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January, Thursday 25, 2012

DOW +81 = 12,756SPX + 11 =1326NAS + 31 = 281810 YR YLD -.06 = 2.01OIL +.79 = 99.74GOLD  + 44.40 = 1711.80SILV + 1.22 = 33.37PLAT + 35.00 = 1585.00 The Federal Reserve will leave interest rates unchanged. That is the biggest non-news event of the day, but wait, there’s more! The Fed wrapped up their FOMC meeting with a new twist, they issued an official inflation target of 2 percent and they published individual policymakers’ forecasts for the Fed funds rate. A 2 percent target for inflation isn’t really new, and it wasn’t really on target because the rate for 2011 was 3 percent. The individual policymakers offered a wide range of views; three policymakers expect rates will need to rise this year and two others don’t think rates will need to rise until about 2016. The consensus seemed to be that rates should stay unchanged until the end of 2014. The Fed says the economy faces “significant downside risks” but it offered little to suggest it was close to launching another round of bond-buying to prop up growth. It did say, however, that it would maintain a “highly accommodative” monetary policy stance. The statement also dropped a reference saying the Fed was monitoring inflation and inflation expectations. Let’s break this down a bit further; the biggest change was that the Zero Interest Rate Policy has been unofficially extended from 2013 to 2014; this could be considered dollar negative; meanwhile, there was no announcement on QE3 – no …

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January, Tuesday 24, 2012

DOW – 33 = 12,675SPX – 1 = 1314NAS + 2 = 278610 YR YLD unch = 2.06%OIL -.37 = 99.21GOLD -9.90 =1666.40SILV -.30 = 32.15PLAT -11.00 = 1554.00 Greece‘s private creditors are negotiating how much of a discount they will take on Greek bonds. Under the agreement drawn up in October, bondholders would take a 50 percent write-down on the notional value of their Greek holdings; in other words, they would swap their bonds for new bonds worth 50 cents on the dollar. Last week the two sides were converging on an agreement that would see private creditors accepting a real loss of 65 to 70 percent and new bonds with 30-year maturity. This week the negotiations seem stuck on the interest rate the new bonds would pay – 4% or 3.5%. Private creditors say a 4% coupon is their final offer; the Greeks say they can only go 3.5%. The idea is that the bond swap would allow Greece to cut its debt from around 160% of GDP to 120% of GDP over the next 8 years. The clock is ticking on a deal because Greece has more than 14-billion Euro in bond redemptions that come due in March. Without a deal, Greece would be forced into a hard default, which would freak out the Eurozone. If they can come to a deal, then Greece is looking at a selective default, meaning they swap the bonds and nobody freaks out. A deal needs to be struck soon. Everything …

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January, Monday 23, 2012

DOW – 11 = 12,708SPX + 0.6 = 1316  NAS – 2 = 278410 YR YLD +.04 = 2.07%OIL + 1.61 = 99.94GOLD + 9.30 = 1677.30 SILV + .15 = 32.45PLAT +25.00 = 1567.00 The stock market is off to its best start in a good 15 years. Stock market sectors leading the rally include:materials, homebuilders, semiconductors, and financials. The 50 worst performing stocks in 2011 are up over 10% so far this year; the 50 best are up a mere 2%. Bonds are off to their worst start since 2003 with the 10-year note yield back up to 2%. The S&P 500 is now up 20% from the early October low and just 3.5% away from the April 2011 recovery high (in euro terms, it has rallied 30% and at its best level since 2007). Meanwhile, a new report from Bespoke Investment Group says stocks are trading at their cheapest levels since at least 1990, according to such commonly used valuations as price-to-earnings and price-to-book ratios as well as dividend yield. Also, the manufacturing sector has been a pocket of strength, while the employment picture is really beginning to show improvement. To start 2012, the S&P500 had an earnings multiple of 13, the lowest since 1990 and below the 80-year average of 15. It would take a move back to 1,484 to get the benchmark back to this long-term mean P/E. The price-to-book ratio is 2.05, below the average since the late 1970s of 2.43. To get back …

