Global debt alarm

Liam Halligan
Market alarm as US fails to control biggest debt in history
US Treasuries last week suffered their biggest two-day sell-off since the collapse of Lehman Brothers in September 2008. The borrowing costs of the government of the world’s largest economy have now risen by a quarter over the past four weeks.
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Comment: Let's remember what I wrote on this blog on November 12: "A mega crash has become inevitable. We're getting closer day by day, minute by minute. Bonds will crash first, taking the stock market and the dollar down with them."

Global bond rout

By Ambrose Evans-Pritchard 8:03PM GMT 08 Dec 2010
The yield on 10-year Treasuries – the benchmark price of money worldwide and the key driver of US mortgages rates – has rocketed to 3.3pc, up 35 basis points since President Barack Obama agreed on Monday to compromise with Senate Republicans on tax cuts.
The Treasury sell-off has ricocheted through the global system, triggering bond sell-offs in Asia, Europe and Latin America. Japan's finance ministry braced as borrowing costs on seven-year debt jumped by a sixth in one trading session, while German Bunds punched through 3pc.
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Comment: Let's remember what I wrote on this blog on November 12:
- A mega crash has become inevitable. We're getting closer day by day, minute by minute. Bonds will crash first, taking the stock market and the dollar down with them.

Euros create permanent debt-crisis mechanism

European Leaders Create 2013 Debt Mechanism Amid Debate on Immediate Steps


By James G. Neuger and Jonathan Stearns - Dec 17, 2010 8:06 AM GMT-0200 European Union leaders agreed to amend the bloc’s treaties to create a permanent debt-crisis mechanism in 2013 as they struggled to bridge divisions over immediate steps to stabilize bond markets.

A day after the European Central Bank armed itself with more capital to resist the crisis, the EU weighed measures such as using the bloc’s main rescue fund to buy bonds of fiscally distressed countries including Portugal and Spain.
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German business riding high

German business confidence unexpectedly rose to a record in December as stronger domestic demand helped bolster the recovery in Europe’s largest economy.
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Backgrounder: http://whiskeyandgunpowder.com/germanys-stable-economy/

Is it this how it is?

"... What we have in the world today is not capitalism. Rather, it more closely resembles "feudalism" than anything else. The elite are "monopoly men" who use their unbelievable wealth and power to dominate the rest of us. In fact, it was John D. Rockefeller who once said that "competition is sin".
It would be great if we lived in a world where those living in poverty were encouraged to start owning land, to create businesses and to build better lives for themselves.
But instead, things are going the other way. Wealth is becoming more concentrated in the hands of the elite, and the middle class is starting to be wiped out even in prosperous nations such as the United States.
It turns out that the global elite have decided that they don't really need so many expensive American "worker bees" after all and they have been moving thousands of factories and millions of jobs overseas. Meanwhile the American people are so distracted watching Dancing with the Stars, Lady Gaga and their favorite sports teams that they don't even realize what is going on..."
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Comment: Even if it were so, they will not win. If such an "elite" existed it would get wiped out. The same unhampered greed that drives these people towards wealth accumulation, makes them also blind to risk.

Why it would be absurd to leave the eurozone ...

... and why, implicityly, it is absurd to speculate on the demise of the euro:
The Economist explains:
http://www.economist.com/node/17629661

Making fun of Bernanke

is not funny at all:
http://dailybail.com/home/watch-jon-stewart-expose-bernankes-lies-from-60-minutes-the.html

It's not the euro, the problem is debt

Listen what Jim Rogers has to say about Britain:
http://www.youtube.com/watch?v=Imwu1lM02C0

Money for nothing

According to recovery.gov, the President's website designed to track the stimulus plan, the $800 Billion plus porkulous bill passed in February 2009 is responsible for 3,348,813 jobs.  According to a new analysis conducted by the San Fransisco office of the Federal Reserve, the president's projection is off by only 3,348,813 jobs.  That's correct The American Recovery and Reinvestment Act of 2009 created exactly zero permanent jobs.
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Comment: It seems to me that I said that before the San Francisco office of the Federal Reserve even took notice: http://mises.org/daily/4158
or just listen in: http://www.youtube.com/watch?v=9gUGfR4b_ew

Sign of the times that the end of paper wealth has come

A retired Navy doctor put his 52 year-old diving watch up for sale on eBay at a price of $9.95. After a week, it sold for $66,100.
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You're the witness of a criminal act - do you know?

QE2 Is Not Only a Mistake, "It's Criminal," Says Vitaliy Katsenelson

The Treasury market is rebounding Thursday. Yields have fallen from a six-month high, reached Wednesday, but are still up from where they were earlier in the week. Yields on the 10-year are trading at 3.23% today.
This is not what the Federal Reserve had in mind when the central bank announced the plan to purchase $600 billion in Treasury bonds -- a move that was hoped would lower rates and stimulate the U.S. economy.
Of course, there are many critics of the Fed who say the second round of quantitative easing is wrong and even harmful. "The failure of QE2 doesn't worry me. It's the success that worries me," says Vitaliy Katsenelson of Investment Management Associates.
"I think it's criminal," he tells Aaron in the accompanying clip. "They're forcing people that should not be taking risk to take risk." The fear is the Fed is repeating its past mistakes -- helping to build an asset bubble that will eventually burst with grave consequences.
Even if the Fed is successful in keeping down rates, Katsenelson doesn't believe it will have any positive economic effect. On the contrary, he says it will lead to a period of "stagflation" as the Fed simply monetizes the debt, lowering the value of the dollar and failing to create economic growth.
Source: Yahoo Finance

Comment: The basic problem is that modern economists of the Bernanke type suffer from the pretense of knowledge. They are liars without knowing that they are liars. I wished they were criminals and thus we could get them. Yet they are worse: madmen in authority!

silver squeeze

Investors to Silver: 'Let’s Get Physical'

by Frank Holmes
The Daily Reckoning

The scramble for physical gold and silver is intensifying. People increasingly want to own the real thing, and not some paper substitute, all of which comes with counterparty risk. This conclusion is apparent from the fact that the futures prices for gold and silver have moved into “backwardation.”
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Comment: Under Ben Bernanke's chairmanship of the Federal Reserve the rest of what has remained of trust in paper wealth has been lost. The gold and silver run won't stop any time soon. We're still a long time away from the final blow-off.

Paul will get the money thieves

Ron Paul, Author of ‘End the Fed,’ to Lead Panel Overseeing Fed

December 09, 2010, 11:19 AM EST

By Phil Mattingly

Dec. 9 (Bloomberg) -- Representative Ron Paul, Texas Republican and author of “End the Fed,” will take control of the House subcommittee that oversees the Federal Reserve.
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Comment: Hard times ahead for Ben Bernanke and his team of plunderers.

Stop of the money printing press

Government can’t print money properly

• By Zachary Roth – Mon Dec 6, 9:36 am ET

As a metaphor for our troubled economic and financial era -- and the government's stumbling response -- this one's hard to beat. You can't stimulate the economy via the money supply, after all, if you can't print the money correctly.

