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Mon, Aug 20, 2012 - 9:46am
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Drastic: Pakistan suspends phone networks to thwart attacks

Pakistan suspends phone networks to thwart attacks

Pakistan shut down mobile phone networks overnight in major cities to prevent Taliban and al-Qaeda attacks as celebrations began for the biggest Muslim festival of the year.

Pakistan shut down mobile phone networks overnight in major cities to prevent Taliban and al-Qaeda attacks as celebrations began for the biggest Muslim festival of the year. Police stand guard outside a Mosque during Eid Al-Fitr congregational prayers in Peshawar Photo: EPA

9:13AM BST 20 Aug 2012

The draconian security measure was imposed on Sunday at 8:00 pm, at a time when millions ordinarily telephone friends and relatives with greetings for Eid al-Fitr. Networks were working again on Monday mid-morning.

Karachi and Lahore, Pakistan's two largest cities, and the troubled city of Quetta, in the insurgency-torn province of Baluchistan, were among the places where networks were suspended.

"We regret that it had to be suspended in some cities due to the risk of terrorist attacks," Rehman Malik, the country's interior minister, was quoted as saying by state TV.

"We regret inconvenience caused to youths and children."

Terrorists were plotting to target "a few areas of Punjab province", of which Lahore is the capital, the minister said. Sindh province, where Karachi is the capital, and Baluchistan were also targets, he added.

Authorities feared that mobile telephones could be used to coordinate attacks or trigger a remote-controlled bomb....

https://www.telegraph.co.uk/news/worldnews/asia/pakistan/9486875/Pakista...

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Mon, Aug 20, 2012 - 9:53am
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Russia, China, and America’s Hypersonic Missile Race

EBG6NYSM4VCJ Russia, China, and America’s Hypersonic Missile Race

By J. Michael Cole

August 20, 2012

X-51A_Waverider_on_B-52_2009

At first everything went as planned: the vehicle separated from a B-52 Stratofortress high above a naval air warfare center sea range in California and decoupled from the rocket booster. But 31 seconds into the test, a problem developed with a cruiser control fin and the X-51A Waverider hypersonic vehicle plummeted into the Pacific Ocean, missing its target of cruising at Mach 6 for five minutes.

Despite the August 14 failure, the race for hypersonic cruise vehicle (HCV) capability between the US, China, and Russia is still on, with India piggybacking on Russian efforts. For a number of years now, the three countries have made major advances in the development of air vehicles that can be maneuvered at speeds beyond Mach 5 (6,125kph). While interest arose during the Cold War, real advances only occurred in the early 1990s, with Russia becoming the first country to successfully test-flight a supersonic combustion ramjet, or scramjet, experimental vehicle, beating the U.S. by nine years.

The X-51A is the result of a consortium involving the USAF, Boeing, the Defense Advanced Research Projects Agency (DARPA), the National Aeronautic and Space Administration, Pratt & Whitney Rocketdyne, and the USAF Research Laboratory’s Propulsion Directorate. So far, the US$140 million program’s only success occurred on May 26, 2010, when the vehicle flew for more than 200 seconds at Mach 5 off the southern California Pacific coast.

For their part the Chinese have reportedly showed significant interest in HCV technology...

https://thediplomat.com/flashpoints-blog/2012/08/20/russia-china-america...

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Mon, Aug 20, 2012 - 10:06am
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Egypt’s new leaders must accept reality

Egypt’s new leaders must accept reality

By Dennis Ross, Published: August 19

The Washington Post

Dennis Ross, a counselor at the Washington Institute for Near East Policy, was a special assistant to President Obama on the Middle East and a senior director on the National Security Council staff from July 2009 to December 2011.

Anew reality and an alternative reality are shaping up in Egypt. President Mohamed Morsi and the Muslim Brotherhood appear firmly in control. Morsi seized on the killing of 16 Egyptian soldiers in the Sinai early this month — an embarrassment for the military and particularly the Supreme Council of the Armed Forces (SCAF) — to remove the most senior military leaders from office. He also unilaterally amended the March 2011 constitution declaration and gave his office executive and legislative powers. In short, with no hint of resistance from the military, Morsi has imposed civilian leadership on Egypt.

