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ARCHIVED DISCUSSION FROM 7/7/2002
All times are U.S. Mountain Time

(Yesterday's Discussion.)

ax (07/07/02; 23:04:49MT - usagold.com msg#: 80060)
MERCK ADJUSTMENT IN REVENUE
http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20020708/bs_dowjones/merck_booked__12_4_billion_in_revenue_it_never_collected

The above link gives a detailed article on the Merck revenue

adjustment described in Monday's Wall Street Journal. This

may be having an impact on the USD now, and may also impact

stock trading in the U.S. on Monday.

ax (07/07/02; 22:49:53MT - usagold.com msg#: 80059)
MERCK EARNINGS NEWS

There is something coming from CNBC Europe about Merck's
Earnings in Monday's Wall Street Journal. Does anyone
have more detailed information on this?

Black Blade (07/07/02; 22:00:16MT - usagold.com msg#: 80058)
Mixed Indicators
http://www.mrci.com/qpnight.asp

The USD is falling flat tonight (so far). Gold is static, petroleum is lower as the deepening recession decreases demand for energy, and the market index futures indicate a lower opening at these levels. Looks like fun.

- Black Blade

Gandalf the White (07/07/02; 21:48:26MT - usagold.com msg#: 80057)
WOWSERS there Sir 'A Canadian' !!!
http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=i
A Canadian (07/07/02; 20:55:22MT - usagold.com msg#: 80053)
===
Looks like a bottomless PIT !
HOLD ON to your PM's.
This is getting SEROIUS !
<;-(

sector (07/07/02; 21:31:20MT - usagold.com msg#: 80056)
Levitating Stock Market
The Fed Issued $39 Billion in "Repos" Last Week
Does it really take rocket science to connect the manipulation dots?

These Fed repos go straight to the stocks, bonds and swaps of the finance and brokerage industry. Indeed the annualized growth of the money supply is at a $2 Trillion run rate.

That spells inflation and voila right on cue, the Economic Cycles Research Institute [ECRI] has just released the USFIG or future inflation gauge data. Jeeze it went UP by 5.5% and is in a kind of moon shot trajectory. For the last year the FIG has risen well over 15% from its low.

The Fed watches this parameter and no doubt is feeling the heat a bit these days. But not to worry, the Master of the Universe is IN CONTROL. He will print and print and print...damn the FIG!


Gandalf the White (07/07/02; 21:25:27MT - usagold.com msg#: 80055)
OK SPOT !!! Enough of that JUMPING Down and Up !!
http://informer2.comdirect.de/de/detail/_pages/charts/main.html?sSymbol=GLD.FX1&sTimeframe=iD&useSettings=0&showSettings=&sid=&hiddenTimeFrame=&sOrdType=price&sScale=linear&sMarket=GLD.FX1&iType=1&sAv1=38&sAvfree1=&sAv2=200&sAv2free2=&sAv2count=1&iInd0=na&sBench1=na&sBenchcount=1&sBench2=&sBench2count=1&showBenchmarkSearch=&iInd1=na&iInd2=na&iIndcount=1&sSettings=na
Just JUMP UP !!!
<;-)

Black Blade (07/07/02; 21:20:39MT - usagold.com msg#: 80054)
EU has own list of financial scandals
http://www.busrep.co.za/html/busrep/br_frame_decider.php?click_id=345&art_id=ct20020706191055796S56074&set_id=60

Snippit:

Paris - Europe has its own list of financial scandals, from a Belgian software maker that fabricated income to a millionaire Briton who plundered his company's pension fund and then drowned. While none is as large as WorldCom's $3.9 billion in mischaracterised expenses, there is no guarantee against something similar happening in Europe, accountants and investors say. "It could definitely happen here," says Markus Straub, a spokesperson for German shareholder activist group SdK. "The reason you don't see cases on the same scale as in the US is that there is a time lag. Our regulators aren't as stringent." "Auditors are the last link in the chain," says Stella Fearnley, a lecturer in accounting at Portsmouth Business School, who in April testified to a UK parliamentary committee on financial regulation. "We are not exercising the right sort of controls." US regulators are better positioned to pick up on company wrongdoing than their European counterparts, experts say.

Black Blade: Not very reassuring.



A Canadian (07/07/02; 20:55:22MT - usagold.com msg#: 80053)
REAL T.V.
The U.S. dollar index daily drama providing a great episode tonight. ( Japs finally realising folly of bailing with a puny scoop). Tomorrow's episode should be an eye-popper. Stay tuned.

goldfool (07/07/02; 20:37:29MT - usagold.com msg#: 80052)
Mr. Gresham - Boomers vs. Doomers
No need to feel apologetic about having a bad feelings about an economy built up on and perpetuated by lies, greed, and corruption. Believe me there are more than enough "cheerleaders" around to help try and keep the spirits of team America fully invested in the stock market. What the country needs now are more critical and independent thinkers like you who see beyond the facade that the bureaucrats, economic analysts, and mainstream media have created to cover up the cold and bleak economic realities and eventualities that exist underneath. Basically we have a good economic foundation but in order to fix a sagging house you've got to tear the siding off to expose the rot underneath.

Boxman (07/07/02; 19:55:11MT - usagold.com msg#: 80051)
Countries going under, are U.S. states next?
http://www.larouchepub.com/other/2002/2926calif_budgt.html
The well to do are going to take it in the shorts (like they don't pay exceedingly more than their fair share now)with calls for increased taxes on them. If I were well heeled, and lived in California, I would high tail it to a friendlier state.

Joe six pack will also pay more, as sin taxes face extreme increases in the coming months.

The elderly, living on fixed incomes will be put in dire straits, as the cost of health care will increase, and state and federal help will be decreased.

