Homeopathy: Overdosing on nothing
by ilene - January 30th, 2010 3:20 pm
Can this hurt the homeopathy industry? It seems the sceptics are more likely to demonstrate the safety of the remedies, and a double blind study would be more apt to show effectiveness/ineffectiveness? Now, if someone gets sick and dies, well, that’s going to be bad. – Ilene
Homeopathy: Overdosing on nothing
By Martin Robbins writing in The New Scientist
AT 10.23 am on 30 January, more than 300 activists in the UK, Canada, Australia and the US will take part in a mass homeopathic "overdose". Sceptics will publicly swallow an entire bottle of homeopathic pills to demonstrate to the public that homeopathic remedies, the product of a scientifically unfounded 18th-century ritual, are simply sugar pills…
The aim of the "10:23" campaign…is to raise public awareness of just exactly what homeopathy is, and to put pressure on the UK’s leading pharmacist, Boots, to remove the remedies from sale.
The campaign is called 10:23 in honour of the Avogadro constant (approximately 6 × 1023, the number of atoms or molecules in one mole of a substance),…
That such a protest is even necessary in 2010 is remarkable, but somehow the homeopathic industry has not only survived into the 21st century, but prospered. In the UK alone more than £40 million is spent annually on homeopathic treatments, with £4 million of this being sucked from the National Health Service budget. Yet the basis for homeopathy defies the laws of physics, and high-quality clinical trials have never been able to demonstrate that it works beyond the placebo effect.
The discipline is based on three "laws"; the law of similars, the law of infinitesimals and the law of succussion.
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DiggEric Sprott On Why Central Banks Are Setting The Stage For The Next Big Move In Gold
by Zero Hedge - January 30th, 2010 2:37 pm
Courtesy of Tyler Durden
A brief look at the contentious gold/central bank history as it is about to rhyme all over again:
The Federal Reserve System was created in 1913 on a promise of stabilizing the banking system. What followed instead was an unprecedented growth in fractional reserve banking, as well as the money supply, which helped fuel the roaring 20’s. The aggressive money printing created inflated values in bonds and stocks, which peaked in 1929. When the market began its precipitous slide, and the public began to realize that stock and bond values were artificially high, the populace began to convert its cash holdings into gold. The government lacked the ability to satisfy that demand and was thus forced to renege on the currency’s founding promise of gold convertibility. It’s important to point out that without this original promise of convertibility for citizens, the currency may never have been adopted.
In 1933, The Gold Reserve Act was passed by Congress and formalized into law the breaking of the gold standard. This law provided for a controlled-currency issue through the Federal Reserve System which was non-redeemable in gold. Although the link to anything tangible had been broken, the citizens had little choice but to continue using these non-redeemable dollars as a medium of exchange. The currency had already been broadly accepted, proven convenient and a perception of safety had already become entrenched.
After forty years of continued dollar printing, in August, 1971, President Nixon effectively declared the US dollar to be a completely “fiat” currency by refusing to allow foreign governments to convert their US dollar holdings into gold. The right of conversion which had been granted under the post World War II, Bretton Woods agreement could not be honoured because of decades of money supply expansion. The original ‘promise’, which had vaulted US dollar to its status as a global reserve currency and a stable store of value, was now completely broken.
These historical events resulted in a world in which all currencies are fiat; they are not backed by gold or any other tangible asset. The supply is infinite. In fact, the production of today’s newly created paper money in relation to historical commodity-based money is akin to counterfeiting. A US dollar printed today has no ties to anything tangible and as a result carries only
…
NY Fed Conspired to Hide Details of AIG Bailouts from Public and Congress
by ilene - January 30th, 2010 1:39 pm
NY Fed Conspired to Hide Details of AIG Bailouts from Public and Congress
Courtesy of Jesse’s Café Américain
“I have to think this train is probably going to leave the station soon and we need to focus our efforts on explaining the story as best we can. There were too many people involved in the deals — too many counterparties, too many lawyers and advisors, too many people from AIG — to keep a determined Congress from the information.” James P. Bergin, NY Fed, in an email to his Fed colleagues.
‘Though it is hard to divine much understanding from the unredacted filing, it has become clear that Goldman had more involvement than previously believed: In addition to the credit default swaps it bought from AIG, the filing shows that Goldman Sachs also originated many of the underlying assets that AIG and the New York Fed bought back from Société Générale.
The American people have the right to know how their tax dollars were spent and who benefited most from this back-door bailout," said Kurt Bardella, spokesman for Issa. "Now that it’s public, let’s see if the sky really does fall as the New York Fed said it would to justify its coverup."