Many see Morsi’s move to control the SCAF — he sacked Field Marshal Mohammed Hussein Tantawi; military chief of staff Sami Anan; and the heads of Egypt’s army, navy and air force — as finally giving Egypt’s revolution the chance to remove key remnants of the Mubarak regime and fulfill its promise. Others, particularly non-Islamists, are more prone to see recent actions as the Muslim Brotherhood removing any checks on its power.

Given some of the other moves that Morsi and those around him have made, there is reason to be concerned. Morsi has....

https://www.washingtonpost.com/opinions/dennis-ross-egypts-new-leaders-m...

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Mon, Aug 20, 2012 - 10:14am
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Pakistan's Descent into Chaos

August 20, 2012

Pakistan's Descent into Chaos

By Gurmeet Kanwal

Embroiled in continuing political turbulence, judicial activism, internal instability and a stagnating economy, Pakistan appears to be hurtling inexorably downhill. The terrorist strike on Minhas airbase in Kamra on August 16, in which one Pakistani soldier and nine terrorists were killed, is but the latest manifestation of the state's inability to protect even its vital military installations. The fact that nuclear warheads are stored at the airbase makes the attack even more ominous. The strike was launched by fighters of the Tehrik-e-Taliban Pakistan (TTP), a terrorist organisation that is committed to the establishment of a "true Islamic state" in Pakistan.

Incidentally, this was the fourth such attack on Minhas airbase. Earlier attacks on the base had been launched by suicide bombers in 2007, 2008 and 2009. The attack was similar to the one launched by well-trained terrorists at the Mehran naval aviation base near Karachi soon after the US Special Forces had killed Osama bin Laden in May 2011. In both cases insider help is suspected. The material damage caused has been extensive - one airborne early warning (AEW) aircraft was damaged at Minhas and two P3C Orion AEW aircraft were destroyed at Mehran and 18 military personnel were killed.

Terrorist organisations inimical to the Pakistani state have repeatedly proved their ability to launch strikes against well guarded military targets at will. They have also demonstrated their ability to infiltrate the rank and file of the armed forces and are getting close to their real objective of seizing a few nuclear warheads.

The Pakistan Army is facing perhaps its deepest crisis since its strategic blunder in Kargil. General Ashfaq Pervez Kayani, the Chief of Army Staff, appears to lack both initiative and ideas to deal with...

https://www.realclearworld.com/articles/2012/08/20/pakistans_descent_int...

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Mon, Aug 20, 2012 - 6:04pm
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Romney Calls for Fed Audit

I don't think an audit will accomplish anything. Does anyone really think a complete audit is even possible? Whose books or numbers would they go by?

I can't even take any talk of it seriously at this point because it isn't going to happen. That doesn't mean I wouldn't like to see what's going on at the Fed, but I just don't see an accurate and above board audit happening.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Romney Calls for Fed Audit as Party Mulls Platform Plank

By Lisa Lerer and Julie Hirschfeld Davis - Aug 20, 2012 6:57 PM ET

Republican presidential candidate Mitt Romney renewed support for auditing the Federal Reserve, wading into an issue that threatens to spark a fight at his party’s national convention next week.

“The Federal Reserve should be accountable,” Romney told thousands of voters at a campaign rally today in Goffstown, New Hampshire. “We should see what they’re doing.”

Under pressure from anti-tax Tea Party activists and other small government advocates, Republicans are considering including a plank in their platform calling for a full audit of the central bank -- a prospect that concerns many party leaders and their financial supporters. Romney’s remarks could put pressure on the Republican Platform Committee -- which is currently meeting in Tampa, the convention site -- to adopt the proposal.

On the platform committee’s website, proposals to audit the Federal Reserve are among the most popular. Representative Ron Paul of Texas, a longtime Fed critic who made opposition to it a major theme of his failed bid for the Republican presidential nomination, has said that if Romney’s backers resist the effort, it could result in a political battle at the convention.

Romney has chosen his words on the issue carefully, stopping short of siding with Paul even as he seeks support from him and his supporters.

Congress Concern

“I would like to see the Fed audited,” Romney said today. Still, he cautioned that Congress shouldn’t be given the authority to run the central bank.

“I want to keep it independent,” he said. “There are very few groups that I would not want to give the keys to. One of them is Congress.”...

https://www.bloomberg.com/news/2012-08-20/romney-calls-for-fed-audit-as-...