Because of a problem with the presses, the federal government has shut down production of its flashy new $100 bills, and has quarantined more than 1 billion of them -- more than 10 percent of all existing U.S. cash -- in a vault in Fort Worth, Texas, reports CNBC.
"There is something drastically wrong here," one source told CNBC. "The frustration level is off the charts."
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Comment: More than a metaphor.

The master of panic

Ben Bernanke is scared, he is in panic and he has an unparalled talent to spread his panic. No wonder the US economy is getting close to a standstill.
http://www.youtube.com/watch?v=LxSv2rnBGA8&feature=player_embedded

Its about exitus, not exit

Fed's $600 Billion Credit Easing May Complicate Stimulus Exit, Lacker Says

By Steve Matthews - Dec 6, 2010 4:43 PM GMT-0200

Federal Reserve Bank of Richmond President Jeffrey Lacker said the purchases of $600 billion in U.S. Treasuries risk spurring inflation in a few years and may make it harder for the Fed to eventually withdraw the stimulus.
“Further balance sheet expansion now could require more rapid balance sheet reduction later on, complicating the withdrawal of monetary stimulus when it becomes necessary to maintain price stability,” Lacker said today in a speech in Charlotte, North Carolina. “It is appropriate” to regularly review the purchases, he said.
Policy makers meet next week to review their plan to buy Treasuries through June and expand record stimulus in a bid to reduce 9.8 percent unemployment and keep inflation from dropping.
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Comment: Who says that an exit is planned? The plan to destroy America calls for one stimulus after the next as long as it takes to bring the economy fully down. The game is about exitus, not exit.

China scared

China Is `Scared' of U.S. Monetary Policy, Rogoff, Rickards Say

By Catarina Saraiva and Kathleen Hays - Dec 2, 2010 8:27 PM GMT-020
Policy makers in China, which holds $883.5 billion in U.S. Treasuries, are concerned the nation with the world’s biggest economy is debasing its currency ...
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Comment: With fear comes the urge to run away.

US in decline

Volcker Says Dollar's Role in Danger as U.S. Influence Declines

By Peter S. Green - Dec 1, 2010 11:37 AM GMT-0200

Former Federal Reserve Chairman Paul Volcker, who is chairman of President Barack Obama’s Economic Recovery Advisory Board, said the U.S. dollar is in danger of losing its role as a global benchmark currency.
“The growing question is whether the exceptional role of the dollar can be maintained,” Volcker told a gathering of New York civic leaders at the University Club of New York last night.
The decline of the U.S. economy, political gridlock at home, U.S. involvement in two wars and “festering” geopolitical issues in the Middle East and Asia have undermined the ability of the U.S. to influence global events, Volcker said...
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Comment:  There is no news in Volcker's conclusion yet is worthwhile to pay attention to the reason that he gives for his thesis. 

Unequal trade

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Euro is peanuts - next big bang is China

Wednesday 01 December 2010

Telegraph.co.uk

Hedge fund manager Mark Hart bets on China as the next 'enormous credit bubble' to burst

Mark Hart, an American hedge fund manager who has made millions predicting the crises in US sub-prime market and European debt, has launched a fund to bet on the imminent implosion of China.

... Raw materials: Corriente says China has consumed just 65pc of the cement it has produced in the past five years, after exports. The country is currently outputting more steel than the next seven largest producers combined – it now has 200m tons of excess capacity, more that the EU and Japan's total production so far this year.
Property construction: Corriente reckons there is currently an excess of 3.3bn square meters of floor space in the country – yet 200m square metres of new space is being constructed each year.
Property prices: The average price-to-rent ratio of China's eight key cities is 39.4 times – this figure was 22.8 times in America just before its housing crisis. Corriente argues: "Lacking alternative investment options, Chinese corporates, households and government entities have invested excess liquidity in the property markets, driving home prices to unsustainable levels." The result is that the property is out of reach for the majority of ordinary Chinese.
Banking: As with the credit crisis in the West, the banks' exposure to the infrastructure credit bubbles isn't obvious because the debt is held in Local Investment Companies – shell entities which borrow from Chinese banks and invest in fixed assets.
Mr Hart reckons that "bad loans will equal 98pc of total bank equity if LIC owned, non-cashflow producing assets are recognised as non-performing.
As a final blow, Mr Hart says that the market belief that the Chinese government has "ample resources" to bail out its banks is flawed.
Corriente's analysis of the ratio of China government debt to GDP comes out at 107pc – five times higher than official published numbers. The hedge fund says this number uses "conservative assumptions" and the real figure could be as high as 200pc.
The result is that, rather than being the "key engine for global growth", China is an "enormous tail-risk."
He is so convinced by his arguments that he has warned investors that the fund, called the China Opportunity Master Fund, is prepared to "burn" 20pc of their cash each year until his theories are proved.
Comment: Short China!

Euro is peanuts

The US needs to take urgent action to cut its debt in order to prevent the next financial crisis, which may start in Washington, Sheila Bair, chair of the Federal Deposits Insurance Corp. (FDIC) wrote ....
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Comment: Don't waste money speculating against the euro, better get ready for the big one.

Silly bets based on silly propaganda bring bad results

Trichet Says EU Determination to Shore Up Euro Region Being Underestimated

By Christian Vits and Gabi Thesing - Nov 30, 2010 2:44 PM GMT-0200

European Central Bank President Jean-Claude Trichet said investors are underestimating policy makers’ determination to shore up the euro region’s stability as contagion spreads through the bloc’s bond markets.
“I don’t believe that financial stability in the euro zone could really be called into question,” Trichet told lawmakers in Brussels today. Observers “are tending to underestimate the determination of governments.”
European leaders are struggling to contain a worsening sovereign debt crisis that forced Ireland last week to follow Greece and ask for an international bailout. While European Union governments on Nov. 28 agreed to give Ireland an 85 billion-euro ($110 billion) rescue package, Spanish and Italian bonds then dropped on concern they may also need to need help as they try to get budgets under control.
The selloff is reminiscent of the declines that preceded the EU’s decision in May to set up a 750 billion-euro bailout fund to rescue the euro. On the same day, the ECB took the unprecedented step of agreeing to buy government bonds.
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Comment: Those who bet on the demise of the euro have fallen victim to their own propaganda and to the nonsense pronounced by the ruling class of  incompetent economists.

Wrong again

Brendan Moynihan from Bloomberg gets it all wrong:
"... The European Union’s sovereign debt crisis has markets predicting another default. Credit default swaps for Ireland, Portugal and Spain resemble those for Greece earlier this year.
The problem is that European countries can’t depreciate their way out of debt problems -- they forfeited that option when they joined the euro..."
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Comment: Devaluation is not a solution. It is excacerbates the problem. Just look at Argentina, Brendan.

