Housing construction, permits hit record lows

Don't believe the mantra of there are "green shoots" of economic recovery out there, it is all confidence building propaganda. It was the housing market that got us into this financial crisis and it will be housing that leads us out of it (or makes it worse). More important than housing starts is permits which forecasts future construction and that figure is at a record low.-Lou

Housing construction, permits hit record lows

WASHINGTON (AP) -- Housing construction plunged to a record low in April as a steep drop in apartment building offset a rebound in single-family construction. Permits for new projects also hit a new low.

The Commerce Department said Tuesday that construction of new homes and apartments fell 12.8 percent last month to a seasonally adjusted annual rate of 458,000 units, the lowest pace on records going back a half-century.

In a disappointing sign for the future, applications for new building permits dropped 3.3 percent to a new record low annual rate of 494,000.
Economists had expected home construction and building permits to post modest increases in April as signs that the worst collapse in housing activity in the post-World War II period was drawing to a close.

Read More:

http://finance.yahoo.com/news/Housing-construction-permits-apf-15288824.html?sec=topStories&pos=main&asset=&ccode=

Gold: 'It's a bargain at $930 an ounce'

Gold: 'It's a bargain at $930 an ounce'

The bullish outlook for gold rests on the increasing likelihood of accelerating US inflation.

From a long-term perspective, gold is a bargain at recent prices in the $900 to $930 an ounce . . . and will remain so even as it begins to move into a higher trading range.

Recent gold-market developments and technical price action – along with broader economic and financial-market developments – suggest gold is bracing for a resumption of its long march upward and a retest of its historic high in the months ahead.

First and foremost, the bullish outlook for gold rests on the increasing likelihood of accelerating U.S. inflation in the years to come – and an associated unprecedented rise in investor demand for the yellow metal.
This nascent inflation has not yet been reflecting in world financial markets. But, judging from anecdotal evidence and the financial press – and the warnings of a growing number of institutional investment managers – we believe a gradual, subtle, but important, upward shift in inflation expectations is already under way.

Inflation doves (and others fearing imminent deflation) point to the currently low, almost negligible, rates of consumer price inflation and the narrow interest-rate spread between ordinary US Treasury securities and US Treasury Inflation-Protected Securities (TIPS) as evidence that inflation and inflation expectations remain subdued. This – along with other important factors that we'll discuss in subsequent posts – has helped keep gold prices down in recent months.

Read More:

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/5324628/Gold-Its-a-bargain-at-930-an-ounce.html

PPT Bombs Gold

click on chart to enlarge

Want to see what market intervention looks like? Look at this chart of gold yesterday. The dollar was down big, oil was up over $2.00 and commodities in general were higher, a very bullish mix for gold. In 60 seconds gold dropped $12.00 on no news that would warrant such a bombing of gold. This was a message from the Masters of the Universe to stay away from gold as an alternative to US dollar. I have been watching this blatant (and criminal) market intervention for years, but I have never seen it so obvious. It always happens during New York trading hours, usually around 10:00am. Something must be really wrong out there if they have to punish gold like this. Makes me want to buy some more gold.-Lou

American Express to cut 4,000 jobs

American Express says it will need to write off 10% of it's outstanding credit card balances? This is depressionary stuff folks. Remember American Express cardholders are the higher income people.-Lou

American Express to cut 4,000 jobs

NEW YORK (Reuters) - American Express Co, the credit card and travel services company, on Monday said it plans to eliminate 4,000 jobs, or 6 percent of its workforce, as the weakened economy causes higher customer defaults.

The cuts are part of the New York-based company's plan to save $800 million over the rest of 2009. They are in addition to 7,000 job cuts and an expected $1.8 billion of savings from a restructuring it announced in October.

Like many rivals, American Express has been hurt by rising delinquencies among cardholders, with the U.S. unemployment rate having risen to its highest level since 1983.

On Friday, American Express said its net charge-off rate, or debt it does not expect to be repaid, rose to 10.1 percent in April from 8.8 percent in March.

"We continue to be very cautious about the economic outlook," Chief Executive Kenneth Chenault said in a statement. He said the cost savings "will be reinvested in the business to make sure we can take competitive advantage of opportunities as the economy begins to rebound."