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Mon, Aug 20, 2012 - 7:34pm
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Why China Can't Afford a Confrontation With Japan

A boat is surrounded by Japan Coast Guard patrol boats after activists descended on Uotsuri Island, one of the islands of "Senkaku" (Japanese) and "Diaoyu" (Chinese), in the East China Sea

A boat is surrounded by Japan Coast Guard patrol boats after activists descended on Uotsuri Island, one of the islands of "Senkaku" (Japanese) and "Diaoyu" (Chinese), in the East China Sea

China-Japan

Why China Can't Afford a Confrontation With Japan

By Bruce Einhorn on August 20, 2012

In its latest confrontation with Japan over disputed islands in the East China Sea, China might seem to have all the leverage. China is a rising power, having passed Japan as the world’s second-largest economy, while Japan is stuck in the doldrums. With few growth prospects at home, Japanese companies like Toyota (TM) and Sony (SNE) need to sell to Chinese consumers. China is also the world’s biggest supplier of rare earth metals, crucial ingredients for high-tech products like Japanese-made hybrid cars.

Don’t be fooled, though. China’s ability to punish Japan for detaining and then expelling Chinese activists over the weekend is limited, argues Ting Wei, a professor in the department of government and international studies at Hong Kong Baptist University. “The Chinese government will be cautious,” he says.

Pro-China activists carrying Chinese and Taiwanese national flags walk on the disputed islands known as 'Senkaku' in Japan and 'Diaoyu' in China after arriving by boat

Pro-China activists carrying Chinese and Taiwanese national flags walk on the disputed islands known as 'Senkaku' in Japan and 'Diaoyu' in China after arriving by boat

The dispute centers on some rocky outposts northeast of Taiwan called by the Chinese the Diaoyu Islands and by the Japanese the Senkaku Islands. Over the weekend, a group of Japanese activists landed on the islands after Japanese authorities detained and then expelled a group of activists from Hong Kong who landed on one of the islands with Chinese and Taiwanese flags. Angry Chinese took to the streets in cities across the country....

https://www.businessweek.com/articles/2012-08-20/why-china-cant-afford-a...

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Mon, Aug 20, 2012 - 10:36pm
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Two Ugly Charts and Treasury Spasms

Here Is The Chart That Explains Why Rates Are Rising In The US

Submitted by Tyler Durden on 08/20/2012 - 11:48

The easy answer is - well, its those dumb money 'safe' investors finally rotating from bonds to stocks; but what about fund flows provides any evidence for that reality. Alternatively, we suggest, the recent (and somewhat market-unexpected) pop in macro data (surprising to the upside) has seemingly provided a Goldilocks for equities (growth is rising and even if it drops back, Bernanke's got our back) and the inverse for Treasuries (growth is rising and if that's the case then Bernanke's Bond Buying extravaganza is over - mark 'em down). What is stunning to us is the incredibly tight correlation since LTRO2 between macro data (trend and beats/misses) and 10Y Treasury yields. While correlation is not causation, discussion of the macro thesis is strong top-down and suggests more than one person believes this correlation. Our concern - what dominant data is this macro strength based on - NFP/Claims beat? Retail Sales beat? (consider the controversy of the seasonal adjustments in both and what that would do to the macro data index.

 

 

Guest Post: Shhhh… It’s Even Worse Than The Great Depression

Submitted by Tyler Durden on 08/20/2012 - 16:46 Art Cashin Consumer Prices Germany Great Depression Gross Domestic Product Guest Post Housing Bubble International Monetary Fund Kool-Aid Monetary Base Money Supply Money Velocity New Normal White House

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression. Hard to believe, but the guy who made a career out of Monday-morning quarterbacking the Great Depression has already proven himself a bigger idiot than all of his predecessors (and in less than half the time!!). During the Great Depression, monetary base was expanded in response to slowing economic activity, in other words it was reactive (here’s a graph) . They waited until the forest was ablaze before breaking out the hoses, and for that they’ve been rightly criticized. Our “proactive” Fed elected to hose down a forest that wasn’t actually on fire, with gasoline, and the results speak for themselves. With the IMF recently lowering its 2012 US GDP growth forecast to 2%, while the monetary base is expanding at about a 5% clip, know that velocity of money is grinding lower every time you breathe.

