Economy

China Overtakes Japan As World’s Second-Largest Economy

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After the coming greatest financial collapse in world history the US will not be the world’s largest economy anymore.

China remains on target to take the number-one slot from the US between 2020 and 2030, after leapfrogging Japan


Beijing citizens prepare to celebrate this week’s lantern festival as China becomes the second-largest economy. Photograph: Chinafotopress/Getty Images

China has leapfrogged Japan to become the world’s second-largest economy, a title Japan has held for more than 40 years.

While Japan grew 3.9% last year – its first annual growth in three years – this was not enough to hold off China’s booming economy. Japan’s nominal GDP was $5.4742tn (£3.4tn) in 2010, less than China’s total of $5.8786tn, according to official data released by Japan.

But, despite Japan’s displacement from second slot, its leadership welcomed the figures as a boost to Asia and as an opportunity for the country’s beleaguered exporters.

Japan’s economy shrank 0.3% in the last quarter of 2010, a decline attributed to slow domestic consumption following the end of government incentives to buy, among other items, low-emission cars.

Read moreChina Overtakes Japan As World’s Second-Largest Economy

US Deficit is Biggest as Share of Economy Since WWII

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Financial terrorist Obama bin Bush

Bankruptcy and hyperinflation we can take a bath in!

– Rep. Ron Paul: Next US Crash Will Be Comparable To That Of Soviet Union, QE2 Is A ‘Total Failure’ And The Fed Is A ‘Central Planning Cartel’

– President Obama Sends Congress $3.73 Trillion Budget

– Government Economists: America Faces The Biggest Budget Deficit In History

– US Government Spends $6.85 Million Per Minute

– Geithner Warns Lawmakers That Failure to Raise US Debt Limit ‘Precipitates a Default by the United States’ With Catastrophic Economic Consequences

Deficit is biggest as share of economy since 1945; economists fear a domino effect later


WASHINGTON (AP) — Not since World War II has the federal budget deficit made up such a big chunk of the U.S. economy. And within two or three years, economists fear the result could be sharply higher interest rates that would slow economic growth.

The budget plan President Barack Obama sent Congress on Monday foresees a record deficit of $1.65 trillion this year. That would be just under 11 percent of the $14 trillion economy — the largest proportion since 1945, when wartime spending swelled the deficit to 21.5 percent of U.S. gross domestic product.

The danger is that a persistently large gap in the budget could threaten the economy. Investors would see lending their money to the U.S. as riskier. So they’d demand higher returns to do it. Or they’d simply put their cash elsewhere. Interest rates on mortgages and other debt would rise as a result.

Read moreUS Deficit is Biggest as Share of Economy Since WWII

Chinese Companies Mass Produce Fake Rice Out of Plastic

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Related article:

– Rice Speculators Expect 50 Percent Jump In Price

(NaturalNews) The Chinese food contamination freak show is back in full swing with new reports out of Singapore indicating that certain Chinese companies are now mass producing and selling fake rice to unwitting villagers. According to a report in the Korean-language Weekly Hong Kong, the manufacturers are blending potatoes, sweet potatoes, and plastic industrial resin to produce the imitation rice.

A report in Very Vietnam states that an official from the Chinese Restaurant Association has announced that eating three bowls of this fake rice is the equivalent of eating an entire plastic bag. Consuming such plastic material is obviously a serious health hazard, and officials are allegedly gearing up to conduct an investigation into the factories accused of producing the phony rice.

Read moreChinese Companies Mass Produce Fake Rice Out of Plastic

At $1.3 Billion, Insider Sales Surge To Highest Of 2011, Double Last Week’s Total

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The latest S&P 500 insider buys/sells report is out, and it is more of the same. Looking at the 8 inside purchases for a total of $21.4 million one may say that the buying interest was not too shabby. That is until one realizes that there was one purchase for $20.2 million by News Corp insider skewing the entire distribution.

Where the fun was, however, is as usual on the selling side, where insiders dumped the biggest amount of shares so far in 2011, selling over $1.3 billion worth of stock (a 61.4x insider buying to selling ratio), which was nearly double last week’s $749 million.

