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Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Smart Grid Security Virtual Summit 2012
Aug. 9, 2012
Sessions and Speakers
2:30 - 3:30 pm EDT
Is Current Legacy IPS And IDS Security Enough For The Smart Grid And Critical Infrastructure?
Larry Karisny, Director, ProjectSafety
Phil Smith, President and Chief Technology Officer, TLC Secure
Rajeev Bhargava, CEO and Founder, Decision-Zone
>> View Recording On-Demand >> View Abstract >> Download PDF
http://www.smartgridobserver.com/agenda-sgs.htm
State Department Orders Evacuation Of Lebanon Diplomats
09/06/2013 08:23 -0400
Tyler Durden
A month ago, when Obama was desperate for some distraction from the torrent of scandals plaguing his administration, he ordered the evacuation of countless US embassies around the world. In the meantime, Syria happened. And now, that the Syria conflict appears it may not get the required congressional approval, it is back to Plan A again.
http://www.zerohedge.com/news/2013-09-06/state-department-orders-evacuation-lebanon-diplomats
How the Bank Lobby Loosened U.S. Reins on Derivatives
By Silla Brush and Robert Schmidt
September 04, 2013 12:01 AM EDT
(special thanks to basserdan)
Commodity Futures Trading Commission Chairman Gary Gensler testifies before the Senate Banking, Housing and Urban Affairs Committee in the Dirksen Senate Office Building on Capitol Hill on July 30, 2013 in Washington, DC. Gensler and Securities and Exchange Commission Chairman Mary Jo White testified and took questions from Senators during the hearing titled, "Mitigating Systemic Risk in Financial Markets through Wall Street Reforms." Photographer: Chip Somodevilla/Getty Images
One by one, Gary Gensler’s supporters deserted him. Now the chief U.S. regulator of derivatives was being summoned by Treasury Secretary Jacob J. Lew to explain why he refused to compromise.
Banks and lawmakers, as well as financial regulators from around the world, had besieged Lew with complaints about Gensler’s campaign to impose U.S. rules overseas.
The July 3 meeting in Lew’s conference room with a view of the White House grew tense, according to three people briefed on it. Gensler argued his plan was vital if the U.S. hoped to seize meaningful authority over financial instruments that helped push the global economy to the brink in 2008, taking down American International Group Inc. (AIG) and Lehman Brothers Holdings Inc. and igniting the worst recession since the 1930s.
Lew insisted that Gensler coordinate better with the Securities and Exchange Commission, whose new chairman, Mary Jo White, was also present. Gensler, who was deep into negotiations with his European counterparts, was surprised by Lew’s demand. He’d been hearing the same request from lobbyists seeking to slow the process, and he told the Treasury chief it felt like his adversary bankers were in the room, the people said.
Gensler subsequently apologized to Lew for the outburst. He also softened his demands, cutting a deal with the European Union a week later. Gensler, chairman of a historically obscure agency called the Commodity Futures Trading Commission, had again pushed an idea to the brink until forced to settle.
Shrinking Purview
The fate of one of Gensler’s central goals shows why the U.S. attempt to rein in the world’s most secretive and profitable financial products falls short of the vision he promoted four years ago. While he won regulators the power to reach deep into a $633 trillion market, Wall Street preserved its dominance in derivatives trading with one of the largest sustained lobbying attacks on a single Washington agency.
In the end, the full force of the rules that the CFTC is writing under the authority of the 2010 Dodd-Frank financial regulatory law will apply to only a small share of the global market -- possibly less than 20 percent, according to data compiled by Bloomberg.
Whole segments of the business have been carved out of the rules. Derivatives based on foreign-exchange rates are largely exempt. Some firms are modifying their products to escape new oversight. And after Gensler’s compromise with Europe, American banks will be able to sell derivatives overseas without direct U.S. scrutiny.
AIG Bailout
Derivatives were famously labeled “financial weapons of mass destruction” by investor Warren Buffett before they became accelerants in the 2008 meltdown and led to the $182 billion U.S bailout of AIG. The insurer couldn’t cover credit-default swaps it sold to banks when the global squeeze began. The derivative rules now taking shape are a core element of Dodd-Frank, the government’s biggest foray into regulating the financial industry since the SEC was created during the Great Depression.
The stakes are high, both for big banks that have earned more than $50 billion a year dealing in derivatives and for the larger economy. While they are rarely traded by individuals, many businesses and institutions use derivatives in investment strategies, which affect heating-oil prices, college savings funds and highway projects. Dairy farmers buy them to protect against sudden price increases in corn and soybean meal for their cows, helping to keep milk prices stable for consumers.
The CFTC has produced about 60 rules for derivatives. This story reviews how the banking industry and its allies forced Gensler to retreat on the three most consequential ones for Wall Street. It is based on agency, court and congressional records; private notes, e-mails and documents; and interviews with dozens of executives, lobbyists and U.S. officials, some of who spoke on condition of anonymity to describe private meetings.
Lobbying Blitz
When the standing of finance lobbyists in Washington began to rebound along with the economy their industry sent into recession, they sought to influence the language in the CFTC’s intricate rulebook. They flooded the agency with visits, unleashed thousands of comment letters, enlisted sympathetic lawmakers and stoked differences between the CFTC and SEC.
Under the three-year assault, the CFTC created winners and losers with keystrokes. Changing a single number in one rule undermined potential competition to banks. Another tweak allows firms including Koch Industries Inc. and ConocoPhillips to trade billions of dollars in swaps and avoid the most stringent rules.
“The banks are going to be fine,” said Sunil Hirani, chief executive officer of trueEX Group LLC, who helped pioneer electronic trading of derivatives. “They are going to make a ton of money.”
Established Players
Jill E. Sommers, a Republican CFTC commissioner who stepped down in July, said the outcome leaves the big players in charge.
“Looking back, of course with 20-20 hindsight, I wish we would have done more to encourage competition,” she said. “The only people that can afford to stay in the business are the people who have already long established their footprint in the market.”
Pride of authorship helps explain why Gensler fought so hard. It’s been a closely held secret that he was the invisible hand behind Dodd-Frank’s derivatives section. His biggest coup was to slip carefully crafted language into the law that the banks didn’t initially realize could give the CFTC authority over their foreign branches.
Gensler turned his agency upside down trying to preserve the intent of his own text. His demanding style got results, while also driving aides to a point of exhaustion and sending some running for the exits. He alienated other commissioners and angered what he calls the G-16 -- the 16 big banks that, according to a 2010 Citigroup Inc. (C) report cited by Deloitte LLP, earn about $55 billion a year from derivatives.
Burned Bridges
In the end, Gensler also sacrificed his ambition, creating so many political enemies in Congress and the industry that his chances for a second term as chairman are dim.
“He burned a lot of bridges getting it all done, within the commission and internationally,” said David Hirschmann, president of the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce.
Gensler, 55, is hustling to finish the rules this year before his tenure at the CFTC ends Dec. 31. He says any shortcomings pale next to Dodd-Frank’s core accomplishment: Many derivative trades once handled privately are being forced into the open. The market will be cheaper for buyers and safer for the economy because participants will report transactions and clear them through a third party, putting up collateral.
Even that success may have unintended consequences. Some finance scholars, Wall Street banks and Gensler himself have warned that concentrating trades at a few big clearinghouses that settle trillions of dollars in deals creates a new risk --a potential too-big-to-fail powder keg when the next crisis hits.
Thousand Visits
The lobbying blitz pitted Gensler against banks, including the one where he started his career as a young star -- Goldman Sachs Group Inc. (GS), which made more than 150 visits and calls to the agency from April 2010 through July 2013, an analysis of CFTC records shows.
Representatives of Gensler’s G-16 opponents together made more than 1,000 contacts with the agency, the records show. They included lobbyists, lawyers and bank presidents. Alone or in groups, they attended more than a third of the 2,100 sessions that the CFTC’s staff reported holding with outsiders.
All told, more than 3,500 people joined meetings at the agency’s red-brick headquarters just outside Washington’s K Street lobbying corridor.
Diverse Lineup
The lineup shows how derivatives have penetrated economic life beyond Wall Street. Royal Dutch Shell Plc (RDSA) and Caterpillar Inc. sent emissaries. The American Bankers Association came calling, as did the American Bakers Association, Chicago Mayor Rahm Emanuel, the head of Carolina Cotton Growers Cooperative Inc., the director of fuel for AirTran Holdings Inc. and the treasurer of Walt Disney Co. (DIS)
(Among firms lobbying was Bloomberg LP, parent of Bloomberg News, which started an electronic derivatives-trading platform that competes with banks. The firm also filed an unsuccessful federal lawsuit against the CFTC involving its trading rules.)
The banking industry was the most persistent and well-financed of the visitors. In the first year after Dodd-Frank was enacted, Wall Street’s biggest lobbying group -- the Securities Industry and Financial Markets Association, known as Sifma -- paid more than $3 million to law firms working on regulations, public filings show. Individual banks spent millions more.
Sifma President Kenneth Bentsen said the industry’s dealings with Gensler aren’t about “a win or lose.” Banks that bear the burden of new rules have a responsibility to make sure lawmakers and regulators understand their perspective, he said.
“None of these things are as simple or as crystal clear as they were sold to be,” said Bentsen. “Gary is a very smart individual. He obviously was in the industry. He has been in government. He is very certain of his view of things and is very determined. That’s what guides him. But there is more than one view.”
Seminal Meeting
Gensler’s vision took shape on a January day in 2009. He sat in a glass-walled conference room across from two other people President-elect Barack Obama picked to rebuild the discredited U.S. oversight system for Wall Street: Timothy F. Geithner, who would be taking over the Treasury, and Mary Schapiro, nominated for chairman of the SEC.
Just as the 2001 terrorist attacks spawned a vast new national-security complex, the credit crisis was fueling calls for a regulatory wall against future financial disasters. All three agreed the U.S. had to wrest control from firms including Goldman Sachs, the biggest securities firm that was transformed into a bank, and JPMorgan Chase & Co. (JPM), the biggest U.S. bank by assets, both of which made billions selling derivatives behind closed doors before taking taxpayer bailouts in 2008.
‘No Books’
Gensler wanted trades to be public, buyers forced to post collateral and new businesses set up to compete with banks.
“We weren’t staffed,” Gensler said, describing the meeting in an interview. “There were no briefing books.” It was a “vision that kind of we cobbled together.”
Unlike regulators who have to learn the language of Wall Street, Gensler was a native speaker. With an MBA from the University of Pennsylvania’s Wharton School, he became one of the youngest partners in Goldman Sachs history. He quit at 39, with investments he recently reported to be worth more than $15 million, and joined Treasury in 1997 as an assistant secretary.
Gensler is more self-assured than the typical finance nerd. He’s fond of kicking off his shoes in the office. Unwinding after an industry conference in Florida last March, he pulled a female attendee onto the dance floor and gyrated expertly to pop rock tracks. A video clip went viral among Washington insiders, including surprised CFTC staff members.
Switching Sides
Gensler also surprised Wall Street with his two-step on derivatives. At Treasury, he advocated for their deregulation. He said he assumed that since banks were heavily regulated as institutions it would be redundant to make rules for each of their activities. “That was a bad assumption,” he said.
Derivatives and the debate over their effects on society are at least as old as capitalism. Some scholars trace them to about 580 B.C., noting that Greek philosopher Thales the Milesian was said to have gotten rich buying rights to purchase olive presses after discerning a big harvest was on the way.
A swap, a common form of derivative, is at its simplest a contract between two parties who agree to exchange money or goods depending on what happens to an asset. Swaps are often used to hedge risk. An investor in a company’s bonds might buy a credit-default swap, which provides a kind of insurance against the chance the firm can’t repay its debt.
AIG Bailout
By the late 1990s, the U.S. swaps market had grown beyond basic hedging into a casino of increasingly ingenious and interconnected products.
When Gensler met with Geithner and Schapiro at the Obama transition offices, set up in a glass-and-concrete office building between the U.S. Capitol and the White House, the government was well into the AIG bailout. Gensler wanted the new regulatory machine to reach beyond the credit-default swaps sold by AIG into all derivatives that aren’t traded on exchanges, the kind known as over-the-counter, or OTC, swaps.
“This would be the entire product suite,” he recalled saying.
To Geithner, Gensler’s views made sense. The Treasury chief had examined the derivatives market in 2005 and 2006 while he was head of the Federal Reserve Bank of New York. He saw risk-management practices that were stuck in the dark ages -- trades confirmed with paper, pencils and faxes -- and had virtually no oversight, according to a person familiar with his thinking.
Industry Roiled
Within months of the downtown Washington meeting, the Obama administration issued a proposal for “comprehensive regulation” of derivatives. News of that plan roiled the banking industry, which had long argued that swaps increase the flow of credit and reduce risk by spreading it around.
With few exceptions, Washington had sided with the banks over the years. “Regulation that serves no useful purpose hinders the efficiency of markets to enlarge standards of living,” then-Federal Reserve Chairman Alan Greenspan told Congress in 1998, explaining why swap rules weren’t necessary.
When regulation talk resurfaced, banks went looking for help again.
There is a “reasonably high risk that the OTC derivatives market could be destroyed,” Blythe Masters, then chairman of Sifma, said at a private April 2, 2009, meeting where Bank of England Deputy Governor Paul Tucker was also in attendance.
Challenging Government
Masters had helped JPMorgan create the credit derivatives market in the 1990s. She asked Tucker how banks could counter the “increasingly prevailing view within Washington DC and Main Street” that swaps threaten the financial system, according to minutes given to Sifma’s board members. Tucker suggested the industry “challenge the notion that government knows best and should engage the academic community,” the minutes show.
Masters now oversees JPMorgan’s commodities unit, which agreed to pay $410 million in July to settle claims it manipulated wholesale electricity markets. She declined through a spokesman to comment. Tucker didn’t respond to requests for comment sent to the Bank of England.
Bankers who told each other Gensler’s resume would make him sympathetic were soon disappointed. It had been more than a decade since he’d departed Goldman Sachs. He left the Treasury in 2001 when Republican George W. Bush became president. In the run-up to the global financial crisis he was largely focused on being a stay-at-home father for his three daughters and a caregiver for his wife, an artist. She died of cancer in 2006.
Rebuffing Bankers
In the intervening years his views had changed. In January 2010, Gensler accepted an invitation to lunch at New York’s Waldorf Astoria hotel with executives from Goldman Sachs, Credit Suisse Group AG (CSGN), Deutsche Bank AG (DBK), Bank of New York Mellon Corp. and others. He rebuffed their concerns, saying his duty now was to taxpayers, according to people who attended. Asked to name the main obstacle to an improved system, the people said, he gestured at his hosts and replied: “You.”
Congress was already at work on the Obama administration’s oversight plan for Wall Street, which reimagined regulation in areas including capital requirements, consumer finance and mortgages. The derivatives piece landed in the Senate Agriculture Committee. During drafting sessions, Gensler sometimes sat at the table reserved for staff, advising its Democratic chairwoman, Blanche Lincoln of Arkansas.
Gensler was reflecting a changed climate in Washington, where Wall Street wasn’t welcome on the front lines in Congress as investigators probed allegations of wrongdoing during the financial crisis. The industry that wanted to fight “tooth and nail” against swap rules turned to others to make its case, said Michael Barr, then an assistant Treasury secretary and an Obama administration point man on Dodd-Frank.
Fortune 500
“They brought in CEOs and treasurers of Fortune 500 companies to say how great it was for America that there was this closed dealer market,” Barr said.
Industrial firms such as Deere & Co. (DE) told lawmakers their balance sheets would crater if they had to post collateral on trades hedging costs of things like fuel. They secured one of the few exemptions written in the law. Since these so-called end users usually buy swaps from banks, the carve-out protects one Wall Street profit center.
The core financial industry won little in the drafts of Dodd-Frank, thanks in part to Gensler. As lawmakers debated the bill, he took sections home Friday nights. His aides would wake up on Saturdays to e-mails with suggestions and questions that he often expected them to deal with before Monday morning, according to former and current employees.
‘Cheat Sheet’
Dan Berkovitz, the CFTC general counsel at the time, and John Riley, the agency’s head of legislative affairs, sent text and suggestions to Democratic staff members on the House Financial Services and Agriculture committees that ended up in the bill almost verbatim, e-mails show.
“Here’s the cheat sheet,” Riley wrote as he offered advice to a House staff member in October 2009. In January 2010, he gave Senate aides Gensler’s thinking on trading rules, adding that a “more formal legislative proposal” would follow.
Gensler campaigned publicly and behind the scenes. He published a Feb. 24, 2010, column in the Financial Times titled, “How to stop another derivatives inferno.” He forwarded the piece to Obama, with a note telling the president that two top priorities -- plugging the end-user loophole and making trades more transparent -- “are being weakened as a result of opposition from Wall Street and corporate interests,” according to a copy of the memo attached to an e-mail to Congress.
Cocktail Hour
In June 2010, as House and Senate lawmakers negotiated the final language in Dodd-Frank, Gensler was seen by reporters padding around in his stocking feet for the late-night sessions. He whispered in Lincoln’s ear to ward off last-minute changes.
Hours after Obama signed Dodd-Frank that July, Gensler invited Capitol Hill staff members who had worked on the derivatives section to a briefing. The 18 months he had spent pressing his case had paid off: Most of what he and the administration had wanted, down to exact language in many cases, was now enshrined in law. “I felt terrific,” Gensler said.
Annette Nazareth, one of the finance industry’s leading Washington lawyers, heard about Gensler’s briefing. The meeting was to be “followed by a cocktail party as a ’thank you.’ How gracious,” she wrote in mock admiration in an e-mail to a friend who worked at the SEC on July 22, 2010.
Gensler is “the James Brown of the regulatory agencies,” Nazareth added, comparing him to the legendary hardest-working man in show business.
High Gear
The celebration was short. Gensler had to defend his congressional victories.
An agency that might only write five rules in a year was now going to do 60. He kicked the CFTC staff into high gear, reorganizing them into teams around each rule. He exiled team leaders who didn’t share his mission or perform to his standards, people with knowledge of the process said.
He ran the show more like a Goldman Sachs operator than a government bureaucrat. After he pledged to hold a transparent and cooperative process, other commissioners felt cut out of the communication loop. They were frustrated and angry when Gensler showed them complex proposals late in the process when he had been discussing them for weeks with the staff, according to former and current CFTC employees.
Staff members unaccustomed to working long hours, nights and weekends would occasionally sleep on the couches on the ninth floor, where the commissioners had their offices, the people said. With the industry arming for a major pushback, Gensler told them, speed and dedication were essential.
An early battle revolved around a number -- one that the CFTC wanted to write into the rules to inject competition into the swaps business.
Slicing Profits
Gensler’s idea was to crack open a closed system and create an electronic market more like futures or stocks. Under existing procedures, someone wanting to buy a swap was free to contact a single broker, often a large bank, and make a deal over the phone that would stay secret.
Big banks and brokers favored the status quo. If forced to show their cards to the entire market, others could see their bets and undermine their strategies. Their cut of the deals -- and profits -- might also come under scrutiny from customers and regulators. Electronic trading and other rules could slice bank revenue from over-the-counter swaps by 35 percent, from $33 billion to $21.2 billion, the Deloitte study said.
Gensler wanted many of the electronic transactions to take place on a new kind of platform, competing with banks and with futures exchanges owned by CME Group Inc. of Chicago and Atlanta-based IntercontinentalExchange Inc. (ICE) Publicly visible prices on these Swap Execution Facilities, or Sefs, would shift the advantage “from Wall Street to Main Street,” Gensler said.
Bidding Battle
How many bids would a swap buyer have to solicit? That was the number that set off a two-year fight between Gensler and the industry.
The topic was discussed more frequently than any other issue on the CFTC’s agenda. It came up during at least 375 meetings with outsiders, according to data assembled from published CFTC records.
One of the lobbyists most often present at those meetings was Micah Green of Patton Boggs LLP, records show. His firm was hired by the Wholesale Markets Brokers’ Association Americas, a trade group that includes swap brokers GFI Group Inc. (GFIG) and ICAP Plc (IAP), which reported spending more than $1 million on legal and advocacy work in the year ending June 2012. Green declined to comment. Along with Green, ICAP’s representatives were the top four visitors on the issue. Their main concern was preserving trading by phone.
Lobbyists also dragged out consideration of the rule by encouraging complaints from Capitol Hill, exploiting differences among the CFTC’s commissioners and seeking help at the SEC. Some firms that mulled opening Sefs drifted away during the delay.
Falling Back
At first, Gensler championed a fully public and electronic system, in which traders would only rarely be able to cut deals in private on the phone, according to a summary he released in late 2010.
Scott O’Malia, a Republican commissioner, sided with industry arguments that Gensler’s plan went beyond the CFTC’s authority under Dodd-Frank and wasn’t flexible enough for swaps that don’t trade as often as futures. The market needs time for “a transition or an evolution,” he said in an interview.
Gensler backtracked. He agreed that not everyone in the market needed to be asked for a bid. Instead, a swap buyer would have to request a set number of bids.
Gensler proposed that the number be set at five.
Immediately, banks and big swap buyers such as money management firms BlackRock Inc. (BLK) and Vanguard Group Inc. set out to cut the number. One tactic was to encourage a split with the SEC, which regulates about 5 percent of the swaps market and had to issue its own Dodd-Frank trading rules.
Sef-a-Palooza
The SEC was receptive. The agency had “a higher level of comfort than the CFTC” with letting market participants decide how many bids would be ideal, according to then-SEC chairman Schapiro. Her agency already oversaw off-exchange trading in equity and bond markets.
Gensler’s number felt arbitrary, Schapiro said in an interview. “How do you pick five?” Schapiro said. “Why not 10? Why not 3?”
The SEC torpedoed the CFTC’s idea, proposing that the number be reduced to just one.
Meanwhile, the CFTC stoked interest in the new system. In March 2011, it staged an event dubbed Sef-a-Palooza. Representatives from two dozen firms traveled to Washington to show their wares to a standing-room-only crowd. Among them were Tradeweb Markets LLC, MarketAxess Holdings Inc. (MKTX) and GFI Group Inc. (Also presenting was Bloomberg LP, parent of Bloomberg News, which has established a Sef.)
The CFTC predicted as many as 40 Sefs would be set up as competitors to the banks and exchanges.
‘Too Long’
Hirani, the derivatives pioneer who had a walk-on role in the 2010 film “Wall Street: Money Never Sleeps” and was one of the first to trade credit swaps electronically, initially was caught up in the hoopla and planned to start a Sef.
In time, he changed his mind. “I thought it would take too long based on our judgment of the lobbying that market participants would unleash,” Hirani said.
His prediction was borne out. Using the SEC’s proposal as a cudgel, banks including Goldman Sachs, JPMorgan and Deutsche Bank kept showing up at the CFTC arguing to drop the minimum entirely, records show.
On Capitol Hill, where banks were regaining influence as the credit crisis waned, the lobby found sympathizers in both parties, including Representative Barney Frank, the Massachusetts Democrat who was one of the bill’s namesakes. At a November 2011 hearing, he called the CFTC’s proposal “more intrusive and more complex than was necessary.”
Swing Vote
The swing vote on the five-member CFTC was Mark Wetjen, a Democrat and former policy adviser to Senate Majority Leader Harry Reid. Wetjen, who joined the agency in October 2011, had little experience with swap rules while working on Capitol Hill. In February 2013, he floated a plan for two bids. “It was the asset managers and hedgers who were most convincing, and they wanted it flexible,” he said in an interview.
The debate raged in mid-March when bankers and regulators gathered for an annual industry conference in Florida at the pink-stucco Boca Raton Resort and Club -- the same meeting where Gensler took his turn on the dance floor.
By the last week of April, Gensler realized the fight was over. He accepted Wetjen’s plan for two bids. His only consolation: The limit would rise to three bids after a year.
“I would have preferred to keep it closer to the five,” Gensler said in the interview.
Bart Chilton, a Democratic member of the CFTC, said he voted reluctantly for the compromise. “We certainly did only the bare minimum of what the drafters of Dodd-Frank envisioned,” Chilton said in an interview. “In the end, I think we caved in order to finalize the rule.”
Avoiding Labels
There was another number regulators had to pick: What amount of derivatives could a firm sell before it was big enough to be formally designated a swap dealer? That would mean the government would be constantly looking over its shoulder.
The task had its origins in a financial crisis a decade earlier. A small power company born in Nebraska transformed itself into a massive derivatives trading firm that was allowed to operate with almost no CFTC oversight. It became Enron Corp.
While Enron’s 2001 collapse was fueled more by accounting fraud than derivatives, government officials had been seeking for years to ensure that no company could escape regulation by essentially pretending to be in a less-risky business.
Gensler’s initial plan would slap the label “swap dealer” on anyone selling at least $100 million worth a year. That would capture dozens of firms far from Wall Street.