 

 

Treasury Spasms

Submitted by Tyler Durden on 08/20/2012 - 18:11 10 Year Treasury Bill Gross Bond Central Banks David Rosenberg Rosenberg

As Bill Gross has been more than happy to demonstrate on several recent occasions, the recent sell off in US Treasurys has been sharp and violent, wiping out all year to date capital gains in the 10 Year in a few short weeks. The flipside to that is that this is not the first such headfake in the bond market, and it certainly will not be the last as David Rosenberg shows today with a chart summarizing all the "spasms" experienced in the 10 year Treasury since 2007. In fact, based on the average duration and move severity, the 10 Year sell off may not only continue for twice as long (on average it has been 49 days, and we are only 19 days in in the current sell off episode), but the final tally may be a further selloff well into the 2% range (the average decline in yield is 88 bps, double the 43 bps widening to date). At the end of the day will it make much of a difference? Very likely not: after all the deflationary implosion has far more to go before all the central banks engage in coordinated easing, and as a result superglue the CTRL and P buttons in the on position, leading to the final round in the global currency devaluation race.

https://www.zerohedge.com/

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Tue, Aug 21, 2012 - 8:49am
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Secret Libor Committee Clings to Anonymity After Rigging Scandal

Secret Libor Committee Clings to Anonymity After Rigging Scandal

By Liam Vaughan - Aug 20, 2012 7:01 PM ET

Every two months, representatives from the world’s largest banks meet at an undisclosed location to review the London interbank offered rate.

Who sits on the British Bankers’ Association’s Foreign Exchange and Money Markets Committee, the body that governs the benchmark for more than $300 trillion of securities worldwide, is a secret. No minutes are published. The BBA won’t identify any members, saying it wants to protect them from being lobbied, and declined to make the chairman available for interview.

The group’s lack of transparency is symptomatic of a self-regulated system that failed to stop traders around the world manipulating the world’s most widely used benchmark interest rate for profit. Martin Wheatley, the British regulator charged with reviewing Libor after the scandal, is now weighing whether to bring oversight under the control of regulators.

“Politically something has to fundamentally change in the way that Libor is run,” said Owen Watkins, a former regulator at the U.K. Financial Services Authority and now a lawyer at Lewis Silkin LLP in London. “The obvious way to change it is to have regulators more involved than they were in the past.”

The group has sole responsibility for all aspects of the functioning and development of Libor, according to the BBA. Its functions include the design of the benchmark, which banks sit on the panels that determine the rate, and scrutiny of all rates submitted.

‘Highly Experienced’

Members are “highly experienced market participants” who are independent of the BBA “and any other organization,” the website says. Still, all committee members act as “individuals representing their firms,” the BBA says. The chairman is also drawn from one of the banks that submit to the rates.....

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Tue, Aug 21, 2012 - 8:52am
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Obama:Chemical Weapons Use by Syria ‘Red Line’ for U.S.

Obama Says Chemical Weapons Use by Syria ‘Red Line’ for U.S.

By Margaret Talev and Nayla Razzouk - Aug 21, 2012 6:11 AM ET

President Barack Obama said any discovery that Syria’s chemicals or biological weapons are being moved or used may force him to reconsider U.S. military action.

“A red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized,” the president told reporters yesterday in a news conference at the White House. “That would change my calculus.”

Obama said the U.S. has contingency plans to deal with President Bashar Al-Assad’s regime and its violence toward the Syrian people. It has made clear to the government and what he termed “other players on the ground” that there would be “enormous consequences” for any development involving Syria’s chemical weapons arsenal.

The U.S. president said he’s not ordered any military engagement in the 17-month conflict. Syria’s hostilities have so far claimed the lives of more than 23,000 people, including more than 16,000 civilians and 5,800 soldiers, according to the opposition Syrian Observatory for Human Rights. United Nations military monitors are leaving the country after the two sides failed to observe an April cease-fire....

https://www.bloomberg.com/news/2012-08-20/obama-says-any-chemical-weapon...