Read moreAt $1.3 Billion, Insider Sales Surge To Highest Of 2011, Double Last Week’s Total

Silver 12 Cents Away From Post Hunt Brothers Closing High

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Now that we know that JPM had a statistically impossible 97% win track record in 2010, we can’t help but drool in jealousy. However, we wouldn’t be doing our journalistic duty if we didn’t inquire just how much did JPM brush under the rug on their underwater gold and silver short exposure, and whether or not Blythe Masters’ bank is even accounting under GAAP for the now documented price suppression scheme?

After all, Blythe is the master brain behind such no margin “bearish exposure” products as CDS – it would be only logical that she discovered some way to make her massive paper silver short carried on the books at a minute fraction of gross notional exposure.

Furthermore, it is no wonder that today Gary Gensler demanded a pound of flesh for his kickbacks to the banker lobby which allowed JPM to be grandfathered in with their huge short positions (claiming the CFTC would need to fire hundreds of worthless staffers if the corrupt agency’s 2011 budget wasn’t lifted, despite O’Malia’s protest).

Read moreSilver 12 Cents Away From Post Hunt Brothers Closing High

Richard Russell: Possibility of Gold Breaking to New Highs

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With gold recently firming and silver closing well above $30, the Godfather of newsletter writers was discussing the technical action in the gold market, “Gold — Let’s study gold from a technical analysis standpoint. Here we see the strong rally from August to November. Starting in November, gold moved sideways forming a rectangle. In January gold turned down and broke temporarily below the bottom of the rectangle.”

Russell continues:

…..

“Moving averages are often useful in technical analysis. For instance, here’s a picture of daily gold fitted on a 150-day moving average. This 150-day MA is interesting, because it has provided support for gold on every decline going back to March of 2009.

Most recently, gold has again touched the 150-day MA, and again gold has bounced off this MA. We look for change. Will the 150-day MA hold again, or will it be different this time? If the MA holds again, it will be another triumph for technical analysis by way of the 150-day moving average.”

Richard Russell has always excelled by looking at the big picture. His technical review was just that, a look at the big picture. Gold’s uptrend is still intact. Until proven otherwise, the rest is just noise.

Full article here: King World News

National Bureau Of Statistics of China: Chinese Food Prices Have Increased By 4.6 Percent In Ten Days! (416 Percent Annualized!)

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This is simply stunning. A quick parsing of the data released every ten days by the National Bureau Of Statistics of China indicates that the average price of food in 50 cities in the January 21-31 period has increased by 4.6% compared to the prior 10 day period (and 416% annualized)!

Granted, this is a simple average calculation of the 29 food items tracked without any weighing, although a quick glance at the components confirms that tonight’s Chinese CPI will likely be a doozy. Some of the key changes: cucumbers up 28.2% in ten days, kidney beans up 21.9%, rapes [no pun] up 14.5%, tomatoes up 12.9%, hair tails up 4.7%, bananas up 3.6%, chickens up 3.1%.

And this, again, is in the past 10 days! But not all is lost: Soybean oil actually dropped by 0.1%. Time for China to release an adjusted adjusted CPI which excludes all foodstuffs except for Soybean oil (and remember, in China, food is 31.4% of CPI)… which actually is exactly what is about to happen.

From the NBSC, which is somehow more transparent, and accurate, than the US’ own Department of Truth.

But fear not: that 31.4% for food as % of CPI…that’s about to be revised dramatically lower. And that will make inflation disappear.

Read moreNational Bureau Of Statistics of China: Chinese Food Prices Have Increased By 4.6 Percent In Ten Days! (416 Percent Annualized!)

Tungsten Outperforms Gold, Returns 70 Percent In Last Year

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Flashback:

– German TV Channel Finds 500 Gram Tungsten Bar At W.C.Heraeus Gold Foundry With Bank Origin

– Fake Gold Bars in Fort Knox! What’s Next? The IMF sold Gold plated tungsten bars to India ?!

– Ron Paul Calls for Audit of US Gold Reserves:

“If there was no question about the gold being there, you think they would be anxious to prove gold is there,” he said of the Federal Reserve.

This is not the first time the congressman has made his pitch. “In the early 1980s when I was on the gold commission, I asked them to recommend to the Congress that they audit the gold reserves – we had 17 members of the commission and 15 voted not to the audit,” said Paul. “I think there was only one decent audit done 50 years ago,” he said.