Hedging Prices
Energy executives who said they expected to escape Dodd-Frank by winning the end-user exemption from Congress rushed to get the $100 million threshold raised. Their yearlong campaign involved newly formed industry groups that wouldn’t disclose members, well-timed campaign contributions and another back-door assault by the SEC.
To see that the business went far beyond banks, all regulators had to do was to scan the roster of the leading trade organization for derivatives. Among the biggest members of the International Swaps and Derivatives Association were BP Plc (BP/), Shell and Koch Industries, which use swaps to hedge the price of oil and natural gas.
Over the past three decades, these energy companies and others built up side businesses selling derivatives to customers. Koch, for example, has said it was the first dealer of a swap to a major airline looking to hedge fuel costs.
‘BP Loophole’
The energy companies said they weren’t banks and shouldn’t be treated as if they were. Gensler saw it differently: The more of the business that remained outside the stiffest regulations, the more chance of another blow-up. He began calling it the “BP loophole.”
When meeting with lobbyists and industry lawyers, Gensler was quick to show off his mastery of market details, which left some visitors with the sense he had already formed his plan and wasn’t interested in their suggestions, according to multiple participants.
Terrence Duffy, executive chairman of CME Group, found Gensler to be different overall than previous CFTC chairmen. “They had a more collegial approach towards making sure the market had an understanding of what they were thinking,” he said in an interview.
Red Font
Early on in the swap-dealer debate, David Perlman of Bracewell & Giuliani LLP in Washington, a former chief counsel of Lehman’s commodity business, emerged as a leader of the opposition to Gensler. His Coalition of Physical Energy Companies included Shell, Apache Corp. (APA) and NRG Energy Inc. (NRG)
Perlman rewrote the text of Gensler’s proposal and sent it to the CFTC in early 2011. His version raised the $100 million bar to $3 billion. He crossed out the agency’s number in red font and put his in blue so no one could miss it, according to a copy later posted on the agency’s website.
The $3 billion threshold could help get many of his clients out from under the rules. “The consequence of crossing that line is significant,” he said in an interview.
Another trade group, the Commodity Markets Council, suggested to the CFTC that the cutoff be jacked up to $10 billion.
BP, Koch, Shell, Vitol Group, ConocoPhillips and Constellation Energy (CEP) Group Inc. joined together in yet another association -- a working group of commercial energy firms, according to public records and people with knowledge of the group’s members, which haven’t been publicly disclosed.
‘Very Harmful’
The group hired Sharon Brown-Hruska, a former acting chairman of the CFTC now with NERA Economic Consulting. She co-wrote a paper concluding that the agency’s plan to oversee energy firms as swap dealers would be “very harmful” for consumers. Republicans on Capitol Hill e-mailed it to reporters.
Brown-Hruska said in an interview the study was effective because it “focused on empirical analysis.” The CFTC proposal “just layered on costs and it would discourage legitimate and important hedging activity by those firms,” she said.
Gensler wouldn’t budge from his $100 million.
After Republicans became a majority in the House in 2011, their staff members met privately with financial lobbyists in the Rayburn office building. They strategized on ways to persuade Democratic members to sign onto bills aimed at slowing Gensler down, two people with knowledge of the sessions said.
Campaign Contributions
In October, Republican legislators wrote a bill that would order a $3 billion threshold for swap dealers. A few Democrats were on board, including Dan Boren of Oklahoma and Mike Ross of Arkansas. While never considered by the full House, it gave lawmakers a chance to hold a public hearing, during which they slammed Gensler’s plan.
One company that testified in support of the legislation was Constellation Energy. The political action committees of the Baltimore utility and the company that was in the process of acquiring it -- Chicago-based Exelon Corp. (EXC) -- together became among the largest contributors to the 2012 campaign of Representative Randy Hultgren, an Illinois Republican who was the bill’s sponsor. They gave a total of $12,500, federal election records show.
Hultgren said in a statement that he backed the bill to protect a “diverse group of Main Street end-users” that he said included Exelon and farmers’ cooperatives from “overly broad and burdensome rules that would threaten consumers with higher prices.”
Gallagher’s Plan
Paul Elsberg, a spokesman for Exelon, said the firm backs candidates “who we believe will support sound energy policies” for Illinois and the nation. “Dodd-Frank should not impose significant costs or restrictions on the ability of companies like ours to manage risk and to hedge our physical exposure to physical commodity prices,” Elsberg said.
At the SEC, industry arguments found a receptive audience in Daniel Gallagher, the newest commissioner and an avowed free-market Republican. SEC staff lawyers already were bucking Gensler, proposing a $1 billion threshold. Gallagher wanted it higher, at $10 billion, to capture only big Wall Street players.
Working with the SEC staff, Gallagher produced an alternative plan. It eventually called for an $8 billion level and a compromise that would drop it to $3 billion after a few years.
Gallagher worked quietly to sell the idea to his counterparts at the CFTC, according to people at both agencies. He invited Republican commissioners Sommers and O’Malia to lunch and spoke with Wetjen by phone, the people said.
‘Little Caper’
Gensler got wind of Gallagher’s campaign and called him in April 2012, a week before the agencies were scheduled to vote on the rule, said a person with knowledge of the conversation. The two men had been on friendly terms when both commuted by Amtrak between Washington and Baltimore. They hadn’t talked or crossed paths in the five months since Gallagher joined the SEC.
After exchanging some pleasantries, Gensler told Gallagher he knew about “your little caper,” as Gallagher later related to others at the SEC. Gallagher responded that he was merely attempting to help put forth responsible regulation.
In the end, Gensler capitulated. He was one of nine officials at both agencies who voted for the rule. Gensler said he would have liked a lower bar, but with so many rules to work on it was significant that “we got it done.”
The energy lobbyists were ecstatic. The NERA consulting firm, which had been hired by BP, Koch and the other energy companies, boasted on its website about the CFTC’s “significant reversal of course.”
Escaping Label
Firms including Exelon, ConocoPhillips, AGL Resources Inc. and MidAmerican Energy Holdings Co., some of which had warned investors that their companies might need to register as swap dealers, now reported they would escape the label.
The company that gave the BP Loophole its name wound up registering with the CFTC as a swap dealer after all. Scott Dean, a spokesman for BP, declined to comment. So far, Cargill Inc. is the only other energy or commodity firm to register.
One consequence of the energy firms’ win: Banks continue to dominate the business. “The large institutions who have always been major players in the swaps business are probably the only ones who can afford to be dealers because it is costly,” said Sommers, the former CFTC commissioner.
Some energy companies agreed. “This seems directly counter to the goal of Dodd-Frank to increase competition and reduce the concentration in large financial institutions,” said Lance Kotschwar, a lawyer for Gavilon Group LLC, who has worked on the issue for the Commodity Markets Council.
Border Security
Gensler still held out against pressure to erode the CFTC’s authority overseas. Few outside his inner circle realized how much of a hand he had in Dodd-Frank’s language on the matter.
The provision in the law begins by saying that the new derivatives oversight wouldn’t apply to trading outside the country. Then comes the key wording: “unless those activities have a direct and significant connection with activities in, or effect on, commerce of the United States.”
“I know who here drafted it,” Gensler said with a grin, without disclosing the name. “I know exactly who. And I thank them from time to time.”
The banking industry, despite employing hundreds of lobbyists and lawyers to watch the legislation, didn’t grasp its significance for almost a year. As the CFTC was writing its policy, lobbyists rushed to delay or kill it, enlisting foreign regulators and U.S. lawmakers in their campaign.
‘Next AIG’
To Gensler and his supporters, there was no sense clamping down on swap trading if the agency couldn’t see what U.S. firms did overseas. Didn’t AIG, which sold swaps out of a London subsidiary and held a French banking license, prove the danger?
“If you develop a set of rules that are designed to prevent the next AIG and it wouldn’t prevent the next AIG, that’s a problem,” said Barr, the former Treasury official.
While other countries were developing their own rules, some U.S. officials said they might not be as comprehensive or transparent.
Gensler’s education on the issue began much earlier than AIG. Working for Goldman Sachs in the early 1990s, he helped oversee the firm’s swaps book in Asia, which he said was recorded on one “massive Lotus spreadsheet.”
As a Treasury assistant secretary in 1998, Gensler was sent on an emergency mission to Greenwich, Connecticut, one Sunday to see if the government could stop the implosion of hedge fund giant Long-Term Capital Management.
Cayman Islands
After investigating the situation, Gensler rushed back to Washington for the Jewish holiday of Rosh Hashanah, calling Treasury Secretary Robert Rubin from the airport with his conclusion: Nobody had any idea what would happen to the firm’s $1 trillion swaps portfolio because it was handled out of a legal entity in the Cayman Islands. Gensler knew well how the industry used such business structures overseas. He had helped set them up at Goldman Sachs.
“I will never forget it,” said Gensler. “This was not a good phone call to make to the secretary of Treasury.”
So when lawmakers were drafting the derivatives bill in October 2009 and considered its overseas reach for five minutes during a seven-hour hearing, Gensler took special notice.
He put his lawyers to work. In late November, the CFTC’s Riley sent Agriculture Committee aide Clark Ogilvie and other House staffers four paragraphs for an “extraterritoriality provision,” according to an e-mail.
Wake-Up Call
The language in Riley’s e-mail was included verbatim in a 228-page amendment and approved on the House floor without debate. It never left the bill. In late December, after the House passed the measure, Riley sent the language to the Senate. Meanwhile, bank lawyers, including Nazareth, told clients the provision would limit the CFTC, not expand it, according to reports issued by her firm.
“I think that it was fairly common for people at that time to be reading it as a limitation,” Nazareth said in an interview.
Ten months later, Wall Street got its wake-up call. At an October 2010 public meeting at the CFTC, Berkovitz, the general counsel, announced that the law gave the agency “a wide reach and a broad reach” overseas. That could extend the rules to any branch or affiliate of a U.S. bank, even if the branch was selling swaps to non-U.S. customers.
Bankers left the CFTC stunned, according to several participants.
Bank Coalition
They quickly increased their lobbying. One of their main advocates was Edward Rosen, a partner with Cleary Gottlieb Steen & Hamilton LLP, who became the most frequent CFTC visitor on the issue, records show. Rosen was hired by an informal coalition of about a dozen large banks including Credit Suisse, Citigroup Inc. and Deutsche Bank. Each member kicked in at least $150,000 to start, according to two participants. Rosen didn’t respond to requests for comment.
The banks also enlisted allies in Congress and among overseas regulators. JPMorgan lawyer Don Thompson, testifying before a House panel in February 2011 on behalf of Sifma, said some of his firm’s overseas clients were threatening to take their business to non-U.S. firms like “Barclays or Credit Suisse or a European bank” that wouldn’t be subject to Dodd-Frank and could offer their services more cheaply.
Three months later, Senator Charles Schumer, a New York Democrat with close ties to Wall Street, led 18 members of his state’s congressional delegation in signing a letter saying Gensler’s proposals could have “significant negative effects on the competitiveness of U.S. institutions.”
Foreign Banks
Later in 2011, the law’s co-sponsor Frank weighed in, signing a letter to Gensler saying that “Congress generally limited the territorial scope” of the derivatives law. Frank said he was mainly motivated by concern about conflicts between CFTC and SEC rules.
Foreign banks were focused on the CFTC’s reach as well, not wanting certain of their own trades to fall under Dodd-Frank. The Institute of International Bankers, a trade group, led an effort to contact foreign regulators and politicians to put pressure on their American counterparts, according to people familiar with the meetings. In the end more than a dozen foreign regulators complained to U.S. officials about the CFTC.
As the pressure on Gensler increased, he got cover from the Treasury secretary. Geithner, in a June 2011 speech to bankers in Atlanta, said strong U.S. rules overseas would help avoid “a race to the bottom around the world.” He singled out the U.K. for its past “strategy of light-touch regulation to attract business to London, away from New York and Frankfurt” noting it “ended tragically.”
British Complaint
Blowback from the speech didn’t help Gensler’s case. British Prime Minister David Cameron went to Obama to complain, according to an official briefed on the matter.
In a small victory for the banks in late 2012, Gensler agreed to a six-month delay on determining the rule’s reach.
The squeeze on Gensler tightened as the July 12, 2013, deadline loomed. Banks and foreign regulators pressed for a further delay, and Gensler faced an insurrection at his own agency. “No one has ever accused Gary Gensler of being reasonable,” Sommers said at the time.
Gensler hadn’t even been able to lock in votes from the other two Democrats. Wetjen gave a speech in London June 25 in support of a slowdown. Chilton called for a compromise.
Then Gensler was summoned to Lew’s offices at the Treasury.
Pale Echo
The July 3 meeting was an echo of the 2009 meeting that launched his regulatory crusade. Gensler again found himself in a room with the heads of the Treasury and SEC. This time it was Lew and Mary Jo White instead of Geithner and Schapiro.
Lew, who had replaced Geithner in February, wasn’t happy to be drawn into the battle, according to the people briefed on the private session, who spoke on condition of anonymity. He said at the meeting that while he didn’t want to undermine Gensler’s plan, he wanted the CFTC chief to better share information with his European counterparts and the SEC.
After the discussion, Gensler called European negotiators offering to give up some of his demands, a person with knowledge of the talks said. The deal was struck with Europe 10 days later and then internally with Wetjen.
Spokesmen for Lew and White declined to comment.
While details are still being worked out, the compromise means trades involving overseas parties, even if handled by a U.S.-based bank, may fall under rules of another country provided those rules are deemed comparable. The process for making those rulings remains under debate.
EU Displeasure
The international hole that Gensler wanted to plug remains at least partly open.
The outcome was a relief to banks that had argued Gensler’s original vision was too ambitious and would have concentrated too much supervision in an agency ill-equipped to manage it.
Gensler’s foreign counterparts were especially angered by his brinksmanship.
Michel Barnier, the EU commissioner responsible for market regulation, said it was unfortunate that the agreement had to come “on the eve of the CFTC’s last meeting” on the matter.
The process, Barnier said, “isn’t necessarily a model.”
Weekend Conversion
As the CFTC retreats on foreign trading and other fronts, the market that’s left for it to oversee is shrinking. Firms are designing contracts so that they fall outside the swaps rules.
The phenomenon has become known as futurization. As far as financial engineering goes, it’s simple: take a swap and call it a future.
The first part of the business to move in that direction has been energy. Large energy companies with total swap dealing near the $8 billion limit were eager for a way to take some of their transactions off the count.
One weekend in October 2012, just before the firms had to start tallying trades under the new rules, ICE, the Atlanta-based exchange, put its futurization plan into effect. On Friday contracts were “swaps.” On Monday they were “futures.”
Within weeks, ICE and CME implemented plans to create similar contracts for the much larger markets in interest-rate and credit swaps.
If enough swaps migrate to futures exchanges, the profitability of alternative trading platforms like Sefs may be less robust. (Bloomberg LP, parent of Bloomberg News asked a federal court to force the CFTC to act to limit futurization. A judge dismissed the lawsuit, saying that the company had neither the standing nor the facts to support its case.)
About a dozen Sefs have been established so far. Hirani, the derivatives pioneer, decided in the end to hedge his bets, starting a firm that is both a Sef and a swaps exchange.
CFTC ‘Slap’
Advocates of less regulation say futurization shows the folly of the government spending several years drawing up complex rules for dynamic markets.
“It is a slap in the CFTC’s face,” said Hester Peirce, a senior research fellow at the Mercatus Center at George Mason University, who was on the Republican staff of the Senate Banking Committee when Dodd-Frank was drafted. “It’s the agency being told this whole scheme it dreamed up is not going to work.”
CME Group and ICE, along with London-based LCH.Clearnet Group Ltd., are also at the center of another vexing question about the new oversight apparatus. They operate swap clearinghouses. The rules for the first time require them to function as third parties for trillions of dollars in trades moving through their platforms, holding collateral from buyers and sellers in case a transaction goes bad.
The benefit is that clearinghouses will become central hubs where a bank’s exposure to derivatives can be monitored and regulators can get information on the market.
Both Sides
In the aggregate, though, a clearinghouse also winds up holding all of the risk because it acts as the other side of the trade for both buyers and sellers.
If a market blows up, the clearinghouse could turn into a sort of supercharged AIG, unable to cover the losses. That could create “potential vectors for the transmission of systemic risk,” the Clearing House Association, a trade group representing the largest commercial banks, said in a December 2012 report. Banks have been warning that clearinghouses aren’t holding enough capital and are using less-liquid collateral, such as corporate bonds rather than cash.
Duffy, of CME Group, said the exchange has put protections in place. “I would have concerns, too, if my trades were in a clearinghouse that I did not know exactly how was being risk-managed,” Duffy said. “We are working with the dealers to make sure they’re comfortable.”
Bailout Risk
Gensler, too, has expressed concern about clearinghouses. In May 2010 he wrote to Lincoln and Senator Christopher Dodd, a Connecticut Democrat who co-authored the financial regulatory law, in a failed attempt to keep the firms from being put under Federal Reserve supervision. Access to the central bank’s emergency lending could raise “the risk of clearinghouse failure and the possible need for a future bailout,” he wrote.
Gensler said that having central clearing is still better than entrusting the system to individual banks.
Analyzing whether the CFTC’s new rules will make the financial system safer than it was in 2008 remains an exercise in estimates. Derivative trades are still largely private and records kept by clearinghouses and other information repositories aren’t standardized. A review of the best available data from those sources and government filings shows that CFTC regulations for trading, clearing and reporting about transactions may be felt in less than a sixth of the market.
Calculating Market
The total value of over-the-counter derivatives traded worldwide is $633 trillion, according to the Basel, Switzerland-based Bank for International Settlements. More than half of that is held outside the U.S., according to government records, and could be mostly excluded from CFTC oversight.
Of the $300 trillion in derivatives held by U.S. banks, only a portion would fall under all the new restrictions, according to the review. The biggest banks sometimes trade half their swaps with overseas clients, and under the cross-border policies, those deals might be subject to foreign law instead of Dodd-Frank. After subtracting trades that fall under the foreign-exchange and end-user exemptions, as little as $100 trillion of the total $633 trillion could feel the full force of Gensler’s rules.
Jeffrey Harris, a former CFTC chief economist, said the exemptions mean that “a very small fraction of the total market” will fall under the new requirements.
“It may be as large as $100 trillion, but at the current time it is probably substantially smaller than that,” he said.
Gensler’s View
Gensler said that such a calculation doesn’t fully capture the scope of the CFTC’s new authority, which is laid out in 60 new regulations that touch on a broad swath of derivatives held in U.S. banks, a market worth $300 trillion. Swap dealers have already reported trillions of dollars in transactions that wouldn’t have been public under the old system, he said.
“The market is shifting,” Gensler said. “The public is far better off today with the transparency and the reforms we put in place.”
As the CFTC prepares for operational oversight, it faces more challenges. No longer a backwater, the agency’s resources haven’t caught up with its new responsibilities. This year it has a $207 million budget and 700 employees, making it less than a fifth of the size of the SEC.
It is “completely wrong” for Congress to keep the CFTC’s funding so low, said Schapiro, who as SEC chairman had a $1.4 billion budget at her disposal. If that isn’t fixed, she said, “We will have a false sense of security about what these rules can do for the stability of the financial system.”
Chairman’s Future
For Gensler himself, the future is also undetermined. With his tenure required to end by Dec. 31, Obama has given no sign that he will be reappointed to the commission, according to people briefed on the matter.
Investor advocates see that outcome as a measure of his success. Gensler shows that “you can go through the revolving door and serve with independence and integrity,” said Jeff Connaughton, a former Democratic Senate staff member who was involved in the Dodd-Frank debate and last year wrote a book chronicling the rise of Wall Street’s lobbying machine.
Hirschmann, of the Chamber of Commerce, said that while Gensler has dealt in a straightforward way with his trade group, he overreached on some proposals. He said it’s unclear whether the rules will accomplish Gensler’s goals.
“My guess is we will find some of it works, some of it didn’t, and we will have to come back and fix it,” Hirschmann said.
Gensler said he understood from the beginning that the original vision wouldn’t survive intact.
“Along the way that means there is some moderation and some compromise,” he said.
He and his inner circle wanted to focus on the most important measures and were able to “maintain the core,” he said. Even with reduced scope, the accomplishment is enormous, he said.
“This is a $300 trillion market coming out of darkness,” Gensler said.
For Related News and Information:
To contact the reporters on this story: Silla Brush in Washington at sbrush@bloomberg.net; Robert Schmidt in Washington at rschmidt5@bloomberg.net
To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net
http://mobile.bloomberg.com/news/2013-09-04/how-the-bank-lobby-loosened-u-s-reins-on-derivatives.html
GoldSeek Live! With Jim Willie of the “Hat Trick Letter” and Rudi Fronk, Chairman & CEO of Seabridge Gold Inc. this coming Monday, September 9th
5 September 2013 |
- Monday, September 9th at 11am EST
- Online:
-https://attendee.gotowebinar.com/register/257880909539196416
o Webinar ID: 106-402-475
- Presentation by Rudi Fronk, Chairman & CEO of Seabridge Gold Inc. (NYSE: SA | TSX: SEA)
- Q&A with Jim Willie, Editor at the “Hat Trick Letter”
GoldSeek.com will be hosting a special 60-minute live online event with Jim Willie of the “Hat Trick Letter” and Rudi Fronk, Chairman & CEO of Seabridge Gold Inc. this coming Monday, September 9th starting at 11am Eastern / 8 am PST.
GoldSeek.com readers will be able to attend this free online Presentation + Q&A with the CEO of Seabridge Gold and GoldSeek.com contributing author Jim Willie.
Jim’s most recent article has over 30,000 reads and 1.2k+ Facebook Likes. Read it here: Syria, Pipeline Politics, OPEC & the USDollar
Seabridge Gold (NYSE.SA, TSX.SEA) owns one of the world’s largest proven and probable reserves of gold located in one of the premier mining jurisdictions of Canada. With nearly 45 million ounces of gold reserves (plus 10 billion pounds of copper) between their two core properties and with nearly the same amount of shares outstanding, investors are leveraged to almost one ounce of gold reserve for each share. Read more from Peter Spina & Simon Russell from GoldSeek.com on Seabridge Gold.
To reserve your seat for this online event, just fill in your name and e-mail address here: https://attendee.gotowebinar.com/register/257880909539196416
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GoldSeek.com LIVE! Event:
- When: Monday, September 9th at 11am EST | 8am PST
- Online:https://attendee.gotowebinar.com/register/257880909539196416 | Webinar ID: 106-402-475
- Presentation: Rudi Fronk, Chairman & CEO of Seabridge Gold Inc. (NYSE: SA | TSX: SEA)
- Q&A with Jim Willie, Editor at the “Hat Trick Letter”
http://news.goldseek.com/GoldSeek/1378429200.php
Visual Capitalist Launches Scoring System To Compare Precious Metals Stocks
-- Posted Wednesday, 4 September 2013
Dynamic system uses data visualization to compare 20+ variables for hundreds of gold and silver juniors head-to-head.
Vancouver, BC — (SEPT. 3, 2013) - Visual Capitalist has launched a new subscription service for precious metals investors that allows for independent analysis and direct comparison of stocks on the TSX and TSX-V. Using a universal scoring system comprised of 20+ company metrics, Visual Capitalist’s “Tickerscores” tabulates a score for each company and compares them via jurisdiction and project stage.
(Video)
“With more than a thousand gold and silver companies out there, it can be very difficult for investors to find and evaluate new investment opportunities,” said Jeff Desjardins, CEO and President. “Our analysts have designed this service to help investors make sense of an otherwise complicated market. It can help them identify new opportunities and will save hours of valuable time on due diligence.”
Over a three month period from June 1 to August 30, the system was beta tested by 250 investors. Results from the system have been promising so far. After rating hundreds of companies, Visual Capitalist compiled the average returns of all companies in each score category. Companies with scores above 70 returned 14.2% while companies with scores above 50 gained 5.25%. Conversely, companies rated below 40, 30, and 20 returned 0.3%, -2.3%, and -10.37% respectively. Over this same time period, the TSX returned -1.51% and the TSX-V returned -0.9%. The five companies with the highest overall ratings had an average return of 25.1% over the same time period.
“Tickerscores is a dynamic platform that brings comprehensive research on mining companies to life,” says John Newell, Senior Investment Advisor with Jordan Capital Markets, “It combines the most important data on each stock with strong and intuitive visuals. This makes it easy for investors to track and evaluate the companies they follow.”
So far, more than 300 companies are covered in the system, but Visual Capitalist is aiming to have every single Canadian-listed company in the database by the end of 2013.
While the rating system that measures the overall “health” of companies is the major draw for investors, Tickerscores has many other features. Power Rankings, for example, track scores over time to show a stock’s momentum against its peers. Investors also get access to all of the individual metrics that are compiled for each stock. This includes data such as burn rates, G&A expense ratios, cash-to-market caps, drill hole scores, management and institutional ownership, and other data.