Other lawmakers believed that the New York Fed was trying to hide its ties to Goldman Sachs.’ AIG Reveals the Story – CNN
"Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.
We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system — apart from the matter of AIG’s bailout — deserves further congressional scrutiny…
By pursuing this line of inquiry, the hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve.
This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank…
New York Fed staff and outside lawyers from Davis Polk & Wardell edited
…
Complete January Bond Performance Heatmap
by Zero Hedge - January 30th, 2010 1:38 pm
Courtesy of Tyler Durden
January is over, and while the stock market closed at its YTD lows, some corporate bond segments are still on fire. Below we present a complete heatmap for January bond price performance by subsector. Each issue is presented on a size relative basis, with the grayed text giving detailed information about any one specific issue, including corporate ticker, one month change, ISIN, Name, Rating, Outstanding, and last price (compared to Dec 31, 2009, red is lower, blue is higher).
Consolidated
And by sector:
Manufacturing
Manufacturing – Aerospace
Manufacturing – Auto Manufacturers
Manufacturing – Building Products
Manufacturing – Chemicals
Manufacturing – Conglomerates Diversified
Manufacturing – Containers
Manufacturing – Electronics
Manufacturing – Home Builders
Manufacturing – Information/Data Technology
Manufacturing – Machinery
Manufacturing – Metals & Mining
Manufacturing – Paper/Forest Products
Manufacturing – Textiles/Apparel/Shoes
Manufacturing – Vehicle Parts
Services
Services – Broadcast
Services – Cable
Services – Food/Drugs
Services – Gaming
Services – Health Care Facilities
Services – Health Care Supply
Services – Leisure
Services – Lodging
Services – Other
Services – Pharma
Services – Publishing
Services – Retail Stores
Services – Satellite
Services – Tower
Telecom
Telecom – Broadband
Telecom – CLEC
Telecom – Diversified
Telecom – Wireless
Transportation
Transportation – Airlines
Transportation – Railroads
Transportation – Other
Consumer
Consumer – Beverage/ Bottling
Consumer – Consumer Products
Consumer – Food Processors
Consumer – Tobacco
Energy
Energy – Gas Pipelines
Energy – Integrated Oil
Energy – Oil Equipment
Energy – Oil Refining & Marketing
Energy – Oil Service
Energy – Retail Propane Distributors
Energy – Secondary Oil & Gas Producers
Insurance
Insurance – Life Insurance
Insurance – Property & Casualty Insurance
Banking
Electric
Industrials/Other
Independent
Finance/Other
Mortgage Banking
REIT
Securities
Utilities
Source: Citigroup
Eric Sprott On How Central Banks Are Setting The Stage For The Next Big Move In Gold
by ilene - January 30th, 2010 1:37 pm
Eric Sprott On How Central Banks Are Setting The Stage For The Next Big Move In Gold
Courtesy of Tyler Durden at Zero Hedge
A brief look at the contentious gold/central bank history as it is about to rhyme all over again:
The Federal Reserve System was created in 1913 on a promise of stabilizing the banking system. What followed instead was an unprecedented growth in fractional reserve banking, as well as the money supply, which helped fuel the roaring 20’s. The aggressive money printing created inflated values in bonds and stocks, which peaked in 1929. When the market began its precipitous slide, and the public began to realize that stock and bond values were artificially high, the populace began to convert its cash holdings into gold. The government lacked the ability to satisfy that demand and was thus forced to renege on the currency’s founding promise of gold convertibility. It’s important to point out that without this original promise of convertibility for citizens, the currency may never have been adopted.In 1933, The Gold Reserve Act was passed by Congress and formalized into law the breaking of the gold standard. This law provided for a controlled-currency issue through the Federal Reserve System which was non-redeemable in gold. Although the link to anything tangible had been broken, the citizens had little choice but to continue using these non-redeemable dollars as a medium of exchange. The currency had already been broadly accepted, proven convenient and a perception of safety had already become entrenched.
After forty years of continued dollar printing, in August, 1971, President Nixon effectively declared the US dollar to be a completely “fiat” currency by refusing to allow foreign governments to convert their US dollar holdings into gold. The right of conversion which had been granted under the post World War II, Bretton Woods agreement could not be honoured because of decades of money supply expansion. The original ‘promise’, which had vaulted US dollar to its status as a global reserve currency and a stable store of value, was now completely broken.