Though Paul did not say whether there is any truth to claims that there is no gold in Fort Knox or the New York Federal Reserve, he said, “I think it is a possibility.”

“If we ever get around to deciding we should use gold in relationship to our currency we ought to know how much is there,” said Paul.  ”Our Federal Reserve admits to nothing and they should prove all the gold is there. There is a reason to be suspicious and even if you are not suspicious why wouldn’t you have an audit?” he said.

The comedy value of the various interpretations of this chart is simply priceless. We leave it up to our readers to share their views on why Tungsten has almost doubled in the past year, and what that means for the cost-benefit analysis for central banks in substituting “one metal” with “another”…

Submitted by Tyler Durden on 02/14/2011 12:46 -0500

Source: ZeroHedge

And Now Clothing Inflation: Prices to Rise 10% Starting in Spring

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And clothing prices will continue to rise:

– Cotton Prices Jump, Continue To Skyrocket, Mills Panic

– Cotton Prices Rise To A 140-Year Record High

Clothing Prices to Rise 10% Starting in Spring

The era of falling clothing prices is ending. Clothing prices have dropped for a decade as tame inflation and cheap overseas labor helped hold down costs.

Retailers and clothing makers cut frills and experimented with fabric blends to cut prices during the recession. But as the world economy recovers and demand for goods rises, a surge in labor and raw materials costs is squeezing retailers and manufacturers who have run out of ways to pare costs.

Cotton has more than doubled in price over the past year, hitting all-time highs. The price of other synthetic fabrics has jumped roughly 50 percent as demand for alternatives and blends has risen.

Clothing prices are expected to rise about 10 percent in coming months, with the biggest increases coming in the second half of the year, said Burt Flickinger III president of Strategic Resource Group.

Read moreAnd Now Clothing Inflation: Prices to Rise 10% Starting in Spring

Mexico’s Big Freeze: Produce Prices Skyrocket, Get Ready To Pay Double Or Even Triple The Price For Fresh Produce

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I’ve covered this before:

– Mexico’s Big Freeze Wipes Out 80-100 Percent of Crops

And there is a lot more like this coming. Prepare yourself.

“By failing to prepare, you are preparing to fail.”
– Benjamin Franklin



The problem started less than a week ago, when our nation was focusing on the Superbowl and sheets of ice falling from Texas Stadium.

Farmers throughout northern Mexico and the Southwest experienced unprecedented crop losses. Now devastation that seemed so far away, is hitting us in the pocketbooks.

“We’ve had to double and triple some prices and consumers come in and it’s quite a shock to them,” said Rusty Peake, GM of Food4Less in Southeast Portland.

“Increase, increase, increase,” said produce manager Troy Winterhalter as he watched urgent messages coming across his laptop computer. “Peppers, zucchini, cucumbers, asparagus, the entire asparagus crop was wiped out,” said Winterhalter.

Roma tomatoes have more than doubled in price since Thursday and very soon they may not be available at all.

Read moreMexico’s Big Freeze: Produce Prices Skyrocket, Get Ready To Pay Double Or Even Triple The Price For Fresh Produce

Brazilian Billionaire Eike Batista Reaffirms $1 Billion Bid for Ventana Gold

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Brazilian Billionaire Eike Batista is reaffirming his $1 billion bid for Ventana Gold. This values Ventana’s gold in the ground at a staggering $434 an ounce or 8.3 times Ventana’s assets. This makes Batista’s bid the most expensive all-cash bid in the past ten years.

Gold mining acquisitions are becoming more expensive as we move through this bull market. There were 91 deals last year, and average takeover premiums rose to 50%, the highest level in more than 13 years.

There is absolutely no question that senior and mid-cap producers are going to have to purchase junior explorers in order to replace depleting reserves. Although they will deny it, pressure is definitely mounting for majors to do something to replace reserves.

This is typical of secular bull markets to see this type of acquisition fever sweep a sector and generally this takeover phase lasts for many years. While some may look at Batista’s bid as expensive, he is incredibly shrewd and I am sure he is basing this acquisition on the fact that he knows gold will trade much higher in the long run.