And it is getting worse

Imagine that ten years ago you invested $10,000 in the S&P 500. How much would it be worth today, adjusted for inflation with dividends reinvested? Brace yourself: Your investment has shrunk to $8,288, an annualized return of -1.86%. That's a loss of 17.1%.
Source

Down we go

The euro weakened, global stocks extended losses into a fourth week and Spanish and Portuguese bonds dropped as Ireland’s 85 billion-euro ($113 billion) bailout failed to ease concern the region’s most-indebted nations will need further aid.
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New bellweather bond

For the first time since the 1990s the U.S. 30-year Treasury bond is becoming the benchmark for the world’s biggest debt investors.
The Federal Reserve’s plan to buy $600 billion of U.S. government debt will focus about 86 percent of its purchases in notes due in 2.5 years to 10 years, leaving the so-called long bond as the security that most closely reflects market expectations for inflation. Since the Fed’s Nov. 3 announcement, the 30-year yield rose 0.28 percentage point, suggesting growing investor confidence in the central bank’s efforts to avoid deflation as the economy expands.
“The 30-year, with minimal Fed involvement, will become the bellwether issue for the bond market’s outlook on the economy and inflation,” said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York.
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Nothing quiet at the Western front

European governments’ 85 billion- euro ($113 billion) bailout package for Ireland failed to quell the market turmoil menacing the euro as stocks, bonds and the currency declined.
Irish 10-year bonds slid after an early advance, Spanish bonds slid by the most since the euro’s launch and European shares sank 1.4 percent. The euro slid against 15 of its 16 major counterparts and the cost of insuring the debt of Spain and Portugal against default soared to records.
“The notion that a rescue package for Ireland would create a firewall and stop the fear of contagion is clearly discredited,” said Preston Keat, director of research at Eurasia Group, a political consultancy, in London. “Portugal and Spain are already facing pressures in the markets.”
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Comment: Playing the "I am righ card" is foolish when it comes to life and the markets.

New bailout rules for eurozone countries

EU agrees on new rules for future bailouts

Gabriele Steinhauser, AP Business Writer, On Sunday November 28, 2010, 6:58 pm

BRUSSELS (AP) -- European finance ministers agreed Sunday to create a permanent mechanism to solve future debt crises in the 16 countries that use the euro in an attempt to calm fears over the stability of the currency bloc.
The plan falls short of demands from Germany, which had insisted that private creditors -- rather than taxpayers -- should shoulder the costs of any future government bailouts.
The new European Stability Mechanism, which will be launched in mid-2013, could force investors such as banks or hedge funds to take losses if a country runs out of money -- but only after other eurozone nations have unanimously agreed that the country is indeed insolvent.
If a country is deemed to merely face a crisis of liquidity -- that is, it can't access funds quickly enough to repay its debts -- it will get emergency loans similar to those signed off on Sunday for Ireland.
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Russia may join eurozone one day

Putin says Russia might one day join the eurozone
By JUERGEN BAETZ
BERLIN
Russian Prime Minister Vladimir Putin said Friday he was confident in the euro despite Europe's debt crisis and said his country might even join the currency block itself one day.
Putin also sharply criticized the dollar's dominance as a world reserve currency.
Despite the problems in some heavily indebted eurozone countries, the euro has proven itself "a stable world currency," Putin said.
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Loan to Ireland

Annex : Distribution of the Loan to Ireland


Total Programme Volume (Billions of euro)

Contribution by Ireland 17.5

External support 67.5

Total 85.0


External Support Breakdown

IMF (One-Third)* 22.5

Europe (Two-Thirds) 45.0

Total 67.5


European Breakdown

EFSM 22.5

EFSF (Plus Bilaterals) 22.5

Total 45.0


EFSF (Plus Bilaterals) Breakdown

EFSF (Effective) euro area 17.7

United Kingdom 3.8

Sweden 0.6

Denmark 0.4

Total 22.5


*Subject to the IMF Board’s approval

Source

Irish bailout

Following is a statement issued today in Brussels by European Union finance ministers:

“Ministers unanimously agreed today to grant financial assistance in response to the Irish authorities’ request on 22 November 2010. Ministers concur with the Commission and the ECB that providing a loan to Ireland is warranted to safeguard financial stability in the euro area and the EU as a whole. ...
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Lifeline for the Irish

European governments threw debt- strapped Ireland an 85 billion-euro ($113 billion) lifeline and scaled back proposals to saddle bondholders with losses in future budget crises, seeking to reverse the market selloff menacing the euro.
European finance ministers backed a Franco-German compromise on post-2013 bailouts that watered down calls by German Chancellor Angela Merkel for investors to be forced to take losses to share the cost with taxpayers. The ministers agreed that a future crisis-management system won’t automatically cut the value of bond holdings, easing away from a proposal that led investors to dump assets of Portugal, Spain and Italy.
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Inflation

Inflation in Germany, Europe’s largest economy, accelerated more than economists forecast in November after food and energy prices rose.
The inflation rate, calculated using a harmonized European method, increased to 1.6 percent from 1.3 percent in October, the Federal Statistics Office in Wiesbaden said today.
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Comment: They get what they wanted. Yet it is us who will pay the price.

Why the Fed is as bad as it is

Mark A. Calabria explains:
"... The law also requires that the president’s choice of board members “have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country.”
Interestingly enough, the Federal Reserve Act makes no specific mention of adequate representation for academia. With Diamond’s appointment, a majority of the governors will be former academics. At best only one governor, Virginia banker Elizabeth Duke, has ever been in the position of having to make a payroll.
The current board lacks any representation at all for “agricultural, industrial, and commercial interests.” We have gotten to the point where the Fed Board is entirely composed of bankers and left-leaning academics. This isn’t a board that Carter Glass, who wrote the 1913 Federal Reserve Act as chairman of the House Committee on Banking and Currency, would even recognize.
Not Science
There is an argument for having an academic, or at most two, sit on the Board. After all, there is a considerable amount of scholarly work on monetary theory. There also is considerable disagreement among monetary scholars. And in spite of all the self-congratulations that academics were giving one another prior to the financial crisis, it is now obvious that monetary economics is far from a reliable set of scientific guidelines.
What is sorely needed at the Fed is the perspective of individuals who have actually worked in the real world. As someone with a doctorate in economics, it pains me to say it, but the last thing the Fed needs is another Ph.D. in economics. The central bank has a staff of thousands of Ph.D.s.
It is hard to make the case that the shift toward packing the Fed board with economists, orchestrated by Walter Heller during his time as chairman of Kennedy’s Council of Economic Advisors, has improved monetary policy. In fact, we largely had price stability in the days when the Fed board lacked academics.
If anything, this era of a “scientific” Fed has been characterized by rampant inflation. That shouldn’t be surprising since it was academics who came up with the notion that you can debase your way to prosperity..."
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German growth

Germans Bail Out Christmas With Biggest Splurge in Six Years

By Holger Elfes - Nov 18, 2010 9:01 PM GMT-0200

Just as Germany’s government bails out its European partners, so the country’s consumers are leading the Christmas cheer.
Germans will spend 76.9 billion euros ($105 billion) in November and December, 2.5 percent more than last year and the strongest growth since 2004, according to the HDE retail association. Deloitte LLP also said retail spending will rise “slightly,” even as most of western Europe contracts.
“Germany is an island of bliss within a pessimistic Europe,” Peter Thormann, head of Deloitte’s consumer business in Germany, said in an interview. “I haven’t seen this for the last 10 years at least.”
The country’s jobless rate fell to an 18-year low in October, boosting consumer confidence at the start of a quarter when some retailers generate all their annual profit.
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Backgrounder: Antony Mueller: The German Economy
http://whiskeyandgunpowder.com/germanys-stable-economy/