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January, Friday 20, 2012

DOW +96 = 12,720SPX +1 = 1315NAS -1 = 278610 YR YLD +.06 = 2.03%OIL -2.19 = 98.19GOLD + 10.30 = 1668.00SILV +1.56 = 32.30PLAT +11.00 = 1541.00 Today, Wall Street was just muddling along. GE and Google posted weak earnings. The Dow advanced and the broader market were flat. Still, stocks have posted three weeks of gains to start the New Year on weak volume. Nobody wants to believe the rally; maybe they’ve decided it’s safer to sit it out. Stocks may muddle higher but it is difficult to sustain gains on light volume and it leaves the market vulnerable to selling pressure. Nihil sub sole novum. That’s Latin for nothing new under the sun. It seems to prove the point when you say it in a dead language. And so, we go from archaic to the contemporary medium for information sharing, the internet. If you think the internet is only about sharing new, original, unique, and innovative information the you really need to move into the 20th century (for starters). There are many things that are inequitable about current copyright and patent laws, but even if we gloss over that discussion, the idea that legislators wanted to make it illegal to share information over the internet was remarkably stupid. It seems several legislators just lined up to do the bidding of their corporate paymasters, without regard to the consequences. The SOPA and PIPA legislation was bipartisan stupidity. The bills were championed by former democratic Senator Chris Dodd, who …

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January, Thursday 19, 2012

  DOW + 46 = 12,625SPX + 6 = 1314NAS + 18 = 278810 YR YLD +.07 = 1.97%OIL -.28 = 100.30GOLD – 2.20 = 1657.70SILV + .12 = 30.74PLAT – 3.00 = 1525.00 The robo-signing scandal, in which mortgage servicers, that is – the big banks, were accused of initiating foreclosures based on inaccurate and sometimes fraudulent documents, “exposed a whole slew of problems in servicing these mortgages that need to be fixed.” Now, the Department of Housing says it’s close to a $25 billion dollar settlement with servicers. Such a deal could result in principal reductions for up to one million homeowners and the settlement would provide cash payments to a smaller number of families who were directly harmed by the servicers’ conduct. One of the big hold-ups to a settlement is that many of the state’s that started out in the settlement talks have since bailed out on a settlement, because the settlement was turning into a sweetheart deal for the big banks. More earnings reports today: Morgan Stanley reported a loss of $227 million, compared with a profit of $871 million a year earlier.  Bank of America posted a profit of $1.99 billion, or 15 cents on a per-share basis, compared to the prior-year loss of $1.24 billion, or 16 cents. The results were in line with estimates, however the results were full of asset sales and one-time charges and gains, and accounting prestidigitation so prodigious as to transmogrify transparency into something beyond the pale of obfuscation. …

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January, Wednesday 18, 2012

DOW + 96 = 12,578SPX + 14 = 1308NAS + 41 = 276910 YR YLD +.05 = 1.90%OIL +.39 = 101.09GOLD +7.30 = 1659.90SILV + .46 = 30.62PLAT +4.00 = 1527.00 “The global economy is entering into a new phase of uncertainty and danger,” so says the World Bank’s chief economist, Justin Yifu Lin. “The risks of a global freezing up of capital markets as well as a global crisis similar to what happened in September 2008 are real.” The bank cut its growth forecast for developing countries this year to 5.4% from 6.2% and for developed countries to 1.4% from 2.7%. For the 17 countries that use the euro currency, it forecast a contraction, cutting their growth outlook to -0.3% from 1.8%. For the United States, the bank cut this year’s growth forecast to 2.2% from 2.9% and for 2013 to 2.4% from 2.7%. In the event of a major crisis, “no country will be spared.” “The downturn is likely to be longer and deeper than the last one.” Many governments are in a weaker position than they were to respond to the 2008 global crisis because their debts and budget deficits are bigger. The World Bank said slower growth is already visible in weakening trade and commodity prices. Global exports of goods and services expanded an estimated 6.6% in 2011, barely half the previous year’s 12.4% rate, and the growth rate is expected to fall to 4.7% this year. Commodity exporters should brace for a fall in oil …

