Is the U.S. economy about to experience a major downturn? Unfortunately, there are a whole bunch of signs that economic activity in the United States is really slowing down right now. Freight volumes and freight expenditures are way down, consumer confidence has declined sharply, major retail chains all over America are closing hundreds of stores, and the “sequester” threatens to give the American people their first significant opportunity to experience what “austerity” tastes like. Gas prices are going up rapidly, corporate insiders are dumping massive amounts of stock and there are high profile corporate bankruptcies in the news almost every single day now. In many ways, what we are going through right now feels very similar to 2008 before the crash happened. Back then the warning signs of economic trouble were very obvious, but our politicians and the mainstream media insisted that everything was just fine, and the stock market was very much detached from reality. When the stock market did finally catch up with reality, it happened very, very rapidly. Sadly, most people do not appear to have learned any lessons from the crisis of 2008. Americans continue to rack up staggering amounts of debt, and Wall Street is more reckless than ever. As a society, we seem to have concluded that 2008 was just a temporary malfunction rather than an indication that our entire system was fundamentally flawed. In the end, we will pay a great price for our overconfidence and our recklessness.
So what will the rest of 2013 bring?
Hopefully the economy will remain stable for as long as possible, but right now things do not look particularly promising.
The following are 20 signs that the U.S. economy is heading for big trouble in the months ahead…
#2 The average price of a gallon of gasoline has risen by more than 50 cents over the past two months. This is making things tougher on our economy, because nearly every form of economic activity involves moving people or goods around.
#3 Reader’s Digest, once one of the most popular magazines in the world, has filed for bankruptcy.
#4 Atlantic City’s newest casino, Revel, has just filed for bankruptcy. It had been hoped that Revel would help lead a turnaround for Atlantic City.
#5 A state-appointed review board has determined that there is “no satisfactory plan” to solve Detroit’s financial emergency, and many believe that bankruptcy is imminent. If Detroit does declare bankruptcy, it will be the largest municipal bankruptcy in U.S. history.
#6 David Gallagher, the CEO of Town Sports International, recently said that his company is struggling right now because consumers simply do not have as much disposable income anymore…
“As we moved into January membership trends were tracking to expectations in the first half of the month, but fell off track and did not meet our expectations in the second half of the month. We believe the driver of this was the rapid decline in consumer sentiment that has been reported and is connected to the reduction in net pay consumers earn given the changes in tax rates that went into effect in January.“
#7 According to the Conference Board, consumer confidence in the U.S. has hit its lowest level in more than a year.
#8 Sales of the Apple iPhone have been slower than projected, and as a result Chinese manufacturing giant FoxConn has instituted a hiring freeze. The following is from a CNET report that was posted on Wednesday…
The Financial Times noted that it was the first time since a 2009 downturn that the company opted to halt hiring in all of its facilities across the country. The publication talked to multiple recruiters.
The actions taken by Foxconn fuel the concern over the perceived weakened demand for the iPhone 5 and slumping sentiment around Apple in general, with production activity a leading indicator of interest in the product.
#9 In 2012, global cell phone sales posted their first decline since the end of the last recession.
#10 We appear to be in the midst of a “retail apocalypse“. It is being projected that Sears, J.C. Penney, Best Buy and RadioShack will also close hundreds of stores by the end of 2013.
#11 An internal memo authored by a Wal-Mart executive that was recently leaked to the press said that February sales were a “total disaster” and that the beginning of February was the “worst start to a month I have seen in my ~7 years with the company.”
#12 If Congress does not do anything and “sequestration” goes into effect on March 1st, the Pentagon says that approximately 800,000 civilian employees will be facing mandatory furloughs.
#13 Barack Obama is admitting that the “sequester” could have a crippling impact on the U.S. economy. The following is from a recent CNBC article…
Obama cautioned that if the $85 billion in immediate cuts — known as the sequester — occur, the full range of government would feel the effects. Among those he listed: furloughed FBI agents, reductions in spending for communities to pay police and fire personnel and teachers, and decreased ability to respond to threats around the world.
He said the consequences would be felt across the economy.
“People will lose their jobs,” he said. “The unemployment rate might tick up again.”
#14 If the “sequester” is allowed to go into effect, the CBO is projecting that it will cause U.S. GDP growth to go down by at least 0.6 percent and that it will “reduce job growth by 750,000 jobs“.