The Economist gets it right

The Economist explains:
That leaves the third question: the euro. For all the talk of the euro failing to survive this sovereign-debt crisis, it should struggle through. Despite the troubles on its periphery, the public debt of the euro zone as a whole is not notably high by rich-country standards. The real problems are the absence of a credible plan to deal with errant countries (as the Germans have recognised), the structural imbalances between Germany and the less competitive southern members and, most of all, the miserable growth prospects for those poorer, weaker southerners, made worse by their fiscal retrenchment. Denied the possibility of devaluation, slow-growing countries like Portugal and now Spain should be looking for structural reforms that can reduce their labour costs, enhance enterprise, stimulate competition and regain competitiveness.

Ironically Ireland looks more likely to find that growth than the Mediterranean countries. None of that excuses the mess it has made of its banking system. But the real question for Europe is whether it wants a slow succession of Greeces and Irelands—or whether it is ready to move beyond government rescues and focus on growth.
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Comment: There is a lot to do. The balancing act exists in being daring and careful at the same time. What is urgently needed is a new (sound!) global monetary system.

Still unsatisfied

Irish Grasp at EU, IMF Lifeline

By DAVID ENRICH And CHARLES FORELLE

Dublin Admits It Needs a Rescue; Moment of Truth for 16-Nation Euro ZoneIt is an equally pivotal point for the 16 nations that use Europe's common currency. After rescuing Greece in the spring, European leaders are now betting that if they extinguish the financial crisis engulfing Ireland, it won't spread to other euro-zone weak spots. But with bond markets continuing to punish those countries, new bailouts may be needed soon—a prospect that some believe will call into question the durability of the euro as a common currency. -Full text
Comment: The euro is hre to stay whether one likes it or not. The cost of its abandonment outsizes its maintenance by a huge margin. The loss of the euro would amount to global instability at a scale of the 1920s and 1930s. The problem is not the euro. The problem is an unsound monetary system which by itself creates a fraudulent banking system. Even without the euro these problems would continue to exist. Even worse: the existence of the euro may actually help to reform the monetary system and establish more sanity into the world of finance which has gone bezerk over the past couple of years driven by irresponsible central bankers who played superstars and intellectually sanctioned by economists who know ever less about the economy.

9 reasons why QE II is bad for the US economy

Very well put:
http://theeconomiccollapseblog.com/archives/9-reasons-why-quantitative-easing-is-bad-for-the-u-s-economy
Comment: The great drama as of now is the US dollar. The euro is the side show. Investors, don't get confused.

Raising retirement age no cure for social security

WASHINGTON – Raising the retirement age for Social Security would disproportionately hurt low-income workers and minorities, and increase disability claims by older people unable to work, government auditors told Congress.
The projected spike in disability claims could harm Social Security's finances because disability benefits typically are higher than early retirement payments, the Government Accountability Office concluded.
The report, obtained by The Associated Press ahead of its scheduled release Friday, provides fodder for those opposed to raising the eligibility age for benefits, as proposed by the leaders of President Barack Obama's deficit commission.
"There's more to consider than simply how much money the program would save by raising the retirement age," said Sen. Herb Kohl, D-Wis., chairman of the Senate Special Committee on Aging. The report shows an unequal effect on certain groups of people, he said Thursday, and many of them "would have little choice but to turn to the broken disability program." --
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Comment: Social security is the other field where the economic doctors excel in malpractice. The simple truth is, and you can get from any solid textbook, to cure the social security problem, one needs economic growth and in order to have economic growth, one needs technical progress. Technical progress flourishes in free societies and is suffocated by the burdens of suppresive laws and high and unfair taxes. The formula for economc growth was spelled out long ago by the great masters such as Adam Smith and Ludwig von Mises: big government get off from our shoulders and let us prosper.

Buy cheap

Russian stocks, the cheapest worldwide, are getting cheaper after the nation’s companies posted record profits that topped analysts’ estimates by the widest margin in emerging markets.
Micex Index companies reported combined earnings of 178 rubles a share ($5.70) during the past year, the most since at least 2003 and 29 percent above the average of about 400 analyst estimates compiled by Bloomberg. The Micex is valued at 6.8 times profit forecasts for the next 12 months, the lowest level among 59 world stock indexes tracked by Bloomberg and about half the global average of 12 times.
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Comment:  Best buy ever.

Greek austerity - no longer an oxymoron

Greece’s government plans to reduce the budget shortfall by 5 billion euros ($6.8 billion) next year by cutting state spending and increasing sales taxes to meet targets under a European Union-led rescue.

The deficit will decline to 7.4 percent of gross domestic product, or 17 billion euros, from 9.4 percent of GDP this year, according to an e-mailed statement from the Athens-based Finance Ministry today. That compares with a target of 7.6 percent under the May agreement with the EU and the International Monetary Fund to secure 110 billion euros in emergency loans... --
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Comment: Greece is doing its homework. No need to worry anymore. Let's go sailing. Where? In Greece, of course. Book your cruise.

Ireland close to accept EU credit line

-- Ireland may ask for a fund amounting to “tens of billions” of euros to rescue its banks to shore up the nation’s finances after talks with European Union and International Monetary Fund conclude.
“If these talks were to result in a substantial contingency capital funding” pool that didn’t need to be drawn down, that “would be a very desirable outcome,” Finance Minister Brian Lenihan said in the Irish parliament in Dublin today. --
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Comment: Ireland has enough liquidity on its own and with the additional credit line there is little risk left of a default. Ireland will put its efforts into avoiding to draw ny rescure money. Anyway, it is time to go back golfing again. Where? In Ireland, of course.

Prot-Fascist EU about to unravel - thus Ambrose spoke

Ambrose Evans-Pritchard
Ambrose Evans-Pritchard has covered world politics and economics for 25 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.
The horrible truth starts to dawn on Europe's leaders -
The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict...
Ireland was the one country forced to hold a vote by its constitutional court. When this lonely electorate also voted no, the EU again disregarded the result and intimidated Ireland into voting a second time to get it “right”.
This is the behaviour of a proto-Fascist organization, so if Ireland now – by historic irony, and in condign retribution – sets off the chain-reaction that destroys the eurozone and the European Union, it will be hard to resist the temptation of opening a bottle of Connemara whisky and enjoying the moment. But resist one must. The cataclysm will not be pretty....
Read more why Amrose is in panic mood
Comment: No reason to get excited another storm in the tea cup. A lot of clattering by the clattering class. A lot of pseudo-action by politicians and technocrats. After a while the storm will pass away as it has done before. Behind will left a wounded herd of euro attackers who should have known better. The simple truth is that the stake for the euros is way too high to let the currency go. The heart of the matter is quite different from what this article and many other articles of this kind suggest: the central problem is that the dollar is mortally ill and that the demise of the US dollar is unavoidable and it is the death of the dollar which provokes the global currency turmoil.