American Express expects to take an after-tax charge of $117 million to $163 million in the second quarter, largely for severance and other costs tied to the job cuts. It said the cuts will occur throughout the company, saving $175 million.

Read More:

http://www.reuters.com/article/email/idUSTRE54H68A20090518

Obama Man

I stole this from my friend Peter Grandich's website http://grandich.agoracom.com . This is really funny, only it's true.-Lou

Listen To This Week's Radio Show

Listen to this past Sunday's "The Financial Physician" radio show.

Listen Here:

http://wobmam.com/personalities_lou_scatigna.html

China holds sway over US Dollar

China holds sway over US$

Diane Francis, Financial Post

Saturday, May 16, 2009

"The U. S. should be afraid, very afraid. China is questioning the dollar's status as a reserve currency and, at US$1,000 an ounce, gold has become the world's de facto currency." -- John Ing, Maison Placements in Canada

It is a chilling statement from an expert on both gold and China. But he is speaking the truth: In a G2 world (the United States and China), he who is the piper calls the tune, and China holds a US$2-trillion mortgage on the United States and is not happy.

This country, along with others that lend money to the United States, such as Saudi Arabia, will determine the value of the U. S. dollar and gold. And they have spoken. They are not buying more U. S. treasuries and are buying gold as a new asset class. China announced that it was doing so quietly, and recent reports are that the Saudis and others have been buying bullion and hocked gold jewellery from around the world.

The only way is up for gold prices because the United States, which backstops the International Monetary Fund, the world's lender of last resort, has had to become its own lender of last resort.

Washington has cranked up the printing presses in an unprecedented way, replicating the behaviour of its spendthrift corporations and consumers. This year's budget is US$3.5-trillion, bigger than any in history.

And as Ing points out, the "bi" in this bipolar global economy is China. Beijing has not only started to hoard gold but has continued to talk up a new reserve currency concept to replace the U. S. dollar. The only reason the Chinese and others don't dump U. S. dollars is because it would be like shooting themselves in the foot.

Inflation, on top of excessive money supply dilution, will (unless mitigated by growth or stoppage) reduce the dollar's value. Ing estimates that the printing of money to bail out banks, autos and the U. S. economy will create a catch-up in gold bullion prices: "Gold should be US$9,000 an ounce to cover the current and projected U. S. monetary base," he says.

Read More:

http://www.nationalpost.com/opinion/columnists/story.html?id=974d25f5-8c5a-4bc2-a65c-3fbdc12fbdef

Gold Stocks Signalling Inflation?

This may be the most important chart of all, it's one I keep a good eye on. This is a chart of Gold Mining Stock ETF, symbol GDX. As you can readily see gold mining stocks have been rising lately. The gold stocks are smelling rising inflation down the pipe and are moving in anticipation of a rise in gold and silver. Owning GDX is a great way to get exposure to what may be an expolsive sector.-Lou

U.S. Plans To Secure Pakistan Nukes

This is the single, most important situation in the world right now. Can you imagine the Taliban or Al Qaida with nukes?-Lou

U.S. Has Plan to Secure Pakistan Nukes if Country Falls to Taliban

American intelligence sources say the military's chief terrorist-hunting squad has units operating in Afghanistan on Pakistan's western border and is working on a secondary mission to secure foreign nuclear arsenals if the Taliban or Al Qaeda overwhelm Pakistan.

The United States has a detailed plan for infiltrating Pakistan and securing its mobile arsenal of nuclear warheads if it appears the country is about to fall under the control of the Taliban, Al Qaeda or other Islamic extremists.

American intelligence sources say the operation would be conducted by Joint Special Operations Command, the super-secret commando unit headquartered at Fort Bragg, N.C.

JSOC is the military's chief terrorists hunting squad and has units now operating in Afghanistan on Pakistan's western border. But a secondary mission is to secure foreign nuclear arsenals -- a role for which JSOC operatives have trained in Nevada.

The mission has taken on added importance in recent months, as Islamic extremists have taken territory close to the capital of Islamabad and could destabilize Pakistan's shaky democracy.

"We have plans to secure them ourselves if things get out of hand," said a U.S. intelligence source who has deployed to Afghanistan. "That is a big secondary mission for JSOC in Afghanistan."

