"The bottom 50 percent of American households held just 1.1. percent of the nation's wealth in 2010 as they saw their net worth steadily decline following the financial crisis, according to a report from the nonpartisan Congressional Research Service, while the top 10 percent of earners held a whopping 74.5 of the nation's wealth during the same period.
"The report, drawing from the Federal Reserve's Survey of Consumer Finances data ranging from 1989 to 2010, analyzed the change in the concentration of net worth across all income groups. Wealth distribution -- or income inequality -- is particularly relevant this election cycle as it is an underlying concern in policy debates regarding tax code reform and the funding and distribution of social welfare programs.
"The richest 1 percent of American's held 34.5 percent of the nation's wealth in 2010 ..."
"... The tightness of the trading range grows by the day. As demand and supply come into balance it is rather like a see-saw where the weight is evenly distributed. When that happens and one adds the tiniest extra weight, the see saw is tipped, one way or the other. We need to know which side that tiniest of extra weight is going to be added.
"Friday is usually the most frantic day of the week in New York so let's see if today will be.
"Concern is growing over the state of the Indian Monsoon, which is 21% below the average. The gold buying public in rural India does not hold back sowing in the same way as the big commercial farmers elsewhere do. They just hope for rain and wait to get it. So does 20% less make a huge difference to the size of the crop? We will have to wait until late August to see. One has to remember that Indian investors have been out of the market because of high prices, so have a great deal of powder that's still dry. Their ability to buy is greater at this time of the year than in the past, but will they buy? The current Rs.87,000 per ounce has been a ‘floor' for some time now and they like a strong ‘floor'.
"In Europe we see the Spanish debt crisis worsening, but are of the opinion that Germany will bail out Spanish banks. There is too much to lose if they don't. ..."
Today Egon von Greyerz told King World News, “The world is simply drowning in debt.” Greyerz, who is founder and managing partner at Matterhorn Asset Management out of Switzerland, also said, “This is why it is guaranteed that governments will print money,” and that “Prices of hard assets will go into the stratosphere.”
But first, here is what Greyerz had to say about the ongoing financial crisis and where we are headed: “Spanish rates have broken back above the 7% level once again, but in reality we know that many European countries will never be able to repay these debts. You now have a total worldwide debt of around $150 trillion. If you add to that contingent liabilities, unfunded liabilities, pension funds, etc., you are talking about $500 trillion.”
“If you add to that the outstanding derivatives, which are around one quadrillion dollars, and there are no reserves for them. These are issued without any real asset backing them. If you combine the two figures you are at a staggering one and a half quadrillion dollars. That’s against world GDP which is around $50 trillion.
"So you are talking here about a leverage of 30 times global GDP. ..."
"The public is starting to realize that they're screwed. There’s no way infinite liquidity can boost real returns enough to prevent the inevitable standard of living reduction for nearly all wage-earning Americans. There will be exceptions, but tax-the-rich policies designed to close the ever-growing fiscal gap will only change the definition of who's considered rich. Wealth's inherent flexibility means a flight of capital towards more productive, job creating uses outside the US."
"Forget decoupling from Europe--we've been decoupled from reality since 2008.
"Have we decoupled from the global slowdown? Doubtful. Have we decoupled from reality? Undoubtedly--and have been since 2008. One key attribute of reality is feedback: actions have consequences, and various forces reinforce or resist each other in a dynamic interplay of positive and negative feedback.
"Another key attribute of reality is risk. Risk is as ever-present as gravity, and it cannot be eliminated; it can only be shared or transferred.
"When you overwhelm feedback with massive interventions that mask risk, you decouple from reality. With feedback suppressed and risk hidden, the system's resilience and resourcefulness both atrophy. Participants start making decisions not on risk assessment and feedback from reality but on the results of the intervention. ..."
[decoupled from reality is a great way to put it. Click through for the rest of his post.]