If energy costs escalate due to hot weather (speaking primarily of CA), things will indeed become unbearable for far to many.

I believe that this decrease in revenues to the states is going to become a huge problem that only now seems to be gaining attention in the press.

Keep a low profile, and most importantly, follow Black Blades advice.

Black Blade (07/07/02; 19:32:59MT - usagold.com msg#: 80050)
Insider-trading creeps into limelight
http://cbs.marketwatch.com/news/story.asp?print=1&guid={DF2EDCFC-DD7F-450B-B544-3C37A3C2D66A}&siteid=mktw

Regulators vow tougher stance, but can they handle it?

Snippit:

Even as the bad old days of Michael Milken and Ivan Boesky fade further from memory, insider trading is making a comeback in America. But those who dare to make ill-gotten earnings may be on a collision course with an SEC that's vowing to take a harder-line stance in the post-Enron era. "Insider trading is creeping back, and the agency wants to crack down on it like a ton of bricks," said Brian Lane, a Washington-based securities lawyer with the firm of Gibson, Dunn & Crutcher.


Black Blade: Insider trading will never end – not anymore than phoney bookkeeping or corporate corruption.



misetich (07/07/02; 19:28:53MT - usagold.com msg#: 80049)
Brazil's Dollar Denominated Debt Doomsday Machine: David DeRosa
http://quote.bloomberg.com/fgcgi.cgi?ptitle=David%20DeRosa&touch=1&s1=derosa&tp=ad_topright_bbco&T=markets_fgcgi_content99.ht&s2=ad_right1_bbco&bt=ad_bottom_bbco&s=APSJ3DxZ4QnJhemls
Snip:


New Canaan, Connecticut, July 3 (Bloomberg) -- Brazil's Arminio Fraga, the former hedge fund manger turned central banker, could easily say he has hunted with the hounds and run with the hare.

You will remember that before Fraga took over his country's central bank in 1999, he worked for the Soros hedge fund. Soros, for many, has long been the lead dog in the hedge fund hunting pack.

Fraga's problem is that Brazil is now the number one rabbit in the field. One of the hunters has become one of the hunted and Fraga -- now Brazil's central banker - is having a hard time outrunning the hounds.

The source of Fraga's problems and Brazil's tribulations is presidential hopeful Luiz Inacio Lula da Silva. Lula is well poised to win the Oct. 6 election.

What worries investors is that as president, Lula will order Brazil to default on its debt. Or he might demand re-negotiations between Brazil and its creditors, which amounts to the same thing.

The odds that Lula will get elected and become Brazil's next president have caused the Brazilian currency to fall 19 percent since March.

..........
If you really want to understand the explosive nature of Brazil's financial situation, consider that it owes $132 billion in debt denominated in dollars.

Doomsday Machine

This is the doomsday machine I referred to in the headline. For as the real sinks, Brazil's indebtedness, measured in terms of its own currency, climbs higher. Since March, the value of Brazil's debts in local currency has increased by 19 percent, or the equivalent of $25 billion dollars.

Where have we seen this before? Lots of places, mostly emerging markets nations. My favorite was Mexico, a country that before abandoning its fixed exchange rate for the peso in December 1994, converted substantial portions of its government debt to dollar-linked bonds.

When the peso exploded, the government went bust. Bust meaning it had to call on the U.S. and other nations as well as the International Monetary Fund for emergency funding.

Dollar-denominated debt is popular with emerging market nations because whereas capital markets are shallow in their own currencies, the dollar-based market is as deep as deep can get.

An Extraneous Factor

Yet fears about Lula are driving Brazil toward bankruptcy. The potential access to money is greater when Brazil taps the dollar debt market, but the country took on an unhedged -- I would argue speculative -- position when it borrowed in dollars. In effect, Brazil is short dollars and long on the local currency when it comes to dollar-denominated debt.

At this point, I would normally expound on the danger of having external dollar-denominated debt in conjunction with a fixed exchange rate regime. That is a witch's brew that took down most of Southeast Asia in 1997, not to mention Russia in 1998 and Argentina last year.

But Brazil already abandoned its peg for the real in 1999. Since then the real has been floating.

Instead, what we have here is a case of a floating exchange rate that is plagued by a crisis of political trust.

And the sad truth is that Fraga probably can't do much about it. Fear of Lula may literally drive Brazil bankrupt.

Misetich

JP Morgan, Corporate Accounting Fraud, Fanny Mae, Life Insurance, Pension Funds, Mutual funds, Distressed bankers, Telecom Debt, Consumer Debt, Corporate Debt, overvalued Stock Markets - so many TRIBUTARIES to our TRAIL - waiting for the gold coil to snap

Got gold?



misetich (07/07/02; 19:21:35MT - usagold.com msg#: 80048)
Euro will gain parity with dollar, says Prodi
http://www.gulf-daily-news.com/Articles.asp?Article=27115&Sn=BUSI
Snip:

"I think that the euro will have in the future similar rate, similar dignity, similar weight as the dollar," he told a forum of government officials, diplomats, academics and businessmen here after delivering a lecture on Asia-Europe ties.

"Europe, when we shall arrive at 500 million people, we shall represent by far the biggest economic entity in the world," he said, referring to the moves to expand the European Union to around 25 members.

Prodi was replying to a question on the possibility of the single European currency increasing its share as part of the foreign reserves of countries worldwide currently dominated by the US dollar.

"We have given birth to a baby and it will grow big," Prodi said at the forum.

Misetich:

CB's holding vast amount of US $ reserves and little else must be getting a bit "worried" as they see their "just good as gold theory, sold to them in the last 20 years" being flushed down the proverbial toilet

Gold has no substitute

Got gold?