SparxTrading.com published an in-depth preview of Tickerscores over the summer, citing that: “Tickerscores does have the ingredients to literally redraw the map on how research on junior precious metal mining and exploration stocks gets done.”
Investors who subscribe to Tickerscores also get Visual Capitalist’s proprietary publications: Weekly Trends, Stock of the Week, and Market Intelligence. The cost per subscription is $35 per month and includes a 100% money-back guarantee. Visual Capitalist is also offering a 15% discount as an introductory offer for any subscription during the month of September 2013.
Visual Capitalist also sells individual reports on its website for as low as $49. Each individual report covers 15-60 similar companies within a specific geographical area and stage.
About Visual Capitalist
Visual Capitalist helps investors gain insight by combining proprietary research with data visualization and design. Visual Capitalist’s flagship product, Tickerscores, allows investors to compare mining stocks head-to-head and spot new opportunities. Based in Vancouver, the company has also developed the world’s largest database of investor education infographics on the natural resource sector.
-- Posted Wednesday, 4 September 2013 | Digg This Article | Source: GoldSeek.com
http://news.goldseek.com/FeaturedPR/1378306800.php
China backs Russia over Syria at G20 summit
By Timothy Heritage
ST. PETERSBURG, Russia
Thu Sep 5, 2013 8:06am EDT
(Reuters) - China warned on Thursday that military intervention in Syria would hurt the world economy and push up oil prices, reinforcing Vladimir Putin's attempts to talk U.S. President Barack Obama out of air strikes.
The rift over Syria could overshadow a summit of the Group of 20 (G20) developed and developing economies in St. Petersburg at which global leaders want to forge a united front on growth, trade, banking transparency and fighting tax evasion.
The club that accounts for two thirds of the world's population and 90 percent of its output is divided over issues such as turmoil in emerging markets and the Federal Reserve's decision to end its program of stimulus for the U.S. economy.
But no rift is wider than the one between the U.S. and Russian leaders on possible military intervention in Syria to punish President Bashar al-Assad over a chemical weapons attack that killed hundreds of people on August 21.
Putin was isolated on Syria at a Group of Eight meeting in June, the last big meeting of world powers, but now has China to back him at the G20 summit in Russia's former imperial capital.
"Military action would have a negative impact on the global economy, especially on the oil price - it will cause a hike in the oil price," Chinese Vice Finance Minister Zhu Guangyao told a briefing before the start of the G20 leaders' talks.
In Beijing, Foreign Ministry spokesman Hong Lei reiterated that any party resorting to chemical warfare should accept responsibility for it but said unilateral military actions violate international law and would complicate the conflict.
Like Moscow, one of Syria's main arms suppliers, Beijing has veto powers on the United Nations Security Council. Obama is unlikely to win Security Council approval for military action but is seeking the approval of the U.S. Congress.
France echoed Obama's call for action over the gas attack, which Washington blames on Syrian government troops and Moscow says may have been carried out by rebels trying to oust Assad.
"The position of France is to punish and negotiate," Foreign Minister Laurent Fabius told France 2 television before travelling to St. Petersburg, where Putin is hosting the summit in a tsarist palace on the coast.
"We are convinced that if there is no punishment for Mr. Assad, there will be no negotiation," he added. "Punishment will allow negotiation, but obviously it will be difficult."
Fabius, whose country is preparing to support the U.S. military action with own forces, said Syria would be discussed at the summit even though it is not formally on the agenda.
Putin has said he would like to hold one-on-one talks with Obama but a Kremlin spokesman said no such meeting was planned. Last month, Obama pulled out of talks with Putin that had been scheduled for Wednesday, and U.S.-Russian ties are in freefall.
Foreign ministers from key states in the G20 - which includes all five permanent U.N. Security Council members - will also discuss Syria on the sidelines of the meeting.
Any G20 decision on Syria would not be binding but Putin would like to see a consensus to avert military action in what would be a significant - but unlikely - personal triumph.
Obama used a visit to Sweden on Wednesday to build his case for a military response, saying: "The international community's credibility is on the line." Putin increased the volume as well, accusing Secretary of State John Kerry of "lying" by playing down the role of the militant group al Qaeda with rebel forces.
LOSS OF HARMONY
The G20 achieved unprecedented cooperation between developed and emerging nations to stave off economic collapse during the 2009 financial crisis, but the harmony has now gone.
There are likely to be some agreements - including on measures to fight tax evasion by multinational companies - at the summit in the spectacular, 18th-century Peterhof palace complex, built on the orders of Tsar Peter the Great.
An initiative will be presented to leaders on refining regulation of the $630-trillion global market for financial derivatives to prevent a possible markets blow-up.
Steps to give the so-called 'shadow banking' sector until 2015 to comply with new global rules will also be discussed.
But consensus is proving hard to achieve among developed economies as the United States takes aggressive action to spur demand and Europe moves more slowly to let go of austerity.
Meanwhile, emerging economies in the BRICS countries - Brazil, Russia, China and South Africa - are divided over the role of the U.S. dollar in the world economy. And there has been no sign of them rallying behind the fifth BRICS member, India, after it called on Friday for joint currency intervention.
Russia and China also joined forces in warning about the potential impact of the Fed ending its bond-buying program to stimulate the economy. Zhu urged the United States to be "mindful of the spillover effects and work to contribute to the stability of the global financial markets and the steady recovery of the global economy".
The International Monetary Fund will call at the meeting for strengthened global action to revitalize growth and better manage risks, according to an IMF document seen by Reuters.
But with the United States and other advanced economies picking up speed, the IMF said it still expected global growth to accelerate in 2014 from this year, helped by the highly accommodative monetary conditions in the rich world.
Further friction on the fringes of the summit could be caused by Obama's plans to meet human rights activists including members of a gay rights group which staged protests against a law Putin signed banning "gay propaganda" among children.
(Reporting by Gernot Heller, Luke Baker, Tetsushi Kajimoto, Lidia Kelly, Katya Golubkova, Alessandra Prentice and Denis Dyomkin, and by Ben Blanchard in Beijing; Writing by Timothy Heritage; Editing by Steve Gutterman and Alastair Macdonald)
http://www.reuters.com/article/2013/09/05/us-russia-g-idUSBRE98315S20130905
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Additional Information
Wall Street’s Secret “Economic Endgame”: Making the World Safe for Banksters, Syria in the Cross-hairs
By Ellen Brown
Global Research, September 04, 2013
Iraq and Libya have been taken out, and Iran has been heavily boycotted. Syria is now in the cross-hairs. Why? Here is one overlooked scenario . . .
In an August 2013 article titled “Larry Summers and the Secret ‘End-game’ Memo,” Greg Palast posted evidence of a secret late-1990s plan devised by Wall Street and U.S. Treasury officials to open banking to the lucrative derivatives business. To pull this off required the relaxation of banking regulations not just in the US but globally. The vehicle to be used was the Financial Services Agreement of the World Trade Organization.
The “end-game” would require not just coercing support among WTO members but taking down those countries refusing to join. Some key countries remained holdouts from the WTO, including Iraq, Libya, Iran and Syria. In these Islamic countries, banks are largely state-owned; and “usury” – charging rent for the “use” of money – is viewed as a sin, if not a crime.That puts them at odds with the Western model of rent extraction by private middlemen. Publicly-owned banks are also a threat to the mushrooming derivatives business, since governments with their own banks don’t need interest rate swaps, credit default swaps, or investment-grade ratings by private rating agencies in order to finance their operations.
Bank deregulation proceeded according to plan, and the government-sanctioned and -nurtured derivatives business mushroomed into a $700-plus trillion pyramid scheme. Highly leveraged, completely unregulated, and dangerously unsustainable, it collapsed in 2008 when investment bank Lehman Brothers went bankrupt, taking a large segment of the global economy with it. The countries that managed to escape were those sustained by public banking models outside the international banking net.
These countries were not all Islamic. Forty percent of banks globally are publicly-owned. They are largely in the BRIC countries—Brazil, Russia, India and China—which house forty percent of the global population. They also escaped the 2008 credit crisis, but they at least made a show of conforming to Western banking rules. This was not true of the “rogue” Islamic nations, where usury was forbidden by Islamic teaching. To make the world safe for usury, these rogue states had to be silenced by other means. Having failed to succumb to economic coercion, they wound up in the crosshairs of the powerful US military.
Here is some data in support of that thesis.
The End-game Memo
In his August 22nd article, Greg Palast posted a screenshot of a 1997 memo from Timothy Geithner, then Assistant Secretary of International Affairs under Robert Rubin, to Larry Summers, then Deputy Secretary of the Treasury. Geithner referred in the memo to the “end-game of WTO financial services negotiations” and urged Summers to touch base with the CEOs of Goldman Sachs, Merrill Lynch, Bank of America, Citibank, and Chase Manhattan Bank, for whom private phone numbers were provided.
The game then in play was the deregulation of banks so that they could gamble in the lucrative new field of derivatives. To pull this off required, first, the repeal of Glass-Steagall, the 1933 Act that imposed a firewall between investment banking and depository banking in order to protect depositors’ funds from bank gambling. But the plan required more than just deregulating US banks. Banking controls had to be eliminated globally so that money would not flee to nations with safer banking laws. The “endgame” was to achieve this global deregulation through an obscure addendum to the international trade agreements policed by the World Trade Organization, called the Financial Services Agreement. Palast wrote:
Until the bankers began their play, the WTO agreements dealt simply with trade in goods–that is, my cars for your bananas. The new rules ginned-up by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.
Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”
And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.
The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organization.
WTO members were induced to sign the agreement by threatening their access to global markets if they refused; and they all did sign, except Brazil. Brazil was then threatened with an embargo; but its resistance paid off, since it alone among Western nations survived and thrived during the 2007-2009 crisis. As for the others:
The new FSA pulled the lid off the Pandora’s box of worldwide derivatives trade. Among the notorious transactions legalized: Goldman Sachs (where Treasury Secretary Rubin had been Co-Chairman) worked a secret euro-derivatives swap with Greece which, ultimately, destroyed that nation. Ecuador, its own banking sector de-regulated and demolished, exploded into riots. Argentina had to sell off its oil companies (to the Spanish) and water systems (to Enron) while its teachers hunted for food in garbage cans. Then, Bankers Gone Wild in the Eurozone dove head-first into derivatives pools without knowing how to swim–and the continent is now being sold off in tiny, cheap pieces to Germany.
The Holdouts
That was the fate of countries in the WTO, but Palast did not discuss those that were not in that organization at all, including Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran. These seven countries were named by U.S. General Wesley Clark (Ret.) in a 2007 “Democracy Now” interview as the new “rogue states” being targeted for take down after September 11, 2001. He said that about 10 days after 9-11, he was told by a general that the decision had been made to go to war with Iraq. Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.
What did these countries have in common? Besides being Islamic, they were not members either of the WTO or of the Bank for International Settlements (BIS). That left them outside the long regulatory arm of the central bankers’ central bank in Switzerland. Other countries later identified as “rogue states” that were also not members of the BIS included North Korea, Cuba, and Afghanistan.
The body regulating banks today is called the Financial Stability Board (FSB), and it is housed in the BIS in Switzerland. In 2009, the heads of the G20 nations agreed to be bound by rules imposed by the FSB, ostensibly to prevent another global banking crisis. Its regulations are not merely advisory but are binding, and they can make or break not just banks but whole nations. This was first demonstrated in 1989, when the Basel I Accord raised capital requirements a mere 2%, from 6% to 8%. The result was to force a drastic reduction in lending by major Japanese banks, which were then the world’s largest and most powerful creditors. They were undercapitalized, however, relative to other banks. The Japanese economy sank along with its banks and has yet to fully recover.
Among other game-changing regulations in play under the FSB are Basel III and the new bail-in rules. Basel III is slated to impose crippling capital requirements on public, cooperative and community banks, coercing their sale to large multinational banks.
The “bail-in” template was first tested in Cyprus and follows regulations imposed by the FSB in 2011. Too-big-to-fail banks are required to draft “living wills” setting forth how they will avoid insolvency in the absence of government bailouts. The FSB solution is to “bail in” creditors – including depositors – turning deposits into bank stock, effectively confiscating them.
The Public Bank Alternative
Countries laboring under the yoke of an extractive private banking system are being forced into “structural adjustment” and austerity by their unrepayable debt. But some countries have managed to escape. In the Middle East, these are the targeted “rogue nations.” Their state-owned banks can issue the credit of the state on behalf of the state, leveraging public funds for public use without paying a massive tribute to private middlemen. Generous state funding allows them to provide generously for their people.
Like Libya and Iraq before they were embroiled in war, Syria provides free education at all levels and free medical care. It also provides subsidized housing for everyone (although some of this has been compromised by adoption of an IMF structural adjustment program in 2006 and the presence of about 2 million Iraqi and Palestinian refugees). Iran too provides nearly free higher education and primary health care.
Like Libya and Iraq before takedown, Syria and Iran have state-owned central banks that issue the national currency and are under government control. Whether these countries will succeed in maintaining their financial sovereignty in the face of enormous economic, political and military pressure remains to be seen.
As for Larry Summers, after proceeding through the revolving door to head Citigroup, he became State Senator Barack Obama’s key campaign benefactor. He played a key role in the banking deregulation that brought on the current crisis, causing millions of US citizens to lose their jobs and their homes. Yet Summers is President Obama’s first choice to replace Ben Bernanke as Federal Reserve Chairman. Why? He has proven he can manipulate the system to make the world safe for Wall Street; and in an upside-down world in which bankers rule, that seems to be the name of the game.
Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her websites are http://WebofDebt.com, http://PublicBankSolution.com, and http://PublicBankingInstitute.org.
http://www.globalresearch.ca/wall-streets-secret-economic-endgame-making-the-world-safe-for-banksters-syria-in-the-cross-hairs/5348107
Gold And Silver Safe Haven Status Displayed
Sep 4 2013
Emmet Kodesh
Seeking Alpha
Disclosure: I am long AG, GEMS. (More...)
The markets got a surprise about 11:15 Tuesday morning that underscored their sensitivity to political hints and trends. As the day wore on, the status of PMs (precious metals and miners) as safe havens and, currently, as value buys was underscored. Yes, the miners too: the best silver companies like Fortuna Silver (FSM), First Majestic (AG) and Endeavour Silver (EXK), profiled here showed gains of 2.41%, 2.89% and 4.22% respectively.
Let's look at the macro context and the performance of PMs as a barometer of the socio-economic and geopolitical weather and for guidance through autumn, fast approaching.
Speaker of the House John Boehner told us early on the holiday weekend that Congress would be in recess and consider the President's request for military intervention in Syria on its return, September 9. But the Speaker must have had some conversations and an overnight conversion late Monday because on Tuesday he announced his support for "the President's call to action." Many others from both parties said intervention should occur. All and sundry were assured that it would be intervention light. The Assad regime would "weather the attack." We and unspecified allies would only "degrade his capabilities" a bit, "no boots on the ground," etc. He will save face, we will save face and things will be neat, tidy and result in democracy.
The indices had opened with a rush. The S&P jumped from its Friday close at 1632 to 1651 at 9:45 on expectations that nothing major would occur for awhile. It trended down a bit and at 11:15 was at 1648.4 when news hit of pending Senate hearings and a full-court press by the administration for action. By 11:30 the S&P hit 1640 and by 2:51pm had made six touches at 1634 till some liquidity injections made for a close at 1638. "Renewed worries about a Syria attack," wrote the Washington Post, "dampened an early rally."
The plan is to stir the pot just a bit, for humanitarian reasons and then to stand back and let progressive forces, "the young, secular, tech-savvy" cadres about whom so much ink has been spilt for 30 months, proceed to an era of peace, freedom and non-violent parliamentary exchange, -- like in Egypt since we ditched Mubarak. The sales pitch is familiar: our action will be quick and cheap, that's the plan. But when you toss a few matches into a pile of firecrackers, as Ronald Reagan had the Navy do near Beirut 31 years ago the consequences can be messy and sad. So the action in the markets Tuesday was a foretaste of volatility to come.
Amid the proclamations and passions one hardly noticed that the 10-year yield climbed back to 2.85%. Everyone servicing debt like adjustable rate mortgages or equity lines knows the stakes for continued QE. In 14 weeks there has been a 75% rise in rates. Debt service is becoming hard and the nominal value of bonds is sinking. The economy and markets are suffering and will suffer more if bonds behave like equities.
The era of stable bond prices and stable income disappeared six years ago and is unlikely soon to return. Another storm-maker is the debate on the debt-ceiling which like many things is now hidden by the cloud of dust the government has chosen to make over Syria. Only four years ago the Secretary of State dined amicably with the latest "Hitler," Bashir Assad and his wife. That datum is pertinent to markets because it indicates the often irrational and shifting agendas of our diplomatic - financial echelons. Recognizing this allows one to adopt a defensive position and select growth areas.
In the markets on the first trading day of September, this context highlighted the value of PMs as a safe haven and, amid other, overbought sectors, a value buy: bullion prices still are far below 1980 inflation-adjusted levels even though demand by investors and industry has increased dramatically. This is especially true for silver which, like silver miners, performed strongly all day. The iShares Silver Trust (SLV) rose 3.54% and Sprott Physical Silver (PSLV) rose 3.50% while the S&P showed an after-hours gain of .45%. Spider Gold (GLD) was up 1.31% while Sprott Physical Gold Trust (PHYS) rose 1.20%. The favorite punching bag for most skeptics, Barrick Gold (ABX) rose 1.88% which would not surprise the analysts at TD Securities who recently made it a "buy" with a 2013 target of $25.
Perhaps the most important news for commodities including PMs, and for commodity exporting nations like Canada, Australia, Chile and the US was the 2.44% rise of copper (JJC), buoyed by China's strong August PMI, its second month of expansion, a trend reversal that carries good short and mid-term news for world economies if Sovereign debt and currency crises can be contained. Nearly all commodities, led by aluminum (JJU) +3.09, coal (KOL) +2.15, copper miners (COPX) +2.87, fertilizers (SOIL) +1.13%, natural Gas (GAZ) +1.67% and Timber (CUT) +1.33%, had strong days with silver the best of all. The only commodity that matched silver's strong day was a similar store of wealth, the Pure Funds Diamond / Gemstone ETF (GEMS) at +3.67%. The results show how investors and traders are reading the unstable macro situation. In a bad August for major indices, the only ones to perform well were those in commodity-hungry China, up over 5%.
Regarding concern about equities generally, Doug Short recently discussed the S&P 140-year trend line, noting that we are about 62% above it while the average level (above or below) is about 40%. For those thinking about corrections, regression to average bull market levels would mean an S&P around 1410. Regression to the mean long-term trend line would be S&P 1000. Regression to the major bottoms of 1920, 1932 and 1982 would mean "an S&P falling to the 450-500 range" Short writes. Right now that is unthinkable for most analysts but it suggests that the thesis of a 20% correction to the level of late 4Q 2012 is possible. Cash and commodities look best in this context and by historic trends.
Takeaways: The data from China the past two months and issues on tap in the West and Middle East reinforce two points I have been making since spring: 1) reduce bond allocation. Balance in asset classes is important but there are times to get out of a rip tide. Uncertainty about QE's continuance or its ability to stem rising yields suggests one sell down fixed income so one can buy back, if one needs or chooses to do so, at lower prices. 2) PMs, precious Gems and other commodities including energy are the best plays at present. These sectors are volatile but they are in tune with the times and PMs have enormous upward pressure from rising demand and supply reduced by cutbacks in capex and E & D during the decline from the 2011 highs.
The rise of PMs may be ragged, that is par for the course, but in the flight to safety as currencies waver, yields rise and conflicts heat up, silver and gold will gather strength.
http://seekingalpha.com/article/1671552-gold-and-silver-safe-haven-status-displayed
Gold And Silver Safe Haven Status Displayed
Sep 4 2013
Emmet Kodesh
Seeking Alpha
Disclosure: I am long AG, GEMS. (More...)
The markets got a surprise about 11:15 Tuesday morning that underscored their sensitivity to political hints and trends. As the day wore on, the status of PMs (precious metals and miners) as safe havens and, currently, as value buys was underscored. Yes, the miners too: the best silver companies like Fortuna Silver (FSM), First Majestic (AG) and Endeavour Silver (EXK), profiled here showed gains of 2.41%, 2.89% and 4.22% respectively.
Let's look at the macro context and the performance of PMs as a barometer of the socio-economic and geopolitical weather and for guidance through autumn, fast approaching.
Speaker of the House John Boehner told us early on the holiday weekend that Congress would be in recess and consider the President's request for military intervention in Syria on its return, September 9. But the Speaker must have had some conversations and an overnight conversion late Monday because on Tuesday he announced his support for "the President's call to action." Many others from both parties said intervention should occur. All and sundry were assured that it would be intervention light. The Assad regime would "weather the attack." We and unspecified allies would only "degrade his capabilities" a bit, "no boots on the ground," etc. He will save face, we will save face and things will be neat, tidy and result in democracy.
The indices had opened with a rush. The S&P jumped from its Friday close at 1632 to 1651 at 9:45 on expectations that nothing major would occur for awhile. It trended down a bit and at 11:15 was at 1648.4 when news hit of pending Senate hearings and a full-court press by the administration for action. By 11:30 the S&P hit 1640 and by 2:51pm had made six touches at 1634 till some liquidity injections made for a close at 1638. "Renewed worries about a Syria attack," wrote the Washington Post, "dampened an early rally."
The plan is to stir the pot just a bit, for humanitarian reasons and then to stand back and let progressive forces, "the young, secular, tech-savvy" cadres about whom so much ink has been spilt for 30 months, proceed to an era of peace, freedom and non-violent parliamentary exchange, -- like in Egypt since we ditched Mubarak. The sales pitch is familiar: our action will be quick and cheap, that's the plan. But when you toss a few matches into a pile of firecrackers, as Ronald Reagan had the Navy do near Beirut 31 years ago the consequences can be messy and sad. So the action in the markets Tuesday was a foretaste of volatility to come.
Amid the proclamations and passions one hardly noticed that the 10-year yield climbed back to 2.85%. Everyone servicing debt like adjustable rate mortgages or equity lines knows the stakes for continued QE. In 14 weeks there has been a 75% rise in rates. Debt service is becoming hard and the nominal value of bonds is sinking. The economy and markets are suffering and will suffer more if bonds behave like equities.
The era of stable bond prices and stable income disappeared six years ago and is unlikely soon to return. Another storm-maker is the debate on the debt-ceiling which like many things is now hidden by the cloud of dust the government has chosen to make over Syria. Only four years ago the Secretary of State dined amicably with the latest "Hitler," Bashir Assad and his wife. That datum is pertinent to markets because it indicates the often irrational and shifting agendas of our diplomatic - financial echelons. Recognizing this allows one to adopt a defensive position and select growth areas.
In the markets on the first trading day of September, this context highlighted the value of PMs as a safe haven and, amid other, overbought sectors, a value buy: bullion prices still are far below 1980 inflation-adjusted levels even though demand by investors and industry has increased dramatically. This is especially true for silver which, like silver miners, performed strongly all day. The iShares Silver Trust (SLV) rose 3.54% and Sprott Physical Silver (PSLV) rose 3.50% while the S&P showed an after-hours gain of .45%. Spider Gold (GLD) was up 1.31% while Sprott Physical Gold Trust (PHYS) rose 1.20%. The favorite punching bag for most skeptics, Barrick Gold (ABX) rose 1.88% which would not surprise the analysts at TD Securities who recently made it a "buy" with a 2013 target of $25.
Perhaps the most important news for commodities including PMs, and for commodity exporting nations like Canada, Australia, Chile and the US was the 2.44% rise of copper (JJC), buoyed by China's strong August PMI, its second month of expansion, a trend reversal that carries good short and mid-term news for world economies if Sovereign debt and currency crises can be contained. Nearly all commodities, led by aluminum (JJU) +3.09, coal (KOL) +2.15, copper miners (COPX) +2.87, fertilizers (SOIL) +1.13%, natural Gas (GAZ) +1.67% and Timber (CUT) +1.33%, had strong days with silver the best of all. The only commodity that matched silver's strong day was a similar store of wealth, the Pure Funds Diamond / Gemstone ETF (GEMS) at +3.67%. The results show how investors and traders are reading the unstable macro situation. In a bad August for major indices, the only ones to perform well were those in commodity-hungry China, up over 5%.