"... Delinquencies and foreclosures are ramping back up. Inventory will ramp back up as well. And then we get today's monthly existing home sales report which showed that existing home sales dropped "unexpectedly" by 5.4% to an 8-month low. It was not unexpected by me as I've been tracking mortgage purchase applications on this blog, which has indicated that home buying activity is in decline (refinancings are going through the roof because the Fed, in combination with FHA refi programs, has made money almost free with near-zero interest rates out to 10-years).
"But wait, isn't this supposed to be the seasonal peak of the home buying season? If home sales are declining through the peak selling season, imagine how bad it could get for the rest of the year. ..."
"The number of Americans lining up for new jobless benefits rebounded last week after a seasonal auto-plant retooling period caused a steep drop the prior week.
"In the week ending July 14, applications for unemployment insurance payments rose by 34,000 from the previous week's upwardly revised figure of 352,000, to 386,000, Labor Department figures showed Thursday. Economists polled by Reuters had forecast claims rising to 365,000 last week. ..."
"The rats everywhere are now jumping furiously off the titanic, but few had taken the time to write a letter explaining in detail just how cracked and broken the hull really was. This has now changed, with the departure of Peter Doyle, formerly a division chief in the IMF’s European Department responsible for non-crisis countries and currently an adviser to the Fund. Not content with quietly slinking off the scandal ridden organization which has become the butt of all jokes in the international community, where humor about Lagarde's Louis Vuitton panhandling bag is as pervasive as punchlines about just how incompetent the organization is at actually doing its duty, Doyle has penned the following scathing letter which tears down every myth about the IMF: from its impartiality, to the selection process of its head, to its effectiveness. The letter also contains the following gem: "After twenty years of service, I am ashamed to have had any association with the Fund at all." Pretty much says it all. This is a scandal in the making, and one which may shake to the core the credibility of the IMF in the context of international organization." click over for the full letter.
In the second quarter, more homes entered foreclosure than in the same period in 2011 — the first increase since 2009. The $25 billion mortgage settlement earlier this year means banks are processing more foreclosures, which could hurt home prices.
by Melinda Fulmer of MSN Real Estate:
"Delinquent borrowers take heed: The number of homes entering foreclosure has picked up after last year's slowdown, when banks were forced to overhaul their foreclosure practices.
"Foreclosure-data firm RealtyTrac said 311,010 properties started the foreclosure process in the second quarter, a 9% increase from the previous quarter and a 6% increase from the second quarter of 2011 — the first year-over-year jump since the fourth quarter of 2009. Moreover, the trend was fairly widespread, with 31 states posting year-to-year increases. ..."
"When will QE become the public practice of all Western world central banks?
"It will more than likely come over a weekend just like this weekend. Major sovereign bonds like the Spanish and Italian will be over 7% yield and rising. The Euro will be under pressure. Equity indices everywhere will be under pressure. Recent economic statistics in the entire Western world will be quite negative. The impact of the drought will have driven food prices through the roof.
"This time all central banks of the Western world, not just the Federal Reserve will announce emergency measures on Sunday evening.
"It is coming a lot faster than the gold bears think. It can be any weekend now. It could be this weekend.
"The longer the central banks wait, the more nuclear and longer the QE blast will have to be maintained.
"... The global financial system is failing. The stop gap measures are becoming less and less believable as the curtains are being pulled back all over the world and revealing that our emperors have no clothes. The solutions, such as quantitative easing, are becoming less and less effective. The recent LIBOR revelations and the developing scandal are recent examples of how markets and the all important function of price discovery have been neutered.
"Recent analysis on KWN has shown that up to a whopping $15 trillion of new stimulus is possible in the near future. Then what? Even $15 trillion is a proverbial drop in the bucket compared to the unfunded liabilities the world is facing. Asset prices will most likely adjust, but the fundamental problems remain.
"In the end we will have a new monetary system. ..."
"The director responsible for the management of Libor rate setting at the British Bankers' Association, has quit for a job at the data provider that plays a key role in the process.