Mr Gresham (07/07/02; 19:10:45MT - usagold.com msg#: 80047)
goldfool
That was a fine summary -- if I had to give someone my overview of the economic picture in ~200 words, I would borrow yours. Each sentence segues to another facet of what is around us, and points to what lies ahead of us in that department. Thank you.

I just saw a friend's $35,000 paint job on his house last night. He borrowed into equity to do it. He thinks he's a house millionaire. He already knows I think he should sell it and convert his remaining equity to "other forms", so I don't nag him about it anymore. Someday that 35k will be grocery money he doesn't have.

Sheesh! What a Doomer I am! Somebody stop me.

But when you think that 95% of all national economic policy since 1940 has been to AVOID a return to the 1930s, you just gotta put in a vote for the "Return of the Repressed" theory and say that what they've done overall is a PERFECT set-up for making it happen again.

misetich (07/07/02; 19:09:36MT - usagold.com msg#: 80046)
Dollar Falls as Japan's Shiokawa Says Currency Likely to Weaken
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&T=markets_bfgcgi_content99.ht&middle=ad_frame2_all&s=APSjdGxaSRG9sbGFy
Snip:

Japan's Finance Minister Masajuro Shiokawa said Saturday that many of his counterparts in other countries have a view that the dollar is weakening, and ``may fall to about 115,'' he told reporters after the Asia-Europe Finance Minister's meeting in Copenhagen.

``Shiokawa's comments led to the dollar's decline as they hint Japan may have changed its stance to tolerate a stronger yen before selling it,'' said Yasuo Kayamoto, vice president for foreign exchange at UFJ Bank Ltd. In the past months, ``Japan's yen sales were the only supporter of the dollar.''

Misetich
Maybe they are getting wiser, maybe they're not telling the truth - maybe they know they can't fight the market-

Time will tell

Got gold?

slingshot (07/07/02; 19:00:37MT - usagold.com msg#: 80045)
Feeling Good Tonight.
*******************************
Welcome all new posters. Looking forward to reading your point of veiw on what is happening with Gold. Yepper, they are at it again trying to push the POG down again tonight. Can you blame them? They're in deep Kim Che. As for Another, FOA and all the rest, I have the feeling they are lurking. Waiting for the right time to come back, center stage.

Yea, I await the day.
Good fortune comes our way.
And we'll ride down the Kings Highway.
Tom Petty, "Kings Highway"

Thinking Positive.
Slingshot----------------------------<>

misetich (07/07/02; 18:54:35MT - usagold.com msg#: 80044)
Rhetoric raised in JP Morgan's Mahonia trial
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1025793323067&p=1012571727304
Snip:

Alleged fraud at WorldCom may be preoccupying markets. But a fierce legal battle is developing around another big US corporate scandal - the collapse of Enron - which could have important ramifications for both Wall Street and the insurance industry.

At issue is whether 11 insurers must pay nearly $1bn to JP Morgan Chase, Enron's adviser and one of its principal creditors, on surety bonds used to guarantee commodity deals between the US bank and the energy trader.

The trial of the case is not due to begin until December 2 - coincidentally under the same New York judge, Jed Rakoff, who will hear the Securities and Exchange Commission's fraud suit against WorldCom next year.

.............

Chubb, whose Federal Insurance subsidiary is one of the 11 being sued by JP Morgan, raised the temperature two weeks ago by filing a direct claim against JP Morgan, alleging that the bank "surreptitiously lent money to Enron, by way of Mahonia, and expected to be repaid . . . by Enron, with interest" directly or via other offshore vehicles.

Such allegations have set regulators, Congress and prosecutors including Robert Morgenthau, the Manhattan district attorney, on the trail of JP Morgan, in search of evidence that the bank misled investors.

...........
In making its case, however, JP Morgan has had to detail the nature of its own pre-paid forward commodity deals with Enron. The bank insists that the underlying sales of oil and gas were real transactions, but it says everybody, including the insurers, "knew that the [Mahonia] deals were part of a structured financing transaction for Enron's general corporate benefit".

What interests regulators is whether these were in reality loans that the bank did not declare. But to describe such deals in that way, JP Morgan suggests, is to over simplify what was a complex, but legal, structured financing technique.

............

Chubb declines to comment on the JP Morgan counter-claim. But the insurers are also probing sensitive territory for the bank, which was slow to detail its exposure to the surety bonds last December. Part of Chubb's complaint is that JP Morgan propped up Enron because, without the additional financial support, the bank risked losing its other outstanding loans.

.............
The insurers have only recently won access to more than 400,000 e-mails and 350 warehoused boxes of documents related to the case, and JP Morgan is seeking further evidence of other surety bond contracts written by the insurers.

Misetich

Will stay on the JP Morgan TRAIL...without deviating too far from FOA "wink, wink"

Got gold

goldfool (07/07/02; 18:49:08MT - usagold.com msg#: 80043)
Gold and the precious metals - investment of last resort
Hope springs eternal for the sheeple until employment and real estate values start eroding then look for a major shift into the PMs. Now that the Fed has lured many people into refinancing their mortgages with low interest rates and sucking the equity out their homes to keep the economy propped up, what's next on their agenda? Can they keep the stock market buoyed up long enough to allow corporate America to climb out of debt and start reexpanding? I doubt it. Consumer spending is showing signs of fatigue as accounts dwindle and the stock market wealth effect turns into the poverty effect ( Wait until the next quarterly 401K statements are sent out, do you think the little rally on Friday was to soothe the nerves of a few frazzled investors? ) . Insiders, the pros, and foreigner investors have seen the writing on the wall and are bailing out of the SM in droves as corporate scandals run amok. The only thing that is probably providing any comfort or solace for the sheeple is overinflated real estate values. People keep pouring money into upgrades ( pools, remodels, etc. ) and new purchases just as they poured money into the tech stocks at the top during the late nineties thinking home values will only keep appreciating. The consequence I'm afraid is going to be the same. Pretty soon unemployment is going to take it's toll and consumer spending is really going to snowball downward. When it does new construction and real estate values will plummet with demand and with no jobs many will default on their mortgages, credit cards, and car loans. Bankruptcies will skyrocket. The Fed has so far been able to control the exodus out of the SM by manipulation of key economic numbers, indexes, currencies, and commodities however pretty soon the dike is going to burst and a lot of capital is going to be desperately looking for a new home and that could be the PMs, the investment of last resort. The central bank selling of reserves in my opinion is nothing but a big bluff as up to 35% ( according to some estimates ) has already been loaned out. The cabal with their paper games will be overwhelmed and be forced to cover. Hopefully the government will take no extreme measures ( such as confiscation ) and let the markets find a natural equilibrium. What to do until then? Just lean back and consider the undulations and machinations of the markets as entertainment.