Regarding concern about equities generally, Doug Short recently discussed the S&P 140-year trend line, noting that we are about 62% above it while the average level (above or below) is about 40%. For those thinking about corrections, regression to average bull market levels would mean an S&P around 1410. Regression to the mean long-term trend line would be S&P 1000. Regression to the major bottoms of 1920, 1932 and 1982 would mean "an S&P falling to the 450-500 range" Short writes. Right now that is unthinkable for most analysts but it suggests that the thesis of a 20% correction to the level of late 4Q 2012 is possible. Cash and commodities look best in this context and by historic trends.
Takeaways: The data from China the past two months and issues on tap in the West and Middle East reinforce two points I have been making since spring: 1) reduce bond allocation. Balance in asset classes is important but there are times to get out of a rip tide. Uncertainty about QE's continuance or its ability to stem rising yields suggests one sell down fixed income so one can buy back, if one needs or chooses to do so, at lower prices. 2) PMs, precious Gems and other commodities including energy are the best plays at present. These sectors are volatile but they are in tune with the times and PMs have enormous upward pressure from rising demand and supply reduced by cutbacks in capex and E & D during the decline from the 2011 highs.
The rise of PMs may be ragged, that is par for the course, but in the flight to safety as currencies waver, yields rise and conflicts heat up, silver and gold will gather strength.
http://seekingalpha.com/article/1671552-gold-and-silver-safe-haven-status-displayed
Russia sends missile cruiser to Mediterranean - Interfax
MOSCOW | Wed Sep 4, 2013 12:09pm BST
(Reuters) - Russia is sending a missile cruiser to the east Mediterranean to take over the navy's operations in the region, state agency Interfax quoted a military source as saying on Wednesday, as the United States prepares for a possible military strike in Syria.
President Barack Obama has won backing from key figures in the U.S. Congress in his call for limited U.S. strikes on Syria to punish President Bashar al-Assad for his suspected use of chemical weapons against civilians.
The ship, Moskva, will take over operations from a naval unit in the region that Moscow says is needed to protect national interests. It will be joined by a destroyer from Russia's Baltic Fleet and a frigate from the Black Sea Fleet.
"The Cruiser Moskva is heading to the Gibraltar Straits. In approximately 10 days it will enter the east Mediterranean, where it will take over as the flagship of the naval task force," the source said.
Moscow has been Assad's most powerful ally, protecting him from consecutive U.N. security resolutions aimed at pressuring him to end violence. Russia insists the conflict must be solved through political dialogue in which Assad must take part.
Nonetheless, President Vladimir Putin, in an interview released on Wednesday, did not rule out approving a military operation if clear evidence showed Damascus had carried out the attacks, but said any attack would be illegal without U.N. support.
Last week, the Defence Ministry said new warships, including the Moskva, were being sent to the Mediterranean but described the movements as routine deployments.
Foreign Minister Sergei Lavrov has said Russia has no intention of getting dragged into any military conflict over Syria.
Earlier this week, Interfax reported that Russia was also sending a reconnaissance ship to the region but that it would operate separately from the naval unit.
(Reporting by Thomas Grove; Editing by Alison Williams)
http://uk.reuters.com/article/2013/09/04/uk-syria-crisis-russia-ship-idUKBRE9830EO20130904
It’s Not Just the Oil. The Middle East War and the Conquest of Natural Gas Reserves
By Washington's Blog
Global Research, October 08, 2012
Washington's Blog
http://www.globalresearch.ca/its-not-just-the-oil-the-middle-east-war-and-the-conquest-of-natural-gas-reserves/5307589
Valdor Technology Slideshow Presentation
http://www.slideshare.net/thorshammerbc/valdorpresentationfeb2011
Valdor Technology A Value Investment
Aug 24, 2013
spit 64
Seeking Alpha
I think we will have a big opportunity investing in Valdor at this stage very interesting time ahead. Valdor goes from a speculative trade to an investment trade at this point.
MR Ray Kapany will bring what we need in Valdor experience and well connected in the fiber optic market.
Shares of Valdor Technology International (CVE:VTI) are soaring 14% after it announced an initial purchase order from an undisclosed Canadian telecommunications firm.
The telecom installed units of Valdor's harsh environment products into its fibre network in January, produced by the company's subsidiary, Valdor Fiber Optics. According to Valdor, the products exceeded the telecom's expectations. Discussions are now underway to sell additional supply to the telecom, as well as other products.
"I see this as a gateway purchase order for Valdor ultimately doing more business with this specific telecom, but in the big picture, for us doing significant business with other Canadian, North American, Central American and South American telecoms," said Ron Boyce, director and vice-president of sales and marketing.
Lockheed Martin is in the final testing of Valdor connector and if I am informed correct the Valdor connector was the only one that meets and passed the initial testing.
If Lockheed Martin accepts the Valdor connector we will have a significant upswing in the Valdor share price.
Valdor have other case studies with NASA, Schlumberg, Kasier optical, US army, Northrop Grumman.
Customer and evaluation
§ Altus Air Force Base
§ Amphenol UK Ltd.
§ B&W Tek
§ Baker Hughes
§ Bookham
§ Cables Plus
§ City of Riverside
§ Colliers International
§ Dornier Medtech
§ Downstream Services
§ Dukcom
§ Electro Optical Components
§ Fiber Systems Int'l
§ FOCI
§ Fujikura LTD.
§ General Atomics
§ Glenair
§ Graybar
§ Hausanschrift
§ Honeywell JDSU
§ Kaiser Optical Systems
§ Kennedy Space Center
§ KT Korean Telecom
§ L3 Communications
§ Lockheed Martin
§ LumeRx, Inc.
§ Luna Technologies
§ Met Engineering
§ Micro Laser System
§ NASA
§ Nobargo Network System
§ OCC
§ Ocean Design
§ Omega Line
§ OptoWorks
§ PD-LD
§ Pacific Northwest
§ Precision Tech
§ Promet International
§ Rainbow Stream Tech
§ Sandia National Labs
§ Schindler Elevator
§ Schlumberger
§ Schott
§ Scientific Atlanta
§ Simac Electronics
§ Timbercon
§ Timbre Technologies
§ Textron
§ Tetra Tech
§ Unit of OKI Semiconductor
§ Ultram
§ U.S ARMY
§ U.S Marines
§ Verathon Medical
Sales of equipment for fiber-optic networks surged 27% sequentially in the second quarter of 2013, driven by the health of the North American market and demand for 100-Gbps technology overall, says Infonetics Research. The market research firm plans to release the figures as part of its new second quarter 2013 (2Q13) Optical Network Hardware report August 23.
Optical transport equipment vendors sold $3.3 billion of hardware in the quarter, according to the report.
"We expected the optical hardware market to turn, particularly in North America, and that's exactly what happened in the 2nd quarter. Total optical spending is up 27% quarter-over-quarter, and the WDM equipment segment is up 21% year-over-year," explains Andrew Schmitt, principal analyst for optical at Infonetics Research. "WDM spending accelerated dramatically in North America as a result of 100G deployments hitting the ground, and worldwide spending on 100G speeds is tracking close to 15% of all optical spending. China's 100G deployments will begin in earnest as the year closes, led by China Mobile, and we're anticipating more than 5,000 ports of 100G in China alone in 2013."
Telecommunications is the primary application for fiber optic connectors. In 2016, the total global value for the telecommunications sector is projected to be $2.9 billion, a compound annual growth rate (CAGR) of 9.5%.
Sales of fiber-optic connectors and mechanical splices of all types registered $2.39 billion in 2012, according to a new report from ElectroniCast Consultants. While data center applications accounted for slightly more than half of this total, the telecom space will see significant growth through 2017, the market research firm says.
Private data network applications accounted for 51% of last year's total sales, $1.2 billion. While the telecommunications sector contributed $669 million to the 2012 total, ElectroniCast predicts that this application will see a 14.5% increase in sales per year, reaching $1.3 billion in 2017. Fiber-optic broadband access requirements will drive much of this growth.
Military/aerospace and other harsh environment applications accounted for $270 million last year as well.
Disclosure: I am long VTIFF.PK.
http://seekingalpha.com/instablog/919109-spit64/2159122-valdor-technology-a-value-investment
INVESTMENT PROFILE
Valdor has a unique breakthrough technology in fiber optics. In early 2000, when technology projects enjoyed unprecedented popularity, the Company's stock price rose from $0.30 to $14.00 in less than two months primarily on the strength of R&D and potential. This R&D is now complete and the technology is ready for market. The Company is in production and has modest annual sales of about US$300,000. The vast majority of high-flying technology companies of the 1995/2000 era no longer exist; Valdor has not only survived, it has grown past the R&D stage, as a new-generation technology company, and is progressing on the continuum to profitability.
VALDOR TECHNOLOGY INTERNATIONAL INC. (VTI-V) FEATURES:
1. Fiber optics is the future of communications. Fiber optic connectors are a major profit center within this market.
2.The basic product line of Valdor is all-mechanical, field installable fiber optic connectors that are revolutionary in that they do not require epoxies or index matching gels.
3. The annual global market for fiber optic connectors is estimated to be US$2 billion. The annual growth rate is estimated to be nearly 10‰.
4. There are two technologies that Valdor has recently developed into revolutionary, next-generation products: (1) the Heptoport, (2) the Omega Enclosure.
5.The CEO / President, Dr. Michel Rondeau, is well known and highly respected world-wide in the fiber optics industry.
6. The Valdor marketing focus is not to displace other conventional technologies that are represented by wealthy, established companies. The Valdor focus is niche markets where, because of technical advantages, Valdor is the only solution.
7. The two major players in Valdor’s industry are Corning and 3M. Unbiased third parties have tested and confirmed that technologically the Valdor connectors are significantly or dramatically superior to these conventional connectors.
8. Directors and close associates own more than 65% of the fully diluted Valdor stock.
9. Valdor holds several patents on its connector technology in strategic global regions.
10. It is estimated that more than US$20 million has been spent in R & D to bring the Company to its current state.
11. Valdor is in discussions with several major companies that, in the near term, could place substantial orders.
12. Upon achieving a market penetration of between 0.5% and 2.5%, Valdor could become a takeover target for major companies that direct sell fiber optic products and / or services.
http://www.valdor.com/fiber-optic-connectors.php?type=2&page=investor&chc=1b
Valdor Technology positions itself for growth in fiber optics components sector
Aug. 27, 2013
by Ian Mclelland
Investors who put their faith in Valdor Technology International's (CVE:VTI) $2 million private placement - which closed last month - have been handsomely rewarded in short order with shares in the fiber optics components specialist already up over 90 per cent from the 10 cent placement price.
The technology company specializes in the design and manufacture of new generation fiber optic connectors, enclosures, splitters, laser pigtails and other optical and opto-electronic components. Fiber optic systems require sophisticated devices in order to function. Valdor makes these components and specializes in harsh environment products, in particular, splitters and connectors.
Investing in small companies can often be a perilous endeavor, but the rewards can also be huge. Valdor, at first glance, may not look like a company with huge potential, but dig deeper into the management team, products and market it is targeting, and one quickly realizes this micro cap company has its sights set on some juicy opportunities for shareholders.
A call with chairman Elston Johnston also quickly gives one the impression that this company places a lot of value and importance on management and its considerable experience within the fiber optics industry.
The company holds several patents on its connector technology in strategic global regions, and there is a clear signal that acquisitions are a priority on the agenda, though not at any cost.
The most recent addition to the management team is fiber optics veteran Raj Kapany, whose experience is highlighted by being the former head of Tyco International's European fiber optics division, and leading a team that funded and oversaw the sale of K2 Optronics to Emcore. "Raj's marketing knowledge and corporate experience will be of great value to our sales and business growth. His M&A experience and high-tech business contacts can help us grow via mergers and acquisitions," says Johnston.
The stock is tightly held. Management and people close to management own well over 50 per cent of the issued shares and this is evident from the market trading activity. With management having a very large position in the public vehicle, “they are putting their money where their mouth is” and are obviously motivated to do what is best for the shareholders.
Fiber optics is an interesting sub-sector of the telecommunications market.
For several years, the world's largest telecom companies have been ploughing capital into expanding upstream and downstream capabilities of their networks to meet growing demand from consumers.
In laymen's terms, there are essentially three stages of this expansion. First was the development of national and international fiber optic networks, connecting countries, cities and towns. Second was the build out of fiber optics to industry and to “your curb". And third, currently underway, is extending fiber “from the curb into your house”. This third phase is no small task, requiring years, if not decades, of investment, and the challenges it can bring are diverse. Reliable, cost effective components are therefore absolutely essential.
Valdor intends on capturing a share of the fibre optic products market relating to this third phase, especially within the telecom sector, which accounts for about 80 per cent of global fibre optic expenditures. This is essentially where Valdor plays, though its range of target markets also includes military, industry, medical and security.
The company’s current niche is launching new technologies that find solutions for its clients, placing a priority on quality products as opposed to sale price. An example of this was highlighted to the market last week, when Valdor announced an initial purchase order from an undisclosed Canadian telecommunications firm. This telecom installed units of one of Valdor's harsh environment products into its fibre network in January. According to Valdor, the product exceeded the telecom company's expectations. Discussions are now underway to sell more of this product, as well as other products, to this telecom.
It is difficult to sell to Canadian telecoms, but once a service or supply company becomes a vendor to one, the other Canadian telecoms typically follow. “I see this as a gateway purchase order for Valdor ultimately doing more business with this specific telecom, but in the bigger picture, for us doing significant business with other Canadian, North American, Central American and South American telecoms," said director and VP of sales and marketing for Valdor, Ron Boyce, who began his career as an executive salesman with a central Canada-based telecom.
Company shares responded positively to the news of this initial purchase order. It can often take some time to have new technologies adopted by industry, hence the significance of Valdor's products being installed into the fibre network of this undisclosed client.
At a share price of 19 cents, the company is valued at about $15 million, and though it does report some sales, it would be difficult to weigh up an investment based on financials alone.
Instead, investors should take a closer look at the company’s management team, business sector, business model and stock structure and decide if this is a horse they want to back.
Based on recent news flow and share performance, it certainly warrants closer inspection.
http://www.proactiveinvestors.com/companies/news/47452/valdor-technology-positions-itself-for-growth-in-fiber-optics-components-sector-47452.html
Valdor Technologies gets purchase order from Canadian telecom
23rd Aug 2013
by Anwar Ali
Shares of Valdor Technology International (CVE:VTI) are soaring 14% after it announced an initial purchase order from an undisclosed Canadian telecommunications firm.
The telecom installed units of Valdor's harsh environment products into its fibre network in January, produced by the company's subsidiary, Valdor Fiber Optics. According to Valdor, the products exceeded the telecom's expectations. Discussions are now underway to sell additional supply to the telecom, as well as other products.
“I see this as a gateway purchase order for Valdor ultimately doing more business with this specific telecom, but in the big picture, for us doing significant business with other Canadian, North American, Central American and South American telecoms," said Ron Boyce, director and vice-president of sales and marketing.
The market for fibre-related products is growing. Valdor intends on capturing a significant share of the fibre optic products market, especially within the telecom sector, which accounts for about 80% of global fibre optic expenditures.
Fiber optics require sophisticated connectors, splitters, and other devices in order to function. Valdor makes these components and specializes in harsh environment products, in particular splitters and connectors.
Aside from telecom, Valdor's other potential targets include medical, military and security industries. Valdor estimates the market for its products is roughly $100M annually in Canada.
http://www.proactiveinvestors.com/companies/news/47389/valdor-technologies-gets-purchase-order-from-canadian-telecom-47389.html
Valdor Technology International profiled on themarketbulls.com
Valdor Technology International Inc. (TSX.V: VTI) is a fiber optics component company specializing in the design and manufacturing of its patented Impact Mount™ Technology (IMT) all-metal-epoxyless field termination connectors, mechanical splices, and installation kits. Every fiber optic cable must end with a connector or splice. ElectroniCast Consultants www.electronicastconsultants.com has forecast that the global market for connectors and mechanical splices is projected to grow from $1.4 billion in 2006 to $3.4 billion in 2011. Valdor’s unique IMT connectors, mechanical splices, and installation kits have major advantages in both established and emerging fiber optic markets. Additionally, Valdor’s patented IMT connectors are the only connectors suitable for many applications in the fiber optics industry.
Impact Mount™ Technology is a radial compression fit of a ductile metal around a cylindrical glass surface. The need to metallize optical fiber is eliminated by Impact Mount™Technology (IMT).
The IMT is a unique, patented design that assures reliable terminations time after time by securing the glass fiber within the metal ferrule. This illustration depicts the single fiber ferrule IMT process. Attachment of metal ferrules to the fiber(s) occurs in one fast mechanical action. This action, called the impact, occurs between the stripped fiber and the ferrule using a precision impact mount die. The IMT connectors/ferrules are made from various metal alloys, the most common types being stainless steel and copper-nickel. The main body of the connector can be all-metal or constructed with glass-reinforced polymer. For a single fiber operation, the result easily creates a hermetic seal between the fiber and the ferrule.
Currently, in the telecom industry, technology is far ahead of the marketplace. Of the three design drivers – cost, performance, and reliability – cost heavily dominates the list. Market dynamics are pressuring manufacturers to produce fiber optic components at very low cost; but they cannot support the economy of scale that traditionally accompanies high volume manufacturing. There is, however, still demand for performance and reliability at the right price.
The emerging importance of manufacturing innovation to component and module performance represents a paradigm shift for the optical communications industry. Impact Mount™ Technology (IMT), and its progeny, HeptoPort™ typifies this paradigm shift. Multiple ADMs, DWDM selectors, isolators, interleavers, and many other functions can be incorporated in a single component, sharing the cost of expensive elements such as filters, lenses, etc. Offering unparalleled self-alignment features with significant cost reduction for the module designer, HeptoPort™ opens an entirely new set of physical design options for the optical networking industry.
Patented Technology for the Fiber Optics Industry
Valdor brings a twenty-year legacy of quality and technology innovation to the marketplace. The IMT technology underpinning our legacy is based on the premise that MARKETS RESPOND TO LOW COST OF MANUFACTURING AND HIGH YIELD.
COMPANY HIGHLIGHTS:
Well-structured share capital; recently consolidated 6.5 to 1.
Inside group owns more than 60% of the fully diluted stock.
Recent private placements include directors, employees, letter writers, brokers and promotional groups.
Dr. Michel Rondeau, CEO/President, is well known and respected worldwide in the fiber optics industry.
Fiber optics is the future of communications and connectors are a major profit center within this market.
Product line is all-mechanical, field installable fiber optic connectors that do not require epoxies or gels.
Annual global market is about US$2 billion and projected to increase to over US$3 billion within two years. (ElectroniCast Consultants)
Valdor is selling products to several major companies that, in the near term, could place blanket orders.
Unbiased third parties confirm that Valdor connectors are superior to all competing connectors.
Valdor’s connector technology is patented in the USA and a few select countries.
Valdor projects it will require a total raise of less than US$1,500,000 to reach profitability.
Valdor has a manufacturing facility in Shanghai, China.
Valdor’s primary marketing focus is on niche markets thru OEM and qualified distributors.
Upon achieving a 0.5% – 2.5% connector market penetration, Valdor could become a take-over target.
http://www.themarketbulls.com/featured-companies-3/valdor-technology-international-inc/
Dynacore Gold Mines Investor Relations Slideshare
http://www.slideshare.net/dynacor/dynacor-performance-review-update
A Must-Have In Your Gold Portfolio
Derek Blain
Seeking Alpha
Dec 10 2012
Disclosure: I am long DNGDF.PK. I am long DNG.TO, listed on the Toronto Stock Exchange. (More...)
If you are looking for that perfect sweet spot between value, growth, technicals and a unique business model within the precious metals sector, there is one company that should immediately catch your eye.
This small junior explorer has a one-of-a-kind business model that provides excellent value for shareholders when compared with almost any other exploration company out there. It is self-financing. It has a strong foothold in the ore processing industry in Peru, where tens of thousands of artisan miners sell their ore on small scale. This unique gold junior is Dynacor Gold Mines - DNG.TO on the Toronto Stock Exchange, and DNGDF.PK on the OTC.
Dynacor's pricing model for ore refining is linked to ore grades and metals prices; essentially, it is insured against even up to a 50% drop in the price of gold (see the latest updated Fact Sheet for margin information), while increasing margin as gold prices increase. Furthermore, as a refiner dealing with many different small miners, it is able to pick and choose which ore it wants to process, meaning it can select the highest grades with the highest yields at its own discretion. It also has an excellent relationship with the Peruvian government and local communities, with a facility in Peru for the last 15 years. A further boon to the ore processing model is the recent crackdown on gray-market mining and processing facilities by the Peruvian government, facilities that use older, harsher and environmentally damaging methods of processing ore. This has left the door open for Dynacor to process even more ore. As a result, it has been processing ore at maximum capacity over the past several months, continuously breaking previously-set records for monthly gold production.
As an ore processor alone, Dynacor is a great value play. It is currently trading at less than 0.5x sales, with a ROE of 36.01%, a current P/E of 6.67, and trade roughly at the net market value right now. This translates into a very efficient use of current assets that generate a return far superior to many other avenues in which a retail investor can invest. It's also a growth story - Dynacor has increased its daily ore processing capabilities to 220t of ore per day, and is self-financing the expansion of another processing facility. That translates into at least 50,000 ounces of gold processed for 2012 (revised up to 58,000 this month), with the new facility increasing expected production up to 100,000 ounces of gold for 2014. Its latest month saw over 6,000 ounces of gold and 14,000 ounces of silver processed, for sales of over $10 million. If monthly production is maintained or increased, Dynacor is trading at a mere 0.3x sales and an annual net profit closer to $0.28/share with four quarters at current operations, leaving Dynacor trading at a forward P/E of roughly 4.3. In other words, dirt cheap.
Dynacor's recent ore processing and sales history, from Dynacor's website:
(click to enlarge)
(click to enlarge)
There is even more to the story of Dynacor than this incredible growth. Dynacor is also an exploration company, and this is where it sets itself apart from your run-of-the-mill junior. Because of its profitable (and growing) ore processing operations, it is able to run with virtually no debt, and completely self-finance exploration operations. As of its most recent reporting quarter (September 30, 2012), Dynacor has just under $19 million in current assets against $7 million in total liabilities. What this boils down to as a shareholder is that Dynacor does not have to take on significant debts (and therefore future cash-flow-eating debt service), or issue new shares and dilute existing holders in order to explore its properties.
Furthermore, Dynacor has landed itself a real gem in its Tumipampa project in Peru. Peru is one of the major precious metals producers (6th in gold, 2nd in silver) on the globe. Tumipampa is smack in the middle of some of the richest gold and copper skarn deposits on earth, property that currently has a high level of exploration and development under way. Dynacor is a tiny player in the middle of some very big names in the mining industry - Southern Copper (SCCO), Xtrata, Hudbay Minerals (HBM), and two large Chinese gold miners, which are collectively investing over $6 Billion in infrastructure (see Dynacor's latest Corporate Presentation). This will offer Dynacor the opportunity to piggyback its Tumipampa project onto the existing infrastructure with a far lower capex. In my opinion, Dynacor will likely seek to partner with a large producer to fund development, and may even end up selling off the actual mining rights for a large cash payment + royalties and processing rights. If Dynacor's project turns up being sizable enough, it also makes it a prime buyout target at its current size. Even if Dynacor only partners for funding and decides to handle the development side, it will still be able to process much of its own ore internally using its higher capacity processing expansions (430tpd total production, from 220tpd, coming on-line 2013 - See Corporate Presentation), leading to even higher net margins and therefore more cash flow for shareholders.
I encourage every interested investor to take a look at its frequently-updated Corporate Presentation, the NI 43-101 report, and review the ore-processing operations for yourself, on its website. This is a great value story with the upside of impressive growth over the next few years, and an exploration project that could move Dynacor from junior to small-cap without compromising shareholder value at all.
On a technical basis, Dynacor looks to be lining up to make another move to the upside. It is just about finished a contracting triangle, taking it over to the right side of the channel formed off the July 2012 lows. This consolidation has provided ample opportunities for an internal technical "reset" on its overbought condition.
(click to enlarge)
Dynacor is one of those pristine gold plays tucked off into a corner, with little coverage or mention. It's not a "big story" stock, because the CEO of the company, Jean Martineau, has built it slowly and organically since taking over operations in 2006. Dynacor has chosen an executive team with a proven record within the industry, who have a history of continually adding Dynacor stock to their personal holdings, and make decisions that offer long-term value to shareholders.
Regardless of the near-term gyrations in the precious metals and miners markets, Dynacor is a deep value play (professional advisors have valued it at $2.50/share [p.8], a premium of over 100% from current levels) that I highly recommend any precious metals investor add to their portfolio. It should generate superior returns and strong growth for years to come.
http://seekingalpha.com/article/1054921-a-must-have-in-your-gold-portfolio
PRESS RELEASE August 30, 2013, 9:43 a.m. ET
Dynacor Increases Its 2013 Gold Production Guidance to 71,000 oz.