"W'e're from the government - we've come to help you" - Watch out, Ireland!

BRUSSELS — The British government Wednesday signaled its willingness to offer direct financial assistance to Ireland, as a team from the International Monetary Fund and the European Union was preparing to descend on Dublin on Thursday to work with the Irish on a rescue package aimed at defusing the latest European debt crisis.
Read more in the New York Times
Comment: In 2004, I wrote:
"Since Alan Greenspan took office, financial markets in the US have operated under a quasi official charter, which says that the central bank will protect its major actors from the risk of bankruptcy. Consequently, the reasoning emerged that when you succeed, you will earn high profits and market share, and if you should fail, the authorities will save you anyway..."
http://mises.org/daily/1627

Assault on the euro - targeting Portugal

Euro under siege as now Portugal hits panic button
By Bruno Waterfield and Robert Winnett, The Daily Telegraph
The euro is facing an unprecedented crisis after another country indicated on Monday night that it was at a "high risk" of requiring an international bail-out.
Portugal became the latest European nation to admit it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems. 
Greece also disclosed that its economic problems are even worse than previously thought.
Angela Merkel, the German Chancellor, raised the spectre of the euro collapsing as she warned: "If the euro fails, then Europe fails."
European finance ministers will meet in Brussels on Tuesday to begin discussions over a new European stability plan that is expected to result in billions of pounds being offered to Ireland, Portugal and possibly even Spain.
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Comment: The problem is not the Euro, the problem is our fraudulent banking system. Nevertheless, the euro authorities will do all they can to save the euro. In order to do that, they are ready to sell grandma's furniture.




Read more: http://www.montrealgazette.com/business/Euro+under+siege+Portugal+hits+panic+button/3831814/story.html#ixzz15alq2dHL

Outlook is bleak - on a global scale

Three Reasons Global Talks Hit Dead End: Mohamed A. El-Erian

By Mohamed A. El-Erian - Nov 17, 2010 12:00 AM GMT-0200

Bloomberg Opinion

“Obama’s Economic View Is Rejected on World Stage,” the New York Times declared on its front page. The Financial Times’ headline was “G-20 Shuns U.S. on Trade and Currencies,” while the Wall Street Journal proclaimed “U.S. Gets Rebuffed at Divided Summit.” In short, the media’s reporting on the Group of 20 summit in Seoul was brutal.
The meeting of government leaders was certainly a disappointment for those looking for coordinated policy actions to place the world economy on a more secure path to high growth, job creation and financial stability. It also highlighted the growing leadership vacuum at the center of the global system.
The focus now shifts to what comes next. Will the summit be a catalyst for more constructive discussions outside the spotlights and beyond the attention of the world media? Or will it seriously undermine a G-20 process that was successful in avoiding a global depression but has since failed to ensure a lasting economic recovery?
Absent some appropriate changes in mindset and behavior, the latter interpretation may well prevail for three reasons that may seem counterintuitive to some.
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Comment: The internatonal financial system suffers from structural deficiencies and no ad hoc measurement is adquate to save the system. We need a new system, a system that does away with fiat money, exorbitant government spending and a fraudulent banking system. Nothing less than a global revolution is warranted.

Irish debt: together we stand -divided we fall

Ireland Prepares to Open Books as EU Weighs Help for Banks

By James G. Neuger and Fergal O’Brien - Nov 17, 2010 9:22 AM GMT-0200

European Union and International Monetary Fund experts will start scanning the books of Ireland’s debt-laden banks tomorrow in Dublin in a prelude to a possible aid package to stem Europe’s widening fiscal crisis.
Finance chiefs from the 16-country euro area said the joint assessment will determine whether Ireland can patch up the banking system on its own or needs to fall back on the EU-IMF 750 billion-euro ($1 trillion) rescue fund.
“If banking problems are too big for this small country to manage, Europe has made it clear they’ll help,” Irish Finance Minister Brian Lenihan told state broadcaster RTE today as meetings of European finance ministers wrapped up in Brussels.
As Europe struggled to present a united front to maintain its fiscal credibility, Britain said it would back support for Ireland, abandoning a hands-off policy toward the euro region to prevent Irish bank woes from spilling over into the U.K. market.
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Comment: Politicians and the technocrats of the international institutions love crisis management, yet they almost often fail in the most important field: to establish and maintain high-order systems those which would require minimal ad hoc interference. What we get is the contrary: low-order system that require a maximum amount of ad hoc interference. After all the fragility of the syems that are put in place is the rason d'être of politics.

Irish nemesis

Why the Irish Crisis is Going Global

Rick Newman, On Tuesday November 16, 2010, 5:49 pm EST

You may not have to worry about Ireland in a week, or a month. But at the moment, the Emerald Isle is causing global investors a whole lot o' anxiety.
On the surface, it's reminiscent of the problem Greece had with its unmanageable federal debt early this year, which shook world markets, ended a global rally in stocks and ultimately led to a $146 billion bailout by the European Union and the International Monetary Fund. Greece spent more money than it took in for years, papered over the gap, and essentially became insolvent when it could no longer borrow the money needed to finance its debt.
Ireland is on the brink of insolvency too, which has helped drive down the S&P 500 stock index by nearly 4 percent over the last few days. But unlike Greece, Ireland is a relatively wealthy country, with per capita GDP of nearly $38,000. That's 21 percent higher than per capita GDP in Greece, and in the top third for European countries. Low corporate tax rates and a skilled workforce have made Ireland a haven for some of the world's biggest companies. And its public debt, about 65 percent of GDP, is far below Greece's crushing load, which is 126 percent of GDP. Ireland's debt levels are even lower than those in France, Germany and the United Kingdom.
But Ireland has one huge problem that may soon make it a supplicant to its European brethren: A failed banking sector that Ireland's government can no longer rescue on its own. Ireland is in the midst of a real estate bust that could trump even the ruinous downturns that turned parts of southern California and Nevada into suburban ghost towns, with home-grown banks stoking it all. Now, those banks are trying to manage catastrophic losses. The Irish government has effectively nationalized the nation's biggest banks by guaranteeing their debt, which would be akin to the U.S. government taking over Citigroup, Bank of America, J.P. Morgan Chase and Wells Fargo.
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Comment: What we are experiencing is not an "euro crisis" but the crisis of the modern fiduciary money system in its combination with a fraudulent banking system.