misetich (07/07/02; 18:41:52MT - usagold.com msg#: 80042)
Bush under pressure on corporate fraudsters
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1025793371794&p=1012571727304
Snip:

US senator Tom Daschle (pictured left), the Democratic leader, on Sunday called for the release of the case file of a 1991 insider trading investigation of George W. Bush, saying discrepancies in the president's account have raised new questions.

Mr Daschle's comments raised the pressure on the administration before a speech by Mr Bush on Tuesday, in which he is expected to announce tougher criminal penalties for executives who commit fraud. They also come as the Senate prepares this week to vote on tough accounting reform legislation, a bill the White House opposes.

The Democrats further turned up the heat with the publication of a 60-page report by the Senate sub-committee on investigations, chaired by Senator Carl Levin, in which the Enron board is charged with contributing to the energy trader's collapse by ignoring repeated warning signs that wrongdoing was under way among executives.
...........
"The president would do well to ask the SEC to release the file . . . let everybody see just what is there," Mr Daschle said on the CBS News programme Face the Nation.

The administration has made a concerted effort in recent weeks to appear tougher on corporate wrongdoing, with Mr Bush speaking forcefully against the $3.8bn (£2.5bn) accounting restatement at WorldCom, and Harvey Pitt, SEC chairman, quickly filing a fraud suit against the telecommunications conglomerate.

But Mr Daschle said the misleading statements about the insider trading inquiry - and the acknowledged failure of Harken to report properly Mr Bush's sale of company stock - highlighted the administration's lack of responsiveness in the wake of recent corporate scandals.

Documents obtained by the Centre for Public Integrity, a watchdog, said the SEC found in 1991 that Mr Bush had insufficient knowledge of Harken's losses to have traded improperly on the information when he sold his stock.

Misetich

Lets see...November elections around the corner - it will get "interesting" as they turn the knives on each other -

Got gold?


misetich (07/07/02; 18:37:55MT - usagold.com msg#: 80041)
Rich lost $2.6trillion in financial markets in '01
http://channels.netscape.com/ns/news/ns/story.jsp?floc=FF-PLS-PLS&id=403781107&dt=20020707190200&w=RTR&coview=
Snip:

LONDON, July 8 (Reuters) - Rich investors on both sides of the Atlantic lost $2.6 trillion -- or six percent of their wealth -- in 2001's plunging markets, according to a survey.

The mountain of assets wiped off in just one year is roughly the size of the entire private banking industry in Switzerland, where wealthy client assets managed by banks are estimated at between $2 trillion and $3 trillion.

"Few investors or regions were untouched by the destruction," said the benchmark industry survey published by global management consultants Boston Consulting Group (BCG).

...........
The BCG, which surveyed more than 60 leading private banking firms representing total assets of $3 trillion, said 2.3 million households around the world slipped below a wealth threshold of $250,000 in net assets last year.

The rich are alarmed by the wealth destruction and are becoming risk averse, shifting to cash and money market funds, it said.

...............
"Many competitors are still assuming unrealistic levels of growth...Institutions must actively manage their costs instead of focusing too narrowly on revenue and asset growth," it said.

It said 2001 industry revenues fell an average 11 percent, commission income 21 percent and asset fee income eight percent while compensation costs climbed one percent, marketing expenditure five percent and operational costs two percent.

As many banks managing money for the rich scale back ambitious expansion plans, bankers expect more job cuts.

Barclays Plc , Britain's fourth largest bank, has said it is mulling cuts to private bank staff costs due to tough market conditions which banking sources say could affect up to 15 percent of jobs in the international business in London.

Coutts & Co, private bankers to the Britain's Queen Elizabeth, says it is restructuring its London business to focus on profitable domestic clients.

In May, Britain's loss-making Schroders Plc shed top private banking executives and axed 19 jobs just a year after creating a private bank.

Citigroup Inc , the world's largest financial services firm, has recently announced cuts in European private banking jobs. Germany's largest Deutsche Bank has also taken the knife to its loss-making London private banking unit.

The survey said many banks were pursuing unprofitable low-balance accounts. On average, half of client accounts at most firms held balances below stated minimums, it added.

Misetich

New Paradigm, New Economy - what a scam!

Got gold?

mikal (07/07/02; 18:36:44MT - usagold.com msg#: 80040)
@BlackBlade, All
As you know, some of Friday's US equities rally has been attributed to relief and release of pressure built up over July 4th terrorism worries. Since Friday was a shortened trading session, has all this pressure been released? And will many traders remain on the sidelines waiting for Bush's, Tuesday State of the Union speech? How will they react to it? TIA!