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The Update Case of Silver

Sinclair Noe is the host of “Financial Review” heard on moneyRadio.com and KFNN 1510 AM in Phoenix, Monday-Friday at 4PM MST. Sinclair has temporarily picked up the hosting duties for Pat Gorman’s “Hard Money Watch” radio program on moneyRadio.com and 1510 AM, Sunday mornings at 10AM MST. Mr. Noe has written six books; the most recent include: “Eat the Bankers” and the “Veterans’ Benefits Reference Manual”. Sinclair is the editor of Bank-o-Meter.com. He has also been a featured speaker at our Wealth Protection Conferences in Tempe for the past few years. The Updated Case for Silver I want to go back to my presentation at the 2011 Wealth Protection Conference; I spoke about several long-term trends. I think I presented several compelling and accurate predictions for long-term trends. I spent a lot of time talking about my investment pick for the next decade –silver! A friend recently chided me for what he considered an egregious mistake. Last April, silver hit $48.55. As I write, silver is around $29 an ounce. In my defense, I said at the Wealth Protection Conference that silver would most likely fall from the April highs and essentially every other speaker and several attendees at the conference confirmed this prediction. I remind you that my pick was for silver as the investment of the decade. Still, the past 9 months have been challenging for silver bugs. I hope you’ve been buying the dips. I think it will pay handsomely. Here is my updated case for silver.Precious …

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January, Tuesday 17, 2012

DOW + 60 = 12,482SPX + 4 = 1293NAS +17 = 272810YR YLD un=1.85%OIL + 2.30 = 101.00GOLD + 8.80 = 1652.60SILV + .09 = 30.06PLAT + 26.00 = 1527.00 On Friday, after the close of business in the stock market, S&P downgraded 9 European countries. Spain and Italy were both taken down 2 notches, leaving Italy with a BBB+ rating and Spain with an A.  But the headline damage was done to France, whose triple-A rating got downgraded to AA+. France had been rated AAA for 36 years.  The French bid adieu to their triple-A status…said they didn’t care about it, expected it, and didn’t need it anyway. But it was a blow. France, with Germany, was one of the strong, big economies at the center of Europe. It was one of the economies the others were depending on to bail them out. Over the weekend, The Wall Street Journal warned that markets needed to “brace for European fallout,” this morning.  And then to put an exclamation point on the matter, this morning Standard & Poor’s downgraded the creditworthiness of the eurozone’s rescue fund, putting the fund’s ability to raise cheap bailout money at risk. The EFSF, the European Fubar Slush Fund was cut by one notch to AA+. Quite the Tempest in Europe: “Some kinds of baseness Are nobly undergone, and most poor matters Point to rich ends.” Spain had a Treasury bill auction today and it went quite well. They sold twice the amount targeted and yields fell, …

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January, Friday 13, 2012

DOW – 48 = 12422SPX – 6 = 1289NAS – 14 = 271010 YR YLD -.08 = 1.85%OIL -.35 = 98.75GOLD – 8.90 = 1640.70SILV – .48 = 29.87PLAT – 7.00 = 1497.00 For all our triskaidekaphobic friends, Friday the 13th actually has a mild upward bias in stock market history. It’s up 55% to 60% of the time. That said, we were down today, and there was a massacre, of sorts, after the close of trade. We start with some shocking news – this is utterly remarkable – Standard & Poor’s has cut France’s credit rating by one notch to AA, down one notch from AAA. Shocking. And expected for about a month now.  More shocking news – S&P cut Italy’s credit rating to BBB+. The cut their ratings on 24 Italian banks and affirmed their ratings on 19 banks.  Now, here’s the fun part. S&P has to provide 24-hour notice to the countries if they are going to change their ratings.  S&P had Italy as A1 on negative watch, and just cut them to BBB+. Earlier today, Italy held a bond auction. Italy sold bonds while in possession of information that they were going to be downgraded. Are those bond sales valid? They sold $ 6 billion–dollars worth of bonds without disclosing insider information of an impending downgrade that would certainly be harmful to the value of the bonds. It doesn’t get more insider than that. But wait – there’s more! Then they cut Russia to BBB. Austria …

