by Dr Jeffrey Lewis
The Silver-Coin-Investor.com

Precious metals prices were buffeted last week as news was released of a reduced economic growth rate in China that sparked renewed speculation of near term monetary easing by the People’s Bank of China or PBOC.
The release of softer Chinese GDP data may have prompted a rally in gold and silver prices as traders increasingly anticipated that the PBOC may move to increase economic production by lowering its benchmark interest rates. Chinese stock prices also generally improved.
Nevertheless, these initial gains were soon moderated by selling pressure and gap filling (where technically traders like to see the trade retrace a bit and fill in moves), that emerged in the metals on news that the Indian government would almost double bullion import duties — a move that was expected to dampen demand in the world’s top bullion consuming country.
Chinese Quarterly GDP Falls Below 9% Level
In particular, the Chinese National Bureau of Statistics put out its quarterly Gross Domestic Product or GDP report on January 17th, which indicated that the Chinese economy had grown by only 8.9% in the last quarter ending in December 2011 compared with the level of production seen in the same quarter of the previous year.
This result was significantly weaker than the 9.1% growth level seen the previous quarter and was also well off the recent 11.9% peak released in April of 2010, although it modestly exceeded market analysts’ consensus expectations of 8.7%.
Furthermore, this event marked the first time since January of 2010 that a Chinese GDP release had fallen below the psychological 9% level. The weaker data also demonstrated a continuation of the recent downwards trend in that closely watched economic indicator.
Weaker Chinese Growth Data and Home Sales Data Sparks PBOC Easing Speculation
The softer growth seen in China was largely attributed to a decline in the demand for exports due to the ongoing Eurozone debt crisis that has increased the odds that the PBOC may soon ease its currently tight monetary policy stance.
The Euro crisis also took a turn for the worse recently as credit downgrades of more Eurozone member nations were announced during the past week, and this has substantially dampened appetite for risk assets in emerging markets.
Another contributing factor supporting easier PBOC monetary policy was the recent weakness seen in domestic real estate prices in response to the Chinese government’s action to moderate property values. Chinese home sales data for 2011 showed an increase at the lowest level for three years.
India Almost Doubles Precious Metals Import Duties
Also significantly affecting bullion prices in recent days was the news released on January 17th that India would be boosting its import tax on gold by 90 percent and its silver import tax by 100%. The notable import duty rises were aimed at increasing the country’s revenue base by taxing jewelry metals that have historically been very popular as luxury and gift items within the country.
Since India (debatably with China) holds the top spot as the largest consumer of precious metals in the world, this import duty increase could significantly slow demand for physical bullion within that key emerging market economy.
Stock prices of Indian jewelers fell in response to the news, and bullion selling pressure emerged due to anticipated weaker demand, which helped soften gold and silver prices.

By Bob Chapman
TheInternationalForecaster.com

The world is waiting with bated breath for the US and its allies to attack Iran. We said this is a game and that the US is not logistically prepared for an Iran invasion. That we said will come in a year or more. Beating the war drums is not the same as war. The propaganda has been spewing forth for a month in order to relieve pressure on European financial problems simple misdirection and misinformation.