#15 According to a recent Gallup survey, 65 percent of all Americans believe that 2013 will be a year of “economic difficulty“, and 50 percent of all Americans believe that the “best days” of America are now in the past.
#16 U.S. GDP actually contracted at an annual rate of 0.1 percent during the fourth quarter of 2012. This was the first GDP contraction that the official numbers have shown in more than three years.
#17 For the entire year of 2012, U.S. GDP growth was only about 1.5 percent. According to Art Cashin, every time GDP growth has fallen this low for an entire year, the U.S. economy has always ended up going into a recession.
#18 The global economy overall is really starting to slow down…
The world’s richest countries saw their economies contract for the first time in almost four years during the final three months of 2012, the Organisation for Economic Co-operation and Development said.
The Paris-based thinktank said gross domestic product across its 34 member states fell by 0.2% – breaking a period of rising activity stretching back to a 2.3% slump in output in the first quarter of 2009.
All the major economies of the OECD – the US, Japan, Germany, France, Italy and the UK – have already reported falls in output at the end of 2012, with the thinktank noting that the steepest declines had been seen in the European Union, where GDP fell by 0.5%. Canada is the only member of the G7 currently on course to register an increase in national output.
#19 Corporate insiders are dumping enormous amounts of stock right now. Do they know something that we don’t?
#20 Even some of the biggest names on Wall Street are warning that we are heading for an economic collapse. For example, Seth Klarman, one of the most respected investors on Wall Street, said in his year-end letter that the collapse of the U.S. financial system could happen at any time…
“Investing today may well be harder than it has been at any time in our three decades of existence,” writes Seth Klarman in his year-end letter. The Fed’s “relentless interventions and manipulations” have left few purchase targets for Baupost, he laments. “(The) underpinnings of our economy and financial system are so precarious that the un-abating risks of collapse dwarf all other factors.”
So what do you think is going to happen to the U.S. economy in the months ahead?
Please feel free to express your opinion by leaving a comment below…
View full post on The Economic Collapse
Europe is not just heading into another recession. The truth is that Europe is heading into a full-blown depression. The economy of the EU is actually larger than the U.S. economy, and we are watching it melt down right in front of our eyes. Things just continue to get worse in Europe, and yet somehow the authorities over in Europe just keep insisting that everything is going to be “just fine”. Well, everything is not “just fine” over in Europe right now. Unemployment in the eurozone has just hit another brand new record high. In some nations in Europe, the unemployment rate is already significantly higher than anything the United States experienced during the Great Depression of the 1930s. Europe is a continent that is collapsing under the weight of its own debt, and this is just the beginning. A lot more pain is on the way. Officials over in Europe are trying to hold the European financial system together with duct tape and prayers, but it could literally fall apart at any moment. Europe has a much larger banking system than the United States does, so when a financial collapse happens in Europe, it is going to be very significant for the entire globe. Sadly, most Americans do not even pay attention to much of anything that is happening in Europe. They tend to think that the United States is the center of the universe and that as long as we are fine that everything will be okay. Well, all of those people who are not paying attention need to wake up. First of all, the U.S. economy is most definitely in decline. Secondly, the European economy is imploding right in front of our eyes and Europe is going to end up dragging the entire globe down with it.
The following are 11 facts that show that Europe is heading into an economic depression…
1. The economies of 17 out of the 27 countries in the EU have contracted for at least two consecutive quarters.
2. Unemployment in the eurozone has hit a brand new all-time record high of 11.7 percent.
3. The unemployment rate in Portugal is now up to 16.3 percent. A year ago it was just 13.7 percent.
4. The unemployment rate in Greece is now up to 25.4 percent. A year ago it was just 18.4 percent.
5. The unemployment rate in Spain has hit a brand new all-time record high of 26.2 percent. How much higher can it possibly go? This is already higher than the unemployment rate in the United States ever reached during the Great Depression of the 1930s.
6. Youth unemployment levels in both Greece and Spain are rapidly approaching the 60 percent level.
7. Earlier this month, Moody’s stripped France of its AAA credit rating, and wealthy individuals are leaving France in droves as the socialists implement plans to raise taxes to very high levels on the rich.