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January, Monday 09, 2012

DOW +32 = 12.392SPX + 2 = 1280NAS + 2 = 267610 YR YLD un = 1.96%OIL -.25 = 101.31GOLD – 5.60 = 1612.00SILV +.30 = 29.15PLAT +20.00 = 1433.00 Remember the Eurozone crisis? Maybe you haven’t heard much in the past couple of weeks, what with the holidays and everything. Well, it’s still a problem; they didn’t fix anything. The Greek government is still trying to agree a bond-swap deal with banks that is crucial to a new 130 billion euro bailout package from European partners and the International Monetary Fund (IMF). Without that package, Athens faces the threat of a debt default in March. Banks and investment funds are being asked to accept 50 percent losses on their Greek bonds to help pay for the bailout have dragged on for weeks. German Chancellor Angela merkel said today that Greece must restructure its debt. Merkel said: “From our point of view, the second Greek aid package including this restructuring must be in place quickly. Otherwise it won’t be possible to pay out the next tranche for Greece.” Greece is entering its fifth straight year of contraction, with no hope of paying down its massive debt. There is a chance there won’t be a deal. Greece might default. Both France and Greece are scheduled to hold elections in a few months and that could complicate decision-making at the national level and make it tougher to finalize agreements sealed at an EU summit last month. Greece has been operating under a technocratic …

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January, Friday 06, 2012

DOW –55 = 12359SPX –3 = 1277NAS  +4 = 267410 YR YLD -.03 = 1.96OIL +.12 = 101.93GOLD – 4.80 = 1617.60SILV-.62 = 28.85PLAT –9.00 = 1407.00 OK, I know the Bureau of Labor Statistics manipulates numbers; I know it looks like the overall labor force is shrinking, and this is the reason the headline unemployment rate dropped in today’s report; I know that if you don’t miscount, the number would really be 11.4% and not 8.5%; and I don’t believe people just drop out of the labor force; and I know there was a freakish gain in new jobs for messengers and couriers and I can’t explain that; and I know the U6 measure of underemployed and marginally employed puts the rate at 15.2%; and I know the non-manipulated number is really closer to 22.4% un-under-marginally-unemployed. Still, today’s monthly jobs report looked pretty good. The economy added 200,000 jobs in December. The headline unemployment rate dropped to 8.5% from an upwardly revised 8.7% in November. Unemployment has fallen fourth straight months. Over the past six months, the U.S. has added an average of 142,000 jobs, the most job growth in more than six years. Virtually every major industry added jobs and only the government sector cut employment. The private sector added 212,000 jobs in December, offset by a 12,000 drop in government employment, primarily state and local government jobs. we’ve now added 3.2 million new private sector jobs over the last 22 months — nearly 2 million jobs last …

