Why Gold?

Gold is rising because the world’s monetary system is being debased – and there is no sign of this stopping.

Gold is not a commodity it is a currency – and the devaluation of paper money by money printing is making it more and more attractive.

The metal was desirable long before the concept of money was ever invented - and it has been used as a medium of exchange for thousands of years. (The first gold coins were minted in Lydia, in modern-day Turkey, in 610 BC).

The money in your pocket is effectively worthless. The government declares it as legal tender and will accept taxation payments with this bill of exchange but the £5 note is no longer backed by anything. When push comes to shove, a £5 note is just a piece of paper and ink with no intrinsic value at all. It certainly isn't worth £5.

Fiat currencies are not backed by gold. When most currencies were on the gold standard, a unit of currency could be exchanged by central banks for a fixed weight of gold. That way, paper money could be used instead of using gold or silver coins.

The world’s monetary system used to be backed by gold – until Richard Nixon scrapped the dollar’s convertibility into gold 40 years ago. This made the dollar the defacto reserve currency, but successive administrations have mismanaged government policy and the US economy is now drowning in a sea of debt.

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STOCKS PLUNGE ON WAVES OF SELLING: DOW -635 S&P -6.5% NASDAQ -7% OIL -$6.50 GOLD SURGES 4%

Gold soars; trades over $1700 oz

NEW YORK (AP) -- The price of gold streaked past $1,700 an ounce for the first time Monday. Investors, beset by worries about the U.S. debt downgrade, Europe's financial crisis and slowing global growth, sought safety in the metal as stocks tumbled around the world.

Gold's allure stems in part from fears that the world's major economies are dangerously indebted. Its value, unlike that of a currency, doesn't hinge on whether countries can make their bond payments.

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Wall Street Sell Off Continues As Markets Open Sharply Lower

NEW YORK — Wall Street tumbled again Monday amid a rout in global stocks after rating agency Standard & Poor’s downgraded the U.S. credit rating for the first time.

S&P cut the long-term debt rating for the U.S. by one notch to AA+ from AAA late Friday. The move wasn't unexpected, but it comes when investors are already feeling nervous about a weak U.S. economy, European debt problems and Japan's recovery from its March earthquake.

The agency’s move came after a wild week for U.S. stocks — the worst in more than two years — as lingering concerns about sluggish economic growth and heavy public debt loads in developed economies dented investor sentiment.

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S&P strips US of AAA credit rating

WASHINGTON — The United States lost its top-notch AAA credit rating from Standard & Poor's Friday in a dramatic reversal of fortune for the world's largest economy.

S&P cut the long-term U.S. credit rating by one notch to AA-plus. The credit agency said it was making the move because the deficit reduction plan passed by Congress Tuesday did not go far enough to stabilize the country's debt situation.

U.S. Treasury securities, once undisputedly the safest investment in the world, are now rated lower than bonds issued by countries such as the United Kingdom, Germany, France or Canada.

The move is likely to raise borrowing costs eventually for the American government, companies and consumers.

"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," S&P said in a statement issued late Friday, after financial markets were closed for the week.

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Long overdue.

Coptic Orthodox threaten to withdraw children from Catholic schools if they abandon church teachings

TORONTO, Ontario, July 29, 2011 (LifeSiteNews.com) – The Coptic Orthodox Churches in Toronto are threatening to withdraw 4,000 families from the Toronto Catholic District School Board if it does not amend its controversial equity policy to protect Catholic teaching in the schools. According to one expert in Ontario education, if the threat were carried out, the board could lose upwards of $40,000,000 in annual public funding, and over 150 teachers.

If the board implements its policy, wrote Fr. Jeremiah Attaalla on June 22nd, “we will not hesitate to withdraw our children at once from attending any Catholic school within Toronto or [the Greater Toronto Area].”

The equity policy, passed earlier this year as part of the Ontario government’s sweeping equity and inclusive education strategy, has sparked an unprecedented mobilization of parents who fear that it will give homosexual activists a foothold in order to further subvert already weak Catholic sexual teaching in the schools.

