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Monthly Archives: December 2012

Iceland’s Hörður Torfason – How to Beat the Banksters

The tiny Nordic European island country of iceland is presently experiencing one of the greatest economic comebacks of all time.  After the privatization of the banking sector completed in 200o, the economy was thrown into a tailspin when over a five year period,  private bankers borrowed 120 billion dollars (10 times the size of Iceland’s economy). A huge economic bubble was created, causing house prices to double, and making a small percentage of Iceland’s population rich enough to buy up overseas investments, mansions, yachts, and private jets, while leaving an absolutely un-payable debt for all Icelanders. Iceland was facing national bankruptcy.

In response to the failed banking system, in October 2008, Iceland’s revolution against this financial tyranny began, rather casually in the street, in front of the Icelandic general assembly.

In the duration of five months, the main bank of Iceland was nationalized, government officials were forced to resign, the old government was liquidated, and a new government was put in its place. By March 2010, Iceland’s people voted to deny payment of the 3,500 million Euro debt created by the bankers, and about 200 high-level executives and bankers responsible for the economic crisis in the country were either arrested or were facing criminal charges.

In February 2011, a new constitutional assembly settled in to rewrite the tiny nation’s constitution, which aimed to avoid entrapment by debt-based currency foreign loans. In 2012, Iceland’s economy is expected to outgrow the Euro and the average for the developed world, as estimated by the Paris-based Organization for Economic Cooperation and Development….”

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Elizabeth Warren Set to Wreak Havoc as She Gets the Nod From the Senate Banking Committee

“Senate newcomer and consumer advocate Elizabeth Warren (D-Mass.) completed her coup against the banks on Wednesday, securing a spot on the Senate Banking Committee.

HuffPost’s Ryan Grim first broke news of Warren’s high-profile move last week, writing that the “ascension to the panel gives her influence over regulators and the industry that non-panel members don’t enjoy.”

Sens. Heidi Heitkamp (D-N.D.) and Joe Manchin (W.V.) were also named as new members of the committee. Senate Majority Leader Harry hailed the Democratic Steering Committee’s appointments in a statement on Wednesday.

“I am excited to work with the members of our expanded majority. Our caucus is more diverse than ever, with a record sixteen female Democratic senators serving in the next Congress,” said Reid. “These committee assignments will allow all members of our caucus to bring their unique talents and expertise to bear as we work together to advance the interests of the middle class.”

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ProPublica: EPA Allows Waivers for Mining Companies to Pollute Aquifers

“Energy and mining companies have received government approval to pollute freshwater aquifers that supply more than half of the nation’s drinking water, according to a report by ProPublica, the investigative journalism project.

The so-called “aquifer exemptions” by the Environmental Protection Agency (EPA) allow toxic material to enter underground reservoirs, some of them in drought-stricken areas, the organization said. At least 100 drinking water aquifers have been written off because they were reportedly used as dumping ground.

“You are sacrificing these aquifers,” said Mark Williams, a University of Colorado hydrologist and National Science Foundation researcher. “By definition, you are putting pollution into them… If you are looking 50 to 100 years down the road, this is not a good way to go.”

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Wiedemer: More Fed Easing Is ‘Insurance Policy’ Against Market Collapse

“The Federal Reserve’s decision to beef up an existing monetary stimulus program may in reality be little more than a move to prevent stock prices from collapsing, said Robert Wiedemer, financial commentator and best-selling author of “Aftershock.”

At its December monetary policy meeting, the Fed announced plans to bolster its current quantitative easing (QE) program, a monetary stimulus tool that sees the U.S. central bank buy $40 billion in mortgage-backed securities a month from banks on an open-ended basis to spur recovery.

Going forward, the Fed will now purchase an additional $45 billion in Treasury holdings from financial institutions alongside its purchases of mortgage debt.

QE functions by pumping liquidity into the economy in a way that keeps interest rates low to encourage investing and hiring, with rising stock prices and a weaker dollar as side effects….”

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Dempsey: Fed Aims to Inflate Stocks To Help Baby Boomers Retire

“The new policy unveiled by the Federal Reserve Wednesday likely aims to push up stock prices to appease Baby Boomers, many of whom are invested in equities, said Edward M. Dempsey, founder of Pension Partners LLC.

At this week’s monetary policy meeting, the Fed unveiled plans to beef up its current quantitative easing program, a monetary stimulus tool that sees the U.S. central bank buy $40 billion in mortgage-backed securities a month from banks on an open-ended basis to spur recovery.