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January, Wednesday 04, 2012

DOW +21 = 12418SPX +0.24 = 1277NAS –0.36 = 264810 YR YLD +.04 = 2.00%OIL +.29 = 103.25GOLD +8.90 = 1613.50SILV -.55 = 29.26PLAT –12.00 = 1427.00 Bill Gross manages PIMCO’s $244 billion Total Return Fund, the largest bond fund in the world. Every so often, Gross posts an investment letter on his website. His most recent letter is entitled “Welcome to 2012”. In the letter, Gross said “paranormal” was a more fitting description for the current economic environment than the phrase “New Normal,” coined several years ago by his chief co-investment officer Mohamed El-Erian to describe a world of low-growth and high unemployment. This year, Gross argues that process will get messier. “We are left with zero-bound yields and creditors that trust no one and very few countries. The financial markets are slowly imploding – delevering – because there’s too much paper and too little trust,” he said. Those factors may lead financial markets to experience “the fat-left-tailed possibility of unforeseen – delevering – or the fat-right-tailed possibility of central bank inflationary expansion.” So, this goes right in line with what I’ve been talking about for quite some time. The situation in Europe, the ongoing situation in the USSA all points to de-levering and the response to de-levering by the central bankers – especially the Federal Reserve – is to pump free money into the markets. That’s really about all they can figure out to do, because they don’t know what else to do. They need the economy to …

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January, Tuesday 03, 2012

DOW + 201 = 12418SPX + 21 = 1278NAS +44 = 264910 YR YLD +.09 = 1.96%OIL +4.22 = 103.05GOLD +37.20 = 1604.60SILV +1.85 = 29.81 (biggest % gain in 3 years)PLAT + 32.00 = 1435.00 Here is the basic question for investing in 2012: will we see a turnaround? Will we see economic growth or is the economy so inherently damaged that you should fear it and possibly short it? The Federal Reserve has been driving the bus, so let’s start there. The Fed has been active in Quantitative Easing. This means the Fed has been adding tremendous amounts of money into the financial system by selling treasuries directly from the government to the big banks at auction.  The Fed then purchases the treasuries from the big banks, also known as primary institutions, and pays the banks by crediting their accounts. The big banks get paid for holding the treasuries in reserve. And the big banks now have new “cash” for their banking activities. You have to think the Fed intervention had something to do with treasury bonds posting one of their biggest annual gains last year. Further, the Fed has a ZIRP Policy, or Zero Interest Rate Policy. The Fed has held interest rates to the big banks at near zero for the past 3 years, and they announced today they will communicate any intention to change the ZIRP – there will be no surprise interest rate hikes, but eventually there must surely be an interest rate hike. …

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December, Friday 30, 2011

DOW – 69 = 12,217SPX –5.42 = 1257.60NAS – 8 = 260510 YR YLD -.03 = 1.87%OIL -.65 = 99.00GOLD =20.90 = 1567.40SILV +.09 = 27.96PLAT +30.00 = 1403.00 One year ago DOW = 11,577.51SPX = 1257.64NAS = 2652.8710 YR YLD =3.31% OIL =79.36GOLD = 1410.25SILV =30.63PLAT =1731.00 US Dollar Index 78.22 on 12/31/2010  & 80.57 on 12/30/2011 Auld Ange Syne – the song always make me miss people, though I’m not sure whom I’m to be missing specifically; I suppose there’s always somebody, isn’t ther? The Pacific island nation of Samoa is taking 186,000 citizens through a national time warp by moving west of the international dateline, forfeiting the last Friday of 2011 and jumping straight from Thursday into Saturday. So, it’s Saturday in Samoa. It never was Friday. For Samoans, this solves a practical question: Why remain 18 to 23 hours behind chief trade partners Australia and New Zealand? Of course, it doesn’t answer the question: Why didn’t they do this on a Monday? The worst performer among the Dow 30 industrial stocks? Bank of America – which isn’t really an industrial stock to begin with. BofA was down 58% for the year, wiping out $80 billion of shareholder value. The bank also ended 2011 last in the Standard & Poor’s 500 Financials Index and the KBW Bank Index. It was BofA’s worst annual performance since 2008, when it dropped 66 percent. Other big banks performed poorly. Citigroup dropped 44%, JPMorgan Chase dropped 22%, Goldman Sachs dropped 46%, …