Black Blade (07/07/02; 18:13:23MT - usagold.com msg#: 80039)
In Mutual Fund Reports, a Midsummer's Nightmare
http://www.washingtonpost.com/wp-dyn/articles/A33670-2002Jul6.html

Snippit:

Before you peruse your second-quarter mutual fund statements, you may want to pour yourself a drink. A stiff one. Chances are the news is not going to be good. In fact, from value to growth, small-cap to large-cap, the news about mutual fund performance over the last three months is pretty much across-the-board awful. Even fund styles that did fairly well in the first quarter, such as large-cap value, suffered in the second, unable to overcome the deluge of scandal that swamped the stock market, sent investors scurrying for cover and pulled down shares of just about any firm with a complicated balance sheet.

In the global arena, gold dominated with the 11.11 percent return, while Japanese funds provided the only other gain, a slim 3.83 percent advance driven by signs of recovery in that nation's long-battered economy. Latin American funds fared worst, plunging 19.37, a drop analysts blamed on reduced export potential for Mexico, as its biggest trading partner, the United States, continues to struggle.


Black Blade: It appears that the banks are at it again tonight in OZ. Some fund/bank is working hard to push Gold prices down during somewhat illiquid trading conditions. It could get more "interesting" when a real market opens in Europe or the US. It should be interesting to watch the equities markets as Friday's run up during extremely thin trading could reverse sharply unless "official" or suspicious "institutional" trading suddenly appears. Of course the end of quarter trading is also done for now – so "normal" institutional trading should be subdued.



Black Blade (07/07/02; 17:59:28MT - usagold.com msg#: 80038)
Top fund manager sees stock markets halving
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1025793330387&p=1012571727143

Snippit:

Hugh Hendry, Europe's best-performing fund manager, believes equity markets will fall a further 50 per cent before bottoming. In the last three weeks Mr Hendry says has sold off a third of his equity portfolio to seek the sanctuary of government bonds. Until recently Mr Hendry relied on the fact that a 'golden' 5 per cent of shares will rise even in a bear market. He identified these by following the flow of liquidity that central banks have been pumping into the economy by aggressively cutting interest rates. Rather than flowing into the equity markets, as has historically been the norm, this liquidity has flooded into assets such gold, property and commodities.

Mr Hendry played this trend by buying equities that were proxies for these assets, such as housebuilders, property companies, food manufacturers and tobacco companies. However, in recent weeks the market has turned against even these stocks. "I have been consistently 100 per cent invested for the last three years, but I am now selling stocks," he says. Mr Hendry admits he is not certain what will happen next, but he is raising the possibility that we may be heading for a 1930s-style depression, rendering it impossible to make money from the markets.


Black Blade: only a 50% decline in the equities markets? Quite the optimist. I agree that we are likely headed into a new Great Depression. There is absolutely nothing holding up the markets – certainly not growing profits.



sector (07/07/02; 17:17:16MT - usagold.com msg#: 80037)
LA Shooter was an Egyptian Jihad Islami Agent
Met with Osama Bin Laden's top deputy in 1998
From DEBKAfile's Exclusive counter-terror sources
7 July: Hesham Mohamed Hadayat was no stranger toEl Al's Los Angeles airport office.

According to DEBKAfile's counter-terror sources, the man who murdered two Israelis on the El Al ticket line at Los Angeles airport on July 4th worked for the American Mercury ground service company from 1993 (one year after he arrived in the US) until 1998, when he left to set up his own limousine service for air passengers.

Exactly what he did at Mercury is vague, but during his five years in their employ, this former bank clerk from Cairo was free to move around Los Angeles international airport. Our sources reveal that during that time, he aroused the suspicions of El Al security personnel who warned airport security. When no action was taken, they put him under surveillance. El Al asked Mercury to rearrange Hadayat's shifts for periods when none of its planes were scheduled, which Mercury agreed to do

After the 4th of July attack, in order not to clash directly with the US authorities which refused to identify it as a terrorist assault, El Al and Israeli security spokesmen said that even if the Egyptian gunman was not a proven member of a terrorist group, his crime ranked as an act of terror.

However, Sunday, July 7 the influential Arabic London-based Al Hayat followed the original DEBKAfile disclosure of July 5 - that Hadayat was a member of the Egyptian Jihad Islami - and took it a step further. According to the Arabic paper, the Egyptian gunman met Dr. Ayman Zuwahri, the Jihad Islami chief who is Osama bin Laden's deputy, twice in California – once in 1995 and again in 1998.
According to DEBKAfile's sources, it was at that second encounter that Hadayat was told to leave his job with Mercury and given capital to set up his small limousine firm, so as to take advantage of his access to airport facilities and airline personnel contacts, while at the same time shaking off any watchers.

The Al Hayat report places Dr. Zuwahri in California unobserved less than three years before the 9/11 hijacking attacks in America and a year and a half before the Egyptair disaster (see first DEBKAfile story).

The Hadayat family lives in Cairo. His father, a retired Egyptian army general, and his uncle, a former minister of science, admit that Hesham was a fervent Muslim who did what he could to encourage everyone to read the Koran. They say he was happy in Irvine, California. His neighbors in that Los Angeles suburb tell a different story, that he hated Israelis and Jews and asked one of them to take down the American and US Marine flags put up after 9/11.

From all the foregoing, our counter-terror experts cite Hesham Hadayat as a classical a Qaeda plant. He was positioned at Los Angeles airport in the early 1990s to bide his time for the right moment to carry out a terrorist attack against an El Al flight. When Hayat's handlers saw he was under observation, they made him lower profile. His assignment was revised to fit his role as a limousine driver familiar to the Tom Bradley terminal staff and free to move around - namely to shoot down a line of passengers waiting to board an El Al flight.