Dynacor Increases Its 2013 Gold Production Guidance to 71,000 oz.
MONTREAL, QUEBEC--(Marketwired - Aug. 30, 2013) - Dynacor Gold Mines Inc. (TSX:DNG) (Dynacor or the Company), a company with gold and silver ore processing operations and exploration projects in Peru, is pleased to announce that it has increased its 2013 gold production guidance to 71,000 ounces up from 66,000 ounces an increase of 7.5%.
July Production
During July 2013, gold production at Dynacor's Huanca ore-processing plant reached 6,460 ounces of gold an increase of 13.3% as compared to July 2012 (5,701 oz.). Also in July, the plant produced 12,526 ounces of silver. As of July 31, 2013 Dynacor has produced 44,381 ounces of gold compared to 31,203 oz as of July 31, 2012, an increase of 42.2%.
Process Optimization
During Q2-2013, Dynacor's process engineers have been working on the Huanca mill and have implemented a series of changes that have led to further process optimization. These measures that required a minimal investment have allowed the Company to increase its ore processing rate by 5% to 230 tpd and the plant is currently running at this capacity.
From January to June 2013, Dynacor has been able to purchase and process exceptionally high grade ores which averaged over 1.07 oz/t well above the forecasted 2013 ore grade of 0.88 oz/t. In July 2013, the Company processed 6,778 DMT of high grade ore with an average grade of 1.01 oz/t and despite a lower price of gold on the world market there was no decrease in the availability of ore. Therefore, considering the first seven months of gold production and the increase in the plant's milling capacity, the Company has increased its 2013 production guidance to 71,000 ounces of gold. This new conservative target assumes that for the rest of 2013 purchased ore grades will probably revert to the forecasted ore grade of 0.88 oz/t Au.
Jean Martineau, President and CEO of Dynacor stated "Despite the difficult overall operating environment for gold companies worldwide, our gold and silver processing division continues to exceed our targets and has allowed us to increase our gold production guidance for 2013 from 66,000 oz. to 71,000 oz. I would like to acknowledge the dedication and expertise of our employees in Peru who have made this possible.
ABOUT DYNACOR GOLD MINES INC.
Dynacor is an ore processing and a gold exploration and mining company active in Peru through its subsidiaries since 1996. The Company differentiates itself from pure exploration companies as it also generates income and cash flow from its wholly owned ore processing plant in Peru. The Company's assets include five exploration properties, including the Tumipampa property, as well as its 230 tpd gold and silver ore processing mill at Huanca. Dynacor's mill produces gold from the processing of ore purchased from many different ore suppliers. Dynacor's strength and competitive advantage comes with the experience and knowledge the Company has developed while working in Peru. Its pride remains in maintaining respect and positive work ethics toward its employees, partners and local communities.
FORWARD LOOKING INFORMATION
Certain statements in the foregoing may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Dynacor, or industry results, to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statements. These statements reflect management's current expectations regarding future events and operating performance as of the date of this news release.
Dynacor Gold Mines Inc. (TSX:DNG)
Website: http://www.dynacorgold.com
Twitter: http://twitter.com/DynacorGold
Facebook: http://www.facebook.com/DynacorGoldMines
Shares outstanding: 36,316,111
Dynacor Gold Mines Inc.
Jean Martineau
President and CEO
514-393-9000 ext. 228
Dynacor Gold Mines Inc.
Dale Nejmeldeen
Investor Relations
604.492.0099 / M: 604.562.1348
nejmeldeen@dynacor.com
www.dynacorgold.com
http://online.wsj.com/article/PR-CO-20130830-907867.html
Where to Buy Gold in Difficult Times: Jay Taylor
Source: Sally Lowder of The Gold Report
2/20/13
The Gold Report
Section of article;
JT: That is a tough call. The mining industry is so capital intensive. On the other hand, companies realize that they need to get their share prices up to a reasonable level. There is a real push and a pull.
"You can make a good case that China and other underdeveloped countries are just getting started. Ultimately, that is bullish for gold and silver."
There is no question that companies that can provide a dividend will do much better in the market. For my newsletter, I am looking for companies that are cash-flow positive, companies that do not have to raise capital. If a mining company has to raise capital to drill highly speculative holes in the ground, the market will not support that today.
TGR: Of course, many of the companies that have sufficient cash are invisible to investors because they do not need—or get—the attention of investment banks and analysts. Can you tell us about any of these diamonds in the rough—companies that are producing, have healthy treasuries and balance sheets and are able to reward their shareholders with increased production and share price profiles?
JT: One is Dynacor Gold Mines Inc. (DNG:TSX). There are lots of small, family-owned, high-grade mining projects in Peru, too small to warrant building a mill. Dynacor provides that processing service, using environmentally accepted practices. The company has been able to get higher recoveries than other operations that were not working within environmental and other regulations. Basically, Dynacor can now select the grades it wants; as a result, its earnings are growing rapidly. It just got permitted to build a second mill. Within two years, I expect annual production will be near 100,000 ounces (100 Koz).
It does not pay a dividend, but its earnings are growing nicely. Production at its processing plant in Peru is increasing and it also has an exploration project with blue-sky potential. The property is in the middle of major copper-gold pour-free targets. Dynacor does not issue shares; it is growing organically. Its shares are selling at two or three times cash flow right now.
TGR: And Dynacor does not have to get the gold out of the ground.
JT: It does not. Other people bring the gold to Dynacor.
The company does have its own non-NI 43-101 resource of more than 600 Koz or 800 Koz in a high-grade, underground vein system at a project called Tumipampa. It is a pour-free skarn gold-and-silver target, in the middle of some major deposits. Dynacor has some very good surface showings. The company expects to mine Tumipampa itself.
TGR: Dynacor has gone from $0.60 to $1.33/share in the last six months. Only a handful of mining companies could boast that.
JT: Yes, and it did it in a horrible market environment.
Continued below:
http://www.theaureport.com/pub/na/where-to-buy-gold-in-difficult-times-jay-taylor
Casey's Louis James Warns: 'Don't Try to Time the Market'
Source: JT Long of The Gold Report
(8/14/13)
Section of article:
We recently recommended Dynacor Gold Mines Inc. (DNG:TSX) in Peru because it's a producer without the danger and technical challenges of actual mining. It is a licensed gold mill and buys ore from miners in the area. Peru is cracking down on illegal mining and milling by so-called artisan miners that are harming the environment. The government decided to get serious about milling in environmentally sound ways and is actually enforcing the law. Dynacor has the only legal mill in an area full of high-grade gold veins, and, presto, now it can pick and choose from the highest-grade supplies of gold ore. The real beauty of this set up is that if the price of gold drops, Dynacor pays less for the ore it buys—it's more "correction proof" than any other producer I know.
Dynacor is a small, thinly traded stock, so buyers should take care. But as long as gold doesn't go so low that the miners stop mining, this one makes money. It's an example of opportunity where the bottom for gold doesn't matter. Share price appreciation doesn't depend on higher gold prices, just on the company executing its business plan.
Continued below;
http://www.theaureport.com/pub/na/caseys-louis-james-warns-dont-try-to-time-the-market
Jay Taylor: In Precious Metals, Cash Flow Is King
Source: Kevin Michael Grace of The Gold Report (6/17/13)
The Gold Report
Section of interview:
Jay Taylor:
But it's not so much mergers and acquisitions that I'm interested in. My target is mostly smaller juniors that are cash-flow positive, don't have to issue tremendous numbers of shares, have great exploration potential and can grow organically. For example, Dynacor Gold Mines Inc. (DNG:TSX) is one of my favorites. The company will produce about $0.30/share in cash flow this year. It is selling at around $1.15/share and will probably double its production to over 100,000 oz by 2014. Dynacor also has some wonderful exploration targets. The company has about 28 million shares outstanding, and it never issues more. It funds its needs internally from cash flow.
One of the biggest risks that shareholders have to be cognizant of in this industry, especially among the exploration companies, is dilution. Dynacor has been patient and has grown slowly but steadily over the past several years. It provides milling facilities in Peru to high-grade mom-and-pop operators. Peru has something like 75,000 small, licensed operators, so Dynacor has really carved out a niche business and its growth prospects are very substantial.
continued at link below...
http://www.theaureport.com/pub/na/jay-taylor-in-precious-metals-cash-flow-is-king
Jay Taylor: In Precious Metals, Cash Flow Is King
TICKERS: AEM, AR, AVA, BVA, DNG, EMX, G; GG, GRG; GAC; GARWF, MRO, MAD, NEM, NG, PZG, NKL; PNIKF; P94P, RRI, SGR, SSL, TMM; TGD
Source: Kevin Michael Grace of The Gold Report (6/17/13)
(Section of article);
TGR: Do you like the prospect-generator model?
JT: Yes, mainly because prospect generators use other people's money to derisk projects and avoid dilution. Prospect generators, at least the companies that I follow and respect, have very strong technical talents in exploration. They've identified projects that have a reasonable potential to host meaningful ore deposits. Most companies have a couple of projects and blow through huge amounts of money to drill them out. Prospect generators do some low-cost preliminary work to establish a geological thesis for exploration. Then they get other companies to come in and spend their money.
TGR: What companies do you like in this area?
JT: Eurasian Minerals Inc. (EMX:TSX.V) is my favorite. There are other companies that I would call hybrid prospect generators, companies like Aurvista Gold Corp. (AVA:TSX.V), Bravada Gold Corp. (BVA:TSX.V) and Paramount Gold and Silver Corp. (PZG:NYSE.MKT; PZG:TSX). But among pure project generators, Eurasian has the biggest projects and the most money, and it is allied with the biggest mining companies. I think it's just a matter of time before Eurasian comes up with at least one major economic deposit that sends the stock to much higher levels.
There are others I like, such as Riverside Resources Inc. (RRI:TSX). John-Mark Staude, the president and CEO, is doing a remarkable job. Riverside has projects in Mexico and in the United States and also now some base metals deposits that are being explored by major companies in British Columbia. The company just announced some excellent high-grade silver results from trench assays and drill core on its Jesus Maria mine on its Penoles project in Durango, Mexico. This could be the first discovery that catapults the company from a $0.35/share stock into the mining big leagues.
(Continued...)
http://www.theaureport.com/pub/na/15376
Analysis: Girding for battle as electronic derivatives trading revived
By Karen Brettell
NEW YORK | Thu Aug 29, 2013 8:12am EDT
(Reuters) - The $300 trillion privately traded U.S. derivatives markets could be on the verge of the biggest change in their 30-year history if investors embrace new electronic trading platforms that would reduce the market dominance of large banks.
There is newfound optimism among many investors that rules to require swaps to trade electronically will open the markets to new competition, reduce trading costs, and bring price transparency.
Derivatives markets are among the largest in the world, but they remain a market where investors negotiate trades with dealers, instead of allowing investors to trade anonymously with each other. Trading is sometimes infrequent and typically in very large sizes.
Bank exposure to derivatives was a major contributor to the financial crisis that brought down Lehman Brothers and nearly destroyed several other firms. After the financial crisis peaked in 2008, some expected a swift move to exchanges and away from the price opacity of the bank-dominated model.
It didn't happen. Several credit derivatives trading platforms were readied for launch but none succeeded. A European antitrust investigation and a mounting number of lawsuits allege that banks killed a venture planned by Citadel Investment Group and CME Group, and others like it, to protect lucrative revenues they earn from keeping the market private.
Banks have long acted to maintain their intermediary role in fixed income and foreign exchange markets and some are likely to continue to resist trading models that increase competition.
This means that many are likely to favor request-based platforms, known as request-for-quote (RFQ), which are based on bank relationships and replicate how the markets currently work, over order-driven markets that allow investors to bypass them as trade middlemen.
Still, new regulations have also shrunk bank balance sheets and left weaker dealers less able to compete against the largest banks. This means some are likely to support lower-revenue, higher-volume businesses, such as order-book trading, especially if enough investors shift their trades. The new regulatory mandate for electronic trading provides extra impetus.
"Getting the sellside to move away from a very profitable business is going to be difficult," said Charley Cooper, head of exchange-traded derivatives and over-the-counter clearing at State Street Global Exchange, which has a multi-asset trading platform, SwapEx, with an order book and RFQ platform.
"The key way to do that is to attract a significant amount of buyside liquidity," he said. "If the sellside see a resulting drop in their own trading activity because the buyside are trading with each other, the dealers will have to join the platforms to be able to avail themselves of that liquidity."
More standard and liquid contracts such as credit index trades and some interest rate swaps are seen most likely to shift to order books. Derivatives are used to protect against losses or to speculate on moves in credit, interest rate and other assets.
But progress may be slow. The launch of multiple trading platforms will fragment liquidity. Eleven platforms have applied to trade swaps since the Commodity Futures Trading Commission (CFTC) last month finalized long-awaited trading rules that take effect in October, and more platforms are expected. The rules require all trading venues to offer an order book.
Many investors are also accustomed to dealing with banks and smaller users have been exempt from clearing and trading rules. It is also easy to modify trades to avoid clearing and trading mandates, with capital rules governing non-cleared trades not expected to come for years.
"You would need a much more diverse community of end-users for central-limit order books to be successful. For that to happen you would need to have a dramatic reduction in average trade sizes of contract sizes at the very least," said Paul Rowady, a senior analyst at TABB Group.
RFQ systems are likely to remain in demand for larger or more customized trades, which are less liquid and benefit from more negotiation, even if order-book trading gains traction.
Electronic trading may be the derivatives reform that threatens bank revenue the most. JPMorgan Chase & Co, the largest U.S. bank by assets, said last year that interest rate swaps and credit trading are two of its highest earning markets, generating on average $350 million and $375 million, respectively, in revenue each quarter.
Around 30,000 interest-rate swaps earn the bank around $12,000 per trade while 250,000 credit trades generate $1,500 per trade. By comparison, the bank trades about 10 billion shares in the U.S. cash equity market, earning it around $150 million per quarter at 1.5 cents per share, JPMorgan said.
WIDESPREAD CONTROLS
The emergence of a new trading regime comes at a time when banks face fresh allegations they thwarted past credit trading ventures, using broad market controls to protect their business.
Large banks own and influence all key parts of the market infrastructure, from clearing, data, documentation, licensing, and settlement to trading systems and flows.
Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations, who has consulted on trading platforms, said the banks use a combination of ownership restrictions, revenue-sharing agreements with trading platform providers, and regulatory arbitrage to remain dominant.
"The whole distinction between buyside and sellside is an anachronism; in an electronic environment it no longer makes any sense," he said.
The U.S. Department of Justice has been investigating potentially anticompetitive behavior in the credit derivatives market since 2009, focused on clearing, trading and information services. Its enquiries have included whether banks used their ownership and sway over trading platforms to control flows and restrict competition, said two people familiar with the probe.
Tensions between market participants have flared on several occasions since the crisis, with wrangling over clearing and trading details delaying reforms.
Large fund managers and others pushing for reform say banks are restricting direct participation in clearing and trading, attempting to reduce the trade anonymity of investors using documentation and other means and slowing technology needed to move to new systems.
Banks have countered in industry meetings and interviews by saying that trading and clearing technology needed time to develop and that certain documentation and systems are needed to ensure trade acceptance by clearinghouses. None would speak on the record for this story.
OPENING THE MARKETS
If order book trading does catch on, the markets could change dramatically.
In open access platforms, investors can set limit orders, standing orders to buy or sell at a set price, which compete with dealer prices. That can sharply reduce costs, as was seen when stock markets included a shift from RFQ to order books, where trading costs ultimately fell as much as 95 percent.
"History has clearly shown that whenever you have order books enter a marketplace you see an immediate increase in liquidity and transparency and lower the cost for both buyside and sellside alike," said Jamie Cawley, head of Javelin Capital Markets, a rate and credit derivatives order book and RFQ.
Trade anonymity would also reduce the advantage banks have in seeing client positions, as many fund managers have complained that request-based systems require them to reveal trading strategies.
"I don't know of a marketplace as large as the swaps market that trades RFQ," said Christian Martin, head of TeraExchange, a multi-asset order book and RFQ. "Information leakage is a significant problem for participants on a RFQ platform and they can avoid that completely on a fully anonymous platform."
If trading remains dominated by the RFQ model, meanwhile, the largest banks are likely to maintain much of their market share, and price transparency may remain limited.
The CFTC finalized a controversial rule in May that requires investors to seek two price quotes on RFQ platforms before entering trades, rising to three after a year. That has brought complaints that the rule favors the incumbent banks - because it is likely to tie investors to the few banks that already offer the most liquidity and limits price transparency before trades, which is critical to drawing in new entrants.
(This story corrects spelling of name in ninth paragraph)
(Reporting By Karen Brettell; Editing by Tim Dobbyn)
http://www.reuters.com/article/2013/08/29/us-derivatives-trading-analysis-idUSBRE97S06820130829
"Hello Scotia Mocatta, It's JPMorgan... Yes, Again... We Need More Gold"
Tyler Durden's picture Submitted
by Tyler Durden on 08/23/2013 18:39 -0400
It happened again.
And like the last time JPM plundered 20K ounces of Scotia gold on August 8...
http://www.zerohedge.com/news/2013-08-23/hello-scotia-mocatta-its-jpmorgan-yes-again-we-need-more-gold
Wall Street’s Rental Bet Brings Quandary Housing Poor
By Heather Perlberg & John Gittelsohn
Aug 29, 2013 8:11 AM ET
Bloomberg
LaTanya Moore-Newsome, a real estate agent with Century 21 in Atlanta, has been calling Wall Street-backed landlords for months on behalf of her low-income clients with government housing vouchers.
She said some of the area’s biggest homebuyers in the past two years, including Blackstone Group LP (BX), American Homes 4 Rent and Silver Bay Realty Trust Corp., repeatedly told her they had nothing available for tenants who use subsidies under the federal Section 8 assistance plan. Last week, she finally got a positive response from Blackstone’s Invitation Homes unit, which said it would accept applications from her renters.
“It’s a really uphill battle dealing with these investors,” Moore-Newsome said. “You already have to deal with some of the issues with owners not wanting to take Section 8 in nicer areas. Now you have these big companies come into their neighborhoods and they say we’re not renting to you either.”
Private-equity firms, hedge funds and real estate investment trusts have bought more than 100,000 U.S. homes, becoming dominant single-family landlords in markets hardest-hit by the housing crash such as Atlanta. As the companies seek thousands of tenants to fill newly renovated properties, their decision whether to lease to low-income Americans with Section 8 vouchers stands to affect both their profitability and poor residents who have been longtime renters.
Blackstone Inherited
Blackstone -- the largest company in the fledgling industry after spending more than $5 billion to buy 32,000 U.S. homes -- inherited at least 200 Section 8 tenants when it bought a portfolio of Atlanta-area houses in April for about $100 million. That brought the amount of homes occupied by voucher holders to less than 1 percent of its portfolio, the company said at the time.
Invitation Homes, which operates the business, leases to 81 of the almost 17,000 families with vouchers in Atlanta and neighboring DeKalb and Cobb counties, according to data from the three largest Atlanta-area housing authorities.
“Invitation Homes has a significant number of Section 8 tenants and continues to rent to new Section 8 tenants,” Christine Anderson, a spokeswoman for New York-based Blackstone, said in a statement.
Some institutional landlords, including Waypoint Homes Realty Trust Inc. (WAY) and Sylvan Road Capital LLC, consider voucher holders a reliable client base because they have a low turnover rate and the government pays most of their rent on a timely basis. Other investors that are building home-rental companies may not want to take on the red tape, stigma of renting to poorer tenants and the potential extra costs, said Christopher Thornberg, principal at research firm Beacon Economics LLC in Los Angeles. They also don’t want to leave their homes vacant for long, he said.
Market Saturation
“As the markets become more saturated with rentals, you may find these guys going to a Section 8 model -- if they don’t decide to sell -- simply because they don’t want these houses sitting empty,” Thornberg said.
Investors are buying houses for the potential value appreciation as much as the rental cash flow, and may be reluctant to commit to Section 8 tenants because those leases come with long-term constraints that reduce the ability to sell quickly, according to Raphael Bostic, assistant secretary for policy development and research at the U.S. Department of Housing and Urban Development from 2009 to 2012.
“These guys are not really rental people,” said Bostic, a professor of public policy at the University of Southern California. “They’re transaction oriented.”
Dangerous Neighborhoods
Landlord participation in the $18.9 billion HUD program is voluntary, as long as there’s no discrimination against Section 8 tenants based on their race or other protected status. The vouchers assist low-income families, the elderly, and disabled afford housing in the private market, paying landlords at or close to market rates, with tenants contributing 30 percent to 40 percent of adjusted gross income for rent and utilities.
Section 8 voucher holders occupy about 5 percent of the country’s 40 million rental residences, almost double the number in public-housing projects units.
Some single-family rental businesses, such as American Home, avoid purchasing properties in areas where many renters have housing vouchers, according to Chief Executive Officer Aaron Edelheit.
“We steer clear of dangerous neighborhoods,” said Edelheit, whose Atlanta-based company owns about 2,500 rentals in the Southeast. “Our experience in the past has been Section 8 involves lower-quality neighborhoods, higher crime, higher vandalism, higher delinquency and problems.”
Fund Buying
Blackstone, Silver Bay, Thomas Barrack Jr.’s Colony Capital LLC and self-storage billionaire Wayne Hughes’s American Homes 4 Rent (AMH) started buying residential properties en masse in the past two years in cities including Phoenix, Las Vegas, and Atlanta. They’ve been seeking to take advantage of U.S. prices that fell as much as 35 percent from the 2006 peak and growing rental demand from some of the more than 7 million Americans that lost their houses to foreclosure.
The U.S. homeownership rate fell to 65 percent this year, its lowest level since 1995, according to Census Bureau data, as fewer people were able to qualify for a mortgage.
Institutional investors bought 24 percent of homes sold in the Atlanta region in the first half of this year, the most of any metro area, and up from 12 percent a year earlier, according to RealtyTrac, an Irvine, California-based data firm.
Prices Soaring
The buying spree has sent prices soaring and rents leveling off. U.S. home asking prices jumped 11 percent in July from a year earlier compared with a 3.9 percent increase in rents, according to San Francisco-based Trulia Inc. (TRLA) In Atlanta, asking prices rose 19 percent, while rents climbed 2 percent, the real estate information website reported.
With a glut of properties to fill, investors that shun some of the 2.2 million Americans with federal vouchers in certain regions risk higher vacancy rates and lower yields, according to Jeff Pintar, CEO of Pintar Investment Co., which has invested more than $1.5 billion in single-family properties.
“If you’re an investor in the markets that have Section 8 housing as a predominant portion of the community and you’re not accepting vouchers, you’ll have a bigger difficulty getting that property leased,” said Pintar, who manages more than 2,500 homes in Southern California, Las Vegas and Atlanta, with about 15 percent occupied by Section 8 tenants.
As the number of investor-owned homes increases, Atlanta real estate agents such as Moore-Newsome say it’s been harder finding homes for voucher-holding clients.
“The majority of properties my clients are interested in are owned by these big companies,” Moore-Newsome said, adding that these tenants were already living in the neighborhoods investors have flooded, renting some of the same properties that were later purchased as foreclosures.
Blackstone Agrees
Moore-Newsome, who also represents market-rate renters and buyers, said she’s called Invitation Homes on a monthly basis since last year to inquire about its properties to rent. Last week -- after Bloomberg News asked Blackstone about its Section 8 policies -- was the first time the firm agreed to accept one of her applications for voucher holders, she said.
Invitation Homes’s policy is to renew Section 8 leases and accept new tenants, according to a person with knowledge of the firm. Any inquiries that were turned away were because of a glitch at the call center level as the company builds out its operations and trains its staff, said the person, who asked not to be named because the practices are private.
‘Don’t Understand’
Nicole Borden, a real estate agent with Coldwell Banker in Atlanta, said she was told this month by representatives from Invitation Homes and American Homes 4 Rent that the companies aren’t offering any of the homes on the market to Section 8 voucher holders.
“This is not homeownership,” Borden said. “I don’t understand how so many people are being turned down from rentals.”
Peter Nelson, chief financial officer of American Homes 4 Rent in Agoura Hills, California, didn’t respond to e-mail and telephone requests for comment. Silver Bay, based in Minnetonka, Minnesota, and Colony declined to comment. The three companies have failed to show a profit while acquiring properties faster than they can fill them with tenants, according to filings.
American Homes 4 Rent had leased 56 percent of its 18,326 homes as of June 30, according to an Aug. 20 statement. The company, which reported a $14 million loss for the second quarter, has cut about 15 percent of its workforce this year, a person familiar with the terminations said earlier this month. It avoids renting to voucher holders, said the person, who asked not to be identified because the company’s policies are private.
Rental Requirements
Silver Bay filled 65 percent of its properties as of June 30, up from 53 percent the previous three months. To qualify for an Atlanta home, tenants must have three times the rent in income, according to the firm’s website, which would likely exclude Section 8 applicants since their vouchers are based on low earnings.