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Tue, Aug 21, 2012 - 8:56am
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10 yr UST Yields Advance on Greece, Fed Stimulus Speculation

U.S. 10-Year Yields Advance on Greece, Fed Stimulus Speculation

By Lucy Meakin - Aug 21, 2012 7:39 AM ET

Treasuries 10-year yields rose to within four basis points of a three-month high on speculation a proposal to ease Greece’s bailout terms will quell the euro crisis and on waning bets the U.S. will add further stimulus.

Two-year notes snapped a two-day gain before reports this week that analysts said will show U.S. home sales and durable goods orders rose last month, reducing the likelihood theFederal Reserve will start a third round of so-called quantitative easing. German bunds slid for a second day and the euro reached a two-week high against the dollar on optimism euro-region leaders meeting this week will agree to extend Greece’s fiscal adjustment program.

“Markets have unwound their expectations on QE3,” saidMarc Ostwald, a London-based fixed-income strategist at Monument Securities Ltd. U.S. economic data is “not weak enough to justify the Fed shifting its position. Also people are looking at the euro-zone program, which has been mooted and thinking that some of the safe-haven support for Treasuries might need to be wound back if the European Central Bank can deliver.”

Ten-year notes dropped, pushing the yield up two basis points to 1.83 percent at 7:36 a.m. New York time, according to Bloomberg Bond Trader prices. The 1.625 percent note due in August 2022 fell 6/32, or $1.88 per $1,000 face amount, to 98 5/32.

The benchmark rate climbed to as high as 1.86 percent yesterday, matching the most since May 11 as well as the 200-day moving average....

https://www.bloomberg.com/news/2012-08-21/u-s-10-year-rate-nears-2-month...

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Tue, Aug 21, 2012 - 9:00am
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Zero Bund Yields No Deterrent

Zero Bund Yields No Deterrent to Euro Breakup Bets: Euro Credit

By Neal Armstrong and Anchalee Worrachate - Aug 20, 2012 7:01 PM ET

Investors are willing to own German bunds at zero yields on speculation the currency boost from a euro breakup would compensate for the sacrifice in returns.

“If you buy German assets denominated in euros today, you could find yourself holding an asset in a superior currency in a breakup scenario,” said Jamie Stuttard, who helps oversee $1.6 trillion as head of international bonds at Fidelity Management and Research Co. in London. “There isn’t a lot of value in German government bonds at these yield levels, and the single best reason to own German assets is re-denomination risk.”

The yield on German notes maturing in 2014 dropped below zero on June 1 and has been negative each day since July 6. While European leaders said they are working on a plan to help defuse the debt crisis, traders raised bets on euro disintegration. The implied probability of a country leaving the monetary union by the end of 2014 rose to 66 percent last week from 64 percent a week ago, according to bets on Intrade.com.

“The currency trade is the main driver of low yields, not only in Germany but also in Switzerland, France, Austria, the Netherlands and Belgium,” said Michael Markovic, a senior fixed-income strategist at Credit Suisse Group AG in Zurich. The debt problem of peripheral countries “is the strength of Germany, Austria and France. Without this weakness, the stronger countries would never pay such low yields.”

Belgium’s five-year borrowing cost of 1.31 percent is within 20 basis points of the record low reached July 20. Investors earn just 0.15 percent on French two-year notes and 0.5 percent on Dutch securities with similar maturities.

Breakup Premium

Yields for Austria, Belgium, Finland, France, Germany and the Netherlands have declined to records as investor demand for their debt increases. The euro traded at $1.2324 yesterday, or 50 percent above its record low of 82.30 U.S. cents reached in October 2000.....

https://www.bloomberg.com/news/2012-08-20/zero-bund-yields-no-deterrent-...

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Tue, Aug 21, 2012 - 10:02am
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Russia warns West over Syria after Obama threats

BEIRUT | Tue Aug 21, 2012 8:38am EDT

BEIRUT (Reuters) - Russia warned the West on Tuesday against unilateral action on Syria, a day after U.S. President Barack Obama threatened "enormous consequences" if his Syrian counterpart used chemical or biological arms or even moved them in a menacing way.

Russian Foreign Minister Sergei Lavrov, speaking after meeting China's top diplomat, said Moscow and Beijing were committed to "the need to strictly adhere to the norms of international law...and not to allow their violation".