"John Ewan, resigned, as Libor director at the BBA on Wednesday, according to filings with Companies House, reports the WSJ.
"Ewan joined the BBA as a Libor manager in April 2005 and became director in March 2007. His profile on the BBA website, which has now been deleted, said that he was "responsible for the management of the BBA Libor rate setting process and the annual review of the panels of banks contributing to the rate setting process."
"A spokesman for the BBA has confirmed that John Ewan is no longer at the BBA. “He left to pursue a new opportunity to further his career. ..."
"I know neither Rule or Sprott, and realize they have a vested interest in talking their book, but their assertion that substantial upside for silver exists once a technical trigger is generated is supported not only by their observations in the physical but also by statistical concentrations in the paper market.
"The invisible hand is furiously covering its shorts into .."
"The U.S. economy is in a massive amount of trouble. There aren't enough jobs. There isn't enough money to go around. Business activity is slowing down again. Household wealth has been falling. Food prices have been rising. Many state and local governments all over the country are flat broke and are drowning in debt. The federal government has been rolling up unprecedented amounts of debt in an attempt to keep things going, but everyone knows that kind of borrowing is simply unsustainable. So where do we go from here? We consume far more than we produce and we use debt to make up the difference ..." click over for the full list.
"The summer has been a dizzying one for commodities. The last four weeks have witnessed the price of corn soaring toward an all-time high due to withering heat in the Corn Belt states. At the same time, this weather-driven bull market in the grain market, as well as the recent oil price rally, has left investors wondering if this summer might finally be gold's time to shine.
"In the same period that the CRB Commodity Index has rallied off a 52-week low, the price of gold hasn't made much headway at all. Gold remains stuck in neutral as both professional and retail traders have shown little inclination to bid up prices. The high frequency speculative crowd had its wings clipped last summer when CME Group initiated a series of margin requirement increases. Since then the momentum crowd has been conspicuously absent from the gold arena.
"Small retail investors have also been missing in recent months. Gold purchases have fallen to levels not seen since before the 2008 financial crisis according to figures released by the world's major mints. According to the U.S. Mint, second quarter sales of American Eagle gold coins fell more than 50 percent from the year-ago period to 127,500 ounces. This was the worst three months since the second quarter of 2008, just prior to the worst part of the global credit crisis. ..."
"Interviewed this week by GoldSeek Radio's Chris Waltzek, U.S. Rep. Ron Paul said the gold market is probably manipulated by the U.S. government via the Treasury Department's Exchange Stabilization Fund. The interview is about 11 minutes long and can be heard at GoldSeek Radio here:
“What is so strange is that investors seem happy to lend governments money at a negative interest rate, certainly on the 2-Year. As we speak today, Eric, five governments are borrowing at a negative interest rate on 2-Year paper. A sixth, Austria, is barely positive at a paltry .009%.
"I find it astonishing that people want to invest in governments with a negative return, yet they appear to be fearful of investing in solid companies, with strong balance sheets, and dividend yields of 3%, 4% and sometimes 5%. It appears to be somewhat of a dichotomy.
"Would you rather invest in the government of France, who’s Ten-Year bonds are yielding 2%, or top notch international companies such as Novartis, Roche, Diageo or Nestle?
"What does this reflect? I think it reflects fear. ..."
"Federal Reserve Chairman Ben Bernanke on Wednesday rebutted Republican lawmakers pushing a bill that would give Congress the ability to review monetary policy decisions, saying it could compromise central bank independence.
"Bernanke said it would be a "nightmare scenario" if politicians decided to second-guess monetary policy.
"That is very concerning because there's a lot of evidence that an independent central bank that makes decisions based strictly on economic considerations and not based on political pressure will deliver lower inflation and better economic results in the longer term," Bernanke told the U.S. House of Representatives' Financial Services Committee.
"The hearing was the likely last chance for retiring Texas Representative Ron Paul, known for proposing the Fed should be abolished, to grill the central bank chairman. ..."