In August the board will be considering a set of amendments to the policy promoted by trustee John Del Grande and Angela Kennedy to ensure that equity and inclusion are interpreted consistently with Catholic teaching.

Fr. Attaalla wrote in his letter, which was addressed to Director of Education Ann Perron, that they will withdraw their children “if the requested amendments are not implemented.” He said the amendments are “faithful to the teachings of the Catechism of the Catholic Church.”

The priest explained that he was writing on behalf of the parishes of St. Mark (Scarborough), St. George and St. Ruiess (North York), St. Mourice and St. Verena (North York), and Ti Agia Maria and St. Demiana (Etobicoke).

He said these parishes have a population of at least 5,000 families, not one of which support the public schools because of their implementation of the government’s controversial equity agenda. He said at least 80% of those families attend the Catholic schools and the rest attend private schools.

The school board reportedly receives about $10,000 in public funding for every child and it requires approximately 19 children to support one teacher.

See a copy of the official Coptic statement here.

Read the Source
HT: An anonymous blog reader

Wall Street Plunges on Economic Fears; Dow Sinks More Than 500 Points; S&P, Nasdaq Down 4%; VIX Soars 30%

Fears of worsening economic turmoil in the United States and Europe triggered a broad-based retreat on global markets Thursday, with stock market indexes plunging more than 4 percent in New York.

The Dow Jones industrial average closed down for its ninth session out of 10, finishing the day down more than 500 points or 4.3 percent in the red; the Standard &Poor’s 500 fell 4.8 percent; and the Nasdaq tumbled 5.1 percent. All three indices experienced their biggest weekly drops since May 2010.

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Economic worries spark steep sell off on Wall Street

NEW YORK — Worries about the state of the economy in the U.S. and around the world slammed stocks on Thursday, driving the Dow briefly down more than 400 points and sending the S&P 500 into correction territory.

Bonds soared as investors sought a safe place to park their money.

The Dow Jones industrials average was down about 3 percent. The broader S&P 500 index was down around 10 percent from its May high. The market's so-called "fear index," the CBOE Volatility Index (VIX), jumped to its highest since March.

"People are throwing in the towel because they can't find relief on any front. There are a lot of worries about the economy," said Milton Ezrati, market strategist at Lord Abbett Co. in Jersey City, New Jersey, which manages $110 billion in assets.

Analysts predicted further losses ahead, given the strong degree of pessimism in the market.

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A Career Sustained by Unwavering Faith

Jack McKeon’s baseball days begin in a pew. At 8 on Tuesday morning, the Florida Marlins’ manager attended Mass at St. Patrick’s Cathedral, less than 12 hours after his team beat the Mets on a 10th-inning grand slam. Such games are testament to his faith in the saint he prays to every game during the national anthem.

“A good night for St. Thérèse,” he said, sitting in the lounge of a Midtown Manhattan hotel.

In each major league city, McKeon has a favorite, or at least a convenient, Roman Catholic church. If he does not know their names, he can describe them or tell you how to get there. In Cincinnati, it’s SS. Peter and Paul. In Chicago, Mass is at Holy Name Cathedral. In Philadelphia, he goes to what he calls “the oldest church in the U.S.” When the Marlins stayed at a hotel on the East Side of Manhattan, he followed these directions: “Walk out the door, take a left, walk 30 yards, and take a right, where the homeless hang out.”

For each of the regular churches in his personal directory, he learns the Mass schedule.

“At St. Patrick’s it’s 7, 7:30, 8, noon and 12:30,” he said. “They’re very flexible.”

Mornings at church “give me energy,” he said. “You’re free. You feel good.” His daily ritual is part of a baseball routine that is now in its 62nd year, stretching back to D League ball in Greenville, Ala.

“When I go to the ballpark, I have no worries,” he said. “God’s looking after me.”