The Section 8 program was created under President Richard Nixon to shift support for low-income housing to the private sector after large government projects, such as Chicago’s Cabrini-Green, became hubs for crime and blight, said Susan Popkin, a senior fellow at the Urban Institute in Washington.
“It’s sort of gotten the connotation of poor people of color moving into my neighborhood,” Popkin said. “But the research we’ve done and other people have done is that there’s no evidence they bring crime to a community. There’s no evidence they hurt property values.”
Population Growth
Over the long-term, affordable housing is going to be harder to find as government subsidies fail to keep pace with demand, rents continue to rise and new construction falls behind population growth, according to Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School.
“Relying on the rental market going forward to house working
families, this is going to be a challenge,” she said in a telephone interview. “Rents have increased through the recession and vacancies have declined. So it’s unlikely to be a market where rents stabilize or decline long-term.”
One firm that’s welcoming Section 8 tenants is Oakland, California-based Waypoint. About 5 percent of the almost 4,000 houses the firm owns were leased to Section 8 tenants, according to a July regulatory filing. Waypoint has asked the Housing Authority of the County of Los Angeles how it can get approval for “hundreds” of homes in the district, said Emilio Salas, deputy executive director for the agency, which has almost 23,000 vouchers.
Financially Stable
Voucher holders are a financially stable base of renters, said Jeff Brock, CEO of Key Property Realty, a real estate investment and management company that he founded in 2001.
Once leases are in place, overseeing the homes can be more labor intensive. Brock has a separate department within his company dedicated to managing the 25 percent of homes with Section 8 renters. The voucher program is administered on the county level, so operators spread across wide areas may have to work with several housing authorities. Georgia has 159 counties, second only to Texas.
“From a purely cash flow circumstance, Section 8 is better than having a market-rate tenant,” Brock said. “Our tenancy is longer, our collections are lower and our delinquencies are fewer. We get paid on time.”
Higher Rents
The median rent for a three-bedroom property in the Atlanta metropolitan area for Section 8 is $1,158 in 24 out of 29 counties -- higher than the single-family median market rent in 83 percent of the region, according to data provider RentRange LLC.
Still, Jean Barner, one of Moore-Newsome’s clients, is among the Atlanta voucher holders having trouble finding a house. She’s seeking a bigger home for her family of seven members to rent next month after getting custody of her 7-year-old grandson.
Barner, 47, obtained Section 8 assistance in 2008, after breast cancer left her unemployed and with more than $50,000 in medical bills. She’s said she’s been turned away by large landlords who told her there’s nothing available for Section 8 tenants.
“A lot of owners with nice houses won’t rent to us,” Barner said. “They won’t even look at us. If half these landlords just give us a chance, they’d have someone to take care of their houses instead of them sitting vacant.”
To contact the reporters on this story: Heather Perlberg in New York at hperlberg@bloomberg.net; John Gittelsohn in Los Angeles at johngitt@bloomberg.net
To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net; Rob Urban at robprag@bloomberg.net
http://www.bloomberg.com/news/2013-08-29/wall-street-s-rental-bet-brings-quandary-housing-poor.html
Syria Strike Plans Advance as Allies Seek Support to Act
By Terry Atlas & Joe Sobczyk - Aug 28, 2013 3:33 PM ET
Bloomberg
The U.S. and the U.K. today said they are prepared to take military action against Syria without authorization from the United Nations Security Council.
After Russia objected to a UN resolution offered by the U.K. authorizing action to protect civilians, a State Department spokeswoman said the U.S. will take “appropriate” action without the international body’s approval.
“We do not believe the Syrian regime should be able to hide behind the fact that the Russians continue to block action” at the UN, Marie Harf told reporters today.
“By far the best thing would be if the United Nations could be united, unlikely as that seems in the face of the vetoes from Russia and China that we’ve had in the past,” U.K. Foreign Secretary William Hague told reporters in London. “But we have to try to do that. We’re clear that if there isn’t agreement at the United Nations, then we and other nations still have a responsibility on chemical weapons.”
The U.S. and its NATO allies began presenting their justification for military action against Syria as they advanced plans for launching strikes and prepared evidence that the Syrian government used chemical weapons on its own people.
Anders Fogh Rasmussen, secretary-general of the North Atlantic Treaty Organization, said after a meeting of allies today in Brussels that evidence from a “wide variety of sources” implicates the Syrian government in the Aug. 21 chemical weapons attack that killed as many as 1,300 Syrians in eastern suburbs of Damascus, the capital.
International Threat
Using language that provides a basis for collective military action, he said, “We consider the use of chemical weapons as a threat to international peace and security.”
President Barack Obama and allied leaders are working to define the objectives of a military strike on Syria, according to a U.S. official. Any use of force won’t be limited to a one-day operation, said the official, who asked not to be identified discussing war-planning efforts.
The U.S. is concerned that letting the Syrian government go unpunished would send a signal to other countries, including North Korea, that have large inventories of chemical weapons, as well as making it likely that the Assad government will attack civilians with such weapons again, according to the U.S. official.
While the U.S. has warships and submarines carrying Tomahawk cruise missiles ready for action in the eastern Mediterranean Sea, any military move may still be days away, in part because a team of UN weapons inspectors needs at least two more days to complete its report.
Syrian Request
British Prime Minister David Cameron today acceded to Labour Party leader Ed Miliband’s demand that the inspectors be allowed to complete their report before Parliament begins a debate on whether to authorize military action against Syria.
At the UN today, Syrian ambassador Bashar Jaafari asked Secretary General Ban Ki-Moon to extend the inspectors’ investigation to include government allegations that rebel groups have used chemical weapons against Syrian troops on three occasions this month.
Amid the diplomatic dueling, the Obama administration is consulting with NATO allies including the U.K., France, Germany, and Turkey, as well as Arab nations such as Saudi Arabia, Jordan, Qatar and the United Arab Emirates, to determine which countries would participate in a military operation, the official said.
The alleged chemical weapons attack has fed calls for deeper global involvement in the 2 1/2-year Syrian civil war, with Saudi Arabia’s Foreign Minister Prince Saud al-Faisal calling for a “decisive and serious international stance,” the state-run Saudi Press Agency reported today.
Other Options
Among the options being explored are how to deter and degrade Syria’s chemical-weapons capability and defeat the Assad government’s defense capabilities, another U.S. official said, also speaking on the condition of anonymity to discuss internal policy deliberations.
Separate discussions are being held on whether, when and how to accelerate and expand military and intelligence assistance to mainstream Syrian rebels groups in an effort to prevent extremist groups affiliated with al-Qaeda from reaping the benefits of Western attacks on the Assad regime, said a third U.S. official who requested anonymity to discuss possible covert action programs.
The prospect of a military confrontation in the Middle East, a region that produces 35 percent of the world’s oil, has rumbled through markets. Stock markets in the region slumped for a second day today as oil reached a two-year high.
Oil Rising
West Texas Intermediate oil climbed 0.8 percent to $109.89 a barrel as of 2:50 p.m. in New York after rising as much as 3 percent to $112.24. The Standard & Poor’s 500 Index added 0.5 percent after the gauge sank 1.6 percent yesterday.
To bolster domestic and foreign support for military action, the Obama administration is working on declassifying intelligence to provide evidence that Syrian President Bashar al-Assad’s forces are responsible for the chemical attack.
That information will be viewed skeptically after flawed intelligence about Saddam Hussein’s supposed stockpile of weapons of mass destruction was used to justify the 2003 U.S. invasion of Iraq, according to Anthony Cordesman, a military analyst at the Center for Strategic and International Studies in Washington.
The“systematic misuse of intelligence by policy makers before and after” the invasion of Iraq “did much to discredit the U.S. and its allies, to destroy trust in intelligence reports that cannot reveal every source and method, and in the motives of U.S. officials,” Cordesman said in a report posted today on the CSIS website.
Damaged Credibility
Any limits and flaws in the intelligence “will fuel every anti-American conspiracy theory in the region,” he said.
The confrontation with Syria will be at the forefront when Obama, Cameron and French President Francois Hollande join other leaders of the Group of 20 nations next week, hosted by Russian President Vladimir Putin in St. Petersburg, Russia.
Fyodor Lukyanov, the editor of Russia in Global Affairs, a Moscow-based foreign affairs magazine, said Putin’s government may boost aid to Assad’s regime in response to a strike against Syria. The differences with the West may freeze relations for some time.
“The situation you have today will remain and will get worse,” Lukyanov said in a telephone interview. If the U.S., U.K. and France lead military action against Syria, for Putin “the long-term the desire not to deal with the West will be very strong.”
Chinese Opposition
China signaled its opposition. The People’s Daily newspaper, published by the ruling Communist Party, carried an editorial today saying that some countries had passed a “verdict” on Syria before all facts were in and that action should only be taken in response to reliable investigations.
Lakhdar Brahimi, the UN and Arab League special envoy to Syria, told a news conference in Geneva today that he’s waiting to see what evidence is produced that Assad’s regime used chemical arms and that any action must have UN sanction.
“International law is clear,” Brahimi said. “It says military action must be taken after a decision by the Security Council.”
UN chemical inspectors today visited the site of alleged attacks in the Ghouta area, UN Secretary-General Ban said at a news conference in The Hague.
Members of the U.S. Congress, who don’t return from recess until Sept. 9, have been pressing Obama to seek their approval for any action by U.S. forces. Some, such as Representative Adam Smith of Washington, warned against getting dragged into the Syrian civil war.
Congressional Doubts
“Simply lashing out with military force under the banner of ‘doing something’ will not secure our interests in Syria,” Smith, the ranking Democrat on the House Armed Services Committee, said in a statement.
Cameron also is encountering resistance. Opposition leader Ed Miliband offered tentative support for possible attacks after meeting Cameron yesterday, while saying his Labour Party won’t vote for military action over Syria without UN involvement.
If Labour opposes military action, Cameron may struggle to win approval from the House of Commons, as some of his own Conservative lawmakers have publicly expressed reluctance to back such a move.
As in the U.S., polls in Britain show a majority of the public opposes further involvement in the Syrian conflict.
Israel’s Defenses
Israel’s military bolstered defenses near the northern border, deploying a second Iron Dome missile defense system outside the city of Haifa and putting an Arrow missile defense battery on alert for medium-range weapons, the Ynet news site reported, without saying where it got the information.
Iranian Supreme Leader Ayatollah Ali Khamenei said a strike on Syria would be a “disaster for the region,” according to the state-run Iranian Students News Agency. “This kindling of fire is like a spark in a room stocked with explosives because the consequences of it are unknown,” he was quoted as saying today in a meeting with officials.
To contact the reporters on this story: Terry Atlas in Washington at tatlas@bloomberg.net; Joe Sobczyk in Washington at jsobczyk@bloomberg.net
http://www.bloomberg.com/news/2013-08-28/syria-strike-plans-advance-as-allies-seek-support-to-act.html
Jim Rogers Warns Syria War And "Market Panic" To Send Gold "Much, Much Higher"
Submitted by Mark O'Byrne of GoldCore,
Aug. 28, 2013
Zero Hedge
Astute investor, Jim Rogers has warned overnight in an interview with Tara Joseph of Reuters that oil and gold will go much, much higher” due to “market panic” regarding Syria and the coming “end of free money”:
Jim Rogers: Well, Tara, I own oil, I own gold, I own things like that and if there is going to be a war, and it sounds like America is desperate to have a war, they're gonna go much, much higher. Stocks are gonna go down, some of the markets that I'm sure are already going down, commodities are gonna go up. I mean, yeah, some of the things I own all make a lot of money. It's, I'm not particularly keen on war, I assure you, but it sounds like they want it.
Tara Joseph: Is your main concern about supply chain disruptions for oil? Is that where we'll see the biggest moves?
Jim Rogers: Well, that's where we'll see huge moves but the problem with war, Tara, is -- and I'm not the first to know this -- no matter how well the plans are made, strange things happen in war and who knows what unintended consequences will come. But I do know that throughout history whenever you had war, things like food prices have gone up a lot, energy prices have gone up a lot, copper price, lead prices: you know, all of these things go up a lot whenever there's been a war in the past.
TJ: Meanwhile, moving farther to the Far East, we're seeing of a mini crisis around Asia. The Fed stimulus unwinding really affecting confidence in India and Indonesia in particular. Do you think this is a short-term blip or do you think these countries face very rough waters ahead?
Jim Rogers: Of course they face rough waters ahead, Tara. You know, India and Indonesia - Turkey too, which is part of Asia - all of them have huge balance of trade deficits, which they've been able to finance with all this artificial free money that's been floating around. Now, the artificial sea of liquidity is going to end some day and when it ends, all the people depending on this free money and this sea of liquidity are gonna suffer. Whether its this week or this year or next year, they're all going to suffer.
TJ: We're already, though, Jim seeing sort of the unwinding of what happens when there's fears of that stimulus coming out. What's next for these countries? Where does it go from here?
Watch the interview in full here. If the video does not display correctly, please click on this link.
Jim Rogers: Tara, we, we haven't seen much of anything yet. I mean, normally, in bear markets things go down 40% to 80% and people give up. They throw the shares out the window and they say, "I never want to invest again as long as I live." Sure, we've seen some declines. Have we seen panic, have we seen terror? Absolutely not. Not in any markets yet.
TJ: Are you expecting panic? We've seen mini crises do you see more panic?
Jim Rogers: Yes, of course. When, when, when this artificial sea of liquidity ends we're gonna see panic in a lot of markets, including in the US, including in West developed markets.
I mean, Tara, this is the first time in recorded history that all major central banks have been flooding the market with artificial money printing at the same time. They've all been trying to debase their currencies at the same time.
This has never happened in recorded history. When this ends its gonna be a huge mess.
http://www.zerohedge.com/news/2013-08-28/jim-rogers-warns-syria-war-and-market-panic-send-gold-much-much-higher
America's Outsourcers to be Reclassified as Manufacturers
Submitted by Robert Oak
August 23, 2013
Economic Populist
Don't like the trade deficit, low GDP and the public outrage over the offshore outsourcing? Change the accounting method to make it go away! Such is the agenda of government statisticians it appears. How they are going to incorporate statistical lies into national accounts is shocking. Production location no longer matters, the thing that will count is ownership of the final product.
We have a new definition, Factoryless manufacturing. Did you know we can have U.S. manufacturing without actually making any goods in the United States? That's the plan to count corporations and their products who are located in the U.S. but offshore outsource their manufacturing abroad as part of the U.S. manufacturing base. Get that?
Factoryless” manufacturers, as defined by the U.S. OMB, perform underlying entrepreneurial components of arranging the factors of production but outsource all of the actual transformation activities to other specialized units.
Right now, iPhones are counted as imports and rightly so. Apple has offshore outsourced manufacturing and final assembly to China. Most parts are not manufactured in the United States and components come from China, Japan, South Korea and Germany. Very obviously an iPhone is no more American than that cheap plastic good marked Made in China.
Yet if the government statistical agencies have their way, that iPhone will be an American manufactured good, despite the fact that 1 million Chinese made the thing while Apple does not provide Americans jobs of scale and maintains their strong profit margins.
The target date for this statistical fraud is 2017. There is a Factoryless Production Group, involving all of the statistical agencies, working out the incorporation to count offshore outsourcing as U.S. manufacturing.
Here is another example, taken from this BEA paper, to show their intent to classify offshored manufacturing as an American good.
If a U.S. shoe company sent soles and leather to a contract manufacturer in another country for assembly of its athletic shoe, the U.S. shoe company— the principal— is importing manufacturing services from the contract manufacturer. Because the U.S. shoe company owns the soles, leather, and assembled athletic shoe, there is no international transaction and therefore the soles and leather should not be recorded as U.S. exports and the assembled athletic shoe should not be recorded as a U.S. import.
See any Americans manufacturing the shoe in the above example? Nope, yet somehow this is now an American good with no record of the fact it was manufactured overseas with foreign workers, foreign capital and then imported back into the United States. The shoe is now an U.S. good which low wage American burger flipper workers cannot afford to buy.
Gets worse, Manufacturing will now be renamed to transformation activities as if manufacturing a product or part of a good is a trivial step and not the offshore outsourcing of production. A recent Census paper spells out the bias for multinational firms who labor arbitrage and frankly don't employ American manufacturing workers.
The new international guidelines state that the recording of imports and exports of goods should be based on the transfer of economic ownership.
By redefining global outsourcing as ownership of the intermediate stages of manufacture, magically multinational corporations can offshore outsource plants, capital, jobs and services, yet because they own it, this redefinition will make that global production part of the U.S. domestic economy. So, instead of Apple iPhones being classified as an import, which they are, only the contract service to build them would be considered. In other words, those one million Chinese workers at Foxconn would be considered a contract service, a cost, similar to electricity, yet the iPhone itself, would be claimed to be an American product, which clearly it is not. This is outrageous for it hides the massive trade deficit and worse, completely discounts how manufacturing scales. Most jobs in making of goods are in the actual production. Sales, Marketing, R&D employ only a small percentage of labor involved in making a product and even there, we have massive offshore outsourcing and the importing of foreign workers as well. Reclassifying imports and exports by which greedy multinational corporation owns what, eradicates the millions of Americans who should and would have been working in manufacturing, making those very products. This agenda to modify national accounting methodology for trade, imports, exports, manufacturing, wholesale trade, GDP, employment and so on will literally sweep under the rug the millions of Americans jobs lost due to offshore outsourcing as well as hide those same jobs being given to China and other low wage nations.
Manufacturing News alerted us to what is going on, with an excerpt of their article below:
Globalization Forces Major Change In Business Classification System: One Result Will Be That Imports From Manufacturers That Have Outsourced Production Offshore Will No Longer Be Considered Imports
U.S. federal agencies involved in economic data are on the verge of a major and transformative change in the way they classify companies that have outsourced their U.S. production to foreign manufacturing contractors.
The change could radically increase U.S. production statistics by classifying "factoryless goods producers" as domestic manufacturers. Companies like Apple will no longer be considered "wholesale traders," and their sales would be counted as U.S. production, even though none of their manufacturing is in the United States.
Imports by American companies that outsource their production to foreign manufacturers also would no longer be counted as imports, thereby impacting the balance of U.S. international trade accounts.
The idea is for the federal government to determine how much production has been offshored and to pinpoint the number of American companies that are linked to manufacturing, even though they don't make the products they design and sell.
....
The wordspeak coming out of America's statistical agencies is shocking. Offshore outsourcing of American jobs will now be classified as a service. Magically those millions of Chinese making goods will simply be service workers and the resulting good itself will be claimed to be an American product. Poof! Gone is the fact America's jobs are offshore outsourcing and multinational corporate profits magically give the illusion there is economic growth in America.
This Federal Reserve economists' research paper estimates this reclassification would have increased the value of manufacturer's shipments by 30% in 2007. Manufacturer's shipments contribute to investment in GDP, so a 30% increase is quite an artificial and illusionary economic growth boost. Fabless semiconductor companies have increased dramatically with more offshore outsourcing and cell phones,since 2007, so we can expect this figure to be even higher.
Another research paper found by identifying and reclassifying these offshore outsourcers as manufacturers resulted in a large boost to manufacturing output and employment. This is an incredible trick and will completely hide the fact millions of jobs have been lost and the U.S. manufacturing base has eroded.
Reclassifying FGP establishments to the manufacturing sector would have increased reported manufacturing jobs by 595,000 in 2002 and by 431,000 in 2007, corresponding to an 4.0 percent increase in manufacturing employment in 2002 and 3.2 percent increase in 2007. The same method of adjustment would have resulted in increased reported manufacturing output by $253B (6.5 percent) in 2002 and by $279B (5.2 percent) in 2007.
The second method involves two strong additional assumptions. First, we assume that the fraction of FGPs in the overall wholesale sector is the same as that among those plants answering both the design and manufacturing questions in 2002, and those answering the design, primary activity and outsourcing questions in 2007. Second, we assume that all these FGPs are proportionally dif- ferent from (larger than) the average in their industry in terms of employment and output to the same degree as the observed FGP plants. Applying the first assumption results in 58,147 FGPs in 2002 and 45,624 FGPS in 2007. Average employment at wholesale plants was 13.5 workers in 2002 and 14.3 workers in 2007 and the within- industry FPG-adjustment factors were 1.67 and 1.65 respectively yielding an average of 22.5 workers per FGP in 2002 and 23.6 workers per FGP in 2007. This more liberal set of assumptions results in 1,311,000 more manufacturing jobs in 2002 and 1,934,000 in 2007, 9.0 percent and 14.4 percent respectively. The same method of adjustment would have resulted in increased reported manufacturing output by $758B (19.4 percent) in 2002 and by $895B (16.8 percent) in 2007.
Who is the culprit for such disastrous reclassification of businesses that do not manufacture in the United States as U.S. manufacturers? The OMB and the Economic Classification Policy Committee (ECPC). The Office of Management and Budget (OMB) means the White House is behind these redefinitions and resulting statistical gamesmanship. Check out their guidelines and ask yourself, how by the description, can this possibly be an employer of Americans making American goods?
When individual steps in the complete process are outsourced, an establishment should remain classified in the manufacturing sector. For example: 1) a decision to produce or purchase raw materials does not change the classification; 2) a decision to use contractors or a professional employer organization (PEO) rather than a traditional employment contract does not change classification; and 3) a decision to outsource marketing and distribution to a wholesaler does not change classification. In each case, the decision to perform or outsource a function changes the establishment production function but does not change the classification.
Below is the definition of of a Factoryless Goods Producer (FGP) by the ECPC and with a stroke of a pen, our multinational corporations who offshore outsourced millions of jobs, ruined millions of lives along with America will now be reclassified as American manufacturers from wholesale trade. The irony is beyond gallows humor, it's like bulldozing a mass grave and pretending it is no longer there and the original atrocities never happened.
Owns rights to the intellectual property or design (whether independently developed or otherwise acquired) of the final manufactured product.
* May or may not own the input materials.
* Does not own production facilities.
* Does not perform transformation activities.
* Owns the final product produced by manufacturing service provider partners.
* Sells the final product.
http://www.economicpopulist.org/content/americas-outsourcers-be-reclassified-manufacturers-5342
Hedge Funds, Insider Traders Begin Dumping Monsanto Stock as Reality of GMOs Sinks in Across Wall Street
Charleston Voice
Aug. 26, 2013
Monsanto executives and insiders are dumping Monsanto stock in record volumes, sending the stock price spiraling downward. CEO Hugh Grant just sold off 40,000 shares at $97.74, and both Janet Holloway and Gerald Steiner -- both high-level Monsanto executives -- recently ditched more than 10,000 shares each. Tom Hartley also bailed on another 6,000 shares at $100.15. (See sources below.)
Hedge funds, meanwhile, are also dumping Monsanto stock, most likely due to sharply increased "negative sentiment." This means people increasingly don't like Monsanto, and that's a direct result of all the growing realizations about the dangers of GMOs, Monsanto's predatory business practices, the company's dangerous experiments that have already unleashed genetic pollution, and the fact that GM corn has been experimentally found to cause widespread cancer tumors in rat studies.
Just the fact that Monsanto's GE wheat trials got out of control and contaminated a wheat field in Oregon -- causing Japan and South Korea to ban U.S. wheat imports -- has resulted in 150 groups now demanding the USDA keep a tighter lid on Monsanto's GMO experiments. These groups are fed up with seeing the market value of their crops destroyed by sloppy "open field" experiments being conducted by Monsanto that spread genetic pollution across the country and contaminate non-GMO crops. (Monsanto goes even further and actually sues the farmers whose fields they contaminated!)
Hedge funds dumping Monsanto
As InsiderMonkey.com reports, Monsanto "has experienced declining interest from the entirety of the hedge funds we track."
The report goes on to say:
At the top of the heap, Jeffrey Vinik's Vinik Asset Management said goodbye to the largest stake of the 450+ funds we monitor, totaling close to $100.8 million in [Monsanto] stock. Sean Cullinan's fund, Point State Capital, also dropped its [Monsanto] stock, about $54.7 million worth.
Lone Pine Capital with the largest holdings of Monsanto, over $613 million worth of the company's stock. Natural News urges all investors to ditch Lone Pine Capital and take your money somewhere else that doesn't invest in "the world's most evil corporation."
Blue Ridge Capital
Blue Ridge Capital also owns over $320 million in Monsanto stock and should be immediately abandoned by all investors.
Monsanto share prices plummeting ever since the March Against Monsanto
So far this year, Monsanto (MON) share prices have plummeted from a high of $109 to a current trading range around $95. That's a drop of nearly 13%, and the bad news for Monsanto just keeps coming.