These historical events resulted in a world in which all currencies are fiat; they are not backed by gold or any other tangible asset. The supply is infinite. In fact, the production of today’s newly created paper money in relation to historical commodity-based money is akin to counterfeiting. A US dollar printed
…
Sham Transactions That Led To AIG’s Downfall: The Ugly Truth Was Hiding In Plain Sight
by ilene - January 30th, 2010 12:58 pm
Guest Post: Sham Transactions That Led To AIG’s Downfall: The Ugly Truth Was Hiding In Plain Sight
Courtesy of Tyler Durden
Submitted by David Fiderer, posted originally at Huffington Post
Sham Transactions That Led To AIG’s Downfall: The Ugly Truth Was Hiding In Plain Sight
If you want to understand the deals that wiped out AIG, the best place to start is the website of the New York Fed. In the financial statement of Maiden Lane III, published last April, we see the gory details of the three largest CDO investments – Max 2008-1, Max 2007-1, and TRIAXX 2006-2A – acquired from AIG’s banks at par. Those deals, which totaled $10.7 billion, offer a template for evaluating the other sham transactions in the portfolio.
Initially, the business deal between AIG and the banks was that AIG sold credit default swap protection. Banks buy credit default swaps for two reasons: They want to slice and their dice credit risk, and/or they want to hide something. Here’s a simple, fairly innocuous, illustration: Suppose you’re a banker who tells his client, Procter & Gamble, "We want to expand the relationship and do more business with you." P&G then says, "Fine, lend us $100 million." Back at the office, your senior credit management says, "The maximum risk exposure we approve for P&G is $80 million." How do you keep in P&G’s good graces? You lend the company $100 million, and simultaneously offload $20 million in risk exposure by purchasing a credit default swap from another bank. P&G’s understanding is that you’ve lent them $100 million.
When Deutsche Bank bought a credit default swap from AIG in 2008, its primary motivation was not to slice up the credit risk, but to hide virtually all of it. Max 2008-1, a CDO that Deutsche arranged and closed on June 25, 2008, was huge. The total debt issue was $5.8 billion, of which 94%, or the entire $5.4 billion Class A-1 tranche, was covered by one credit default swap issued by AIG Financial Products. The Class A-1 tranche was considered "supersenior" because it was ahead of two other tranches, both originally rated Aaa, which totaled $200 million. (The remaining debt $200 million worth of debt was rated Aa, a and Baa at closing.)
Put another way, Deutsche Bank did not bring Max 2008-1 to "the marketplace," where investors might consider…
Crisis in Spain and Greece: Plan A and Plan B
by ilene - January 30th, 2010 12:41 pm
Crisis in Spain and Greece: Plan A and Plan B
Courtesy of Mish
Credit default swaps and rising interest rates suggest Greece is in serious trouble in spite of the ECB’s futile attempts to downplay the situation. Please consider Greek Bonds Show Waning Faith It Can Avoid Bailout.
Greece is losing the confidence of bondholders that it will reduce the largest budget deficit in the European Union amid increased speculation that the country won’t be able to meet its debt obligations.
The nation’s government bonds are the world’s worst performers in January, losing 6 percent in local currency terms and extending their decline over the past three months to more than 11 percent, Bloomberg/EFFAS indexes show. Credit-default swaps tied to Greece trade at about the same levels as Dubai when it got a $10 billion bailout from Abu Dhabi in December. Greek 10-year bonds rebounded today after EU Monetary Affairs Commissioner Joaquin Almunia said the country won’t default.
Investor concern that Greece can’t tackle its budget deficit is hurting the debt of national utility companies and banks, said Philip Gisdakis, head of credit strategy at UniCredit SpA in Munich.
“If you fear a Greek crisis then you should not only avoid government bonds but corporates as well,” Gisdakis said. “And if you fear Greece, you should also fear Portugal and Spain.”
EU policy makers have no “plan B” to help Greece, Almunia said today.“There is no bailout problem,” the bloc’s top economic official said in an interview with Bloomberg Television at the World Economic Forum’s annual meeting in Davos, Switzerland. “Greece will not default. In the euro area, default does not exist.”
What’s Plan A?
Pardon me for asking but precisely what is "Plan A" if interest rates in Greece soar out of control?
Can there be a "Plan C" even if there is no "Plan B"? Are there any plans at all?
While pondering those questions, please consider Deteriorating Greece Situation Could Force EU’s Hand.
European Union officials insist there won’t be a bailout for Greece, but if the country’s borrowing costs continue to climb, the bloc will have to do something to stave off default.
Such a bailout would be unprecedented for a euro-zone country, but would nonetheless be feasible. When Greece’s borrowing costs soared last spring, the German finance minister
…
Next Currency … A Real One?
by Zero Hedge - January 30th, 2010 11:57 am
Courtesy of mikla
Pretend for a moment that the US $dollar is no longer useful. With what could we settle transactions?