8. Industrial production is collapsing all over Europe. Just check out these numbers…
You don’t have to be an economic genius to understand that the perpetual uncertainty over the Eurozone’s future has led to a widespread freeze on industrial investment and development. Industrial production is collapsing at an accelerating rate, falling 7% year-on-year in Spain and Greece, 4.8% in Italy, and 2.1% in France.
9. There are even trouble signs in the “stable” economies in Europe. In Germany, factory orders in September were down 3.3 percent from the month before, and retail sales in October declined 2.8 percent from the previous month.
10. The debt of the Greek government is now projected to hit 189 percent of GDP by the end of this year.
11. The Greek economy has shrunk by more than 7 percent this year, and it is being projected that the Greek economy will contract by another 4.5 percent in 2013.
But sometimes you can’t really get a feel for how bad things really are over there just from the raw economic numbers.
Many people that are living through these depression-like conditions are totally giving in to despair. Just check out the following example from an RT article from earlier this year…
A 61-year-old Greek pensioner has hung himself from a tree in a public park after succumbing to the pressure of crushing debt. A note in his pocket indicates he is merely the latest in a rash of economic crisis-induced suicides.
The pensioner’s lifeless body was found dangling by an attendant in a public park not far from his home in the suburb of Nikaia, Athens. The attendant also found a suicide note in the man’s pocket, The Athens news reports.
The man, identifying himself as Alexandros, said he was a man of few vices who “worked all day.” However, he blamed himself from committing one “horrendous crime”: becoming a professional at the age of 40 and plunging himself into debt. He referred to himself as a 61-year-old idiot who had to pay, hoping his grandchildren would not be born in Greece, as the country’s prospects were so bleak.
Please take note of what is happening in places like Greece and Spain right now, because similar conditions will soon be coming to the United States.
This is one reason why I try so hard to encourage people to prepare for what is coming. There is hope in understanding what is coming and there is hope in getting prepared.
You don’t want to end up getting blindsided by the coming crisis and end up sitting on a park bench trying to figure out if life is still worth living or not.
Life is most definitely worth living. Yes, a storm is coming and the world is going to become incredibly unstable in more ways than one. But if you understand what is coming and you work hard to prepare, then you and your family will have a chance to thrive even in the midst of the storm.
Please learn from what is happening over in Europe. The economic horror show that is unfolding over there is going to come to America too, and time is running out.
View full post on The Economic Collapse
We’re heading for economic dictatorship
The whole of the West is falling into the economic black hole of permanent no-growth
A permanent absence of growth would have baleful consequences
By Janet Daley
9:00PM GMT 17 Nov 2012
Forget about that dead parrot of a question – should we join the eurozone? The eurozone has officially joined us in a newly emerging international organisation: we are all now members of the Permanent No-growth Club. And the United States has just re-elected a president who seems determined to sign up too. No government in what used to be called “the free world” seems prepared to take the steps that can stop this inexorable decline. They are all busily telling their electorates that austerity is for other people (France), or that the piddling attempts they have made at it will solve the problem (Britain), or that taxing “the rich” will make it unnecessary for government to cut back its own spending (America).
So here we all are. Like us, the member nations of the European single currency have embarked on their very own double (or is it triple?) dip recession. This is the future: the long, meandering “zig-zag” recovery to which the politicians and heads of central banks allude is just a euphemism for the end of economic life as we have known it.
Now there are some people for whom this will not sound like bad news. Many on the Left will finally have got the economy of their dreams – or, rather, the one they have always believed in. At last, we will be living with that fixed, unchanging pie which must be divided up “fairly” if social justice is to be achieved. Instead of a dynamic, growing pot of wealth and ever-increasing resources, which can enable larger and larger proportions of the population to become prosperous without taking anything away from any other group, there will indeed be an absolute limit on the amount of capital circulating within the society.
The only decisions to be made will involve how that given, unalterable sum is to be shared out – and those judgments will, of course, have to be made by the state since there will be no dynamic economic force outside of government to enter the equation. Wealth distribution will be the principal – virtually the only – significant function of political life. Is this Left-wing heaven?
Well, not quite. The total absence of economic growth would mean that the limitations on that distribution would be so severe as to require draconian legal enforcement: rationing, limits on the amount of currency that can be taken abroad, import restrictions and the kinds of penalties for economic crimes (undercutting, or “black market” selling practices) which have been unknown in the West since the end of the Second World War.