Read moreBrazilian Billionaire Eike Batista Reaffirms $1 Billion Bid for Ventana Gold

World’s Biggest Farm Put Up For Sale

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The world’s biggest farm has put up the for-sale sign, after being hit by a collapse in grain prices during the world financial crisis, and then by the droughts and the fires that raged across its territories last summer.

Ivolga, a farming conglomerate which controls 1.5m hectares of land across Russia and Kazakhstan, is presently negotiating with Royal Bank of Scotland, which leads its creditors, to restructure a $300m loan it arranged in 2007.

The company’s immense holding, an area a third the size of Wales, easily outstrips that of El Tejar, the Argentine conglomerate which is the largest farm in the Western hemisphere, with 1.1m hectares under cultivation. Analysts estimate that a sale could value the farm at £500m-£1bn.

Ivolga last year asked a team of investment banks from Europe and Russia to try and find a buyer for a stake in the company, after deciding it needed a strategic partner to fund further development. Vasily Rozinov, the company’s owner, is thought to be keen not to lose ultimate control of the company.

Read moreWorld’s Biggest Farm Put Up For Sale

COMEX Silver Inventories Drop To 4 Year Low. COMEX Default Or Hunt Brothers Redux?

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Silver Bullion COMEX Stocks at 4-Year Low as Backwardation Deepens

Gold and silver are higher after last week’s 1% and 3.5% gains in dollars. Silver is particularly strong again this morning and the euro has come under pressure as bonds in Ireland, Spain, Portugal and Greece continue to rise. While Asian equity markets were higher, European indices have given up early gains.

Silver’s backwardation has deepened with spot silver at $30.16/oz, March 2011 contract at $30.13/oz and April’s at $30.00/oz. While spot silver has risen nearly 1% so far today, the July 2012 futures contract was down 0.187% to $29.81/oz.

The gradual drain of COMEX silver inventories seen in recent months continues and COMEX silver inventories are at 4 year lows. Total dealer inventory is now 42.16 million ounces and total customer inventory is now at 60.68 million ounces, giving a combined total of 102.847 million ounces.

The small size of the physical silver market is seen in the fact that at $30 per ounce, the COMEX silver inventories are only worth some $3 billion. The US government is now paying some $4 billion a day merely on the interest charges for the national debt. It is also the same value as Twitter’s new venture round of financing or Ford’s debt pay down in the first quarter.


Comex Silver Inventory Data

Talk of a default on the COMEX is premature but the scale of current investment demand and industrial demand, especially from China, is such that it is important to monitor COMEX warehouse stocks.

Read moreCOMEX Silver Inventories Drop To 4 Year Low. COMEX Default Or Hunt Brothers Redux?

Rice Speculators Expect 50 Percent Jump In Price

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Analyzing last week’s CFTC Commitment of Trader data continues to confirm our assumption that ever more speculators are honing in on rice as the fulcrum commodity. Jumping to a fresh year high of 6,652, non-commercial net spec contracts are the highest they have been since December 2009, when they hit 6,773, and approaching the record from early 2008.

Yet while the price of rough rice in late 2009 was comparable to recent price levels in the $16 region, the peak from early 2008 was 50% higher, approaching $25. Therefore it is safe to assume that should speculative interest continue surging at the current rate, and if it were to approach the spec exposure of ~8,000 last seen in early 2008, then the price of rice has a long way to go…

(Click on images to enlarge.)

And some other CFTC charts, confirming that spec exposure in grains and softs continues to be near recent all time highs:

Read moreRice Speculators Expect 50 Percent Jump In Price

President Obama Sends Congress $3.73 Trillion Budget

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Resulting in the THE BIGGEST BUDGET DEFICIT IN HISTORY!

– Government Economists: America Faces The Biggest Budget Deficit In History

Prepare for greatest financial collapse in history and hyperinflation.

– Rep. Ron Paul: Next US Crash Will Be Comparable To That Of Soviet Union, QE2 Is A ‘Total Failure’ And The Fed Is A ‘Central Planning Cartel’

–  Federal Reserve US Treasury Holdings Pass The $1 Trillion Mark

WASHINGTON (AP) — President Barack Obama sent Congress a $3.73 trillion budget Monday that holds out the prospect of eventually bringing deficits under control through spending cuts and tax increases. But the fiscal blueprint largely ignores his own deficit commission’s view that the nation is imperiled unless huge entitlement programs like Social Security and Medicare are slashed.