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A Liberal Catholic's View of the Orthodox Liturgy

I’m drawn to the beauty and sacredness of the Orthodox liturgy, the sense of an inherited tradition not invented by us, the absence of commentators and announcers and songleaders waving arms at us, the absence of ad-libbing celebrants, the purity of vocal music without accompaniment. But the people do not seem to form a community celebrating the liturgy together. Each individual makes the Sign of the Cross repeatedly, seemingly whenever moved to do so; only when a certain word or phrase is picked up by the worshipers did they (or many or most of them) make the Sign of the Cross at the same time. The iconostasis, as artistically beautiful as it is, distorts the liturgy and divides the assembly too much into privileged clergy and excluded people, even though the entire church space is clearly sacral, and the people are clearly connected to what is going on behind screen, even when the doors are closed and they can only hear but not see the liturgy.

From here.
HT: A blog reader.

Bill Gross on the debt deal (we are still broke)

“Over the years we’ve had some fun together – killin some ‘bars,’ drinkin moonshine – some even in these chambers. (Whiskey that is – the ‘bars’ I’ve seen once or twice, but only when I was plum drunk). But the time for funnin is over. They’ll be no jokes from David Crockett today.”
Davy Crockett Speech to Congress, 1830

Figurative coonskin cap on head, I echo the sentiments of Davy Crockett – Indian fighter, Alamo defender and Tennessee Congressman – not necessarily in that chronological order. The debt ceiling may have been raised and the palpable sighs of relief heard across global financial markets, but the fun times are over. They’ll be no jokes from Bill Gross today, nor across this land for years to come I suspect. Even though the U.S. has managed to avert a debt crisis and perhaps a ratings downgrade, there remains a stain on our reputation, a scarlet “A” for budgetary “Abuse,” that will not disappear. The whole world was watching, and what they saw was a dysfunctional government taking its country to the financial precipice and backing off at the very last moment. “Shades of a Banana Republic,” as former Reagan budget director David Stockman opined somewhat harshly last week. We may not be Greece just yet, but Mr. Stockman is looking in the right direction.

Nothing in the Congressional compromise reached over the weekend makes a significant dent in our $1.5 trillion deficit. “Out year” fantasies, as opposed to “current year” realities, is an apt description of the spending cuts that characterize this compromise. The Office of Management and Budget (OMB) estimates that future deficits will be reduced at most by .5%, and if so, it would be welcomed, but that .5% comes with no new taxes and a continuation of the belief that we don’t have to pay for our trespasses. Like many a Banana Republic, we may one day be invoking the Lord’s Prayer, pleading – “Forgive us our debts, as we forgive our debtors,” yet at the same time looking towards the heavens á la Saint Augustine with a fervent “let me be chaste, but let it be tomorrow.”

Treasury Secretary Tim Geithner noted last week that it would be unthinkable that the U.S. would not meet its obligations on time. Now that the timeliness has temporarily been put aside, an investor must logically ask how we will meet our obligations, and how much they really are. In addition to an existing nearly $10 trillion of outstanding Treasury debt, the U.S. has a near-unfathomable $66 trillion of future liabilities at “net present cost.” As shown in the following table from a Mary Meeker “USA Inc.” study, and validated by the Department of Treasury and Congressional Budget Office (CBO) calculations, the combined present cost “payment due” from Medicaid, Medicare and Social Security is over six times our current obligations of Treasury debt. The press and most professional investors are accustomed to measuring “paper” debt as opposed to walking/living liabilities in the form of people. I call these liabilities “debt men walking” because as long as 330 million living Americans require promised entitlements – the $66 trillion that wear shoes are as much of a liability as the $10 trillion on paper.

Read the rest here.

HT: T-19

Gold sets new records as financial markets tank

NEW YORK (Dow Jones)--Gold futures pushed to record highs Tuesday as concerns about a slowdown in global growth and Europe's debt crisis spurred investor demand for the metal as a refuge.

U.S. leaders Tuesday gave final approval to legislation raising the country's debt limit, averting a default. But the deal wasn't enough to stem the tide of investment in perceived safe-haven assets, as investors remain cautious on the chance that U.S. could see its credit rating downgraded and as growth stumbles across much of the developed world.