In this dystopian future there would have to be permanent austerity programmes. This would not only mean cutting government spending, which is what “austerity” means now, but the real kind: genuine falls in the standard of living of most working people, caused not just by frozen wages and the collapse in the value of savings (due to repeated bouts of money-printing), but also by the shortages of goods that will result from lack of investment and business expansion, not to mention the absence of cheaper goods from abroad due to import controls.
And it is not just day-to-day life that would be affected by the absence of growth in the economy. In the longer term, we can say good-bye to the technological innovations which have been spurred by competitive entrepreneurial activity, the medical advances funded by investment which an expanding economy can afford, and most poignantly perhaps, the social mobility that is made possible by increasing the reach of prosperity so that it includes ever-growing numbers of people. In short, almost everything we have come to understand as progress. Farewell to all that. But this is not the end of it. When the economy of a country is dead, and its political life is consumed by artificial mechanisms of forced distribution, its wealth does not remain static: it actually contracts and diminishes in value. If capital cannot grow – if there is no possibility of it growing – it becomes worthless in international exchange. This is what happened to the currencies of the Eastern bloc: they became phoney constructs with no value outside their own closed, recycled system.
When Germany was reunified, the Western half, in an act of almost superhuman political goodwill, arbitrarily declared the currency of the Eastern half to be equal in value to that of its own hugely successful one. The exercise nearly bankrupted the country, so great was the disparity between the vital, expanding Deutschemark and the risibly meaningless Ostmark which, like the Soviet ruble, had no economic legitimacy in the outside world.
At least then, there was a thriving West that could rescue the peoples of the East from the endless poverty of economies that were forbidden to grow by ideological edict. It remains to be seen what the consequences will be of the whole of the West, America included, falling into the economic black hole of permanent no-growth. Presumably, it will eventually have to move towards precisely the social and political structures that the East employed. As the fixed pot of national wealth loses ever more value, and resources shrink, the measures to enforce “fair” distribution must become more totalitarian: there will have to be confiscatory taxation on assets and property, collectivisation of the production of goods, and directed labour.
Democratic socialism with its “soft redistribution” and exponential growth of government spending will have paved the way for the hard redistribution of diminished resources under economic dictatorship. You think this sounds fanciful? It is just the logical conclusion of what will seem like enlightened social policy in a zero-growth society where hardship will need to be minimised by rigorously enforced equality. Then what? The rioting we see now in Italy and Greece – countries that had to have their democratic governments surgically removed in order to impose the uniform levels of poverty that are made necessary by dead economies – will spread throughout the West, and have to be contained by hard-fisted governments with or without democratic mandates. Political parties of all complexions talk of “balanced solutions”, which they think will sound more politically palatable than drastic cuts in public spending: tax rises on “the better-off” (the only people in a position to create real wealth) are put on the moral scale alongside “welfare cuts” on the unproductive.
This is not even a recipe for standing still: tax rises prevent growth and job creation, as well as reducing tax revenue. It is a formula for permanent decline in the private sector and endless austerity in the public one. But reduced government spending accompanied by tax cuts (particularly on employment – what the Americans call “payroll taxes”) could stimulate the growth of new wealth and begin a recovery. Most politicians on the Right understand this. They have about five minutes left to make the argument for it.
Statistics: Posted by yoda — Sat Nov 17, 2012 7:40 pm
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Gold beats all other assets over five years, now heading up again?
Posted on 12 August 2012
Mid-August and financial markets are quiet with the main players on holiday. But gold and silver prices are showing signs of renewed life after a long trek sideways since the highs of last year.
This time last summer we wrote excitedly about $2,000 as the autumn price target and then gold rushed ahead and crashed from a high of $1,923 on September 6th. Still it was a major up shift and could happen again. The flickers of life in the bullion pits could mean a repeat of the bullish seasonal autumn pattern.
August 9th was the fifth anniversary of the beginning of the global financial crisis. And what was the best investment since then? ArabianMoney readers can probably guess.
Gold and corn are up 144 per cent over five years. Silver follows at 122 per cent. Oil is up 61 per cent and US treasuries 38 per cent. Stocks have been volatile to say the least and the S&P 500 returned only eight per cent.