Russia and China have opposed military intervention in Syria throughout a 17-month-old revolt against President Bashar al-Assad. They have vetoed three U.N. Security Council resolutions backed by Western and Arab states that would have put more pressure on Damascus to end violence that has cost 18,000 lives.

The United States and its allies have shown little appetite for military action in Syria, in contrast to last year's NATO campaign that helped topple Libyan leader Muammar Gaddafi.

But Obama used some of his strongest language yet on Monday to warn Assad not to cross a "red line" of even shifting unconventional weapons in a threatening manner.....

https://www.reuters.com/article/2012/08/21/us-syria-crisis-idUSBRE8610SH...

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Tue, Aug 21, 2012 - 4:17pm
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H'mmm: SEC Pays $50,000 In First Dodd-Frank Whistleblower Reward

SEC Pays $50,000 In First Dodd-Frank Whistleblower Reward By Joshua Gallu - Aug 21, 2012 2:45 PM ET

The U.S. Securities and Exchange Commission awarded $50,000 to a whistleblower in its first payout from a program launched last year to reward people who provide regulators with evidence of securities fraud.

The whistleblower helped the SEC bring an enforcement action that resulted in more than $1 million in sanctions, the agency said today in a statement. The award represents 30 percent -- the maximum allowed under the Dodd-Frank Act -- of the approximately $150,000 collected so far.

The agency set up a whistleblower program in August 2011 to reward individuals who provide evidence of securities law violations which results in sanctions of more than $1 million. The program was authorized in the 2010 financial-regulation overhaul, which said awards could range from 10 percent to 30 percent of the money collected.

“Had this whistleblower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized,” SEC Enforcement Director Robert Khuzami said in a statement.

The SEC, which didn’t name the whistleblower or identify the related enforcement action, said it rejected a claim from a second person in the same matter because the information the person provided didn’t lead to or significantly contribute to the enforcement action.

https://www.bloomberg.com/news/2012-08-21/sec-pays-50-000-in-first-dodd-frank-whistleblower-reward.html

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The Greek Dilemma: Three Thorny Paths to Saving the Euro

The Greek Dilemma Three Thorny Paths to Saving the Euro

 

Athens and the Acropolis: If Greece goes bankrupt, market fears will likely be exascerbated.Zoom  

Athens and the Acropolis: If Greece goes bankrupt, market fears will likely be exascerbated.

Greece may soon face bankruptcy, but what would happen after that? If governments and central banks want to preserve the euro, they might have to take some very risky steps -- each with its own potential dangers. Europe has begun searching for the lesser of several evils. Will Greece obtain fresh aid or slide into bankruptcy? Those will be the fundamental issues at stake when Greek Prime Minister Antonis Samaras travels to France and Germany this week for meetings with French President François Hollande and German Chancellor Angela Merkel. Even though the talks won't result in official decisions, the two most important politicians in the euro zone will know after these meetings just what they can still expect from Greece -- and they will draw the necessary conclusions.

For the currency union as a whole, however, the Greek tragedy itself is merely a prelude to the real battle to save the euro. If Greece actually did go bankrupt or left the currency union, the main priority for the rest of the bloc would be to use every means possible to prevent a further dissolution of the euro zone -- even if these means have some quite problematic aspects.

The key issue will be to prevent the remaining crisis countries from suffering the same fate as Greece. The main priority will be to prevent...

https://www.spiegel.de/international/europe/the-greek-dilemma-three-thor...

Part 1: Three Thorny Paths to Saving the Euro

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Tue, Aug 21, 2012 - 10:30pm
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Terrible Numbers: Japan Swings to Trade Deficit

Japan Swings to Trade Deficit as Europe Drags Down Exports

By Andy Sharp and Keiko Ujikane - Aug 21, 2012 10:07 PM ET

Japan reported a wider-than-expected trade deficit in July as Europe’s sovereign debt crisis and a slowdown in China dragged down exports and higher oil prices boosted imports.

The shortfall was 517.4 billion yen ($6.5 billion), after a revised 60.3 billion yen surplus in June, the Finance Ministry said in Tokyo today. The median forecast in a Bloomberg News survey of 28 analysts was for a 270 billion yen deficit. Exports fell 8.1 percent from a year earlier, compared with an estimated 2.9 percent decline. Imports rose 2.1 percent.