Obama called his new budget one of “tough choices and sacrifices,” but most of those cuts would be held off until after the end of his first term.

Overall, Obama proposed trimming the deficits by $1.1 trillion over a decade. The administration is projecting that the deficit will hit an all-time high of $1.65 trillion this year and then drop sharply to $1.1 trillion in 2012, with an expected improvement in the economy and as reductions in Social Security withholding and business taxes expire.

Read morePresident Obama Sends Congress $3.73 Trillion Budget

Carlyle Group Lost $105 Million On A Fictional Chinese Forestry Company (And It Will Make The Same Mistake Again)

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I have a friend with a fair career as an analyst in Asian private equity funds.  He describes the central debate as being between the “Guanxi guy” and the “Analyst guy” (in his world they are mostly guys) and he says the “Guanxi guy” has won almost all of the battles.

“Guanxi” is one of those words proponents claim defies easy translation: something between connections and relationship.  Wikipedia defines it as a personal relationship between people in which one is able to prevail on another to get things done.  Whatever: Guanxi is often sold as the key to doing business in China.

At Private Equity (PE) firms the debate as to which deals to do and what price to pay has been between the Analyst guys and the Guanxi guys – and with the Guanxi guys winning almost every time.  Analysts – when they have reservations about deals – are seldom heeded.

Some analysts – not wishing to besmirch their reputation with bad deals done for the wrong reasons struck out and started their own small private equity funds.  When they find the deals they try to fund them and discover that the banks (or their Guanxi connections) want to take a piece of the equity.  I guess that is the price of doing business.  But even after paying up they find the banks want to charge them over-the-odds for funding.

So the deal goes to some Guanxi guy – and the banks queue up to do the funding at low spreads.  (Whatever you say Sir says the banker…)

And so – in the great Guanxi vs Analyst debate Guanxi repeatedly wins.

Guanxi is less important in the West – but connections remain important.  The definitive Western Guanxi firm is Carlyle.  Carlyle is a private equity firm known for employing senior political figures and using those connections to win deals – but also for their knowledge of how government functions.  The list of famous employees is large and include:

George H W Bush
George W Bush
James Baker (former Bush Secretary of State)
Mack McLarty (former White House Chief of Staff under Clinton)
John Major (former British Prime Minister)
Anand Panyarachun (former Thailand Prime Minister)
Fidel Ramos (former Phillipine President)
Arthur Levitt (former SEC chair)

Slideshow: Carlyle Then And Now (Businessweek)

I could go on – the list is extensive.

Carlyle is conspiracy theorist’s dream because with all of those famous and well connected people the company understandably has important and profitable investments in the defence establishment.

Read moreCarlyle Group Lost $105 Million On A Fictional Chinese Forestry Company (And It Will Make The Same Mistake Again)

‘US Silver Term Structure Inverts As Supply Tightens’ – Reuters Article On Silver Backwardation

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Don’t miss:

– Silver Bullion Backwardation Suggests Supply Stress:

Backwardation rarely happens in the gold and silver bullion markets. Since gold futures first started to be traded in 1972 (on the Winnipeg Commodity Exchange), there have only been momentary backwardations of a few short hours.

– Silver Lease Rates Rise Sharply – Bond Yields in Portugal Rise to Record

– Silver Is Already In Extreme Backwardation! If The Same Happens With Gold, Then The End Game For The US Dollar With Hyperinflation Is Near

* COMEX silver stocks falls to four-year low

* First silver futures backwardation since ’97-98

* Strong industrial, coins demand, producer hedging cited


NEW YORK, Feb 11 (Reuters) – The tightest physical silver supplies in four years have tipped the U.S. silver futures market into backwardation this week, making near-term prices more expensive than more distant months.

Market watchers said that it has been more than 10 years since silver futures were last in backwardation, an unusual term structure, associated with shortage of physical supply. Warehouse stocks of the white metal have dropped to a four-year low on surging demand, while miners have hedged their future production.

