Daily Digest - Feb 19

* Hope (Humor)
* Why Gold Rallying in all currencies
* The Burning Platform
* The White House, Homeowner Affordability and Stability "Plan"
* The Silver Lining (For China, Savings is King)
* Gold Demand Pushed $US100 Billion Barrier Investors Recognized Store of Value (Hat Tip CM)
* Supply and demand statistics Gold Supply and Demand - Q4 and Full Year 2008
* More on eastern Europe
* More...


* Zombie banks
* How Foreclosures Help Banks Conceal Losses (Hat Tip Suzie)
* "All? of us need to live within our means ---- again"?
* Depositors turned away from Stanford banks
* Chairman Bernanke At the National Press Club Luncheon, National Press Club, Washington, D.C.
* For Release February 18, 2009
* US Domestic Borrowing (Chart)
* Recession Will Change Our Economic Geography (Hat Tip Christopher Peters)
* Jim Chanos
* Fox News, Ron Paul & Peter Schiff
* How the Crash Will Reshape America (Hat Tip Christopher Peters)

Economy
Hope (Humor)

Why Gold Rallying in all currencies (Picture in Article)

In the latest manifestation of the world financial crisis, gold is rallying strongly now in all major currencies. Gold detached from the usual commodity drivers gradually over the period August 07 to the present, and closely reacted to any major new developments in the credit crisis. Gold now is almost totally dominated by ongoing credit crisis developments, and the massive attempts to bailout the financial system in every country. That is why gold and the USD are rallying together.

As we know, the $trillions the US, ECB, BOE, Japan, Russia and China have thrown at either bailouts or stimulus are causing gold now to rise relentlessly in the major currencies. Obviously, at some point, gold as a central bank reserve asset would reflect what I estimate to be going on $20 trillion worth of stimulus and financial bailouts by the world central banks since August 07. The US alone has now committed over $10 trillion fighting the world financial chaos.

Ironically, the USD rallies along with gold to date. Massive flight to ‘safety' is finding its way to the USD and gold both. The Yen is also strengthening a lot too, but much of that is from Yen carry trade deleveraging, where people sell the stocks and financial assets and then buy Yen and pay off their hundreds of $billions worth of Yen they borrowed in the carry trade.

The Burning Platform

I prefer the wisdom of Thomas Jefferson and Abraham Lincoln.

"Delay is preferable to error." - Jefferson

"Give me six hours to chop down a tree and I will spend the first four sharpening the axe." - Lincoln

The White House, Homeowner Affordability and Stability "Plan"

The Silver Lining (For China, Savings is King)

Gold Demand Pushed $US100 Billion Barrier Investors Turned to Recognized Store of Value (Hat Tip CM)

NEW YORK & LONDON--(BUSINESS WIRE)--Sustained investor interest in gold over the course of 2008 against a backdrop of the worst year on record for global stock markets and many other asset classes, helped push dollar demand for the safe haven asset to $102bn, a 29% increase on year earlier levels. According to World Gold Council's ("WGC") Gold Demand Trends, identifiable gold demand in tonnage terms rose 4% on previous year levels to 3,659 tonnes.

Japan's January chip equipment orders fell 80.1% on year, say reports (Hat Tip CM)

LONDON - Orders from around the world for semiconductor manufacturing equipment made in Japan fell to 25.51 billion yen (about $275 million) in January, down 80.1 percent from a year earlier, according to a Dow Jones report that cited the Semiconductor Equipment Association of Japan as its source.
The book-to-bill ratio was 0.55 for the month down from 0.70 in December the report said.

Supply and demand statistics Gold Supply and Demand - Q4 and Full Year 2008

more on eastern Europe

I would offer that ... major European nations face a very real and looming Sophie's (or should I say Nicholas and Alexandra's) choice - either help bail out their troubled EU brethren, and thereby risk burdening their own domestic economies with significant new debt; or let the other nations fail, and risk the collapse of the EU.

Now, I'm sure there are some reading this who would say there is no choice - the strong must save the weak. But I would offer that, in this environment, that may be too quick a conclusion - one need only look at what's happened to Bank of America (BAC) and Wells Fargo (WFC) in the aftermath of their bailouts of Merrill Lynch and Wachovia, respectively.

Ordinarily, size and reputation would delineate the strong from the weak. But in these turbulent times, a great many lifeguards can be, and are, drowned each year trying to save drowning swimmers. (That's why, here in the US, there will be no more large scale bank mergers.)

Zombie banks

How Foreclosures Help Banks Conceal Losses (Hat Tip Suzie)

If a long term downturn were acknowledged, a conservative bank would avoid buying foreclosed houses and prefer to take the losses up-front, letting the outside buyers pick up the home and the downside risk of further price slides. But banks are still long housing, so they keep buying houses and booking them at inflated values.

"All? of us need to live within our means ---- again"?

Depositors turned away from Stanford banks

ST. JOHN'S, Antigua - Panicky depositors were turned away from Stanford International Bank and some of its Latin American affiliates Wednesday, unable to withdraw their money after U.S. regulators accused Texas financier R. Allen Stanford of perpetrating an $8 billion fraud against his companies' investors.

Some customers arrived in Antigua by private jet and were driven up the lushly landscaped driveway of the bank's headquarters, only to be told that all assets have been frozen pending an investigation by Antiguan banking regulators.

Chairman Bernanke At the National Press Club Luncheon, National Press Club, Washington, D.C.
For Release February 18, 2009

US Domestic Borrowing (Chart)

Recession Will Change Our Economic Geography (Hat Tip Christopher Peters)

Jim Chanos

Fox News, Ron Paul & Peter Schiff

How the Crash Will Reshape America (Hat Tip Christopher Peters)

MY FATHER WAS a child of the Great Depression. Born in Newark, New Jersey, in 1921 to Italian immigrant parents, he experienced the economic crisis head-on. He took a job working in an eyeglass factory in the city's Ironbound section in 1934, at age 13, combining his wages with those of his father, mother, and six siblings to make a single-family income. When I was growing up, he spoke often of his memories of breadlines, tent cities, and government-issued clothing. At Christmas, he would tell my brother and me how his parents, unable to afford new toys, had wrapped the same toy steam shovel, year after year, and placed it for him under the tree. In my extended family, my uncles occupied a pecking order based on who had grown up in the roughest economic circumstances. My Uncle Walter, who went on to earn a master's degree in chemical engineering and eventually became a senior executive at Colgate-Palmolive, came out on top-not because of his academic or career achievements, but because he grew up

source