We believe part of this game is the result of Iran selling oil in other currencies over the past two years. The basis for the dollar’s strength is the petro dollar and if that grip is broken the US dollar will be in serious trouble. Being a corporatist, fascist dictatorial state allows the US to unilaterally do as it pleases. Financial sanctions on Iran will not work because they have powerful partners working with them, such as Russia, China, Japan and India. As far as others are concerned those who were beaten into submission by the State Department, we wonder where they will get their oil after the embargo is lifted? Actions bring consequences. A consequence of which can be pointed out in a recent agreement between China and Japan to deal in their own currencies, rather than in US dollars in trade settlement. The dethroning of the US petro-dollar is in process. The elitists in NYC and London are finding out Iran is no pushover as was Iraq and Libya. The US is never your friend and it is all about money and power. As a result the Japanese are buying Chinese bonds, which makes the agreement more significant. Over time the US dollar will lose its preeminent position and then finally the US will implement trade tariffs to finally stop the massive exodus of jobs and companies from the US. An important result as well will be the strengthening of the yen and yuan versus the dollar. If the euro fades from the scene it will make the yen and yuan more important. Without a euro the US dollar will be under intense pressure. For some time the euro has acted as blocker and cover for the dollar and that luxury is coming to an end. You just saw US backstage action in the form of grading house downgrades to make the euro the negative highlight. Those raters are all in the pocket of the City of London Wall Street and the Fed. That to us explains the timing and tells us they want the euro and Greek problems to go on as long as possible. These elitists could care less about the future credibility of S&P, Moody’s and Fitch. All they care about is immediate results. These same agencies gave AAA ratings to mortgage securities that were Triple B. The court said they made a mistake – a $4 trillion mistake? You have to be kidding us. The game is rigged and has been for a long, long time.

It is Monday and as we write the big financial meeting is being held in Europe. The proposals as we understand them are already set in stone. Greece will issue a new 30-year bond, initially paying 3.10%, which would rise over time to 4.75%. they call this an orderly default, as implemented in Argentina 10-years ago.

In addition a fiscal, ESM, pact will be implemented taking over each state’s budget and spending. That pact would eliminate state sovereignty. There would still be fines or controls for those states that broke the rules.

The World Bank disclosed last week that it was lowering world GDP growth rates from 3.6% to 2.5%. High-income nations fell from 2.7% to 1.4%, which for the US would be 1-1/2% to 2%, which we changed our figures to three weeks ago. The Bank sees Mexico at 3.5%, more then double the rate of the US. They see European growth at 3.3%, which we see at 2% at best.

If you can believe this, the European downgrades, now that they have been accomplished, has generally set support levels for stock and bond markets, this in spite of a probably 20% plus lower S&P earnings for 2012. In three-months the Dow and S&P are up about 20%, which can only be maintained at best.

The unbelievable prosperity since WWII is over, as use of credit is curtailed and the US and world returns to reality. The average debt increase is $2.5 billion per year or $50 billion a year. That sustainability cannot be maintained indefinitely.

Fewer companies in the U.S. plan to boost payrolls in early 2012 even as growth is projected to pick up, a survey showed.

The share of companies seeking to add workers in the next six months fell to 27 percent, the lowest in at least five quarters, and 64 percent said employment will not change, the National Association for Business Economics said today in Washington. Sixty-five percent of firms estimated the world’s largest economy will grow more than 2 percent this year, up from 16 percent in an October survey.

“The optimism reflects growth in the economy,” said Nayantara Hensel, chairwoman of the NABE outlook survey committee and professor of Industry and Business at the National Defense University in Washington. “But the optimism could change as there’s also uncertainty. That’s why we see a degree of caution on employment.”

An improvement in the jobless rate and retail sales going into the holiday season may have helped lift the outlook in the latest survey, she said. At the same time, employers were holding steady on hiring and investment plans given concern over Europe’s debt woes, efforts to trim the U.S. deficit and swings in the price of oil reflecting tensions with Iran, Hensel said.

The share projecting employment will increase was down from 29 percent in October and 42 percent in the January 2011 report. Eight percent said they will cut payrolls, down from 12 percent in the previous survey.

In the latest survey, taken Dec. 15 to Jan. 5, fewer participants also said they will pick up the pace of spending on new plants and equipment for the next 12 months. Fifty-three percent forecast a rise in capital investment, down from 60 percent in the prior survey, and 42 percent said it would stay the same.

While 29 percent of respondents projected sales would decrease in the next six months due to the debt crisis in Europe, 63 percent said it was unlikely to affect demand. Firms were about evenly divided over whether the failure of U.S. debt- reduction efforts would hurt their business.

A stable inflation outlook was among the bright spots in the report. About 55 percent of companies said materials costs were likely to remain little changed in the next three months, similar to the prior survey, and 71 percent of firms reported wages are holding steady.