For one, the European Union's new food safety guidelines affirm the methodology and findings of the Seralini GM corn rat study. As much as the biotech industry and all its pimped-out science trolls have attempted to attack the study, the secret is already out: GM corn causes cancer tumors and consumers accurately see GM corn as equivalent to a "poison" symbol on foods.
The Seralini study, by the way, found that:
• Up to 50% of males and 70% of females suffered premature death.
• Rats that drank trace amounts of Roundup (at levels legally allowed in the water supply) had a 200% to 300% increase in large tumors.
• Rats fed GM corn and traces of Roundup suffered severe organ damage including liver damage and kidney damage.
• The study fed these rats NK603, the Monsanto variety of GM corn that's grown across North America and widely fed to animals and humans. This is the same corn that's in your corn-based breakfast cereal, corn tortillas and corn snack chips
Anyone who is still investing in Monsanto is investing in this:
All food companies that use Monsanto's corn will be punished in the marketplace
The future for sales of Monsanto's GM corn look especially bleak due to the simple fact that GMO labeling is now inevitable. The consumer push to know what's in our food is unstoppable, no matter how much lobbying Monsanto conducts in a desperate effort to keep consumers ignorant about what they're eating.
Whole Foods, of course, has already announced mandatory GMO labeling on everything it sells by 2018. I believe Wal-Mart and other retailers are also considering a similar move, or they'll lose market share to Whole Foods.
At the same time, major food manufacturers are realizing they must either get the GMOs out of their products or face a massive consumer backlash. As a result, there is currently a mad rush by food companies to get their products certified by the Non-GMO Project. Across the board, products that achieve Non-GMO Project Verified status experience an almost immediate30% increase in sales nationwide.
Do the math: companies that use Monsanto's GM corn are punished and boycotted in the marketplace. Companies that use non-GMO corn experience huge increases in sales. In food company corporate boardrooms all across America, this is a no-brainer: dump GMOs if you want to survive.
The same is also true for hedge funds and mutual funds: the more they invest in Monsanto, the more they stand to lose from the global outrage against Monsanto, GMOs and GM corn in particular.Plus, I also happen to believe there will come a day when many of the top Monsanto executives will be arrested and prosecuted for their role in carrying out crimes against humanity (not just from GMOs but also from glyphosate).
When that day comes, Monsanto share prices will obviously fall through the floor. The company may, in fact, implode like a dot-com bubble, leaving investors holding worthless paper instead of valuable shares... a kind of poetic justice for all those who furthered the means of such a destructive entity in the first place.
See the funds that still invest in Monsanto
The mutual funds still investing in Monsanto include:
• Fidelity Select
• American Century
• Rydex Basic Materials
• Hartford Growth
• ICON Materials
• Vanguard Materials
If you own any of these mutual funds, sell them now and invest somewhere else. Become an "activist investor" and put your money in companies that create a better world, not companies that destroy their world for their own selfish greed.
Why humanity will achieve victory against Monsanto
Monsanto is at war with humanity and the planet, but humanity will achieve victory against this evil corporate force of death and destruction. It is already happening in the marketplace and across the minds and hearts of millions of activists in stand in solidarity against corporate evil.
So spread the word about not just avoiding GMOs but also avoiding owning Monsanto stock in any form. If you have money invested in a mutual fund or hedge fund that owns Monsanto, sell the fund! Don't let anyone use your money to further the profits of the biotech industry. Invest your money in something that helps humanity, not harms it.
chasvoice.blogspot.com
http://www.silverbearcafe.com/private/08.13/dumping.html
The Leveraged Buyout of America
By Ellen Brown
August 26, 2013
(special thanks to basserdan)
(please note: The underlined words are 'clickable' links when accessed via the link at the bottom of this page)
Giant bank holding companies now own airports, toll roads, and ports; control power plants; and store and hoard vast quantities of commodities of all sorts. They are systematically buying up or gaining control of the essential lifelines of the economy. How have they pulled this off, and where have they gotten the money?
In a letter to Federal Reserve Chairman Ben Bernanke dated June 27, 2013, US Representative Alan Grayson and three co-signers expressed concern about the expansion of large banks into what have traditionally been non-financial commercial spheres. Specifically:
(W)e are concerned about how large banks have recently expanded their businesses into such fields as electric power production, oil refining and distribution, owning and operating of public assets such as ports and airports, and even uranium mining.
After listing some disturbing examples, they observed:
According to legal scholar Saule Omarova, over the past five years, there has been a “quiet transformation of U.S. financial holding companies.” These financial services companies have become global merchants that seek to extract rent from any commercial or financial business activity within their reach. They have used legal authority in Graham-Leach-Bliley to subvert the “foundational principle of separation of banking from commerce”. . . .
It seems like there is a significant macro-economic risk in having a massive entity like, say JP Morgan, both issuing credit cards and mortgages, managing municipal bond offerings, selling gasoline and electric power, running large oil tankers, trading derivatives, and owning and operating airports, in multiple countries.
A “macro” risk indeed – not just to our economy but to our democracy and our individual and national sovereignty. Giant banks are buying up our country’s infrastructure – the power and supply chains that are vital to the economy. Aren’t there rules against that? And where are the banks getting the money?
How Banks Launder Money Through the Repo Market
In an illuminating series of articles on Seeking Alpha titled “Repoed!”, Colin Lokey argues that the investment arms of large Wall Street banks are using their “excess” deposits – the excess of deposits over loans – as collateral for borrowing in the repo market. Repos, or “repurchase agreements,” are used to raise short-term capital. Securities are sold to investors overnight and repurchased the next day, usually day after day.
The deposit-to-loan gap for all US banks is now about $2 trillion, and nearly half of this gap is in Bank of America, JP Morgan Chase, and Wells Fargo alone. It seems that the largest banks are using the majority of their deposits (along with the Federal Reserve’s quantitative easing dollars) not to back loans to individuals and businesses but to borrow for their own trading. Buying assets with borrowed money is called a “leveraged buyout.” The banks are leveraging our money to buy up ports, airports, toll roads, power, and massive stores of commodities.
Using these excess deposits directly for their own speculative trading would be blatantly illegal, but the banks have been able to avoid the appearance of impropriety by borrowing from the repo market. (See my earlier article here.) The banks’ excess deposits are first used to purchase Treasury bonds, agency securities, and other highly liquid, “safe” securities. These liquid assets are then pledged as collateral in repo transactions, allowing the banks to get “clean” cash to invest as they please. They can channel this laundered money into risky assets such as derivatives, corporate bonds, and equities (stock).
That means they can buy up companies. Lokey writes, “It is common knowledge that prop [proprietary] trading desks at banks can and do invest in a variety of assets, including stocks.” Prop trading desks invest for the banks’ own accounts. This was something that depository banks were forbidden to do by the New Deal-era Glass-Steagall Act but that was allowed in 1999 by the Gramm-Leach-Bliley Act, which repealed those portions of Glass-Steagall.
The result has been a massively risky $700-plus trillion speculative derivatives bubble. Lokey quotes from an article by Bill Frezza in the January 2013 Huffington Post titled "Too-Big-To-Fail Banks Gamble With Bernanke Bucks":
If you think (the cash cushion from excess deposits) makes the banks less vulnerable to shock, think again. Much of this balance sheet cash has been hypothecated in the repo market, laundered through the off-the-books shadow banking system. This allows the proprietary trading desks at these "banks" to use that cash as collateral to take out loans to gamble with. In a process called hyper-hypothecation this pledged collateral gets pyramided, creating a ticking time bomb ready to go kablooey when the next panic comes around.
That Explains the Mountain of Excess Reserves
Historically, banks have attempted to maintain a loan-to-deposit ratio of close to 100%, meaning they were “fully loaned up” and making money on their deposits. Today, however, that ratio is only 72% on average; and for the big derivative banks, it is much lower. For JPMorgan, it is only 31%. The unlent portion represents the “excess deposits” available to be tapped as collateral for the repo market.
The Fed’s quantitative easing contributes to this collateral pool by converting less-liquid mortgage-backed securities into cash in the banks’ reserve accounts. This cash is not something the banks can spend for their own proprietary trading, but they can invest it in “safe” securities – Treasuries and similar securities that are also the sort of collateral acceptable in the repo market. Using this repo collateral, the banks can then acquire the laundered cash with which they can invest or speculate for their own accounts.
Lokey notes that US Treasuries are now being bought by banks in record quantities. These bonds stay on the banks’ books for Fed supervision purposes, even as they are being pledged to other parties to get cash via repo. The fact that such pledging is going on can be determined from the banks’ balance sheets, but it takes some detective work. Explaining the intricacies of this process, the evidence that it is being done, and how it is hidden in plain sight takes Lokey three articles, to which the reader is referred. Suffice it to say here that he makes a compelling case.
Can They Do That?
Countering the argument that “banks can’t really do anything with their excess reserves” and that “there is no evidence that they are being rehypothecated,” Lokey points to data coming to light in conjunction with JPMorgan’s $6 billion “London Whale” fiasco. He calls it “clear-cut proof that banks trade stocks (and virtually everything else) with excess deposits.” JPM’s London-based Chief Investment Office [CIO] reported:
JPMorgan's businesses take in more in deposits that they make in loans and, as a result, the Firm has excess cash that must be invested to meet future liquidity needs and provide a reasonable return. The primary reponsibility of CIO, working with JPMorgan's Treasury, is to manage this excess cash. CIO invests the bulk of JPMorgan's excess cash in high credit quality, fixed income securities, such as municipal bonds, whole loans, and asset-backed securities, mortgage backed securities, corporate securities, sovereign securities, and collateralized loan obligations.
Lokey comments:
That passage is unequivocal -- it is as unambiguous as it could possibly be. JPMorgan invests excess deposits in a variety of assets for its own account and as the above clearly indicates, there isn't much they won't invest those deposits in. Sure, the first things mentioned are "high quality fixed income securities," but by the end of the list, deposits are being invested in corporate securities (stock) and CLOs (collateralized loan obligations). . . . (T)he idea that deposits are invested only in Treasury bonds, agencies, or derivatives related to such "risk free" securities is patently false.
He adds:
(I)t is no coincidence that stocks have rallied as the Fed has pumped money into the coffers of the primary dealers while ICI data shows retail investors have pulled nearly a half trillion from U.S. equity funds over the same period. It is the banks that are propping stocks.
Another Argument for Public Banking
All this helps explain why the largest Wall Street banks have radically scaled back their lending to the local economy. It appears that JPMorgan’s loan-to-deposit ratio is only 31% not because the bank could find no creditworthy borrowers for the other 69% but because it can profit more from buying airports and commodities through its prop trading desk than from making loans to small local businesses.
Small and medium-sized businesses are responsible for creating most of the jobs in the economy, and they are struggling today to get the credit they need to operate. That is one of many reasons that banking needs to be a public utility. Publicly-owned banks can direct credit where it is needed in the local economy; can protect public funds from confiscation through “bail-ins” resulting from bad gambling in by big derivative banks; and can augment public coffers with banking revenues, allowing local governments to cut taxes, add services, and salvage public assets from fire-sale privatization. Publicly-owned banks have a long and successful history, and recent studies have found them to be the safest in the world.
As Representative Grayson and co-signers observed in their letter to Chairman Bernanke, the banking system is now dominated by “global merchants that seek to extract rent from any commercial or financial business activity within their reach.” They represent a return to a feudal landlord economy of unearned profits from rent-seeking. We need a banking system that focuses not on casino profiteering or feudal rent-seeking but on promoting economic and social well-being; and that is the mandate of the public banking sector globally.
For a PublicBankingTV video on the bail-in threat, see here.
Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her websites are http://WebofDebt.com, http://PublicBankSolution.com, and http://PublicBankingInstitute.org.
http://WebofDebt.wordpress.com
Re : "OBAMA WEIGHS MILITARY STRIKES AGAINST SYRIA " - Washington Post. Money Morning.
War on the horizon? Let's not forget that in 2006 Syria and Iran agreed on a mutual defense treaty for military co-operation against common threats.
Russia warns of 'catastrophic consequences' if Syria hit
Anna Smolchenko 2 hours ago
Aug. 27, 2013
Yahoo News
Russia on Tuesday warned a military intervention in Syria could have "catastrophic consequences" for the region and called on the international community to show "prudence" over the crisis.
"Attempts to bypass the Security Council, once again to create artificial groundless excuses for a military intervention in the region are fraught with new suffering in Syria and catastrophic consequences for other countries of the Middle East and North Africa," foreign ministry spokesman Alexander Lukashevich said.
"We are calling on our American partners and all members of the world community to demonstrate prudence (and) strict observance of international law, especially the fundamental principles of the UN Charter," he said in a statement.
Earlier, Deputy Foreign Minister Gennady Gatilov said that Moscow regretted Monday's decision by the US to postpone a meeting on the Syria crisis, as Western powers mulled military action over last week's chemical attack in Syria.
The scrapping of the meeting, which was due to take place at The Hague later in the week, is the latest sign of a new peak in tensions between Moscow and the West over the possibility of strikes against President Bashar al-Assad's regime.
"It arouses regret that our partners decided to cancel the bilateral meeting," Gatilov said on Twitter.
"Working out the parameters of a political solution in Syria would have been especially helpful right now, when military action is hanging over this country."
In such a climate, it was especially important to work in concert to try to organise the repeatedly postponed peace conference bringing together the Damascus regime and the rebels, Lukashevich added.
"However, the United States' decision to postpone the meeting in The Hague is sending precisely the opposite signal to the opposition, encouraging their intransigence as they await outside intervention," he said.
Lukashevich added convening the peace conference was the "most urgent task."
Western countries led by the United States are considering their response to an alleged chemical weapons attack by Assad's regime on August 21.
Russia has said it believes rebels were behind the incident and has warned any military action without UN approval would violate international law.
On Monday Russian Foreign Minister Sergei Lavrov condemned the "hysteria" over the claimed chemical attack and said the West had yet to come up with proof that Assad's regime was behind it.
He also said Russia would not get involved in a military conflict in Syria.
Russian President Vladimir Putin told British Prime Minister David Cameron in a telephone call on Monday there was no evidence yet that the Syrian regime had used chemical weapons against rebels, Cameron's office said.
Pro-Kremlin Russian newspaper Izvestia published Monday an interview with Assad who ridiculed as "nonsense" the idea his regime used chemical weapons and warned the United States of failure if it attacked Syria.
Russian officials are now comparing the possible use of force against Syria to the 2003 US-led invasion of Iraq, which was vehemently opposed by Moscow as based on flawed intelligence that Saddam Hussein's regime possessed weapons of mass destruction.
"Deja-vu," Alexei Pushkov, the head of the lower house of Russian parliament's foreign affairs committee wrote on Twitter.
"It feels like in the White House it's still (George W.) Bush, (Dick) Cheney and (Donald) Rumsfeld and in Downing Street Tony Blair," he said, referring to the former US president, vice president, defence secretary and British premier during the Iraq war.
The Interfax news agency quoted a diplomatic source who derided US Secretary of State John Kerry's most recent statement on Syria, saying it was "pompous".
Kerry called the use of chemical weapons against civilians "a moral obscenity".
A military diplomatic source also told the news agency the possible use of force would not lead to "an easy victory" because Syria had enough air defence systems to rebuff attacks.
http://news.yahoo.com/russia-warns-catastrophic-consequences-syria-hit-100720291.html
Allana Potash Nearing Construction Financing
Aug. 26, 2013
Katchum's Macro-Economic Blog
Following the news on July 30, 2013, that Russia’s OAO Uralkali was abandoning Belarusian Potash Co., a joint venture with rival Belaruskali of Belarus, the whole potash industry's stock market fell around 20%. Two cartels, Canpotex (PotashCorp, Mosaic and Intrepid) and BPC (Uralkali and Belaruskali), which control 40% and 30% of the potash market, would split up into three cartels: Canpotex, Uralkali and Belaruskali.
Uralkali said it would be focusing on production volume, which means they would sell more potash following the breakup of the cartel. As a result the capacity will grow on this news. The question is, how should investors play this news? Should they buy the dip in potash stocks or sell out?
Today, a month after this news, we already see that potash prices have fallen 5% just recently. Prices for spot shipments of the crop nutrient from Port Metro Vancouver recently slipped $20 (U.S.) to less than $400 a tonne, while there are preliminary signs of market softness elsewhere, including slightly discounted potash prices on rail shipments to China. So, it looks like potash prices are indeed softening.
We know that demand is still growing as potash deliveries are dependent on population growth in the Asian world and that number is still growing at a rate of around 5% per annum. If we bring this number down to world population growth, we have a growth rate of 1.1% per annum. Demand for potash is pretty inelastic, so it could be that some years demand will be higher due to lower potash prices, while other years will have less demand due to high potash prices. Overall, the demand side looks positive. According to Green Markets, a fertilizer industry information provider, demand will increase 26% to 66 million tons. Now let's look at the supply side.
Chart 1: Potash Delivery Vs. Population Growth
The potash industry is having a pretty high capacity utilization rate of around 80% (not as high as compared to a typical 90% capacity utilization rate in the mining industry), but let's say there is overcapacity at the moment. As capacity is set to grow due to the breakup of the cartel, we could see falling potash prices. At this moment, the marginal cost of potash production is around $280/tonne. So we could see potash prices fall another 30% to this level due to an increase in supply. It is estimated that supply will go to 96.5 million metric tonnes by 2017, according to Green Markets.
A good metric to predict potash prices is to look at the capacity utilization trends. The capacity utilization rate is a leading indicator for future inflation. When capacity utilization goes up, we can expect a similer increase in price in about a year from now. We can use this theory to predict potash prices.
Chart 2 gives the potash capacity utilization projection. As you can see, the capacity utilization plunged from 90% in 2007 to 50% in 2009. This corresponded with a drop in potash price from $870/tonne in 2009 to $312/tonne in 2010, exactly a one year lag as predicted by this correlation between capacity utilization and prices.
If we then look at what is happening in 2013, we see that the capacity utilization rate is pretty flat, so I don't expect any huge movements in price in the coming years, but prices could certainly soften to around marginal cost of production. If we look at the Green Market numbers, we would get 66 million tonnes and 96.5 million tonnes by 2017. That's a capacity utilization of around 70%. This really isn't all too bad, considering the plunge to 50% in 2009. Also consider that many of the mines won't come into production at the current price of $400/tonne.
Chart 2: Potash Capacity Utilization
Chart 3: Potash Price (KCL)
The conclusion is that this breakup in the BPC cartel can definitely lower potash prices to around $300/tonne. If you know this will happen, you should invest only in those projects that are low cost. Many development projects need at least a $400/tonne potash price to be economically viable, according to Patricia Mohr, vice-president and commodity market specialist at Bank of Nova Scotia. Knowing that potash prices could go lower than this level, I would be very wary about development companies. Investors should look at low cost producers that are fully funded.
One of my favourite plays was Allana Potash (ALLRF.PK) and it is still my favourite. I have written about this company a year ago. Even though Allana Potash has declined since then (together with the whole commodity market and mining industry), the news gets better and better. Allana Potash's valuations have only improved and the company has all the ingredients to make it into a producing mine. The most recent developments are:
Jan 7th: the company announced the hydrogeological study being completed by Fugro Consult GmbH ("Fugro") on its Dallol Potash Project in Ethiopia, indicating a positive outcome on the recharge rate of its water reservoir.
April 18th: the company has filed its complete Feasibility Study with the Ministry of Mines in Ethiopia as the final condition for the application of a Mining License.
May 22th: The company receives approval of its Environmental, Social, and Health Impact Assessment ("ESHIA") from the Ethiopian Environmental Protection Authority ("EPA") and Ministry of Mines and Energy (the "Ministry").
August 7th: The Company has submitted complete mining permit documentation to the Ministry of Mines of Ethiopia.
And just this week, the company announced that formal mandate letters have been signed between Allana and members of the group of DFIs and ECAs. This project update is extremely important as project financing is the last piece of the puzzle.
Allana Potash has significantly de-risked its project and is well positioned to start its construction work next year. If you know that the net present value is $1.32 billion at a $430/tonne basis, while the total production cost is $100/tonne, which is well under the predicted $300/tonne in the future. Then you know that the future is still going to be bright for this company. We are talking about multiples of upside from the current stock price, based on the current market price of 140 million and the net present value of at least $1 billion.
Geplaatst door Albert Sung op 19:11
http://katchum.blogspot.com/2013/08/allana-potash-nearing-construction.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+KatchumsMacro-economicBlog+%28Katchum%27s+Macro-Economic+Blog%29
The "Halting" Truth of a Frozen Nasdaq
By SHAH GILANI, Capital Wave Strategist
Money Morning
August 26, 2013
From the Editor: Losing access to your money is frightening, no matter how long the powerless state lasts. But when investors in more than 3,200 public companies lost contact with their Nasdaq-listed shares Thursday, we caught a glimpse of something far more troubling. So here's Shah with what this all means for "our once shining city on the hill."
If Goldman Sachs can lose $100 million in a matter of minutes on account of its computers misfiring, is that a sign of things to come? Or is it proof we're already there?
You heard about last week's shutdown, but do you know what it means?
On Tuesday morning, Goldman Sachs let its computers run; too bad for Goldman they got out of the corral and ran wild.
Within 17 minutes after the markets opened, the damage was done. By some estimates, Goldman could lose up to $100 million.
The final body count - in terms of whether it will affect one or five employees' year-end bonuses at the trading behemoth - depends on whether Goldman will be held responsible for its errant trades, or how many of them will be canceled, or whether they might have to make other traders whole for the black hole they dug for them.
It could have been a fat finger, or it could have been a ghost in the machine, or it could have been a window into the reality of high-frequency game theory and its application.
I say it was the latter.
And here's why it matters, to all of us...
No Fat Fingers This Time
There are too many lean and mean traders and pointy people in general at Goldman for it to have been a fat finger. The only thing that's fat over at Goldman is their bonus checks.
A ghost in the machine? Nah. When your existence is overseen by "spooks" (that's the name insiders call CIA operatives, and once a spook, always a spook), it's impossible to not have ghosts in the machines, in the hallways, in the underground offices protecting their building and operatives worldwide.
Here's everything you need to know...
The Events
Goldman's computers sent "expressions of interest" - that's what the Financial Times called them, based on its interviews - down to the exchanges. (I'll come back to expressions of interest, and you'll see them for what they really are.) However, the expressions of interest weren't what was transmitted. What got fired instead were real orders.
The orders were to buy and sell options.
Of the estimated 400,000 contracts on 51 different stocks that got executed, and of the 500 biggest orders, 405 orders were sent down on targeted stocks whose tickers start with the letter H, I, J, K, or L. Of those 405 orders, some 130 orders were for 1,000 or more contract lots each.
In other words, this was some type of "program."
The Outcome
The options prices at which Goldman ended up buying and selling were so far outside where the options were actually trading that they lost a lot of funny money... maybe 100 million shekels.
For example: At the open on Tuesday, some iShares Russell 2000 ETF options were changing hands at $3.32; Goldman came in two minutes later and sold a chunk of those options at $1.00; a minute later they were back trading at $3.32. Now, that's a trade I wish I was on the opposite side of. Imagine buying 1,000 options contracts at $1.00 (thank you, Goldilocks) and selling them in a few seconds for $3.32!
So, you can see how the outcome for Goldman was such a huge loss on the day.
And of course, Goldman knows how much $100 million a day is.
Why, just back a couple of years ago, after the crisis in 2010, Goldman earned at least $100 million a day from its trading division on 116 out of 194 trading days through the end of September. The firm lost money on just one day during the three-month period ending in September, federal regulatory filings showed. So a $100 million losing day? SHOCKING!
The Aftermath... and What Really Matters
Goldman will get a bunch of the errant trades it lost money on canceled. It will lose money on others.
What matters, what is hugely important, is this:
You just got a glimpse of what happens behind the scenes.
Let's talk about that "expression of interest" thing. That is a ridiculously insulting way of characterizing the bids and offers Goldman sent out. What they were doing was sending fake bids and offers or pinging the markets to get market-makers and traders to move their quotes to trigger trades.
It's about program trading in the high-frequency trading universe.
It's game theory in action. And it's a dangerous game.
Why on earth would Goldman send an order to sell the iShares Russell options for $1.00 when it's trading at $3.35? Of course they wouldn't! They never meant to send real orders. They were supposed to be sending expressions of interest, or manipulative bids and offers, to shake out free-money trades. How else do you make $100 million a day for almost 116 days in a row?
For heaven's sake, I've been screaming about the dangers of high-frequency trading for years. I've written about it at Money Morning innumerable times (here, here, and here), for Forbes, over at The Wall Street Journal's MarketWatch. I was actually talking about it on Fox's Varney & Co. the very same day this all went down. (You can watch that interview right here.)
Even worse, Goldman isn't the only ghost out there. There are a lot of them rising up from the graveyard we used to call our capital markets, our former free markets, our once shining city on the hill.