It is indeed hard to get the daily or monthly trends right in markets. Many day traders lose the lot to commissions over time. But get the long-term trends right and investments take care of themselves.
Is this the right time to buy gold and silver? Well, the odds on a short-term gain in the autumn are very good on past precedent. The money printing central banks could pre-empt market crashes this autumn with some big moves that would be precious metal positive.
There is the US presidential election in November, after all. Or gold and silver could rise sharply in a seasonal move and then tank with the rest of the markets as the reality of another global recession finally dawns on financial markets.
However, in the long-run we are convinced that the precious metals bull market is far from over and that its performance over the next five years could be even more spectacular, especially in a dramatic price spike that we just have not seen thus far.
For a commodity price to really breakdown you need to see a price spike, and we will eventually get one for both gold and silver. Until then it pays to be invested because you never can tell exactly what the future holds for trading and could easily miss the best days for gold and silver by trying to be too clever.
Statistics: Posted by yoda — Sun Aug 12, 2012 8:20 am
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$700 or $7,000 – Two views on which way gold is heading
Where is gold headed? Downwards to $700 or upwards to $7,000. Depending which ‘expert’ you listen to there is a huge difference in opinion on the likely direction of the gold price.
Author: Lawrence Williams
Posted: Monday , 02 Jul 2012
Bulls will be bulls and bears will be bears. Contrasting viewpoints on the likely path of the gold price abound – no wonder the investor who relies on advice from recognised ‘experts’ in the field just doesn’t know which way to turn – and why the huge majority have continued to ignore gold as an investment or wealth protector all the way through the yellow metal’s bull run.
The latest ‘expert’ to see his airs viewed on no less a website than that of U.S. based CNBC – the self styled ‘recognized world leader in business news’ – is Yoni Jacobs of Chart Prophet Capital who is most definitely in the bear camp as far as gold is concerned.
"Technical levels show us when the trouble is coming. Gold struggled at $1,700 and then at $1,600. If it breaks through the next key level of $1,500, which could be approaching soon, investors would start panicking and selling hard," said Jacobs. "It appears that the market has decided on gold’s fate. And it’s not looking pretty. It looks like gold is about to see prices collapse and is on its way to $700"
Jacobs thus joins a number of others who have been talking down the gold price throughout the 11+ years of its current its bull run. Indeed at some stage gold will likely go out of favour and the price could then collapse as the gold ETF holders in particular start divesting. The big question is at what level gold will be when such a sell-off becomes a rout. If it is the current level, then Jacobs could be right in his views. If, though, gold is several times higher than it is today when the cyclical top is reached, then any collapse could be to a level well above even the current gold price.
So far there is little sign of any weakness among holders of the ETFs and we would argue that as long as there is so much financial uncertainty in global economies then the major underlying gold holders will continue to sit on their gold investment purely as a true and tested safe haven.
There is, of course, much talk at the present time of gold no longer behaving as a safe haven, but again one would counter argue that it is only on the day-to-day short term trading fringe that this is true. The safe haven holders are well and truly embedded with their gold holdings and that the vast majority of the gold in private and long-term institutional hands is indeed safe-haven gold – and will remain so at least until global market uncertainty subsides, if not well beyond that. These are the holders in there for the long term and short term fluctuations up and down are largely immaterial to them. Wealth preservation and portfolio diversification is the key here.
But how about the other predictions? There are plenty of gold bulls out there looking for $7,000 gold, or even much higher over the medium to long term. For the purpose of this article we admittedly pulled the $7,000 figure out of the air as a contrast to Jacobs’ $700 – we could equally well have used $10,000 – or any level between the current price and that advanced height. There are plenty of analyses and predictions covering virtually any eventuality. But taking the precise $7,000 figure – only recently Bank of America technical analyst MacNeill Curry – an Elliott Wave Theory proponent – reckoned that despite fluctuations which have taken gold down close to nearly $400 below its last-September $1920 high, this kind of volatility was nowhere near extreme enough to convince him the precious metal’s long-term uptrend was nearing finality. Nothing in the gold price pattern since will have changed this technical assessment.
Curry was quoted as saying any long-term commodity advance tends to end with, "a massive speculative blow-off. They don’t end quietly," he said and projected that gold will ascend to levels somewhere between $3,000 to $5,000 and potentially $7,000 per ounce before the rally comes to an end.