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December, Thursday 29, 2011

DOW +135 = 12287SPX +13 = 1263NAS +23 = 261310 YR YLD -.01 = 1.90OIL +.45 = 99.81GOLD – 10.80 = 1546.50SILV +.62 = 27.87PLAT –18.00 = 1377.00 Or listen to this http://www.moneyradio1510.com/Audio-Archive You always have to be careful when you read the news or watch it on TV or listen to it on the radio or the web of internets. Take this snippet from the AP: “The European Central Bank said banks had parked $590.72 billion with it overnight, surpassing the record set only Monday. That means European banks were less willing to take the risk of making short-term loans to each other, opting instead to earn low interest rates from the ECB. The move shook confidence in the euro currency, which dropped to $1.2910 at one point on Wednesday — its lowest level against the dollar in nearly a year.” It seems fairly straightforward, however the big problem is that the bankers aren’t earning anything – they are being given a gift – a gift of money stolen from taxpayers. The banks are not working for the money, they are not producing anything, and you would have to be brain dead to believe the banks are “earning” anything in this situation. The next problem is that European banks aren’t making short-term loans to each other because they all know what they have on their own books, and if the other banks hold the same garbage on their books (and they do) then all the banks are essentially insolvent …

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December, Wednesday 28, 2011

DOW –139 = 12,151SPX –15 = 1249NAS –35 = 258910 YR YLD -.10 = 1.91%OIL –1.75 = 99.59GOLD –36.00 = 1557.30SILV –1.58 = 27.25PLAT –42.00 = 1390.00 The Euro fell to its lowest level against the dollar in nearly a year. Italy held an auction of short-term bonds; it went well, but there is another auction tomorrow. Eurozone banks are reportedly hoarding the cash injected by the European Central Bank, and not lending the money out – for some reason, some investors found this news alarming, even though it is straight out of the Federal Reserve playbook. Oil prices fell after Saudi Arabia said it will offset any loss of oil from a threatened Iranian blockade of a crucial tanker route in the Middle East.The US Navy warned that any disruption of traffic through the vital Strait of Hormuz “will not be tolerated.” Pretty much everything was down in the US markets, and the S&P 500 moved back into negative territory for the year. It’s that time of year where everybody is putting together lists of this that and the other for the old year and the new year. I ran across a good list on the Calculatedrisk blog. It’s a list of the top 10 economic questions for 2012. it’s a good list because it just asks questions and doesn’t give answers. 1) House Prices: How much further will house prices fall on the national repeat sales indexes (Case-Shiller, CoreLogic)?  2) Residential Investment: Residential investment (RI) made a modest positive contribution to GDP growth …

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December, Tuesday 27, 2011

DOW – 2 = 12,291SPX +0.1 = 1265NAS + 6 = 262510 YR YLD -.02 = 2.01%OIL +1.59 = 101.27GOLD –14.70 = 1593.00SILV -.40 = 28.83PLAT +2.00 = 1437.00 How do you feel? Good, yeah? You not only made it over the river; you made it through the woods; you’ve almost made it holidays and you are oh so close to surviving 2011 – no small feat. The Conference Board index of consumer confidence jumped to 64.5 this month from a revised 55.2 in November. Consumer confidence is up nearly 25 points in the past three months and now sits at its highest level since April. Consumers are more optimistic that business conditions, employment prospects and their financial situations will continue to get better. Yep, the American consumer is unfazed and confident – maybe it’s that $41 billion in unspent gift cards we’ve squirreled away for a rainy day. Apparently holiday cheer is contagious. Each year the Associated Press surveys top economists, strategists, and analysts to peer into their crystal balls and prognosticate. The big thinkers say stocks will gain 10% in 2012. U.S. companies are generating record profits. Americans are spending more than expected and factories are producing more. The job market is showing a pulse – weak, but a pulse. The economy has generated at least 100,000 new jobs for five months in a row — the longest such streak since 2006. The economists expect the country to create 177,000 jobs a month through Election Day 2012. That would …