So if Goldman Sachs can lose $100 million in a matter of minutes on account of its computers misfiring, is that a sign of things to come? Or is it proof we're already there?
You don't have to look further than the Nasdaq "freeze" two days later for the answer to that.
http://moneymorning.com/2013/08/26/the-halting-truth-of-a-frozen-nasdaq/
The "Halting" Truth of a Frozen Nasdaq
By SHAH GILANI, Capital Wave Strategist
Money Morning August 26, 2013
From the Editor: Losing access to your money is frightening, no matter how long the powerless state lasts. But when investors in more than 3,200 public companies lost contact with their Nasdaq-listed shares Thursday, we caught a glimpse of something far more troubling. So here's Shah with what this all means for "our once shining city on the hill."
If Goldman Sachs can lose $100 million in a matter of minutes on account of its computers misfiring, is that a sign of things to come? Or is it proof we're already there?
You heard about last week's shutdown, but do you know what it means?
On Tuesday morning, Goldman Sachs let its computers run; too bad for Goldman they got out of the corral and ran wild.
Within 17 minutes after the markets opened, the damage was done. By some estimates, Goldman could lose up to $100 million.
The final body count - in terms of whether it will affect one or five employees' year-end bonuses at the trading behemoth - depends on whether Goldman will be held responsible for its errant trades, or how many of them will be canceled, or whether they might have to make other traders whole for the black hole they dug for them.
It could have been a fat finger, or it could have been a ghost in the machine, or it could have been a window into the reality of high-frequency game theory and its application.
I say it was the latter.
And here's why it matters, to all of us...
No Fat Fingers This Time
There are too many lean and mean traders and pointy people in general at Goldman for it to have been a fat finger. The only thing that's fat over at Goldman is their bonus checks.
A ghost in the machine? Nah. When your existence is overseen by "spooks" (that's the name insiders call CIA operatives, and once a spook, always a spook), it's impossible to not have ghosts in the machines, in the hallways, in the underground offices protecting their building and operatives worldwide.
Here's everything you need to know...
The Events
Goldman's computers sent "expressions of interest" - that's what the Financial Times called them, based on its interviews - down to the exchanges. (I'll come back to expressions of interest, and you'll see them for what they really are.) However, the expressions of interest weren't what was transmitted. What got fired instead were real orders.
The orders were to buy and sell options.
Of the estimated 400,000 contracts on 51 different stocks that got executed, and of the 500 biggest orders, 405 orders were sent down on targeted stocks whose tickers start with the letter H, I, J, K, or L. Of those 405 orders, some 130 orders were for 1,000 or more contract lots each.
In other words, this was some type of "program."
The Outcome
The options prices at which Goldman ended up buying and selling were so far outside where the options were actually trading that they lost a lot of funny money... maybe 100 million shekels.
For example: At the open on Tuesday, some iShares Russell 2000 ETF options were changing hands at $3.32; Goldman came in two minutes later and sold a chunk of those options at $1.00; a minute later they were back trading at $3.32. Now, that's a trade I wish I was on the opposite side of. Imagine buying 1,000 options contracts at $1.00 (thank you, Goldilocks) and selling them in a few seconds for $3.32!
So, you can see how the outcome for Goldman was such a huge loss on the day.
And of course, Goldman knows how much $100 million a day is.
Why, just back a couple of years ago, after the crisis in 2010, Goldman earned at least $100 million a day from its trading division on 116 out of 194 trading days through the end of September. The firm lost money on just one day during the three-month period ending in September, federal regulatory filings showed. So a $100 million losing day? SHOCKING!
The Aftermath... and What Really Matters
Goldman will get a bunch of the errant trades it lost money on canceled. It will lose money on others.
What matters, what is hugely important, is this:
You just got a glimpse of what happens behind the scenes.
Let's talk about that "expression of interest" thing. That is a ridiculously insulting way of characterizing the bids and offers Goldman sent out. What they were doing was sending fake bids and offers or pinging the markets to get market-makers and traders to move their quotes to trigger trades.
It's about program trading in the high-frequency trading universe.
It's game theory in action. And it's a dangerous game.
Why on earth would Goldman send an order to sell the iShares Russell options for $1.00 when it's trading at $3.35? Of course they wouldn't! They never meant to send real orders. They were supposed to be sending expressions of interest, or manipulative bids and offers, to shake out free-money trades. How else do you make $100 million a day for almost 116 days in a row?
For heaven's sake, I've been screaming about the dangers of high-frequency trading for years. I've written about it at Money Morning innumerable times (here, here, and here), for Forbes, over at The Wall Street Journal's MarketWatch. I was actually talking about it on Fox's Varney & Co. the very same day this all went down. (You can watch that interview right here.)
Even worse, Goldman isn't the only ghost out there. There are a lot of them rising up from the graveyard we used to call our capital markets, our former free markets, our once shining city on the hill.
So if Goldman Sachs can lose $100 million in a matter of minutes on account of its computers misfiring, is that a sign of things to come? Or is it proof we're already there?
You don't have to look further than the Nasdaq "freeze" two days later for the answer to that.
http://moneymorning.com/2013/08/26/the-halting-truth-of-a-frozen-nasdaq/
Probe Mines - A Cashed-Up Explorer Getting Noticed
Aug 21 2013
by: Itinerant
Seeking Alpha
The Company
Probe Mines (PROBF.PK) is a junior precious metal exploration company that has made two major discoveries in Ontario since 2009, the Borden Gold Project and the Black Creek Chromite Project.
The Thesis
The Borden Gold project has already attracted the interest of a major Canadian mining company. The resource has been growing steadily with every drilling season; and an evolving high-grade zone within the deposit has the potential to improve the economics of the project significantly. Recent drill results seem to confirm our expectations of this high grade zone.
We believe that the Borden gold discovery has a high probability of becoming a profitable mine in due course; and we also believe that the chromite project is a logical candidate for an accretive sale.
Probe Mines have already shown the ability to create value by advancing these discoveries.
Support from Agnico Eagle
We had been following the progress of this company for some time but only raised an eyebrow when Agnico Eagle (AEM) made a $11.25 investment in the company. It can be safely assumed that Agnico Eagle had been able to perform a level of due diligence that remains unattainable for mere retail investors. This investment therefore represented a serious tick of approval. Following this transaction Agnico Eagle owns almost 10% of the outstanding shares. If Agnico Eagle decides to exercise the warrants that were also part of this deal it will increase its holding to 16.2%. This investment is one of several that Agnico Eagle has made this year and in each case it gave this senior gold miner a foothold in a promising exploration project.
(click to enlarge)
The Borden Gold Project
Probe Mines landholdings are situated about 160km to the south-west of the gold mining town of Timmins. Despite the prolific nature of this district the particular area of the Borden project is comparatively underexplored. The Borden Gold discovery was made in 2010 and since then this project has been the sole focus of the company's exploration activities. The latest NI 43-101 resource estimate dating back to January this year reported on 3.868M ounces of gold in the indicated category plus further 0.625M inferred ounces at a cutoff grade of 0.5 g/t.The metalurgy is advantageous and recoveries of more than 90% have been achieved for the higher grade ore of the deposit.
This resource averages just over 1g/t which is on the low side for our comfort. However, the deposit has a distinct high-grade zone. Increasing the cutoff grade to 1.5g/t yields an indicated resource of more than 1M ounces at a very respectable grade of 2.34 g/t.
This year's drill campaign is concentrating on expanding this high grade zone and first drill results have started to flow in. Last week's announcement prompted us to raise an eyebrow yet again. Reported intercepts included 47.0 meters grading 6.8 g/t Au and 29.4 meters grading 5.9 g/t Au. The latter of the two quoted results is especially interesting since it indicates a significant expansion of the high grade zone by 200m to the northwest.
As we are putting the final edits to this article, more drill results are being released including 44.4 metres grading 4.0 g/t Au.
Upcoming Catalysts
Given the high quality of these first drill results for this season we recommend that potential investors remain alert to future announcements reporting on drill results. These should be forthcoming regularly from now on.
Once this drilling season concludes later this fall we expect the new results to be worked into the resource model. This will lead to a resource update, presumably with yet another increase in ounces and confidence. A preliminary economic assessment based on this updated resource will be the logical next step.
The company continues to consolidate its landholding and has added a large area called the East Limb in order to extend its control of the Borden Gold Belt to over 41 km. A few gaps still need filling in and corresponding action would be accretive for the company.
The Black Creek Chromite Project
Turning to the chromite project we note that the location of Probe's resource is wedged between two other deposits controlled by Cliffs Resources (CLF). Probe Mines has conducted enough exploration work on this property to release a NI 43-101 report. This document indicates a substantial resource of over 10 million tonnes of high grade chromite rich enough to be direct-shipped upon extraction. Chromite is an iron-chromium oxide which is used in stainless steel production. Probe has not performed exploration activities on this project since shifting focus to the Borden gold discovery. However, enough information has been generated to whet Cliffs appetite should it decide to develop the adjacent deposits on either side of Probe's landholding.
(click to enlarge)
Stock & Financial Information
Probe Mines is listed on the Toronto Stock Exchange and shares of the company trade on the pink sheets in the US with adequate liquidity for retail purposes. The company currently has a market capitalization of $122M and there are 75.7M shares outstanding (88.5M fully diluted). Shares are currently trading at $1.81 which is not far from the top end of the 52-weeks trading range. Management owns 5% of the company and institutional investors control a 35% stake (not counting Agnico Eagle's investment). Nine analysts are currently covering Probe Mines.
Very importantly, the company has no debt and has $28M of cash at its disposal which will be sufficient to pay for all exploration activities this year. We presume, that these funds will also be sufficient to perform a PEA for the Borden Gold Project.
Risk
Probe Mines is an exploration company and still near the very beginning of a long process that may eventually lead to operating a gold mine. Many pitfalls can happen along the way, and most companies do not make it to production from such an early stage. Investors putting their money into this type of enterprise run a very high risk of loosing their investment. The few that don't, however, typically earn rich rewards.
The Chart
There are two features that we note from the daily chart above:
The 200dMA has crossed back over the 50dMA which is a bullish indicator called golden cross.
This year's summer low was significantly higher than last year's.
Both features distinguish the performance of this company from the general sector and we interpret them as bullish signs.
Conclusion
If the blossoming gold price rally has legs and positive drill results continue to flow in we believe that this stock has the potential to run significantly higher before the end of the year.
In the longer term we view Probe Mines as a potential takeover target. If equity and capital continues to be managed diligently then such a scenario should be advantageous for Probe shareholders.
http://seekingalpha.com/article/1649512-probe-mines-a-cashed-up-explorer-getting-noticed
US-Russia “New Cold War”: The Battle for Pipelines and Natural Gas
What The US & Russia Are Really Quarreling Over: Pipelines
By Steve Horn
Global Research, August 20, 2013
mintpressnews.com
For both countries, the Snowden affair is just another ho-hum spat in the greater imperial rivalry
Nearly two months ago, former National Security Agency (NSA) contractor-turned-whistleblower Edward Snowden handed smoking-gun documents on the international surveillance apparatus to The Guardian and The Washington Post in what’s become one of the most captivating stories in recent memory.
Snowden now lives in Russia after a Hollywood-like nearly six-week-long stint in a Moscow airport waiting for a country to grant him asylum.
In this video still image taken Thursday, Aug. 1, 2013 and made available Sunday Aug. 4, 2013, by Russia24 TV channel, showing US National Security Agency leaker Edward Snowden, third right, as he leaves Sheremetyevo airport outside Moscow with his Russian lawyer Anatoly Kucherena, second right, on Thursday, Aug. 1, 2013. Snowden has been granted asylum in Russia for one year and left the transit zone of Moscow's airport, his lawyer Kucherena said Thursday while revealing that Snowden's whereabouts will be kept secret for security reasons. (AP Photo/Russia24 via Associated Press Television) TV OUT
Journalists and pundits have spent countless articles and news segments conveying the intrigue and intensity of the standoff that eventually resulted in Russia granting Snowden one year of asylum. Attention now has shifted to his father, Lon Snowden, and his announced visit of Edward in Russia.
Lost in the excitement of this “White Bronco Moment,” many have missed the elephant in the room: the “Great Game”-style geopolitical standoff between the U.S. and Russia underlying it all, and which may have served as the impetus for Russia to grant Snowden asylum to begin with. What’s at stake? Natural gas.
Russia, of course, has its own surveillance state and has been described by The Guardian’s Luke Harding as a “Mafia State” due to the deep corruption that reportedly thrives under Putin’s watch.
It all comes as the U.S. competes with Russian gas production thanks in part to the controversial drilling process known as hydraulic fracturing — “fracking” – transforming the United States into what President Barack Obama has hailed as the “Saudi Arabia of gas.”
Russia produced 653 billion cubic meters of gas in 2012, while the U.S. produced 651 billion cubic meters, making them the top two producers in the world.
Creating a “gas OPEC”
Illustrating this elephant in the room is the fact that when, on July 1, Russian President Vladimir Putin first addressed whether he would grant Snowden asylum, he did so at the annual meeting of the Gas Exporting Countries Forum (GECF) in Moscow, which unfolded July 1-2.
“If he wants to stay here, there is one condition: he must stop his work aimed at harming our American partners, as strange as that sounds coming from my lips,” Putin stated at GECF’s annual summit.
Paralleling the Organization of Petroleum Exporting Countries (OPEC) — The New York Times calls it a “gas OPEC” — GECF is a bloc of countries whose mission is to fend off U.S. and Western power dominance of the global gas trade. The 13 member countries include Russia, Iran, Bolivia, Venezuela, Libya, Algeria and several others.
GECF has held informal meetings since 2001, becoming an official chartered organization in 2008 and dominated in the main by Russia. GECF Secretary General Leonid Bokhanovskiy is also the former VP of Stroytransgaz, a subsidiary of Russian oil and gas giant Gazprom.
Depicting the close proximity between Putin’s regime and GECF’s leadership is the fact that Gennady Timchenko – a member of “Putin’s inner circle,” according to The Bureau of Investigative Journalism – owns an 80-percent stake in Stroytransgaz.
A 21st-century “gas Cold War” has arisen between the U.S. and Russia, with Edward Snowden serving as the illustrative protagonist. President Obama, upset over Russia’s asylum offer to Snowden, recently cancelled a summit with President Putin.
With access to the free flow of oil and gas resources a central tenet of U.S. national security policy under the Carter Doctrine, there’s no guarantee this new Cold War will end well.
Fracked gas exports fend off Russia, but for how long?
Fracking is in the process of transforming the U.S. from a net importer of gas to a net exporter, with three liquefied natural gas (LNG) export terminals on the Gulf Coast already rubber-stamped for approval by the U.S. Department of Energy.
Industry cheerleaders as well as President Obama and other like-minded politicians say there are “100 years of natural gas” under the United States, a geopolitical game-changer to say the very least.
But independent petroleum geologists and investors alike see it differently, concluding perhaps 15-20 years of gas exist at current diminishing, “exploration treadmill” rates of return.
“More and more wells must be drilled and operated to maintain production as the average productivity per well is declining,” David Hughes, a Fellow at the Post Carbon Institute explains in his report “Drill Baby, Drill.” “Since 1990, the number of operating gas wells in the United States has increased by 90 percent while the average productivity per well has declined by 38 percent.”
This means there likely won’t be enough gas to fend off GECF and Russian dominance of the global gas market in the long term, particularly because Russia relies on easier-to-obtain conventional gas, as opposed to tough-to-obtain unconventional shale gas.
Despite the reality of the “exploration treadmill,” myriad politicians have backed the notion of the U.S. serving as a global supplier of gas via LNG exports. Congress has already introduced two bills in 2013 – the Expedite our Economy Act of 2013 and the Expedited LNG for American Allies Act of 2013 – calling for expedited approval of the remaining LNG export terminal proposals.
“[T]he timeline for considering these applications may jeopardize our ability to retain a competitive position against other natural gas exporting nations who are also working diligently to export LNG,” a bipartisan cadre of 34 U.S. Senators wrote in a July 9 letter to U.S. Department of Energy head Ernest Moniz urging the DOE for to speedily approve LNG export terminal applications. “There is a global race for market share underway,” the letter continued. “American competitors have been at a disadvantage for the past year and a half because the Department of Energy has delayed action on pending applications.”
Sometimes politicians are vague when it comes to the rationale for expedited LNG exports, using phrases like the ability to maintain a “competitive position” against “other natural gas exporting nations” but not calling out those nations by name.
Others, however, take off the kid gloves and name names. “Our bill will also promote the energy security of key U.S. allies by helping reduce their dependence on oil and gas from countries, such as Russia and Iran,” said Sen. John Barrasso (R-Wyo.), co-sponsor of the Expedited LNG for American Allies Act of 2013, of the rational behind the bill’s January 2013 introduction.
Months later, Rep. Ted Poe (R-Texas) wrote similarly in a June 2013 Houston Chronicle op-ed piece. “Aside from unquestionable economic benefits, there are also geopolitical considerations that make exporting LNG to our friends and allies a no-brainer,” Poe wrote. “The risk of high reliance on Russian gas has been a principal driver of European energy policy in recent decades … From the U.S. perspective, cheap but reliable natural gas would reduce Moscow’s clout while shoring up goodwill amongst our allies.”
Faced with diminishing returns on shale gas basins nationwide, U.S. strategic planners haven’t put all of their eggs in one basket, and have a backup plan in mind to fend off Russia and GECF.
Enter U.S. gas “anchor,” Azerbaijan
The LNG for NATO Act was another key bill introduced in December 2012 by now-retired U.S. Sen. Dick Lugar (R-Ind.). That legislation’s introduction came alongside the release of a key Senate Foreign Relations Committee report titled, “Energy and Security from the Caspian to Europe.”
First discussed at a press event hosted by the influential Atlantic Council – then headed by current Secretary of Defense Chuck Hagel – the premise of the report was simple: many NATO member states rely on Russia for gas imports.
Russian President Vladimir Putin, right, gestures to Azerbaijan's President Ilham Aliyev as they walk along an embankment in Baku on Tuesday, Aug. 13, 2013. (AP Photo/RIA Novosti Kremlin, Mikhail Klimentyev, Presidential Press Service, Pool)
And Russia is the main power player alongside China overseeing the Shanghai Cooperation Organization, which effectively operates as NATO’s foil. Thus, the report concludes, NATO must find a way to wean itself off of Russian gas.
“This strategic U.S. initiative would advance U.S. interests by alleviating Russian gas-fueled pressure against NATO allies, bolstering bilateral relations in the Caspian Sea region, and further isolating Iran,” Lugar wrote in introducing the report.
One of the report’s solutions calls for undermining the DOE’s LNG export approval process for fracked gas exports to NATO allies due to the U.S. having — wait for it — a “100-year supply” of gas.
“As a first step, we should allow exports of U.S. natural gas, now abundant thanks to shale gas, to all our NATO allies,” Lugar wrote in an op-ed summarizing the report’s conclusions. “At current consumption rates, we have an estimated 100-year supply, and prices have fallen so low that new drilling activity is drying up. We easily could export some of this surplus as LNG without causing consumer gas prices to spike here at home.”
Perhaps knowing the “100-year supply” is more fiction than fact, the report does point to something “even more important”: Azerbaijan’s robust supply of conventional gas.
Azerbaijan, ruled by a human-rights-violating authoritarian regime and bordered by the Caspian Sea to the east and Iran to the south, has the 24th highest proven reserves of natural gas in the world and maintains friendly relations with the U.S. and NATO countries.
The Senate Foreign Relations Committee report refers to Azerbaijan as an “anchor” gas supplier for NATO countries, a key source of imported gas in particular for European Union countries seeking to fend off reliance on Russian gas.
Given Azerbaijan’s strategic importance, the report calls for expedited building of the Trans-Adriatic Pipeline, set to pipe Azeri gas from the Shah Deniz gas field in the Caspian to Turkey and eventually into EU member states.
“TAP will transport natural gas from … Shah Deniz … in Azerbaijan, via Greece and Albania, and across the Adriatic Sea to Southern Italy, and further to Western Europe,” the TAP website explains. “TAP offers the shortest and most direct link from the Caspian region to the most attractive European markets.”
The importance of Azerbaijan as an “anchor” and TAP is explained bluntly in the Senate Foreign Relations Committee report and was recently praised in a State Department press release.
“Fully committed to energy trade with the West, Azerbaijan is [a] pivotal supplier,” the report explains. “For the past two decades, Azerbaijan’s leadership has made the strategic calculation to use [TAP] to forge closer ties with the West, a decision that was by no means inevitable given the substantial cost of vast new pipeline infrastructure and geopolitical pressures from neighboring Iran and Russia. However, Azerbaijan’s main alternative to westward trade would be with Russia, which is not an attractive prospect.”
The report closes by recommending the Overseas Private Investment Corporation, the U.S. Trade and Development Agency, the European Bank for Reconstruction and Development and the European Investment Bank to finance construction of LNG import terminals for NATO countries. It also recommends the creation of a full-time U.S. Envoy for Eurasian Energy Security position.
Contextualizing the recent big Azerbaijan junket
One of the recommendations the Senate Foreign Relations Committee report offers in its report is maintaining closer ties with SOCAR — the State Oil Company of Azerbaijan Republic — “to minimize future miscommunications.”
This lends an explanation as to why many former Obama upper-level staffers, along with Stratfor founder George Friedman, state politicians from across the U.S., Vice President Joe Biden’s wife Jill and former World Bank head and Deputy Secretary of Defense Paul Wolfowitz all attended a key gathering in Azerbaijan in late May, officially titled, “USA-Azerbaijan: Vision for the Future.”
Ted Poe, who weeks after returning from the event wrote the Houston Chronicle op-ed praising fracked gas exports, was also among the attendees.
SOCAR sponsored the event. So too did BP, KBR, ConocoPhillips, and Chevron, all companies deeply invested in fracking in the U.S.
“No doubt this was among the biggest concentrations of American political star power ever seen in the Caucasus — 317 delegates from 42 states, including 11 sitting members of Congress and 75 state representatives,” a Washington Diplomat reporter who got inside the conference explained of the nature of the event.
Russia excluded from State Dept. fracking “missionary force”
In August 2010, President Obama’s first-term State Department established the Global Shale Gas Initiative (GSGI), now referred to as the Unconventional Gas Technical Engagement Program.
In this March 29, 2013 photo, a worker checks a dipstick to check water levels and temperatures in a series of tanks at an Encana Oil & Gas (USA) Inc. hydraulic fracturing operation at a gas drilling site outside Rifle, Colorado. Hydraulic fracturing, or “fracking,” can greatly increase the productivity of an oil or gas well by splitting open rock with water, fine sand and lubricants pumped underground at high pressure. Companies typically need several million gallons of water to frack a single well. In western Colorado, Encana says it recycles over 95 percent of the water it uses for fracking to save money and limit use of local water supplies. (AP Photo/Brennan Linsley)
Its purpose: creating a so-called “missionary force,” showing other countries fracking’s “best practices” based on the U.S. experience.
“The GSGI uses government-to-government policy engagement to bring federal and state governments’ technical expertise, regulatory experience in ensuring the safety of water supplies and air quality, and diplomatic capabilities to bear in helping selected countries understand their shale gas potential and the responsibilities of governments,” the State Department explains on its website.
State Department officials have spent time instructing Ukraine, Poland, China and India how to do fracking “safely and economically.” This tutelage agenda is yet another way to wean NATO countries off of Russian gas in an attempt to further isolate it economically.
Noteworthy is the fact that though Russia possesses a shale gas prize of its own — the massive western Siberian Bazhenov Shale field — the State Department has not included the country under its Global Shale Gas Initiative/Unconventional Gas Technical Engagement Program umbrella.
Snowden standoff part of gas “race for what’s left”
The lion’s share of media coverage surrounding Edward Snowden has focused on both the intrigue of his asylum standoff and the pervasiveness of the global surveillance apparatus alone.
Missed in the discussion is what Hampshire College professor Michael Klare refers to as “Rising Powers, Shrinking Planet” in his book titled precisely that, on full display in the Snowden asylum standoff milieu.
That is, a relentless battle royale ensuing between the global powers for the world’s quickly diminishing, increasingly difficult-to-obtain and ecologically hazardous forms of “extreme energy,” like shale gas fracking.
“Make no mistake: Rising powers/shrinking planet is a dangerous formula. Addressing the interlocking challenges of resource competition, energy shortages, and climate change will be among the most difficult problems facing the human community,” he writes in the book’s conclusion.
“If we continue to extract and consume the planet’s vital resources in the same [...] fashion as in the past, we will, sooner rather than later, transform the earth into a barely habitable scene of desolation.”
http://www.globalresearch.ca/us-russia-new-cold-war-the-battle-for-pipelines-and-natural-gas/5346344
Loved it! thanks for posting it basserdan.