So there you are. Two hugely diverging viewpoints to confuse the prospective gold investor. The writer’s view is to err mildly on the bullish side of the argument. There’s too much uncertainty out there and gold tends to thrive on global economic uncertainties. While the West’s deflationary environment may count against stock markets in general and commodities, it won’t necessarily bring down the gold price – indeed gold can thrive in periods of both inflation and deflation. There is virtually certain to be more monetary stimulus in Europe and the U.S. – which should also benefit gold, while Eastern markets for the yellow metal remain strong overall and are soaking up a huge amount more gold than they used to.
As far as new mine production is concerned, any increase will be limited and the recent relatively range-bound gold price will be making prospective developers perhaps delay more marginal propositions and the banks look again at the cost of some of the horrendously high capital cost mega projects which are the only ones likely to have any significant impact on global gold output. Most of the traditional gold mining countries are seeing continuing production declines from aging mines and declining grades, while the country seeing the biggest rise in gold output, China, does not export its production to external markets.
While the writer sees the path of the gold price as likely to move upwards, albeit fairly modestly in the months ahead, it does seem to be taking a breather at the moment. However, it also seems to have found a recent floor at around the $1560 level and is back above $1600 at the time of writing. That the continuing Eurozone crisis is having a positive impact on bullion demand is seen by at least one Swiss vaulting company having to expand its secure vaulting facilities because of the inflow of privately held gold into Switzerland. Ongoing negative interest rates, which seem likely to continue in Europe and the U.S. until at least 2014 also are contributing to gold’s appeal.
Re the prospect of gold ETF sales, it is interesting to note that although gold held by SPDR Gold Shares, the world’s biggest gold ETF, did fall back by 5 tonnes in the past quarter – a pretty infinitesimal 0.4% drop – this has been more than countered by increases in holdings by other gold ETFs – notably that of London-based ETF Securities, which rose by 13.2 tonnes. Silver ETFs have been seeing continuing rises too. So an ETF sell-off certainly does not yet seem to be on the horizon yet.
As to the writer’s personal view as to where the gold price is headed this year, in Mineweb’s gold price competition at the beginning of this year he forecast a year-end gold price of a fairly conservative $1875 and a high for the year of $1985 and still sees no need to change these predictions.
iPad Version: Picture – Gold bars of one kilogram are placed on a table at a plant of gold refiner and bar manufacturer Argor-Heraeus SA in the southern Swiss town of Mendrisio: REUTERS/Pascal Lauener
Statistics: Posted by DIGGER DAN — Mon Jul 02, 2012 9:19 pm
View full post on opinions.caduceusx.com
Why Physical Silver Demand is Heading Higher
June 14, 2012
The silver price is depressed compared with its historical relationship to gold, one ounce being worth about 55 of silver, against the historical rate of 15 or 16. The reason, perhaps, has to do with silvers demonetization and its role as an industrial metal. However, with global supply from mines and recycling running at about one billion ounces and demand at only a hundred million less, it does not take much investment demand to create a severe shortage.
For now, pricing is managed for industrial use, and industry has a vested interest in keeping the price low. For clues of future prices, we need to look at market data, and the graph below shows the aggregate positions of two groups of users extracted from disaggregated futures data going back to September 2009.
The two categories shown are swaps and producers and fabricators. Swaps are hedging positions on other markets, mostly physical or physical for forward delivery. Swaps amount to a net long position of 17,952 contracts, representing just less than 90m ounces, indicating there are short positions on other markets amounting to nearly the whole of that 100m ounce gap between industrial demand and annual silver supply. This suggests that the market for physical silver is very tight.
I have called the second category "producers and fabricators" for simplicity, though the reporting form actually categorizes them as producers, manufacturers and dealer/merchants. Essentially shorts hedge price risk for miners and refiners, and longs are taken out by manufacturers and other users as protection from price rises. The position shown is a net position, and as the chart shows, this has reduced by approximately half to 32,286 contracts (161,430,000 oz.) over the last three years.
Within this figure shorts total 254,000,000 oz. and this is the bigger variable. Many mines have to sell silver in the form of concentrate or doré to cover cash flow. The mines sell through specialist commodity traders such as Glencore and Trafigura, who then get it processed by the cheapest refiners, who are mostly in China, which also happens to be the largest industrial user of the metal. This is why it has been in Chinas interest to control the price for industrial purposes. In the past China has simply increased her forward sales to compensate for increased investment demand.