The source said JSOC has been updating its mission plan for the day President Obama gives the order to infiltrate Pakistan.

"Small units could seize them, disable them and then centralize them in a secure location," the source said.

Read More:
http://www.foxnews.com/politics/2009/05/14/plan-pakistan-teeters-falling-taliban/

India thinks Pak N-sites already in radical hands: Report

If this is true and I'm sure it is given the source, this is truly frightening.-Lou

India thinks Pak N-sites already in radical hands: Report

India Times May 16, 2009

India's Prime Minister Manmohan Singh has told President Obama that nuclear sites in Pakistan's restive frontier province are "already
partly" in the hands of Islamic extremists, an Israeli journal has said, amid considerable anxiety among US pundits here over Washington's confidence in the security of the troubled nation's nuclear arsenal.

Claims about the high-level exchange between New Delhi and Washington were made in the Debka, a journal said to have close ties with Israeli intelligence, under the headline "Singh warns Obama: Pakistan is lost." The brief story said the Indian prime minister had named Pakistani nuclear sites in the areas which were Taliban-Qaida strongholds and said the sites are already partly in the hands of "Muslim extremists." A sub-head to the story said "India gets ready for a Taliban-ruled nuclear neighbor."

There was no official word from either Washington or New Delhi about the exchanges, with India in the throes of an election and US winding down for the weekend. But US experts have been greatly perturbed in recent days about what they say is Washington's misplaced confidence in, and lackadaisical approach towards, Pakistan's nuclear assets.

The disquiet comes amid reports that Pakistan is ramping up its nuclear arsenal even as the rest of the world is scaling it down. "It is quite disturbing that the administration is allowing Pakistan to quantitatively and qualitatively step up production of fissile material without as much as a public reproach," Robert Windrem, a visiting scholar with the Center for Law and Security in New York University and an expert on South Asia nuclear issues told ToI in an interview on Thursday. "Iraq and Iran did not get a similar concessions... and Pakistan has a much worse record of proliferation and security breaches than any other country in the world."

Read More:
http://timesofindia.indiatimes.com/India-thinks-Pak-N-sites-already-in-radical-hands-Report/articleshow/4537037.cms

Continuing Claims For Unemployment Hit A Record

click on chart to enlarge

Here is a chart of continuing claims for unemployment benefits, pretty scary isn't it? This does not include those who have taken on part-time work or have exhausted benefits. There is no way this econmy improves until this chart stops reaching for the heavens.-Lou

A Little Sunday Humor

I have been telling you that the bank "Stress Tests" were a sham, using rosy economic forecasting and allowing the banks to "negotiate" a better grade. I was not the only one who thinks the stress tests were laughable. The folks at Saturday Night Live agree with me.-Lou

Beginning Of Inflation?

click to enlarge

This is a chart of the CRB Commodities Futures Index. After a huge deflationary drop in commodities prices the second half of 2008, commodities prices are turning up pointing to higher comsumer prices later this year. We are already seeing gasoline prices rising with price of oil. Couple the rise in commodity prices with rising yields in long-term U.S. Treasury bonds and the decline in the dollar and you have the telltale signs of inflation in the future.-Lou

China's yuan 'set to usurp US dollar' as world's reserve currency

This is what happens when a country lives beyond it's means and becomes the largest debtor nation in history.-Lou

China's yuan 'set to usurp US dollar' as world's reserve currency

The Chinese yuan is preparing to overtake the US dollar as the world's reserve currency, economist Nouriel Roubini has warned.

Professor Roubini, of New York University's Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan's ascendance.

Known as "Dr Doom" for his negative stance, Prof Roubini argues that China is better placed than the US to provide a reserve currency for the 21st century because it has a large current account surplus, focused government and few of the economic worries the US faces.

In a column in the New York Times, Prof Roubini warns that with the proposal for a new international reserve currency via the International Monetary Fund, Beijing has already begun to take steps to usurp the greenback.

China will soon want to see the yuan included in the International Monetary Fund's special drawing rights "basket", he warns, as well as seeing it "used as a means of payment in bilateral trade."

Prof Roubini's warning followed the US government's latest economic data that showed producer prices in April experienced their biggest year-on-year drop since 1950, falling 3.7pc.

Read More:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html