Although from 1994 or 1995 at the latest, Hadayat was brought to the notice of American security, was under the eye of El Al security, and the Egyptian authorities must have known about him, he was never investigated - even after 9/11. The FBI has admitted he figured on no watch list for terrorists. This left him perfectly free to carry out his mission on behalf of the extremist Islamic organization – all of which raises some hard questions about the way in which the war against terror is carried out in the United States.
+++++++++++++++++++++++++++++++++++++++
Another black eye for the FBI and CIA…This shooter was a deep underground operative. No wonder the Feds can't admit that fact.


Ten Bears (07/07/02; 17:02:35MT - usagold.com msg#: 80036)
Scattershooting while wondering what happened to ORO and PANDAGOLD
The Poker Game-another analogy
How would you like to play poker where one player (the banker) had the power to create an infinite number of chips, loan them to other players, and collect interest on the loans as well as taxing a portion from the winner of each pot? Soon the banker would own not only all of the players' chips, but would also own the players he had loaned money to---not an easy game to win---unless you are the banker. Oh! Also, if you leave the game solvent, a portion of your chips is confiscated as a 'game leaving tax'. Your kin, who take your seat at the game, will be further disadvantaged with each successive generation.

David Ricardo's "Iron Law of Wages" in modern times= "trade, the race to the bottom". Remove all restrictions on importation of goods, and capital will move to the lowest labor and environmental cost regions, driving down worldwide wages to subsistence levels= "Socialism for financial corporations; aid as needed in exchange for control of industrial corporations; and cutthroat competition for natural (non-corporate) individuals." (Based on an article from The Royal Danish Ministry for Foreign Affairs)

Robert M. Hutchins's speech to a 20th century university graduating class: "The greatest, the most insidious, danger you will face is that you will be corrupted. Your friends will corrupt you, your business associates will corrupt you, and the system will corrupt you. It is this corruption that you must avoid." Recent news headlines indicate that his advice was not well received.

Cherokee neighbor says ... "the only people who can make corrupt corporate chiefs look good are politicians...they sell their services to the corporations. What does that make them?"

Alexander Del Mar noted in "History of Money Systems", published in 1895..."Coinage is the surest mark of sovereignty." Coinage in a more modern sense can be construed to mean the creation of money. That power (and sovereignty) resides with the Central Banks. This was pointed out recently by a post on this very board. Del Mar also observed that when a new order was in process of being established, new coins were struck with different names to note the change. Will we get new money and new names as FRN's depreciate at unprecedented rates?

Del Mar's research is extensive and his book is a good read...there is a chapter on the "Sacred Character of Gold". Also see "The Science of Money" published in 1896 from the same author.
__ Ten Bears

kludge (07/07/02; 14:23:51MT - usagold.com msg#: 80035)
Thar's gold in dem dare archives
As luck would have it, I began early last week to reconsider the sector weightings of some investments. Friday's market action provided the impetus get out of some losers while the getting was good (or at least better), so consequently I spent a fair amount of the weekend reading, studying, and debating with myself where the new home for this cash should be.

After some more or less random browsing of newer analysis, commentary, and charts - I ultimately found myself in the USAGOLD forum archives. With as many browser windows open as my poor, tired PC would allow: I went day-to-day thru the earliest archives (got to 12/99) while constantly referring back to historical price charts, news archive sites, and the linked commentaries/predictions of the then current day. All with the benefit of 20/20 hindsight. The results were impressive, and I thank the posters then (some gone, many still here, one or two due back soon?) for their courage to "make the call".

While it'd be no surprise to those that read here where a significant chunk of the cash will be going, just wanted to thank CPM for providing this forum, and invite others to make use of this valuable repository and draw their own conclusions.

Thanks!

Boilermaker (07/07/02; 14:01:03MT - usagold.com msg#: 80034)
Woodie's Dilemma
http://www.americanroyalarts.com/ViewSub.cfm?Section=Disney&SubSection=Scrooge%20McDuck
Scrooge McDuck is a marvelous model for a gold bug's "what to do with it".

misetich (07/07/02; 13:01:24MT - usagold.com msg#: 80033)
Leftists could dominate Brazil presidential vote
http://ad.doubleclick.net/adi/N815.forbes/B997259.5;sz=336x280;ord=2002.07.07.18.43.20?
Snip:

BRASILIA, Brazil, July 7 (Reuters) - Brazil on Sunday faced the possibility of two leftist opposition candidates squaring off in the October presidential election after two polls showed the center-right government's candidate sharing second place.

Such a scenario, which could further unnerve financial markets fretting about a turn to the left in Latin America's biggest country, has never taken place in Brazil's democracy.

Misetich

Keep on eye on this possible financial explosive trouble spot- largest SA economy - US bank interests are heavy as are imports from US

Got gold?

misetich (07/07/02; 12:40:17MT - usagold.com msg#: 80032)
Richard Russell on Gold
http://216.46.231.211/boards/user/non-frames/message.asp?forumid=4&messageid=131125&threadid=131125
Snip:

The money supply figure for the latest week shows the broad M-3 money supply up a mind-blowing $39.7 billion. M-3 is now growing at the annualized rate of $2 trillion a year. I've been saying that when the bear market hits, the Fed will fight the trend "tooth and nail." I was wrong, the Fed is fighting the bear "tooth and nail and fists and feet and elbows and knees." The classic definition of inflation is an unusual growth in the money supply. If so, then boys and girls, the US is inflating -- big time.

I was almost shocked to see that the latest Confidence Index (CI) figure out of Barron's was 80.0, a huge drop from last week's figures of 83.3. The CI is Barron's High-Grade bond index divided by Barron's Medium-Grade bond index. The steady decline in the CI indicates that the bond market is increasingly worried about the credit-worthiness of the nation's corporations. The old rule was that the CI (sophisticated bond investors) moves two to four months before the stock market moves. If so, watch out.
.........