The most actively traded gold contract, for December delivery, climbed $22.80, or 1.4%, to settle at a record $1,644.50 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract climbed as high as $1,646.80 an ounce, a record intraday high.

"There's still concern about the weak economy, growth generally, weak [purchasing managers' indexes] in a range of countries," said David Jollie, strategic analyst at Mitsui Global Precious Metals. U.S. debt was only part of the story behind gold's recent rise, he added.

Weaker-than-expected U.S. and European manufacturing data Monday dampened investors' appetite for risky assets. And currency markets Tuesday were rattled as worries about Europe's debt crisis sent Italian and Spanish bond yields to their widest levels since the adoption of the euro.

Some investors turn to gold as a refuge from turmoil in other markets, and the metal has reached all-time highs for four consecutive weeks. The Swiss franc hit record highs against the U.S. dollar and euro Tuesday and Treasury prices rose, highlighting the demand for a safe place to park cash.

"People are concerned about what currencies they hold," said Sterling Smith, a market analyst with Country Hedging. "Risk aversion is growing stronger."

Sentiment in the gold market also received a boost from the news that South Korea's central bank made its first gold purchases in 13 years. The bank acquired 25 tons of gold during June and July, bringing its total reserves to 39.4 tons at the end of last month. Central banks have been moving to reduce their dependence on the U.S. dollar, the world's chief reserve currency.

The central banks of Russia, Mexico and Thailand have also announced substantial gold purchases this year.

Read the rest here.

Moody’s Affirms U.S. AAA Rating, Assigns Negative Outlook After Debt Deal’s ‘First Step’

The compromise package to raise the U.S. debt ceiling signed by President Barack Obama Tuesday was enough to avert a default and, for now, get the ratings agencies off Uncle Sam’s back.

Moody’s affirmed its AAA rating of U.S. government debt Tuesday morning, hours after Fitch Ratings signaled it is likely to do the same when it completes a review at the end of August. While Moody’s acknowledged the debt ceiling hike eliminated the risk of default it also, unsurprisingly, assigned a negative outlook and said a downgrade could be in the offing if:

(1) there is a weakening in fiscal discipline in the coming year;

(2) further fiscal consolidation measures are not adopted in 2013;

(3) the economic outlook deteriorates significantly; or

(4) there is an appreciable rise in the US government’s funding costs over and above what is currently expected.

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Stocks' free-fall leaves S&P negative for the year

NEW YORK — The S&P 500 turned negative for the year Tuesday as the wrangling over the U.S. debt ceiling faded and investors turned their attention to the stalling economy.

The broad-based index fell for a seventh day and crashed through the key 200-day moving average in an ominous sign for markets. The seven days of losses mark the longest losing streak since October 2008.

"It is going to be a long week," said Jim Maguire Jr., a NYSE floor trader at E.H. Smith Jacobs. "The bid is not here in the market."

The selloff accelerated into the close as volume jumped well above average. The fall was broad-based, with four stocks falling for every one rising on the New York Stock Exchange.

The index also broke through its 2-1/2 year uptrend line from its bear market low in March 2009. Thursday was the index's worst day in a year.

Investors seemed to find little to cheer after the U.S. Senate agreed to a deal to raise the debt ceiling because of the possibility it will not stave off a downgrade of the U.S. government's triple-A rating.

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Moderate Senate Dems prepare a balanced budget amendment

One of the big victories by tea-party Republicans in the debt-ceiling measure signed into law Tuesday was securing a requirement that Congress vote later this year on a balanced budget amendment to the Constitution.

The measure would need a two-thirds vote in each chamber, and then ratification by 38 states, to succeed. And most observers believe passage in the Democratic-controlled Senate is all but impossible.

Enter Sen. Mark Udall, the centrist Democrat from Colorado, who has introduced an amendment proposal and said Tuesday that Democratic leaders have chosen his legislation to be considered in the fall.

President Obama and other senior Democrats have opposed any balanced-budget amendment, but the idea is popular with many voters – particularly independents, who are growing more fiscally conservative.