Strength in the yen and weakness in global demand threaten to curb exports over the rest of this year, undermining the economy’s recovery after a contraction in 2011. Japan’s ninth deficit in 12 months underscores the country’s reliance on energy imports after atomic plants were shut down following last year’s earthquake and nuclear disaster.

“It’s unavoidable that Japan’s economic growth will lose steam this quarter,” said Kohei Okazaki, an economist at Nomura Securities Co. in Tokyo. “Global demand is looking stagnant as China’s economy is slowing while the advanced nations’ economies remain weak.”

The yen traded at 79.21 per dollar as of 9:02 a.m. in Tokyo, up more than 5 percent since mid-March. A stronger currency erodes export sales and profits. Today’s level compares with a post-World War II high of 75.35 in October.

Shipments to the European Union fell 25 percent in July from a year earlier, the biggest decline since October 2009, while those to China slipped 12 percent, the ministry said....

https://www.bloomberg.com/news/2012-08-22/japan-swings-to-july-trade-def...

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Tue, Aug 21, 2012 - 10:31pm
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How Volcker Created a Gold Standard Without Gold

How Volcker Created a Gold Standard Without Gold

By William L. Silber Aug 21, 2012 6:30 PM ET

On Aug. 14, 1979, a week after he took office as chairman of the Federal Reserve, Paul Volcker led his first meeting of the Federal Open Market Committee.

“Economic policy,” he said, “has a kind of crisis of credibility.” As a result, “dramatic action” to combat inflation would not receive public support “without more of a crisis atmosphere.”

He did not have to wait long.

A public squabble erupted after a meeting at the Fed on Sept. 18, 1979. The morning began with Volcker’s second FOMC meeting as chairman and ended with the committee ratifying his recommendation “to make a little move” up in the federal funds rate. The vote was eight in favor and four against, with three of the four dissenters urging greater tightening. Volcker wanted tighter credit and higher interest rates to fight inflation but knew that some members of the FOMC were worried about a recession, so he emphasized caution.

No one but Wall Street professionals would have paid attention to the slight increase in the federal funds rate, the overnight interest rate on loans of reserves between banks, because the action occurs far from the public spotlight. The New York Fed’s trading desk sells government securities from its holdings to withdraw reserves from the banking system. These transactions push up the rate by forcing banks to borrow reserves.

Discount Rate

However, a follow-up meeting of the seven-member Board of Governors that same afternoon was much more widely noticed. Volcker convened the board to discuss raising the...

https://www.bloomberg.com/news/2012-08-21/how-volcker-created-a-gold-sta...

An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246

Wed, Aug 22, 2012 - 9:08am
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Scandal, FTSE Miners and Bernanke: Reuters (3)

UK banks face scandal over toxic insurance products

By Matt Scuffham and Myles Neligan

LONDON - British banks are under fire for their sale of interest rates swaps -- products designed to protect lenders from increases in interest rates. Those banks could wind up with a bill in the billions of pounds. Full Article

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Market Pulse: Miners slide, but don't bet against UK's FTSE

Aug. 22 - Falling profits at BHP Billiton and Lonmin's travails keep mining stocks under heavy pressure. But the mining-heavy FTSE could be poised to outperform its peers, says City Index's Josh Raymond.

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Federal Reserve Chairman Ben Bernanke prepares to testify to the House Budget Committee on Capitol Hill in Washington June 9, 2010. REUTERS/Joshua Roberts Politics

Bernanke should stay, top Romney adviser says

By Jonathan Spicer and Chrystia Freeland

NEW YORK - Ben Bernanke received an unlikely defense of his work at the Federal Reserve by a top Mitt Romney adviser, who said he should be considered for a third term as chairman. Full Article

https://www.reuters.com/

An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246

Wed, Aug 22, 2012 - 10:00am
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Lebanese Premier Warns of Syrian Spillover as Gunfights Flare

Lebanese Premier Warns of Syrian Spillover as Gunfights Flare

By Donna Abu-Nasr - Aug 22, 2012 8:16 AM ET

Lebanon’s Prime Minister Najib Mikati urged national unity to insulate the country from “the burning fires all around it,” after gunbattles in his hometown of Tripoli.

Mikati expressed concern over “attempts to involve Lebanon more and more in the current conflict in Syria,” according to his official website. The remarks came a day after seven people were killed and more than 70 wounded in fighting between supporters and opponents of Syrian President Bashar al-Assad, according to the official National News Agency.