Obvious answers are a new fiat currency from a new Central Bank; currency issued directly by the government, such as US Treasury-issued Greenbacks; precious metals in raw, coin, or certificate form; various forms of local or private coupons or currencies; novel concepts, like various forms of digital currency; and certificates of claims on present or future assets, baskets of goods, commodities, energy, or even other currencies.
Currency is managed scarcity. The complaint against fiat currencies is that it is managed poorly. Precious metals are by their nature scarce, but have practical issues associated with mass, competition with industrial consumption, speculation, coin clipping, and assorted predatory market manipulation.
Clearly a society can have some level of success trading in feathers, seashells, salt, precious metals, government coupons, and even fiat currencies. Of course, systems tend to fail with surplus or scarcity shocks, either through natural disruptions, or more commonly through management-induced changes in currency supply when the Wizards of Smart are found to be lacking. However, most would probably agree that historically the most successful currencies have been through precious metals and fiat currencies (depending on a definition of “success”, and to some extent, the motives for maintaining a currency).
For fun, let’s assume for a moment that we want to try something different.
In our pretend example, we would like to have our currency “backed” by something, thus fulfilling the fundamental requirement of scarcity: Since nothing is infinite, a currency backed by something cannot itself be infinite (short of accounting fraud). It would be nice if the market determined the value of that backing, and (of course) that backing will change over time relative to other things society values, but we generally want that something to have a somewhat “stable” value.
What about a basket of stocks and bonds?
Remember that a “stock share” is a share of all future profits. While some pretend it is represents a percentage of ownership of a company (which is sort- of true), and it may represent a claim on the company in liquidation, remember that the company’s bondholders and creditors fill their claims from a company’s assets first. While most shares today are purchased for speculation (e.g., the share is desired because the…
Weekly Chartology And Prophetology
by Zero Hedge - January 30th, 2010 11:32 am
Courtesy of Tyler Durden
This week’s most relevant estimates and charts from Goldman Sachs:
On Earnings:
Our top-down EPS forecast of $76 and $90 for 2010 and 2011 reflect +33% and +20% growth, respectively. Our pre-provision and write-down EPS forecasts are $81 for 2010 and $91 for 2011. Bottom-up consensus forecasts a 38% increase in 2010 to $79, and a 21% increase in 2011 to $95.
On Valuation:
Top-down, the S&P 500 trades at an NTM P/E of 14.3X (13.4X on pre-provision EPS). Bottom-up, it trades at NTM P/E of 14.1X and LTM P/B of 2.3X
This Time Is Different
by ilene - January 30th, 2010 11:16 am
This Time Is Different
Courtesy of John Mauldin at Thoughts from the Frontline
The Statistical Recovery has Arrived
This Time Is Different
A Crisis of Confidence
Greeks Bearing Gifts
Biotech, Conversations and Babies
“Our immersion in the details of crises that have arisen over the past eight centuries and in data on them has led us to conclude that the most commonly repeated and most expensive investment advice ever given in the boom just before a financial crisis stems from the perception that ‘this time is different.’ That advice, that the old rules of valuation no longer apply, is usually followed up with vigor. Financial professionals and, all too often, government leaders explain that we are doing things better than before, we are smarter, and we have learned from past mistakes. Each time, society convinces itself that the current boom, unlike the many booms that preceded catastrophic collapses in the past, is built on sound fundamentals, structural reforms, technological innovation, and good policy.”
- This Time is Different (Carmen M. Reinhart and Kenneth Rogoff)
When does a potential crisis become an actual crisis, and how and why does it happen? Why did most everyone believe there were no problems in the US (or Japanese or European or British) economies in 2006? Yet now we are mired in a very difficult situation. “The subprime problem will be contained,” said now controversially confirmed Fed Chairman Bernanke, just months before the implosion and significant Fed intervention. I have just returned from Europe, and the discussion often turned to the potential of a crisis in the Eurozone if Greece defaults. Plus, we take a look at the very positive US GDP numbers released this morning. Are we finally back to the Old Normal? There’s just so much to talk about.
But first, I want to give you a chance to register for my 6th (where do the years go?!) annual Strategic Investment Conference, cosponsored with my friends at Altegris Investments. The conference will be held April 22-24 and, as always, in La Jolla, California. The speaker lineup is powerful. Already committed are Dr. Gary Shilling, David Rosenberg, Dr. Lacy Hunt, Dr. Niall Ferguson, and George Friedman, as well as your humble analyst. We are talking with several other equally exciting speakers and expect those to firm up shortly.
Comments from those who attend often…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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