Going forward, the Fed will now snap up an additional $45 billion in Treasury holdings from financial institutions alongside its purchases of mortgage debt.

Watch our exclusive video. Article continues below…”

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El Erian Explains Why the Markets Faded the Fed Announcement

“Analysts will be hard pressed to explain how equity markets ended unchanged on the day of an unprecedented policy announcement from the Fed. Rather than resort to cliches, they could consider the competing emotions felt by a patient taking an experimental drug that has not been through clinical tests. Let me explain.

The “expected and therefore fully priced in” excuse for an unchanged market does not work. A notable component of today’s Fed announcement – the shift to quantitative (employment and inflation) thresholds – was a surprise. Most had expected this would not occur until March 2013 at the earliest; and the few outliers had mostly opted for January.

The second traditional explanation – compensating news – also does not work. Away from the Fed, it was a relatively quiet day.

A better answer can be found by considering the competing emotions a patient feels when confronted with news of a new drug that is yet to go through clinical testing.

Professional investors welcomed the news that the Fed is “all in” when it comes to trying new drugs to stimulate the economy. And they fully understand that the transmission mechanism runs right through the equity markets. As Bernanke has stated, the Fed is looking to “push investors to take more risks.” Hence the initial positive reaction to the announcement.

Later in the day, however, and especially when Fed Chairman Ben Bernanke answered questions, the enthusiasm dissipated. There are reasons for this too.

As the day proceeded, investors realized that, like any experimental drug, there is a material risk of complications. After all, the Fed’s operational modalities are not straightforward; the analytical underpinnings are far from robust; and the Fed’s prior experimental measures have not succeeded in generating sustainable growth…”

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Conservatives Are Threatening To ‘Systematically Replace’ Republicans Who Agree To A Deal On The Fiscal Cliff

“Driven by growing concerns that House GOP leaders will give in to raising tax rates, grassroots conservatives are ramping up pressure on Republicans to block any deal on the fiscal cliff.

More than 100 conservative leaders — including Santorum megadonor Foster Friess, RedState editor Erick Erickson, Phyllis Schlafly, longtime GOP activist Morton Blackwell, and others — banded together Wednesday to send an open letter warning Republican members of Congress against voting for any compromise on the fiscal cliff.

“The thrust of the letter is to remind Republicans in the Congress that this is a time of testing,” said Morton Blackwell, a veteran Republican Party activist who hosts the exclusive Weyrich Lunch conservative strategy sessions. “The pressure is on to cave into the demands of president Obama and the left….They need to understand or be reminded that to cave in would be very bad and very much damage the credibility of the GOP…”

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U.S. Adopts Hamas Tactic Called the Double Tap

“NYU student Josh Begley is tweeting every reported U.S. drone strike since 2002, and the feed highlights a disturbing tactic employed by the U.S. that is widely considered a war crime.

Known as the “double tap,” the tactic involves bombing a target multiple times in relatively quick succession, meaning that the second strike often hits first responders.

2007 report by the Homeland Security Institute called double taps a “favorite tactic of Hamas” and the FBI considers it a tactic employed by terrorists.

UN special rapporteur on extrajudicial killings Christof Heyns said that if there are “secondary drone strikes on rescuers who are helping (the injured) after an initial drone attack, those further attacks are a war crime.”

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Gold Bugs Miffed as the Shiny Metal Falls on Fed Easing

“….After the Fed initially made its announcement, gold spiked.

But the effect is fading. It only took a couple of hours until the spike ended, and tonight gold is tanking some more in early Asian trading.”

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Asian Stocks Rise, Led by Japan’s Exporters, as Yen Falls

“Asian stocks rose, with the regional benchmark index extending its longest rally in more than three years, as Japanese exporters advanced after the yen fell to an eight-month low versus the dollar.

Canon Inc., the world’s biggest camera maker, climbed 3.1 percent in Tokyo as the weaker yen boosted the outlook for exporters. Mitsubishi UFJ Financial Group Inc. rose 2.1 percent as Japan’s No. 1 lender is poised to announce the purchase of Bank of America Corp.’s stake in their Japanese private banking venture. Chimei Innolux Corp., Taiwan’s largest maker of liquid- crystal displays, jumped 6.9 percent in Taipei on a report it will return to profit next year as sales increase.”