The flaw in this approach is there are no significant reserves of physical silver available, and price suppression depends on countering physical demand with derivative paper. This strategy is more vulnerable to the shortage of physical, which drives swap positions, rather than the forward sales of mined and processed silver, which only delays the delivery needed by the physical markets.
Coming events, such as the impending bankruptcy of a number of European nations and the progression of the Arab spring, together with the unattractiveness of alternative investments at a time of growing systemic risks, should accelerate physical demand. At some point China will become more interested in retaining her valuable silver than controlling the price for the benefit of industrial users everywhere.
Statistics: Posted by DIGGER DAN — Fri Jun 15, 2012 2:46 pm
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What happens when debt-fueled false prosperity disappears? Just look at Spain. The 4th largest economy in Europe was riding high during the boom years, but now the Spanish economy is collapsing with no end in sight. When a debt bubble gets interrupted, the consequences can be rather chaotic. Just like we saw in Greece, austerity is causing the economy to slow down in Spain. But when the economy slows down, tax revenues fall and that makes it even more difficult to meet budget targets. So even more austerity measures are needed to keep debt under control and the cycle just keeps going. Unfortunately, even with all of the recently implemented austerity measures the Spanish government is still not even close to a balanced budget. Meanwhile, the housing market in Spain is crashing and unemployment is already above 24 percent. The Spanish banking system is a giant, unregulated mess that is on the verge of a massive implosion, and the Spanish stock market has been declining rapidly. The Spanish government is going to need a massive bailout and so will the entire Spanish banking system. But that is going to be a huge problem, because the Spanish economy is almost 5 times as large as the Greek economy. When the Spanish financial system collapses, the entire globe is going to feel the pain and there will be no easy solution.
So just how bad are things in Spain at this point?
The following are 22 signs that the collapsing Spanish economy is heading into a great depression….
#1 The unemployment rate in Spain has reached 24.4 percent – a new all-time record high. Back in April 2007, the unemployment rate in Spain was only 7.9 percent.
#2 The unemployment rate in Spain is now higher than the U.S. unemployment rate was during any point during the Great Depression of the 1930s.
#3 According to CNBC, some analysts are projecting that the unemployment rate in Spain is going to go above 30 percent.
#4 The unemployment rate for those under the age of 25 in Spain is now a whopping 52 percent.
#5 There are more than 47 million people living in Spain today. Only about 17 million of them have jobs.
#6 Retail sales in Spain have declined for 21 months in a row.
#7 The Bank of Spain has officially confirmed that Spain has already entered another recession.
#8 Last week, Standard & Poor’s Ratings Services slashed Spain’s credit rating from A to BBB+.
#9 The yield on 10-year Spanish bonds is up around 6 percent again. That is considered to be very dangerous territory.
#10 Two of Spain’s biggest banks have announced that they are going to stop increasing their holdings of Spanish government debt.
#11 Of all the loans held by Spanish banks, 8.15 percent are considered to be “bad loans”.
#12 The total value of all bad loans in Spain is equivalent to approximately 13 percent of Spanish GDP.
#13 Of all real estate assets held by Spanish banks, more than 50 percent of them are considered to be “troubled” by the Spanish government.
#14 That total amount of money loaned out by Spanish banks is equivalent to approximately 170 percent of Spanish GDP.
#16 Spanish housing prices are now down 25 percent from the peak of the housing market and Citibank’s Willem Buiter expects the eventual decline to be somewhere around 60 percent.
#17 It is being projected the the economy of Spain will shrink by 1.7 percent this year, although there are some analysts that feel that projection is way too optimistic.
#18 The Spanish government has announced a ban on all cash transactions larger than 2,500 euros.
#19 One key Spanish stock index has already fallen by more than 19 percent so far this year.
#20 The Spanish government recently admitted that its 2011 budget deficit was much larger than originally projected and that it probably will not meet its budget targets for 2012 either.
#21 Spain’s debt to GDP ratio is projected to rise by more than 11 percent during 2012.
#22 Worldwide exposure to Spanish debt is estimated to be well over a trillion euros.
Spain is going down the exact same road that Greece went down.
Greece is already suffering through a great depression and now Spain is joining them. The following is from a recent BBC article….