A lot of subscribers are asking me for significant support levels for gold and the gold shares. I don't want to talk about such levels, because all such supposed "levels" will do is knock gold holders out of their positions, assuming they sell if such levels are violated. If this is a bull market in gold, which I believe it is, then you should take your position in gold items and hold them until the bull market fully expresses itself. This means that you should not assume a position that will worry you if gold and gold shares decline.

Remember, just as the bear wants to go down while taking the greatest number of stockholders with it, the bull wants to advance while taking the fewest investors with it. Therefore, this gold bull will try to shake as many gold investors off its back as possible as it rises. The best way to do that is to violate so-called support levels. Advice -- take a gold position that you can sleep with and forget about trading gold.

With the Fed pumping up the money supply at the rate of $2 trillion a year, even if gold never goes anywhere, holding gold items (real money) is logical and makes sense. Also, bull markets start in areas where most people are not. Who do you know who owns any physical gold or gold shares? Not many people. If fact, I'm flooded with people who ask me where to buy gold coins. They really have no idea.

Misetich

Lifted from PrudentBear' Post - Thanks to Jessel

Got gold?

misetich (07/07/02; 12:24:34MT - usagold.com msg#: 80031)
Fannie Mae Distorts Markets
http://www.mises.org/fullstory.asp?control=986
Snip:

An Affordable Housing Bubble
Fannie gives banks the ability to lend potential home buyers funds that they could not otherwise qualify for, with which they may purchase a home that they could not otherwise afford. For example, the Wall Street Journal reports that home loan mortgage payments as a percentage of disposable income are at record levels due to "changes in mortgage underwriting standards," and that the average down payment has declined over the last decade from 10 percent to 3 percent, with zero down payments not uncommon.[8] Fannie claims that it is using its regulatory privilege to decrease the cost of the credit to home buyers.

But does this make housing more affordable? The housing market will respond to an increase in demand by some combination of increasing supply and/or increasing prices. Research by Bert Ely, author of a study on the GSEs for the American Enterprise Institute, has suggested that subsidizing mortgage loans does not do much, if anything, to make housing more affordable because most of the subsidy goes into price increases rather than supply increases. His research shows that only a small increase in home prices is necessary to fully capitalize the interest rate subsidy.[9]

Ely's research also indicates that a portion of the demand subsidy goes toward an increase in the size of homes.[10] Ironically, it is this increase in home size that Raines cites as another factor driving demand for its lending activities.

The GSEs have linked home prices to the market for risk-free debt securities. Domestic and foreign buyers purchase these securities. In fact, they are a significant fraction of the capital accounts surplus funding U.S. the trade deficit. Fannie's continued ability to find buyers for riskless debt securities allows it to create what appears to be an increasing demand for housing by magnifying the amount of systemic risk.

Most home owners are completely unaware of this process, believing instead that their home prices are driven by the factors similar to those Raines cites, and that home prices move in only the upward direction. This process is not unlike the way small investors approached the stock market during the stock market bubble.

The fallacy of Raines's demand-side case for subsidized mortgage credit is that when a demand subsidy exists, home prices are partially a byproduct of the demand subsidy. Raines's claim that Fannie is simply stepping in the gap to supply much-needed credit is disingenuous. Increasing home prices are partially a consequence of Fannie's credit subsidy. Of Raines's list of so-called drivers of credit demand, most are side effects of the leverage and declining credit quality that Fannie has created.

If Fannie's policies enable some buyers to obtain loans credit that they could not otherwise afford, then for them, the cost of buying a home will be lower--"more affordable." As Raines has claimed in one of his speeches, "The suggestion that too much capital is going into housing is not new. We heard it a lot in the beginning of the 1990s. Fortunately for the 10 million families who became homeowners during this decade, the theory did not get much traction."[11]

It is not surprising that the recipients of a subsidy were pleased with the result: demand for a free good always exceeds supply. The borrowers, the banks, and Fannie's shareholders are quite happy with this arrangement. Taxpayers will probably remain unaware of their obligation until the bill becomes due. Were interest rates to rise, housing prices to turn down, or the ratio of mortgage loan defaults to increase beyond Fannie's reserves, a taxpayer bailout reminiscent of the S&L bailout would probably be called for by holders of GSE debt.

.............

As chronicled by numerous observers of the current financial scene,[14] Fannie funding is increasingly used for "cash-out" refinancing and home equity loans, the proceeds of which are spent to pay down credit card debt, or to fund more consumption items. The long-term result of increasing consumption at the expense of savings investment is that capital is consumed without being replaced. An economy with less capital can produce fewer consumption goods. Overall wealth is diminished.

Conclusion
An economy grows, i.e., increases its ability to produce consumption goods, when people save enough to fund the accumulation of more capital. Thus, wealth creation depends on savings. This is the only real way to make most things more affordable for the bulk of the population. Only the accumulation of more capital goods will enable business firms to produce more consumption goods.

Raines may be in a dream business, but the net result of Fannie Mae's actions in the credit markets is a nightmare of resource misallocation and massive systemic risk.

Misetich

Murphy's Law Mr. Raines, Murphy's Law

Got gold?



misetich (07/07/02; 12:12:39MT - usagold.com msg#: 80030)
The Trouble with Debt by Sean Corrigan
http://www.mises.org/fullstory.asp?control=994&titlenum=&FS=&title=&Month
Snip:

Thus, another tenet of the Greenspan Model proves to be invalid. Not only were profits often fraudulently overstated--as well as being falsely, if legally, enhanced by stock-options accounting--but "growth," too, was slower than reported in the boom years.