Sixty-three NABE members responded to the survey. The National Association for Business Economics, founded in 1959, is the professional organization for people who use economics in their work.

South Carolina’s attorney general has notified the U.S. Justice Department of potential voter fraud.

Attorney General Alan Wilson sent details of an analysis by the Department of Motor Vehicles to U.S. Attorney Bill Nettles.

In a letter dated Thursday, Wilson says the analysis found 953 ballots cast by voters listed as dead. In 71 percent of those cases, ballots were cast between two months and 76 months after the people died. That means they “voted” up to 6 1/3 years after their death.

The letter doesn’t say in which elections the ballots were cast.

The analysis came out of research for the state’s new voter identification law. The U.S. Justice Department denied clearance of that law.

Wilson told Nettles he asked the State Law Enforcement Division to investigate.

The New American Divide The ideal of an ‘American way of life’ is fading as the working class falls further away from institutions like marriage and religion and the upper class becomes more isolated. Charles Murray on what’s cleaving America, and why.

The primary indicator of the erosion of industriousness in the working class is the increase of primeage males with no more than a high school education who say they are not available for work they are “out of the labor force.” That percentage went from a low of 3% in 1968 to 12% in 2008…

In 1960, America already had the equivalent of SuperZIPs in the form of famously elite neighborhoods.

But despite their prestige, the people in them weren’t uniformly wealthy or even affluent. Across 14 of the most elite places to live in 1960, the median family income wasn’t close to affluence. It was just $84,000 (in today’s purchasing power). Only one in four adults in those elite communities had a college degree.

By 2000, that diversity had dwindled. Median family income had doubled, to $163,000 in the same elite ZIP Codes. The percentage of adults with B.A.s rose to 67% from 26%. And it’s not just that elite neighborhoods became more homogeneously affluent and highly educated …

Why have these new lower and upper classes emerged? For explaining the formation of the new lower class, the easy explanations from the left don’t withstand scrutiny. It’s not that white working class males can no longer make a “family wage” that enables them to marry. The average male employed in a working-class occupation earned as much in 2010 as he did in 1960. It’s not that a bad job market led discouraged men to drop out of the labor force. Labor-force dropout increased just as fast during the boom years of the 1980s, 1990s and 2000s as it did during bad years.

As I’ve argued in much of my previous work, I think that the reforms of the 1960s jump-started the deterioration. Changes in social policy during the 1960s made it economically more feasible to have a child without having a husband if you were a woman or to get along without a job if you were a man; safer to commit crimes without suffering consequences; and easier to let the government deal with problems in your community that you and your neighbors formerly had to take care of. [Socialism]

Unemployment dropped in 37 U.S. states in December, indicating the improvement in the job market is broad based as the economy picks up.

Alabama showed the biggest decrease in joblessness, with its rate falling to 8.1 percent last month from 8.7 percent in November, a report from the Labor Department showed today in Washington. Payrolls increased in 25 states, led by Texas.

An average of 6.69 billion shares changed hands on U.S. exchanges in the 50 days ended Jan. 18, the fewest on record in Bloomberg data starting three years ago that excludes over-the-counter venues. On the New York Stock Exchange, volume has tumbled to the lowest level since 1999.

Warren Buffett’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanda Corp’s Keystone XL oil pipeline permit.

If the GOP had any smarts, they’d batter Obama and Buffett over this incessantly.

Bob Chapman on the Power hour – 23 January 2012

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By Bob Chapman
TheInternationalForecaster.com

We announced our belief a few weeks ago that the Fed loan to the ECB could with fractional banking be $10 trillion. This past week we found that Credit Suisse shares our ideas as well. We believe that what this move by the Fed and the ECB is telling us that this is probably it. We also ask again how can the banks in the LTRP repay the funds in a timely manner? No plan has been presented before or since, there is no plan. Again, just throw money at the problem. The only player really capable of saving Europe is Germany and they would destroy themselves in the process. Everyone should have seen this coming but no one did except a handful of insiders. The resultant use of funds since the ECB distribution is hardly even mentioned in the media. It is a big dark secret.