Booming industrial demand for silver and record U.S. coin sales, combined with a surge in demand from mining companies to borrow the metal for their hedge programs have led to a squeeze in the physical silver market.

“The problem is that there is great industrial demand for a specific grade of silver, and there is not enough coming fresh from the mines,” said Miguel Perez-Santalla, vice president of Heraeus Precious Metals Management.

“The stocks are being pulled for all the high grade and better materials, and that essentially put a squeeze on the physical market,” he said.

Perez-Santalla said that silver futures have not been in backwardation since billionaire Warren Buffett bought 130 million ounces of silver between 1997 and 1998.

Backwardation is a condition where cash or nearby delivery prices are higher than the price for delivery dates further in the future. Usually, forward prices are higher than cash prices to reflect the costs of storage and insurance for stocks deliverable at a later date.

“The extent of the backwardation in silver is unprecedented. It suggests that retail investment and industrial demand internationally is very robust and the small silver bullion market cannot cater to the level of demand for refined coin and bar product,” bullion dealer GoldCore said in a note on Friday.

Read more‘US Silver Term Structure Inverts As Supply Tightens’ – Reuters Article On Silver Backwardation

The One Chart Bernanke Doesn’t Want You To See And Will Never Admit To Seeing

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See also:

– Rep. Ron Paul: Next US Crash Will Be Comparable To That Of Soviet Union, QE2 Is A ‘Total Failure’ And The Fed Is A ‘Central Planning Cartel’

– Silver Is Already In Extreme Backwardation! If The Same Happens With Gold, Then The End Game For The US Dollar With Hyperinflation Is Near

The One Chart Von Bernankestein Will Never Admit To Seeing


Charting Austrian Money Supply, the Fed’s outright security holdings, and commodity prices. Any questions?

(no snow was abused as a strawman excuse for the Fed’s mandate of “price stability” in the making of this chart)

(Click on image to enlarge.)

Submitted by Tyler Durden on 02/12/2011 19:27 -0500

Source: ZeroHedge


US-China Trade Deficit Grows to Record $270 Billion

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• Trade gap is largest that the US has had with any country
• 23% increase in imports from China exceed rise in exports


Chinese containers ready for shipping. China notched up another chunky trade surplus with the US. Photograph: Aly Song/REUTERS

The US trade deficit with China has hit a record high, fuelling tensions between the countries over currency imbalances.

The gap between US imports from China and what it sold to the country rose to $273.1bn (£170bn) last year, the largest trade imbalance the US has ever recorded with a single country. While US exports to China grew by a third last year to an all-time high of $91.9bn, imports worth $364.9bn travelled in the other direction, an increase of 23.1%.

Some US politicians blame Beijing for the size of the trade gap between the nations, claiming it is unfairly keeping the yuan’s value too low. On Thursday a bipartisan group in Congress proposed a bill that would allow the US to impose emergency tariffs against China if its currency was found to be undervalued.

China, though, has long denied that it is responsible for American exports lagging so far behind its imports.

Read moreUS-China Trade Deficit Grows to Record $270 Billion

US: Gas Pump Prices Highest Ever For This Time Of Year

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A gas station in Lincoln, Neb.

NEW YORK – U.S. gasoline prices have jumped to the highest levels ever for the middle of February. The national average hit $3.127 per gallon on Friday, about 50 cents above a year ago.

The price is about 6 percent higher than on this date in 2008. The next day, pump prices began a string of 32 gains over 34 days. They rose 39 percent over five months, eventually hitting an all-time high of $4.11 per gallon in July.

Although gas prices are expected to rise, most experts aren’t expecting a reprise of 2008, when the price spike forced many drivers to join car pools and trade in gas-guzzling SUVs for fuel-efficient cars.

Read moreUS: Gas Pump Prices Highest Ever For This Time Of Year

Buy Silver – Crash JP Morgan

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Some new readers may not know who Blythe Masters is (Flashback):

– JPMorgan Employee Who Invented Credit Default Swaps is One of the Key Architects of Carbon Derivatives, Which Would Be at the Very CENTER of Cap and Trade


Added: 4. February 2011

Ingrid and Juergen discuss what to do about the rising price of silver.

Conspiracy Theory with Jesse Ventura: EPISODE GUIDE (Full Length Videos)

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