Panic contagion

Ambrose Evans-Pritchard is in panic mood:


Europe stumbles blindly towards its 1931 moment
It is the European Central Bank that should be printing money on a mass scale to purchase government debt, not the US Federal Reserve.
Unless the ECB takes fast and dramatic action, it risks destroying the currency it is paid to manage, and allowing a political catastrophe to unfold in Europe.
If mishandled, Ireland could all too easily become a sovereign version of Credit Anstalt - the Austrian bank that brought down the central European financial system in 1931, sent tremors through London and New York, and set off the second deeper phase of the Great Depression, the phase when politics turned ugly.
“Does the ECB understand the concept of contagion?” asked Jacques Cailloux, chief Europe economist at RBS. Three EMU countries have already been shut out of the capital markets, and footloose foreign creditors hold €2 trillion of debt securities issued by Spain, Portugal, Ireland and Greece....
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Comment: Ambrose is a better writer than thinker. His talk is nonsense and contradictory. What we really have is the second assault on the euro by the same group that desastrously failed the first time when they tried. Another great opportunity to get out of US stocks, US bonds and out of the US dollar. Probably the last chance.

Inflation is here

European inflation accelerated to the fastest in almost two years in October, led by surging energy costs.
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Comment: We're beyound the point of no return. Massive inflation is building up: in the US, China and Europe. The Irish bailout is insignficant to the true monster of looming hyperinflation.

Inflation is here

The U.K. inflation rate unexpectedly rose in October, exceeding the government’s 3 percent limit and forcing Bank of England Governor Mervyn King to write his fourth letter of explanation to the Treasury this year.
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The euro-zone in Irish hands

The Wall Street Journal:

For Europe's sake, take the money

By SIMON NIXON

Ireland's day of reckoning has arrived. When Brian Lenihan meets his fellow European Union finance ministers in Brussels Tuesday, he will find himself in the surreal position of being begged to accept a European Union bailout, despite the fact Ireland doesn't need to tap bond markets until the middle of next year and his government will next month deliver a budget which it believes will enable the country to bring its borrowing under control. But this crisis is now about the survival of the euro zone. Mr. Lenihan should take the money —and the rest of Europe must hope that does the trick.
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A different view:
Bloomberg:

Euro Dominos Will Fall Until Currency Is Split: Matthew Lynn

The euro has turned into a bankruptcy machine. Once the markets have finished with Ireland, they will simply move on to Portugal and Spain, and after that to Italy and France.
There is a domino effect at work, and, with each rescue, the fault lines within the euro grow wider and wider. This process isn’t going to stop until the euro is taken apart.
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Ireland wants to stand alone - yet can it?

By SHAWN POGATCHNIK, Associated Press Shawn Pogatchnik, Associated Press – 2 hrs 28 mins ago

DUBLIN – Debt-burdened Ireland is talking with other European Union governments about how to handle its troubled finances, but denied they needed a bailout from an EU rescue fund as the continent's debt crisis continued to challenge policymakers for a response that would calm market turmoil.
Greece, which has already received a financial rescue loan, had to revise its deficit figures upward yet again.
But the main focus was on Ireland ahead of a meeting Tuesday of eurozone finance ministers in Brussels, where they will look for ways to quell market fears of an eventual Irish default.
Those fears are driving up the borrowing costs of other EU nations saddled with red ink, notably Greece, Spain and Portugal.
Analysts said investors needed the finance ministers in Brussels to offer a clear path forward for Ireland to reduce its deficit and bear the costs of its enormous bank bailout.
Irish officials insisted they had no need to seek help because they have enough cash to avoid new borrowing until mid-2011. Still, speculation is mounting that other EU countries are pressing Ireland to stop the rout in bond markets by taking help from the eurozone's euro750 million financial backstop put together with the EU executive commission and the International Monetary Fund.
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Weapons of monetary mass destruction

Radical Difference Between Monetization 1 and QE2
Submitted by Daniel R Amerman CFA on Fri, 5 Nov 2010
It's official: the Federal Reserve announced on November 3rd that it will create approximately $600 billion of new money to fund US Treasury bond purchases, and will also utilize another $250-$300 billion of money that had been previously created (also out of the nothingness). The usual term in the media for these planned purchases is "QE2", as in the second round of quantitative easing.
The "2" in "QE2" implies that this is something that has been done before. This implication is dead wrong.
"QE2" is radically different – and radically more dangerous – than the risky games that were played with earlier "quantitative easings". The Fed's current actions are all too likely to go down into financial infamy, and this brief article is intended to warn readers about some of the key differences this time around. --
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Comment: We are beyond the point of no return. Don't lament - seek cover. The situation is much more dramatic than most people think.



The most significant difference is that this time there appears to be no references to "sterilization" of the newly created money. It's likely good old-fashioned monetization in other words, with potentially quick and dire results.



It is also essential to note that the Fed won't be directly buying Treasury bonds from the US Treasury, but will instead be intervening in the Treasury bond markets. In other words, the Fed will be creating an artificial Treasury bond market, where it uses an unlimited amount of newly created public money to buy from private investment banks.

It is time to resign

Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers said he has been proven right about his criticism of Federal Reserve Chairman Ben Bernanke whom he characterized as "a disaster... doing the wrong thing... and making mistake after mistake after mistake."
Speaking with Betty Liu on Bloomberg Television's "In the Loop" in a discussion including Bethany McLean, a Bloomberg contributing editor, about Dr Bernanke's job performance and policy decisions, Rogers said: I defy you to find a single time in the last six years that he [Dr Bernanke] has been in Washington, where he's been right about anything."
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Comment: The real tragedy is that it is not only Bernanke who is the problem but that most of the American "economics" profession is a catastrophe. Indeed, economics in its true sense is no longer taught in America. Particularly at the so-called "top universities" you mainly get your economics PhD not for a serious study of economics but for bad math.

Bringing America down - come and join Krugman et al.

Krugman vs Krugerrand

Posted by Michael S. Rozeff on November 12, 2010 12:47 PM

In honor of inflationist Paul Krugman, I call the 1976 dollar a KRUGMAN.
In 1976, 125 Krugmans bought 1 Krugerrand (on average). A Krugerrand has 1 troy oz of pure gold.
Today, as of minutes ago, 1,365 Krugmans will buy 1 Krugerrand. The U.S. has followed Krugman’s inflation policy faithfully for 34 years. It has successfully depreciated the Krugman. Where 1 Krugman bought 0.008 Krugerrand, it now buys only 0.0007326 Krugerrands. That’s a decline of 90.8425 percent in the Krugman’s price.
Where are all the supposed benefits of this massive drop in price of the Krugman? Will they appear when the Krugman drops even further to the point where it won’t purchase ANY Krugerrands at all?

Game over - getting ever closer to the crash

Treasury prices take a fall; Interest rates jump 

Treasurys fall, pushing yields to levels last seen in September; Fed buys $7.23B in bonds

On Friday November 12, 2010, 12:41 pm EST

NEW YORK (AP) -- Treasury prices are taking a plunge even after the Federal Reserve stepped into the market to buy government bonds.
The Fed bought its first batch of Treasurys on Friday since announcing its $600 billion plan to boost the economy last week. The central bank picked up $7.23 billion in Treasurys coming due between 2014 and 2016.
The Fed's Treasury purchases are supposed to drive down long-term interest rates over the long term. But Treasury prices dropped Friday, sending their yields sharply higher.
The yield on the 10-year Treasury jumped to 2.76 percent, the highest yield since Sept. 16. The two-year yield rose to 0.51 percent. It had hovered around 0.40 percent since late September.
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Comment: A mega crash has become inevitable. We're getting closer day by day, minute by minute. Bonds will crash first, taking the stock market and the dollar down with them.