Will Germany want to rescue France or will France want to be rescued? We say it depends in part who the next president of France is in May. Based on current polls the socialists lead, but it is a very tight race. If Sarkozy loses in the primaries it will then depend on whether the conservatives throw their vote to Marine Le Pen and FN, something the conservatives have never done before. One thing is for sure if either the Socialist or the FN win the euro is history and perhaps the EU as well. We watched this years ago when the conservatives threw almost all their votes to the Socialists. This time it could be different.

As in Germany more than 50% of French voters want an end to the euro, but the major media does not bring this to anyone’s attention. The French are no longer anxious about their leadership position. They want France the way it once was; not jumbled up with a group of other countries. We saw this when we lived there 60 years ago. The French had a great drive on to make sure words like hotdog and weekend did not seep into the French language. We can vividly remember our daughter in Middle School in Lausanne, and Miss Galgosh storming the corridors yelling, parle français. You have to live in a culture to understand it.

If Le Pen eliminates Sarkozy, France will have set a new course no matter if it’s Hollande and Le Pen, part of which is the people versus the status quo. Germans and the French want change and that is rational considering their citizens no longer want the euro and all the responsibilities that go with it. This is the eternal game that is being played out within these countries. Even though the Federal Reserve came to the temporary rescue they have really lost their key front man in Sarkozy. The Fed, the US Treasury, the CIA and the Mossad are going to have to go to Plan B and we do not think they have an effective Plan B. The French are not dumb. They know exactly what has been going on. French banks and the French government have gone the limit in the attempts to save the euro and its constituent parts, the sovereign nations.

After French elections and later German elections we believe you will find that there will be cooperation on phasing out the euro among many things. The LTRO will allow for that transition phase. Greece has become a cat and mouse game and if the elitists and their appointed president think they are going to win they are mistaken. They lost 2-1/2 years ago. Once a new government is in place they’ll just reverse it all, default and go their own way, which they should have done 2-1/2 years ago, unfortunately Pasak sold them out. Greek creditors want a voluntary debt exchange, but they will take what they can get. In the end the creditors will sue and get nothing. Since when could you get blood from a stone: then there is the money owed via CDS, which is in the billions. Do you really believe credit default underwriters have any cash behind their promises to pay? It is all a scam. The backup funds do not exist. It should be noted no progress.

While Greece is headed to the dustbin the European one-worlders are fighting for an ESM, European Exchange Mechanism, which they plan to pass on January 30th in Mexico City. This would put the ESM online in July with a treasure chest of $650 billion, which may be increased. Where all the funds will come from remains to be seen and wait until the voters in each country discover they have been sold out again, and that their sovereignty is gone and with it their freedom and liberty. The banks do not have any transparency on the issue, so the public is essentially in the dark. That is the way the elitists like to work, secretly behind the scenes because you do not have a need to know.

Due to the LTRO at the ECB many investors are buying European bank debt again.

The downgrades of many sovereigns and banks recently cost the EFSF, its AAA rating. It fell from AAA to AA+. This is the pathway toward the implementation of the ESM, which has to be approved by all 27 EU members’ not just 17-euro zone members, as it was an amendment to the Lisbon Treaty. As of last week Germany refused to increase the size of the EFSF.

At the same time the ECB’s balance sheet has grown to $3.5 trillion dollars, which is larger than that of the Federal Reserve. This is a record and puts pressure on the euro, low interest rates and very high liquidity. The pledged collateral is in part financial garbage, and that means the euro will find it hard to stage a strong permanent rally.

Finland says the proposed new treaty is unnecessary and harmful. Their foreign minister says that Finland should not sign the treaty. The majority of the parliament has the same view.

During Sarkozy’s presidency almost $800 bullion was added to the national debt.

If we have a Greek default and more defaults to follow, will Germany leave the euro? It would give them the perfect opportunity to do so.

Bob Chapman on the Alex Jones show – 20 January 2012

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