“In Spain today, a cycle similar to Greece is starting to develop,” said HSBC chief economist Stephen King.
“The recession is so deep that when you take one step forward on austerity, it takes you two steps back.”
In Spain right now there is a lot of fear and panic about the economy. In many areas, it seems like absolutely nobody is hiring right now. The following is from a recent USA Today article….
“The situation is very bad. There’s no work,” said Enrique Sebastian, a 48-year-old unemployed surgery room assistant as he left one of Madrid’s unemployment offices. “The only future I see is one with wages of €400 ($530) a month for eight-hour days. And that’s if you can find it.”
But Spain is just at the beginning of a downward spiral. Just wait until they have been through a few years of economic depression. Once that happens, millions of people begin to lose all hope. A recent Reuters article discussed the epidemic of suicides that is happening in Greece right now….
On Monday, a 38-year-old geology lecturer hanged himself from a lamp post in Athens and on the same day a 35-year-old priest jumped to his death off his balcony in northern Greece. On Wednesday, a 23-year-old student shot himself in the head.
In a country that has had one of the lowest suicide rates in the world, a surge in the number of suicides in the wake of an economic crisis has shocked and gripped the Mediterranean nation – and its media – before a May 6 election.
And you know what?
The nightmares that we are seeing unfold in Spain and Greece right now are just a preview of what is coming to most of the rest of the world.
The next wave of the economic crisis will soon envelop the United States, Japan and the rest of Europe.
When it strikes, the pain will be immense.
But it won’t be the end – it will only be just the beginning.
The global financial system is starting to crumble.
You better get ready.
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Massive solar storm heading for Earth
Wednesday 7 March 2012
Airlines and energy suppliers are on alert as the largest solar storm in five years threatens to disrupt flights and power lines
• How do solar storms work?
Airlines and energy suppliers are on alert as the largest solar storm in five years heads toward Earth, threatening to disrupt flights and power lines.
The eruption on the surface of the sun, known as a coronal mass ejection (CME), has led to a "massive amount of solar particles heading towards Earth", which are due to hit the planet between 6am and 10am on Thursday morning, a Met Office spokesman said. But he added that the phenomenon was likely to go unnoticed by most.
The forecaster has advised airlines that they may reroute planes from near the polar regions where the radiation caused by the storm is likely to be most intense, while energy suppliers have been warned that the National Grid could also be affected.
Solar storms can also cause communication problems, such as radio blackouts, as well as affecting satellites, disrupting oil pipelines and making global positioning systems (GPS) less accurate.
"It should arrive some time tomorrow morning and last through tomorrow," the Met Office spokesman added. "In terms of what that means from the public’s point of view, there’s an increased chance of aurora borealis or Northern Lights being seen if conditions are right and the skies are clear."
But Gemma Plumb, a forecaster with Meteogroup, said most of the UK would be cloudy during the solar storm.
She said: "From midnight there will be widespread cloud so there is unlikely to be much visibility."
Forecasters at the US government’s Space Weather Prediction Center said the storm is growing in intensity as it speeds outward from the sun. The charged particles hit Earth at 4 million mph (6.4 million kph).
Nasa solar physicist Alex Young said: "It could give us a bit of a jolt."
The solar storm is likely to last until Friday morning, although further eruptions may follow.
In North America, auroras or Northern Lights could stretch as far south as the Great Lakes states or even lower, but a full moon will make them hard to see, said Joe Kunches, a scientist for the National Oceanic and Atmospheric Administration.
Solar storms have three ways they can disrupt technology on Earth: with magnetic, radio and radiation emissions. This is an unusual situation when all three types of emissions are likely to be strong, Kunches said.
In 1989, a strong solar storm knocked out the power grid in Quebec, Canada, leaving 6 million people without power.
Harlan Spence, an astrophysicist at the University of New Hampshire who is principal investigator on the Cosmic Ray Telescope for the Effects of Radiation (CRaTER) aboard Nasa’s Lunar Reconnaissance Orbiter, said the sun was on the ascendant phase of its 11-year cycle of solar activity, with the peak expected next year.
"It’s a clear harbinger that the Sun is waking up," Spence told Reuters.
Statistics: Posted by DIGGER DAN — Thu Mar 08, 2012 2:43 pm
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