California where the top 1% pay taxes at a rate which generates 50% of ALL State income.  Taxes are now collapsing, as are these breadwinners who stay there quit producing, or vote with their feet.  Now it is being done on a national level and you can expect the economy to collapse with them.  It DOES NOT PAY TO PRODUCE and they WON’T, you can bet on it.

Just like dead cats, economies bounce if you throw them down hard enough; the G7 and world economies were thrown down harder than any time in history in this initial stage of the collapse, a weak bounce could have been expected and appears to be about OVER.

Only the most FOOLISH or uninformed entrepreneurs would venture into a new business with this storm on the horizon, because the only businesses that can survive are on the government dole, aka EARMARKS, which they paid for with CAMPAIGN contributions.  And only a rising private sector and rising incomes will father the recovery.  These GOVERNMENT policies are a dagger in the heart of any nascent recovery.

I know that expansion plans in my business and ALL my friends’ businesses are on INDEFINITE hold, as to make money from hard work, risk taking and building my business will be CONFISCATED for the GREATER good of those who have chosen not to do so.  How nice!  Why work hard with the goal to make a million dollars when government in one form or another is going to take 600,000 to 700,000 dollars of it?  I won’t and no one else will either.  Income in the G7 is collapsing and set to collapse FURTHER.  Government is NOT the solution, it is the problem.  The parasites in government are killing the private sectors on which they feed.  ON PURPOSE!

For millennia, governments and kings have employed ALCHEMIST’S to turn lead into gold, trash into cash, and FAILED.  Modern governments believe they have done so, creating money and capital from almost-worthless pieces of paper.  This is an illusion; the worthless pieces of paper ARE NOT money, they are the illusion of it.  Modern governments have failed as well, we see it every day as they try to control the markets which are careening wildly higher and lower in reaction to this FLOOD of funny money.  These are opportunities learn to catch them!!!

Cash for clunkers is the latest bailout for the auto sector (pulling forward next year’s purchases to today); looks like its bombs away as SOON AS IT’S OVER.  Don’t use your computer to get the coupon, though.  To do so you have to accept a disclosure which says if you proceed, your computer becomes the “Property of the Government” and subject to search and seizure.  During an episode of Glen Beck, they did proceed and an auto program promptly began downloading ALL THE FILES.  When looking at the public option for healthcare, it is the same.  Your body and finances become?  What else? The property of government!  With the rebates for home purchases, you also have the government as shareholder!

When the inevitable COLLAPSE occurs, they will use that as the EXCUSE to seize everything they have not already seized in one manner or another.  The first lesson in Econ 101 is TANSTAAFL “there ain’t no such thing as a free lunch,” and it is about to be learned on a scale which will boggle the mind.  The printing press WILL BE rolled out to an extent larger than can be imagined.  But soon, those IOU’s will be reduced to their intrinsic value and the collapse in living standards will ACCELERATE.

Bernanke MUST stop any audits of the Fed as it would allow the WORLD to discover actually HOW MANY dollars are in existence.  Off-balance-sheet vehicles are great until they are DISCOVERED, then all hell breaks loose.  As for the people who store wealth in dollars, what would they do if they found out that there were 10, 20 or 30 TRILLION dollars more in circulation than what is now BELIEVED to be in existence?  As a store of value it would be DESTROYED.  This is entirely possible, or should I say PROBABLE.  The US claims to have a debt-to-GDP ratio near 80%; informed investors know the liabilities are 70 to 90 trillion dollars, or almost 600%.

Look no further than the recent GDP numbers and the benchmark REVISIONS to see government corruption and PUBLIC RELATIONS in action.  Here is a recent excerpt from a report by John Williams of www.shadowstats.com

Five of the last six quarters now are reported in real quarterly contraction. The revised official real GDP quarterly growth rates (and prior estimates of growth) are: 1q08 was down 0.7% (previously up 0.9%); 2q08 was up 1.5% (previously up 2.8%); 3q08 was down 2.7% (previously down 0.5%); 4q08 was down 5.4% (previously down 6.3%); 1q09 was down 6.4% (previously down 5.5%); 2q09 was down 1.0% in its “advance” estimate.

As noted in the SGS Newsletter No. 51, July 2009 marked the 19th month of economic contraction, the longest downturn (based on NBER timing) since the first downleg of the Great Depression. The new string of quarterly GDP contractions, as well as annual declines of 3.3% and 3.9%, respectively, in first- and second-quarters 2009, are the worst showings in the history of the quarterly GDP series, which goes back to 1947/1948.

Rest assured that the fall in GDP was much worse than -1%; we will only know when the bean counters do the next BENCHMARK REVISIONS.  Can GDP bounce from here?  Sure, anything is possible as long as it comes from such a low new baseline, showing a countercyclical bounce, and you can lie about the numbers from which they are calculated, as they have done so now for YEARS…

Last but not least is the recent revelation of legalized front-running by high-frequency traders with the express knowledge of the regulators and the exchanges.  They saw approximately $23 billion of profits in the last year alone, transferred directly from investor’s pockets into their own.   To see an explanation for the criminality involved, see this Bloomberg report: http://www.youtube.com/watch?v=V4cRYI2x60Q&eurl=http%3A%2F%2Fwww%2Egoldismoney%2Einfo%2Fforums%2Fshowthread%2Ephp%3Ft%3D394720&feature=player_embedded .

Corruption is running out of control as the elites try to revive the un-revivable.  Printing money out of thin air is nearing its demise, of that you can be certain.  The moves up and down in the market and the rapidity (up and down moves which used to take years now unfold in weeks and months) as markets and investors are blown about as NEW surprises cause investors to change course.  Buy and Hold is dead, absolute-return investing (making money in up and down markets) as volatility expands is not, and volatility is opportunity.  Learn how to catch it.

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By Ty Andros
TraderView
Copyright © 2009 Ty Andros

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