All parties in Lebanon should consider themselves jointly responsible for the “bloody events in Tripoli” and the“consequences resulting from killing, destruction and bloodshed that will not only impact the city but Lebanon as a whole,”Mikati said.

The violence is the latest sign that the crisis in Syria is spilling into neighboring Lebanon, where fighting between pro-and anti-Assad groups has broken out in Tripoli and Beirut. The deteriorating security situation last week caused Gulf states to order their citizens to leave Lebanon after kidnapping threats linked to the conflict in Syria.

The U.S. Embassy in Lebanon warned on Aug. 17 of “an increased possibility of attacks,” including kidnappings and the potential for an upsurge in violence.

“The priority is ultimately to stamp out the elements of strife,” said Mikati.

Assad’s troops clashed with rebels in several provinces across Syria, including Idlib, Hama and the suburbs of Damascus, the Syrian Observatory for Human Rights said by e-mail. At least 54 people have been killed so far today, including 21 in Damascus, the statement said.

https://www.bloomberg.com/news/2012-08-22/lebanese-premier-warns-of-syri...

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Merkel Backs Samaras on Greece’s Euro-Zone Future:Rhetoric

Angela Merkel Backs Samaras on Greece’s Euro-Zone Future

By Tony Czuczka and Maria Petrakis - Aug 24, 2012 9:46 AM ET

Chancellor Angela Merkel said thatGermany will stand behind the Greek government as it struggles to overhaul the economy, rebuffing European critics who advocateGreece’s exit from the euro.

Merkel, speaking at a joint press conference with Greek Prime Minister Antonis Samaras in Berlin today, said the conditions for Greece’s international bailouts remain in force and she is “deeply convinced” he will make every effort to solve the country’s problems. The goal of austerity measures is to help Greece reach “the light at the end of the tunnel.”

“I want Greece to stay in the euro zone and that’s what I’m working for,” Merkel said after meeting Samaras on his first official visit to Berlin since he took power in June.“Fulfilling commitments and expectations will lead to a return of confidence in the euro zone.”

Merkel’s backing for Samaras and comments lamenting a rift between Germany and Greece are the strongest attempt yet to restart relations between the two main actors in the sovereign-debt crisis that is now nearly three years old. They’re also a rebuke to members of her own coalition and others who question Greece’s willingness to reform and call for the country to be kicked out of the 17-nation euro region.

‘Cacophony’

Samaras, asked about critical comments made by a senior member of Merkel’s party, said the “cacophony” of talk and speculation about Greece leaving the currency union must stop because it deters investors, undermining the task of sticking to the bailout terms....

https://www.bloomberg.com/news/2012-08-24/merkel-backs-samaras-on-greece...

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How big mining deal will sabotage America

Aug. 24, 2012, 10:34 a.m. EDT

How big mining deal will sabotage America

Commentary: Ex-Im bank financing too risky for U.S. taxpayers

By PaulBFarrell[at]charter[dot]net (Paul B. Farrell), MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, the proposed Export-Import Bank of the United States investment in a $10 billion Australian coal-mining deal is at best highly suspect, failing to use sound underwriting principles ... too secretive for general public scrutiny ... may contradict the best interests of American foreign policy.

And at worst, our Ex-Im Bank is putting hard-earned American dollars and credit into a mining deal in far-off Australia in what appears to be a poorly thought-out use of tax dollars, at a time when there’s a high risk of a global recession ... when our bloated federal budget is increasing an already excessive national debt, piling new hidden tax burdens on the backs of future generations of American taxpayers.

1. Mining joint venture too risky as global economies fear recession

Here’s the deal basic from LiveMint.com, an India News Service partner of the Wall Street Journal. Early this week the headline read: “Rineheart confident of GVK approval.” Turns out Australians had already been telling the world the American government has approved this $10 billion joint-venture deal between the Ex-Im banks of the U.S., China and Korea. Not true even before Friday’s announcement by Australia’s Federal Environmental Minister Tony Burke that the project could move ahead.

The Australians seem in too big a hurry....

https://www.marketwatch.com/story/how-big-mining-deal-will-sabotage-amer...

An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246

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