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The Nikkei

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RAY DALIO: The US Economy Is Facing A Rare Set Of Circumstances That Will Be Bad For Markets

“At the Dealbook conference, Ray DalioSteve Schwarzman and David Rubinstein just wrapped up a panel on investing and markets.

Of particular interest was Ray Dalio, the hedge fund god who has been killing it throughout the crisis.

And so you have to be intrigued that he’s bearish.

He’s not wildly so (thinks stocks will do better than bonds) but his basic idea is that risk premiums are maxed out, and have to come down. In other words, people have paid up max dollar for all risk assets thanks to the Fed dropping rates to rock bottom. Now that will reverse.

His novel set of circumstances he sees is an economy that faces austerity (due to the Fiscal Cliff, etc.) coupled with a  Fed that’s mostly blown its bazooka, and can’t get much more juice out of QE (he believes that QE does less and less because the Fed can’t push that much that much more money from bonds into riskier assets).

So the novel set of circumstances are: ”

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Market Update

U.S. equities sold off a small rally this morning after Boehner made some cold water comments over fiscal cliff negotiations.

The Markets managed to rally right into the FOMC meeting by noon and has just hit the highs of the day, (+65 DOW points,) as the Fed announces more stimulus.

Currently, Bernanke is speaking about potential exit programs from monetary policy at the right time. Don’t worry the punch bowl has been restocked for more gorilla cocaine risk on trades.

For now rates remain low, and inflation is expected to be in check for the foreseeable future.

Gold is up $5 sticks while oil is up $ $1. The Yen, Euro and the Sterling are up against the dollar for the moment.

Market update

3 D heat map 

[youtube://http://www.youtube.com/watch?v=58z-eRUFt_E 450 300]

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FED: GDP Expected to Grow 2.3% to 3% for 2013, Rates Expected to Stay Low Until 2015

“A majority of Federal Reserve officials don’t expect to raise the main interest rate until 2015, when they forecast the jobless rate will fall to between 6 percent and 6.6 percent.

Federal Open Market Committee participants forecast today that gross domestic product will expand 2.3 percent to 3 percent next year, compared with 2.5 percent to 3 percent in September. Estimates for 2014 are from 3 percent to 3.5 percent, versus 3 percent to 3.8 percent in the previous projection, according to the central tendency forecasts, which exclude the three highest and three lowest of 19 projections.

The FOMC earlier today voted to supplement their $40 billion a month of mortgage-bond purchases with $45 billion in monthly Treasury purchases once their Operation Twist program expires at the end of the month. The Fed said interest rates will stay low “at least as long” as theunemployment rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent.

The jobless rate probably will average 7.4 percent to 7.7 percent in the final three months of next year, officials said, versus 7.6 percent to 7.9 percent in September.

Five of 19 officials said the first interest-rate increase since 2006 would be warranted in 2014 or sooner, while 13 said it would occur in 2015. One called for an increase in 2016.

Officials said prices as measured by the personal consumption expenditures price index may rise 1.3 percent to 2 percent next year, versus an increase of 1.6 percent to 2 percent in September. Central bankers have set a 2 percent target for inflation.”

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Fed Expands Asset Buying, Links Rates to Joblessness

“The Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, and for the first time linked the outlook for its main interest rate to unemployment and inflation.

“The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor-market conditions,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington.

The Fed said interest rates will stay low “at least as long” as the unemployment rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent. The committee “views these thresholds as consistent with its earlier date-based guidance.” The Fed dropped its earlier pledge to hold interest rates near zero “at least through mid-2015.”

Chairman Ben S. Bernanke is using his unlimited authority to buy Treasuries in an unprecedented effort to stoke growth and reduce 7.7 percent unemployment. The Fed acted in its last regular meeting of the year as lawmakers and the Obama administration continue talks to avert more than $600 billion of automatic spending cuts and tax increases that threaten to throw the country into a recession.

Stocks and Treasury yields rose after the statement. The Standard & Poor’s 500 Index climbed 0.7 percent to 1,437.67 at 1:38 p.m. in New York. The yield on the 10-year Treasury note was 1.69 percent, compared with 1.66 percent late yesterday.

‘Very Active’

“The Fed has been very active since the crisis began, and they are feeling some time pressure because the longer Americans stay unemployed, the harder it is to incorporate them back into the labor force,” said Dana Saporta, a U.S. economist at Credit Suisse Group AG in New York….”

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