Do you know what was real, though? Incontrovertibly, unimpeachably, and rigorously recorded? Debt--even if the ultimate title to much of it has been obscured by Wall Street's skills in financial engineering. Debt. Liabilities. Owing money. Claims on yet-to-be-earned income. A lien on the future. A mortgage on Tomorrow. Debt. The real, four-letter legacy of Alan Greenspan and his former accomplice, Bob Rubin.

............

FitchIBCA painted a somewhat bleaker picture, posting a 13.4-percent default rate on its high-yield universe, with any improvement in overall ratings a mere statistical artefact resulting from the fact that even as so many CCC and lower-grade bonds had defaulted--fully $34 billion out of $120 billion late last year--several "fallen angels" had been newly included, as they in turn dropped out of the investment grade rankings.

S&P was perhaps the most sombre, noting that "the second half of 2002 continues to be challenging." Standard & Poor's also pointed out that, while 60 percent of U.S. ratings outlooks were currently stable, negatives, at 35 percent, outpaced positives 7:1.

Moreover, the firm was at pains to point out that pressure was not restricted to tech, telecom, and energy, but that the malaise was much more widespread.

Autos were characterized thus: "financial performance deteriorated precipitously." In capital goods: "the extent of the weakness cannot be overstated." Banks? "The majority of the 25 percent subject to change have a negative outlook." Energy: "Dismal."

Chemicals, forestry & mining, auto supply, consumer goods, media & entertainment, airlines--all had more companies with negative outlooks than with positive. Only health had parity between the ups and the downs (thank you, socialized medicine!).

As for those banks, while earnings were a record $21.7 billion in the first quarter--largely due to the Fed's largesse and the corresponding aid to net interest income--the FDIC warns of two major risks; that high loan-to-value consumer loans are not performing as well as their grantors’ models predicted (Capital Insight Rule I: The Model is NOT the Market) and that there are heavy exposures to commercial property in some of the districts worst affected by the bust.

For thrifts, there are other worries. For the first time in four years, loan-loss provisions do not fully cover noncurrent loans, and there has been a sharp jump in problem thrift assets to a $15 billion level not seen since 1994.

...........

Dr. Debt may well find it will not just be equity investors and overseas dollar holders who come to curse him. Overburdened homeowners and even those who count these debts and their derivatives among their own savings may well come to do likewise before the crisis passes.

Misetich

"Do you know what was real, though? Incontrovertibly, unimpeachably, and rigorously recorded? Debt--even if the ultimate title to much of it has been obscured by Wall Street's skills in financial engineering. Debt. Liabilities. Owing money. Claims on yet-to-be-earned income. A lien on the future. A mortgage on Tomorrow. Debt. The real, four-letter legacy of Alan Greenspan and his former accomplice, Bob Rubin."

Greenspan, Rubin (now O'Neil), and the rest, the architects of Debt - Debt Engineers - and rest assured that they have the cure - More debt


Got gold?

Mr Gresham (07/07/02; 11:59:33MT - usagold.com msg#: 80029)
Woodie
"what to DO with it?"

Nothing. Absolutely nothing.

(It's a very Zen thing we're into here ;-) Oh, yeah.)

Mr Gresham (07/07/02; 11:35:12MT - usagold.com msg#: 80028)
Pimco
http://www.pimco.com/bonds_commentary_fed_focus_0702.htm
Thanks, misetich!

With the great insights from McCulley & Bill Gross, you wonder if at some point they will admit they shouldn't be running a bond fund ("Sure, we'll continue to do the best we can for you who want to stay in bonds, but...") and jump the divide over into something that really will preserve capital.

Hey -- if monetary "management" really WERE done responsibly, as the Fed would like all textbooks to assert it is, would we even be here talking about gold?

The sooner they shake it all out, the sooner we all could begin to talk about something else, something that will promote the _productive_ use of assets, and not just be a holding operation to survive the downslide. Meanwhile, they just want us all to mistake monetary THEORY for actual behavior.

Come over here, Charlie Brown, and kick this football...

TownCrier (07/07/02; 11:31:49MT - usagold.com msg#: 80027)
Whether they do or not, be aware of what governments CAN do in a tight spot
http://biz.yahoo.com/rf/020706/economy_argentina_3.html
Exxcerpts:

BUENOS AIRES, Argentina, July 6 (Reuters) - Despite pressure to stop Argentina's financial system from collapsing, President Eduardo Duhalde crushed on Saturday market hopes he would forcibly transform billions of dollars of frozen bank deposits into bonds.

Instead, his economy ministry announced details of some new incentives that encourage Argentines to swap their savings for bonds...

"There will not be mandatory bonds," Duhalde told a news conference. He added that the government would look for other ways to save from collapse banks which lost billions of dollars after a bank freeze and a currency devaluation.

This week there was widespread market optimism the government would forcibly switch deposits into public bonds, a move that many analysts say is the only way of stopping banks from going bankrupt.

-----------

Bottom line: Such is the problem when you borrow short-term and lend long-term, coupled with a market that is perhaps too shallow for effective Central Bank open-market and Lombard operations without running a great risk of hyperinflation as a consequence.

Don't let yourself and the liquidity of your own portfolio be caught standing in the rain. Preparation, by definition, is something you do while the sky is still blue.

R.

USAGOLD / Centennial Precious Metals, Inc. (07/07/02; 11:18:38MT - usagold.com msg#: 80026)
How to Protect Your Wealth through Private Gold Ownership -- An Education at Your Doorstep
http://www.usagold.com/cpm/abcs.html

The ABCs of Gold Investing "Gold will play a critically important role in American investment portfolios in the years to come. This book provides investors a basic education on private gold ownership from one of the nation's top experts." --Rep. Ron Paul, Texas, U.S. House of Representatives Please Remember: It is your purchase from USAGOLD / Centennial Precious Metals that nourishes these pages.

Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.

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