Inflation is already here

Secret Walmart Survey Shows Inflation Already Here

Published: Thursday, 11 Nov 2010
2:59 PM ET Text Size By: John Melloy
Executive Producer, Fast Money
There might not have been a second round of quantitative easing, if Federal Reserve Chairman Ben Bernanke shopped at Walmart.
A new pricing survey of products sold at the world’s largest retailer [WMT 54.34 -0.17 (-0.31%) ] showed a 0.6 percent price increase in just the last two months, according to MKM Partners. At that rate, prices would be close to four percent higher a year from now, double the Fed’s mandate.
The “inaugural price survey shows a small, but meaningful increase on an 86-item grocery basket,” said Patrick McKeever, MKM Partners analyst, in a note. Most of the items McKeever chose to track were every day items like food and detergent and made by national brands...
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Irish debt

Irish debt distribution
and yield spread.
Major holders of Irish debt: US, Germany, UK, France, Japan.
Yield of Irish government bonds - spread against German bunds.

The truth behind QE 2

Peter Schiff explains: "... The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem. If the truth were known, a real panic would ensue. So, the Fed pretends buying treasuries is simply part of its master plan to boost the economy, even though, in reality, it is simply acting as the buyer of last resort..."
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Agenda Korea 2010 G20

Source

The deconstruction of Ben Bernanke by Robert Higgs

Writes Bob Higgs:
"... Like nearly all modern macroeconomists, Bernanke’s focus on aggregates alone prevents him from asking, “spare capacity” for what? He sees unemployed labor and capital, and he concludes that overall monetary stimulus will remedy these apparent wastes. But the effects of expansionary monetary policy will not be felt equally in every part of the economy, nor should they be. He fails to see that the unemployed labor and capital are concentrated in places to which they were drawn as a result of malinvestments made during the (Fed-fueled) boom, especially in housing construction and finance and related industries. When the Fed now creates new bank reserves via QE2, the banks, if they increase their lending at all, may simply finance—directly or indirectly—investments in commodity speculation, stock speculation, or other expenditures that only inflate new asset bubbles.This policy-making on the basis of the latest observations of inflation and unemployment not only demonstrates a supremely unjustified faith in the Fed’s ability to micromanage the macroeconomy, but also betrays an obtuseness to one of Milton Friedman’s best-known empirical claims, namely, that between changes in money and changes in macroeconomic aggregates such as output and inflation lie long and variable lags. So, even if the latest observations of aggregate variables were accurate and were all the information that matters, the Fed’s belief in its ability to make successful policy on that basis would be utterly unfounded. When the Fed throws a rock into the lake, the ripples keep spreading, and future changes in winds and water currents affect precisely where and how quickly those ripples spread..."
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Madness with method

What the Fed did and why: supporting the recovery and sustaining price stability

By Ben S. Bernanke

Thursday, November 4, 2010
"...  Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation. We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time. The Fed is committed to both parts of its dual mandate and will take all measures necessary to keep inflation low and stable..."
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The great divide: current account surplus and deficit countries

Phantom jobs for a phantom economy

The Intel Hub
Paul Craig Roberts
If we cannot trust what the government tells us about weapons of mass destruction, terrorist events, and the reasons for its wars and bailouts, can we trust the government’s statement last Friday that the US economy gained 151,000 payroll jobs during October?
Apparently not. After examining the government’s report, statistician John Williams (shadowstats.com) reported that the jobs were “phantom jobs” created by “concurrent seasonal factor adjustments.” In other words, the 151,000 jobs cannot be found in the unadjusted underlying data. The jobs were the product of seasonal adjustments concocted by the BLS. ---
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14 news

#1 More than 42 million Americans were on food stamps during the month of August. That is a new all-time record, and that number is 17 percent higher than it was one year earlier. In fact, the number of Americans on food stamps is up more than 58 percent since August 2007.
#2 The number of "persons not in the labor force" in the United States has set another new all-time record. The United States has not had such an extended bout of mass unemployment since the Great Depression. The "official" unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months.
#3 More than 1000 people now live in the 200 miles of flood tunnels that exist under the city of Las Vegas. Once one of the most prosperous cities in the United States, Las Vegas is now little more than a shiny, glittering corpse that it rapidly decaying.
#4 Poverty is absolutely exploding and it is hitting those who are the most vulnerable the hardest. According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.
#5 In the past 60 days alone, the price of cotton is up 54%, the price of corn is up 29%, the price of soybeans is up 22%, the price of orange juice is up 17%, and the price of sugar is up 51%.
#6 One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.
#7 The American Bankruptcy Institute says that there will be about 1.6 million consumer bankruptcies in 2010. That would represent a huge increase over 2009.
#8 According to one recent survey, 28% of all U.S. households have at least one member that is looking for a full-time job.
#9 The individual U.S. states are mostly flat broke. For example, it is being reported that the 15 largest U.S. states spent on average over 220% of their tax receipts over the past decade. Clearly this is not even close to sustainable.
#10 The U.S. government is completely and totally broke. After analyzing Congressional Budget Office data, Boston University economics professor Laurence J. Kotlikoff concluded that the U.S. government is facing a "fiscal gap" of $202 trillion dollars.
#11 In an attempt to keep our financial system solvent, the U.S. Federal Reserve has announced plans to create $600 billion out of thin air and pump it into the U.S. economy. The Fed is calling this "quantitative easing," but what they should really be calling it is "cheating, debasing and inflating."
#12 Many of the major trading partners of the United States are expressing deep resentment regarding the new quantitative easing policy announced by the Fed. Ambrose Evans-Pritchard recently described the growing animosity this way....

Li Deshui from Beijing's Economic Commission said a string of Asian states share China's "deep bitterness" over dollar debasement, and are examining ways of teaming up to insulate themselves from the tsunami of US liquidity.

#13 For many analysts, the economic collapse of the United States comes down to cold, hard math. For example, the former CEO of the tenth largest bank in the United States says that it is a "mathematical certainty" that the U.S. government will eventually go bankrupt.
#14 According to a recent article on CNBC, the financial world is already buzzing about QE3....
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Another one bites the dust

Ambac, which was the second-largest U.S. bond insurer before suffering huge losses on risky mortgages, filed for Chapter 11 bankruptcy on Monday.
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Gold - thanks, Ben, for making me rich!