Udall is up for reelection in 2014. Many of his Democratic co-sponsors – including Sens. Claire McCaskill (Mo.), Joe Manchin (W. Va.), Bill Nelson (Fla.) and Ben Nelson (Neb.) – are running this year and need support from centrists.

Republicans in the Senate will likely rally around their own proposal, sponsored by Utah Sens. Orrin Hatch and Mike Lee, which would limit spending to 18 percent of GDP and require congressional supermajorities to raise taxes.

Both measures would require that the president submit and Congress pass balanced budgets. And both provide for exemptions in wartime.

But Udall’s amendment has a couple of provisions that might win over some Democrats. It creates a “Social Security lockbox” (with apologies to Al Gore and his Saturday Night Live impersonator) that his office says would “protect the revenue and outlays of Social Security from any balanced budget requirement.” And it prohibits Congress from providing income tax breaks for people earning over $1 million a year unless the country is enjoying budget surpluses.

“What I’m proposing is the most responsible, thoughtful, and workable balanced budget amendment,” Udall said.

The senator said his proposal marks the first time since 1997 that the Senate will consider a Democratic-sponsored balanced budget amendment. That year, the measure failed by one vote.

 Source.

Will the defense cuts stick?

“The deal puts us on track to cut $350 billion from the defense budget over 10 years,” says the White House. That’s been one of the catchy headlines from the debt-ceiling deal: Expect sweeping cuts to the Pentagon’s budget. But defense observers are discovering all sorts of caveats embedded in the fine print. So is there any way to figure out how much the Pentagon’s budget will actually shrink in the coming decade? And how likely is it that those cuts will stick?

The way the bill treats defense is fairly confusing. The White House told Foreign Policy’s Josh Rogin that in the first round, there are roughly $420 billion in cuts over 10 years to “security” spending (which includes the Pentagon, Homeland Security, State Department, Veterans Affairs and USAID), compared with the baseline. Of that, $350 billion is supposed to come out of the Pentagon’s pockets. But as Rogin points out, the White House was reticent on the fact that that $350 billion number wasn’t a sure thing. It’s up to Congress, not written into the bill.

Take the near term. In fiscal 2011, the total security budget was $689 billion, of which $529 billion went to the Pentagon. Next year, under the debt deal, security spending gets capped at $684 billion. But there’s no guarantee that the Pentagon will absorb that $5 billion cut. In fact, if — as many hawks in Congress would prefer — the Pentagon’s budget grows next year, then agencies such as the State Department and Homeland Security will have to absorb even more in cuts.

“We just don’t know how that will play out yet,” says Gordon Adams, a senior White House budget official for national security in the Clinton administration.

Read the rest here.

What more can the Fed do now?

With the U.S. economy flatlining and at risk of falling into a new recession, the Federal Reserve lacks good tools to do much of anything about it — though that won’t necessarily stop the central bank from trying.

The Fed has a policy of ultra-low interest rates and other unconventional steps to pump up the economy already in place. But the central bank has declined to take any new actions to try to further loosen monetary policy this year, amid projections that economic growth will rebound in the second half of the year. But the most recent data has made those predictions look more doubtful.

Read the rest here.

Obama signs debt-limit bill into law

The Senate passed a landmark plan to raise the federal debt limit and reduce government spending Tuesday, ending a partisan stalemate that threatened to plunge the nation into default and destabilize the world economy.

The measure was approved by a vote of 74 to 26. It promptly went to President Obama, who signed it into law, giving the government the money to pay its bills ahead of a midnight deadline.

Speaking in the White House Rose Garden after the Senate vote, Obama called the legislation “an important first step” in ensuring that the nation lives within its means, and he said it avoids “cutting too abruptly while the economy is still fragile.” He vowed to keep working for a “balanced approach” to deficit reduction that includes “reforming our tax code so that the wealthiest Americans and biggest corporations pay their fair share.”

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Vigil and Akathist for the Feast of St. Sergius