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December, Friday 23, 2011

DOW + 124=12,294SPX +11 = 1265NAS + 19=261810 YR YLD +.08 = 2.03%OIL +.33 = 99.86GOLD + 1.60 = 1608.00 SILV unchanged = 29.23PLAT +6.00 = 1425.00 Not much economic news to propel the markets into the holiday weekend. Lets cover the data points quickly: Seasonally adjusted annual rate for sales of new single-family houses increased to 315,000 last month. The pace of sales is up 9.8% from the prior year. The median sales price fell to $214,100 in November from $222,600 in October. Durable-goods orders rose 3.8% in November. For some reason, there was a huge surge in airplane orders. Go figure. Personal income rose 0.1% in November, as consumer spending also gained 0.1%. At this pace we’ll see income get back to where we were in December 2007 in another 5 years, not counting inflation. Yesterday we talked about the sweetheart deal the Departmetn of justice offered Bank of America to settle allegations of discrimination against 200,000 clients of Countrywide. The American ideal of “equal and impartial justice under law” has repeatedly been undermined by attempts to concentrate power.  Our political system has many advantages, but it also provides motive and opportunity for resourceful people to become so strong they can elude the legal constraints that bind others.  The most obvious example is the oil and railroad trusts at the end of the nineteenth century.  A version of the same process is happening again today but what has become concentrated is not a vital energy source or the nation’s …

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December, Wednesday 21, 2011

DOW + 4 = 12,107SPX +2 = 1243NAS –25 = 257710 YR YLD +.04 = 1.97 OIL +1.78 = 99.02GOLD – .20 = 1616.00SILV -.24 = 29.42PLAT – 4.00 = 1434.00 For the past few months you’ve been hearing me telling you the Europeans were going to follow the Federal Reserve Playbook. I’ve told you there were lots of bright boys and girls who believe they have learned valuable lessons from the near collapse of 2008, and they would apply those lesson in Europe, with subtitles. And yet, for the past three months you’ve also heard stories about how the European Central Bank, the ECB has claimed they won’t be the lender of last resort, they won’t act like the Federal Reserve. You’ve heard how the ECB does not have a mandate to do the things the Fed does. Today, the ECB reported that it had doled out almost half a trillion euros, or about $640 billion dollars, in low-cost three-year loans to 523 Euro banks to keep credit flowing at a time when European banks are finding it all but impossible to finance their operations through normal market channels. I told you a little about this yesterday, and today we are getting confirmation. Here is how it works: in exchange for collateral, lenders borrowed at the ECB’s benchmark interest rate, currently 1 percent; then they use the funds to purchase the debt of euro zone governments, pocketing the difference as profit. Spanish bonds, for example, yield around 3.4 percent …

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December, Tuesday 20, 2011

DOW +337 = 12,103SPX +35 = 1241NAS +80 = 260310 YR YLD +.11 = 1.92%OIL +3.12 = 97.00GOLD +21.30 = 1616.20SILV +.76 = 29.66PLAT +21.00 = 1437.00 Yesterday, Euro finance ministers confirmed they would loan close to $200 billion dollars to the IMF for a fund to help needy Euro countries. It is a less-than-hoped for amount.  The ECB President Mario Draghi said the ECB would not have a Federal Reserve version of Quantitative Easing. So, yesterday was a down day in the markets because the governments weren’t handing out free money. Spain held a bond auction today and there were buyers. Spain has large debts and large deficits and high unemployment, so it was encouraging to see a good bond auction.  The implication is that Spain can actually pay back their debts. It was only about $7 billion dollars worth of debt, but that was enough to kick start European debt and equity markets, and set an optimistic tone for a scheduled auction of 3-year bonds by the ECB later in the week. Who was really buying? Well there is a good chance that the ECB was propping up the sale – maybe. But it would be wrong to think the ECB and the powers that be are not doing anything. Today marked the first day for the new ECB bank lending facility, offering unlimited funds to the banks at 1% for up to 3 years. So, a bank can borrow euros from the ECB at 1% and they …

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