"The formation of a new Greek government Wednesday staves off fears of a swift departure from the euro zone by the Hellenic Republic. But this week's election and installation of a new pro-austerity administration merely extends the country's economic death spiral as its economic woes remain deep and pervasive. ...
"... What the election did was reduce the possibility of a near-term big negative. If Syriza had won, Greece's and the Troika's negotiations could have become quite complicated ... it would have been a bit mess," Bryson said, adding that a victory by the left-leaning Syriza party would have made the departure of Greece from the euro zone more likely. ..."
"Whipsaws everywhere. Gold and Silver soared back up to unchanged on the day and S&P 500 e-mini futures roared over 15pts higher off spike lows to take out the stops at the high of the day-session. EURUSD also dipped and ripped swiping aside everyone's stops (long and short). 60 minutes after the announcement of disappointment but hope to come, it appears the over-reaction to the knee-jerk reaction is being faded now as Stocks, Gold, Treasury Yields, and EURUSD are all falling now. The realization that Merkel's comments were simply fact and nothing new and the stop-hunt is complete provides some food for thought for all those buying this dip ahead of Bernanke's press conference. Beware now.
"The Federal Reserve, worried about the US economic recovery and Europe's continued debt crisis, decided Wednesday to extend the stimulus program known as "Operation Twist" through the end of this year.
"Stocks initially fell on disappointment that the Fed offered no additional easing, but the market soon rebounded on hints the central bank is still weighing such a move.
"In a significant change in the post-meeting statement, the Fed said it is "prepared to take further action," a stronger sign that there may be a third round of quantitative easing, or QE3. ..."
"... Here in the United States we are experiencing a slowdown, and clearly the other economic powerhouse, China, is also experiencing a weakening of their economy. So we are obviously in a struggling global economy.
"When you couple that with the very high debt levels in the developed nations across the globe, there is pressure on central banks to dig into their toolbox and make something happen. The Federal Reserve probably won’t do anything dramatic today, even though the expectation is in place that they will try to stimulate the sagging economy.
"Regardless, looking past the Fed meeting, the Fed is focused on trying to lift asset prices in an attempt to encourage economic activity. Right now the Fed isn’t thinking about what’s going on in five years time, they are thinking about the next few months. ..."
"... What to watch for in all of this? Keep your eyes on policy discussions that could lead to increasing inflation. There are serious debt problems not only in the Eurozone, but in the US and Japan as well. Decidedly, money printing (read inflation here) is the only tool central banks and world leaders have left in their arsenal. Many of them are beginning to believe that more austerity will only dig them into a deeper hole. ..."
"The "narrative" of Greece is simple: no entity, be it a household or nation, can live beyond its means indefinitely.
"Imagine a ship with 100 passengers and crew drifting down a river that eventually cascades over a 1,000 foot waterfall. It's easy to plot the ship's course and the waterfall ahead. You might think 100% of those onboard would agree that something drastic must be done to either reverse course or abandon ship, but before we jump to any conclusion we must first identify what each of the 100 people perceive as serving their self-interest.
"If life onboard is good for 55 of the 100, they may well rationalize away the waterfall dead ahead. Indeed, they might vote to maintain the current course, thus dooming the 45 others who can hear the thundering cascade ahead but who are powerless to change course in a democracy.
"This is the "tyranny of the majority" feared by some of the American Founding Fathers. ..."
"... What we’re seeing is the real end game. We’re coming to the end of government’s ability to borrow money to fund current spending that’s beyond the growth of their economy.
"I actually find that massively bullish because that government funding misallocates capital. So governments are going to have to live within their means. Not just in European countries, not just in Britain, not just in Japan which has its own problems that will be coming to us next year, not just in France which will be the headline in 2 years, but also in the US.
"It’s going to end in the next 2 or 3 years, Europe first, then Japan, then the US. Hopefully we (the US) don’t end by becoming Spain and hitting the wall and losing access to the market, without the central bank massively funding ourselves and watching interest rates rise. ..."
"... So the wolves are at the door and it’s the door to (German Chancellor) Merkel’s home. My guess is she is going to cave. The Mexican central banker, Ortiz, who is widely regarded as one of the clear thinkers, was quoted as saying they can stop the problem in Europe almost immediately, ‘by carrying out a massive round of government bond purchases.’
"I think that’s where we have to go. In other words, just as our Fed has printed literally trillions of dollars by buying our bonds, the European central bank has to do something very similar.
"Where will everybody turn to for safety in that atmosphere? Gold. I know China is turning to gold, they’ve been buying it hand over fist. In addition to being the world’s number one producer of gold, they are buying as much as they possibly can in the open market.
"So I think the world is rapidly heading toward what you would call a ‘de facto’ gold standard. I think the winners are going to be those with precious metals. Investors can accumulate gold right now, but once the turmoil in Europe is over, just back up the truck. ..."
"... It's bad enough that Obama and Eric Holder have enabled the persistence and rapid growth of financial industry fraud and theft by refusing to apply the law to the Too Big To Fail banks. And now Obama is going to let Eric Holder walk away from the Fast and Furious scandal. Democracy is dead and we only have ourselves to blame. Anyone who can possibly defend a vote for Obama is completely brain dead. If you have to vote to feel like an American, you don't have to vote for Romney, write in Ron Paul."
The Federal Reserve on Wednesday extended its monetary stimulus to a U.S. economic recovery that looks at risk of stalling, renewing its effort to depress borrowing costs by selling short-term bonds to buy longer-dated ones.
"... The Fed has held overnight interest rates near zero since December 2008 and has bought $2.3 trillion in mortgage and government bonds in a further effort to help the economy.