Gold

1411.60

Monetary deluge

The Great Flood that will bury us all:   

Source

Shocking the world with liquidity

Chinese Vice Finance Minister Zhu Guangyao said the U.S. Federal Reserve’s decision to pump $600 billion into the economy might “shock” emerging markets by flooding them with capital.
The first round of quantitative easing, as the Fed policy is termed, in 2009 was justified because the global economy lacked liquidity, Zhu told reporters in Beijing today. With a recovery now under way, new purchases of Treasuries to inject funds into the financial system may be destabilizing, he said.
“Around the world we have $10 trillion of hot money flowing around, more than the $9 trillion in hot money at the beginning of the global financial crisis,” Zhu said. The U.S. “has not fully taken into consideration the shock of excessive capital flows to the financial stability of emerging markets.”
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By, by, American pie

18 Iconic Products That America Doesn't Make Anymore

Posted Nov 04, 2010 08:00am EDT by Anika Anand and Gus Lubin in Investing, Products and Trends, Recession

Related: f, ge, mat, DELL, MOT, aapl, bni

Provided by the Business Insider November 1, 2010:
Another American icon has bit the dust: Pontiac.
GM is canceling the 84-year-old brand after winding down production over the past few years. Like other American automakers, it is restructuring and rebranding to compete with foreign companies.
Pontiac joins a long list of iconic products that aren't made anywhere in America.
Meanwhile, plenty of beer is still made here, but many of America’s most-iconic beer brands, including Miller, Coors, and Budweiser, are owned by foreign companies. In 2008, Anheuser-Busch, the St. Louis-based company that has a nearly 50 percent market share in the U.S., was sold to InBev, a Belgium-based conglomerate run by Brazilian executives. In the accompanying video, Julie McIntosh, author of Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon, discusses the deal with Yahoo! Finance economics editor Daniel Gross.
Here are 18 Iconic Products That America Doesn't Make Anymore:
Rawlings baseballs
Last production date: 1969
Rawlings is the official supplier of baseballs to Major League Baseball. The St. Louis shop was founded in 1887 by George and Alfred Rawlings. In 1969 the brothers moved the baseball-manufacturing plant from Puerto Rico to Haiti and then later to Costa Rica.
Etch a Sketch
Last production date: 2000
Etch A Sketch, an iconic American toy since the 1960s, used to be produced in Bryan, Ohio, a small town of 8,000. Then in Dec. 2000, toymaker Ohio Art decided to move production to Shenzhen, China.
Converse shoes
Last production date: 2001
Marquis M. Converse opened Converse Rubber Show Company in Massachusetts in 1908. Chuck Taylors– named after All American high school basketball player Chuck Taylor– began selling in 1918 as the show eventually produced an industry record of over 550 million pairs by 1997. But in 2001 sales were on the decline and the U.S. factory closed. Now Chuck Taylors are made in Indonesia.
Stainless steel rebar
Last production date: circa 2001
Many forms of this basic steel product are not available domestically. Multiple waivers to the Buy America Act have allowed purchase of rebar internationally.
Note: The Buy America Act requires government mass transportation spending to use American products.
Dress shirts*
Last production date: Oct. 2002
The last major shirt factory in America closed in October 2002, according to NYT. C.F. Hathaway's Maine factory had been producing shirts since 1837.
*We know there are other shirt manufacturers in America. They do not produce in large quantities or supply major brands.
Mattel toys
Last production date: 2002
The largest toy company in the world closed their last American factory in 2002. Mattel, headquartered in California, produces 65 percent of their products in China as of August 2007.
Minivans
Last production date: circa 2003
A waiver to the Buy America Act permitted an American producer of wheel-chair accessible minivans to purchase Canadian chassis for use in government contracts, because no chassis were available from the United States. The waiver specified: "General Motors and Chrysler minivan chassis, including those used on the Chevrolet Uplander, Pontiac Montana, Buick Terraza, Saturn Relay, Chrysler Town & Country, and Dodge Grand Caravan, are no longer manufactured in the United States."
Note: The Buy America Act requires government mass transportation spending to use American products.
Vending machines
Last production date: circa 2003
You know that thing you put bills into on a vending machine? It isn’t made in America, according to a waiver to the Buy America Act.
Neither is the coin dispenser, according to this federal waiver.
Note: The Buy America Act requires government mass transportation spending to use American products.
Levi jeans
Last production date: Dec. 2003
Levi Strauss & Co. shut down all its American operations and outsourced  production to Latin America and Asia in Dec. 2003. The company's denim products have been an iconic American product for 150 years.
Radio Flyer's Red Wagon
Last production date: March 2004
The little red wagon has been an iconic image of America for years. But once Radio Flyer decided its Chicago plant was too expensive, it began producing most products, including the red wagon, in China.
Televisions
Last production date: Oct. 2004
Five Rivers Electronic Innovations was the last American owned TV color maker in the US. The Tennessee company used LCoS (liquid crystal on silicon) technology to produce televisions for Philips Electronics. But after Philips decided to stop selling TVs with LCoS, Five Rivers eventually filed for Chapter 11 bankruptcy protection in Oct. 2004. As part of its reorganization plan, the company stopped manufacturing TVs.
Now there are ZERO televisions made in America, according to Business Week.
Cell phones
Last production date: circa 2007
Of the 1.2 billion cell phones sold worldwide in 2008, NOT ONE was made in America, according to Manufacturing & Technology publisher Richard McCormick.
After studying the websites of cell phone companies, we could not identify a single phone that was not manufactured primarily overseas.
Railroads (parts including manganese turnout castings, U69 guard bars, LV braces and weld kits)
Last production date: circa 2008
Here's another standout from dozens of waivers to the Buy America Act: railroad turnouts and weld kits.
Manganese turnout castings are used to widen railroad tracks, and they were used to build our once-great railroad system. U69 guard bars, LV braces and Weld Kits, along with 22 mm Industrial steel chain are basic items that were certifiably not available in the US.
Note: The Buy America Act requires government mass transportation spending to use American products.
Dell computers
Last production date: Jan. 2010
In January 2010, Dell closed its North Carolina PC factory, its last large U.S. plant. Analysts said Dell would be outsourcing work to Asian manufacturers in an attempt to catch up with the rest of the industry, said analyst Ashok Kumar.
Canned sardines
Last production date: April 2010
Stinson Seafood plant, the last sardine cannery in Maine and the U.S., shut down in April. The first U.S. sardine cannery opened in Maine in 1875, but since the demand for the small, oily fish declined, more canneries closed shop.
Pontiac cars
Last production date: May 2010
The last Pontiac was produced last May. The brand was formally killed on Halloween, as GM contracts Pontiac dealerships expired.
The 84-year-old GM brand was famous for muscle cars.
Forks, spoons, and knives
Last production date: June 2010
The last flatware factory in the US closed last summer. Sherrill Manufacturing bought Oneida Ltd. in 2005, but shut down its fork & knife operations due to the tough economy. CEO Greg Owens says his company may resume production "when the general economic climate improves and as Sherrill Manufacturing is able to put itself back on its feet and recapitalize and regroup."
Incandescent light bulb
Last production date: Sept. 2010
The incandescent light bulb (invented by Thomas Edison) has been phased out.
Our last major factory that made incandescent light bulbs closed in September 2010. In 2007, Congress passed a measure that will ban incandescents by 2014, prompting GE to close its domestic factory.
Note: A reader pointed out that the Osram/Sylvania Plant in St. Mary's, Penn. is still producing light bulbs to fill old and international contracts. However, the plant has announced plans to wind down incandescent production.
Source