"Last year, it launched "Operation Twist," in which the central bank sold bonds with maturities of three years or less and bought $400 billion of securities with maturities of six years and longer to push longer-term interest rates lower.
"Fed Vice Chair Janet Yellen earlier this month had argued further action might make sense to "insure" against downside risks given a sharp slowdown in hiring by U.S. employers and an escalating debt crisis in Europe. ..."
Societe Generale is "enthusiastic on gold" -- so much so that in their latest cross-asset strategy report, they call "buy gold ahead of QE3" their number one strategy, saying it's "the perfect asset to benefit" from additional loose ...
"Chinese demand for gold isn’t letting up following a strong first quarter that saw demand reach record levels from Asia’s biggest economy, offsetting weakening appetite in India.
“It does seem that China is picking up the slack in the system from a weaker India,” said Ross Norman, chief executive of London-based bullion broker Sharps Pixley.
"Chinese imports of the yellow metal from Hong Kong were 65% higher in April than the month before, the third monthly increase in a row according to data compiled by Commerzbank, citing the Census and Statistics Department of Hong Kong.
"A research note by the German bank says the Hong Kong statistics are important because they offer a clue into China buying since the country doesn’t release overall gold import figures. By the end of April, China had this year already imported more than half of last year’s total gold import volume, says Commerzbank. ..."
"... As well as announcing its latest decisions on interest rate and asset purchases, the Fed will also publish policymakers' economic projections, while Fed chairman Ben Bernanke will give a press conference.
"We think Bernanke will talk up the Fed's readiness to act if required and there is a chance of a policy gesture - an extension to Operation Twist perhaps," reckons Nick Trevethan, Singapore-based senior metals strategist at Australian bank ANZ, referring to the Fed's program aimed at lowering longer-term interest rates.
"But anybody looking for some sort of grand [quantitative easing] scheme risks disappointment," says Trevethan, adding that gold prices could fall as low as $1530 an ounce "if investors are really disappointed".
"Extending Operation Twist is the path of least resistance," agrees Josh Feinman, global chief economist at Deutsche Bank's asset management arm DB Advisors in New York. ..."
"The BRICS countries have pledged to provide about $70 billion to the International Monetary Fund's global firewall against Europe’s debt crisis, adding to the IMF’s lending fund of $380 billion, as they met at the G20 summit in Mexico.
"The IMF said, China has offered $43 billion, while Brazil, Russia, India and Mexico promised $10 billion each. Meanwhile South Africa, Turkey, Colombia, Malaysia, New Zealand and the Philippines also promised smaller sums.
"China’s contribution was one of the largest ever offered falling below only Japan's $60 billion and German's $54.7 billion. Meanwhile the world largest economy the US hasn’t contributed anything.
"With the contribution BRICS nations renewed calls for greater voting power at the IMF and World Bank, adding that the money should only be used as a “second line of defense” when existing funds run out. Brazil even threatened to withhold its help, if Europe won’t provide BRICS with a bigger say at the IMF. ..."
"... As mainstream economists, central banks, politicians, or bureaucrats fail to identify the root cause of the current financial and economic crisis and as the moronic masses continue to have faith in our current leaders, the prudent few, who see how today's fiat money regime is causing seriously harmful economic problems that will ultimately end in a depression on a grand scale, will take the appropriate action to protect themselves.
"While weak economic data plagues headlines in Europe and the U.S. especially, and as our political and financial leaders find new controls to ring fence individuals in an attempt to stem potential capital flight, investors who see this, understand that gold and silver offer the only glimmer of hope these days.
"When our G-20 leaders meet in Mexico don't expect much. But, be sure that this group of leaders will find ways to finance governments and banks at the cost of the individual tax payer. No one really knows what is going to happen in the next five years, but by judging the events of the last five years, things can only get worse. It is therefore necessary to add precious metals to your investment portfolio- especially gold and silver. ..."
The firewall purse being worked on by the International Monetary Fund (IMF) got a significant boost late Monday as the world's emerging markets pledged a total of $US95.5 billion to the emergency fund that the global lender said will be used to...
"... It's no secret that many currencies around the world, including the US dollar, are choosing the path of inflation. If we were to slip into hyperinflation, there will be disastrous consequences for those unprepared. Given that the US dollar is the world's reserve currency, the problems would spread to practically every country on earth. Hyperinflation will shake people's confidence not only in the US dollar, but in the paper currency system as a whole.
"What will actually come to pass, we don't know. What we do know is that the measures to cure hyperinflation include tying the currency to a hard asset or even replacing it with one. When creditability in fiat money dissipates, gold may be the only viable option left standing.
"Again, the investment implication is obvious: continue to accumulate gold.
"How much is enough? Well, how many ounces do you own in relation to your total assets? Anything less than 5% will not offer you a sufficient level of protection in a high inflationary environment.
"Another way to look at it is this: how many ounces do you need to cover your monthly expenses? In Weimar Germany, inflation rose uncomfortably for two years – and then pinched harder, spiraling into a destructive hyperinflation for another two. Consider what it would take to maintain your standard of living for a couple years instead of just a couple months. ..."
"Since I haven’t read this public information anywhere yet today, I thought I might try to cheer you up a bit. After all these years of not being able to speak of gold in public company, I am beginning to have a smile on my face.
"If gold isn’t money, it sure seems to beat cash from the BIS point of view. Now it appears gold is acceptable as currency beyond sovereign currencies. Sovereign currency can’t say that! Bernanke, Munger, Gates and Buffet have some explaining to do with this public announcement today. Granted, this is only a final proposal, but it is now in documented print. It might be interesting if the bullion banks try to nix one of the zero percent RW items that require zero capital reserves, and qualifies as low RW collateral. What a fraud the media puts upon us! Frankly, they should have put Gold bullion at the top of the line.