WHO IS BROOKSLEY E. BORN ?

Well, she was the chair of the Commodities Futures Trading Commission 1996-99, who called for greater regulation of the derivative market. As you might have guessed, Alan Greenspan (Fed Reserve Chairman), Robert Rubin and his deputy Lawrence Summers (Department of Treasury) opposed any regulation of this ‘dark market’.

Here are some links on Brooksley E. Born and her attempt to impose greater regulation on derivatives.
http://en.wikipedia.org/wiki/Brooksley_E._Born
http://www.opednews.com/maxwrite/diarypage.php?did=10029
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/14/AR2008101403343_pf.html
http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?_r=1&pagewanted=all
http://www.global-sisterhood-network.org/content/view/2205/59/

‘In 1997, Brooksley Born warned in congressional testimony that unregulated trading in derivatives could "threaten our regulated markets or, indeed, our economy without any federal agency knowing about it." Born called for greater transparency -- disclosure of trades and reserves as a buffer against losses. Instead of heeding this oracle's warnings, Greenspan, Rubin & Summers rushed to silence her.’
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4221335&mesg_id=4221335

According to Wikipedia, she has declined to comment on the unfolding crisis.

I couldn't find any recent comments, so I guess she's not talking!!!!!

TOO LITTLE TOO LATE ?http://www.nytimes.com/imagepages/2008/10/09/business/09greenspan.graphix.ready.html

SHIFTING SANDS

Markets have been volatile and confidence & volumes have been low.

The US GDP news was bad, and it makes me wonder if the Q2 2008 GDP figure was

''accurate''!

Gold continues to rise amidst this uncertainty, although it could run into resistance levels this week.

STOP LISTENING TO PEOPLE WHO HAVE BEEN WRONG ALL ALONG!

I recently came across a link on Bloomberg titled
‘Roubini Sees Global Gloom after Davos Vindication’
http://www.bloomberg.com/apps/news?pid=20601170&refer=special_report&sid=a6A9lCHrtAqk

Let me say it again -

STOP LISTENING TO PEOPLE WHO HAVE BEEN WRONG ALL ALONG!

There have been many whose predictions and expectations have been way off!!!!! Downright misguiding & consistently wrong!!
There were those who said that there was no US Housing bubble in 2005-2006 and still others who had been recommending buying stock in AIG & Lehman Brothers until months before they finally went under.

CHANGE OR MORE OF THE SAME
Even as the ‘Bad Bank’ solution has already been discussed to death; it’s surprising that no one is opposing the fact that the same management teams will continue to lead the banks. These are the same guys who took ‘crazy risks’, earned ‘extraordinary bonuses’ and got us into this mess in the first place. They lost money once, and now thanks to the FED & Treasury, they are being invited to ‘Scam the Public’ Round 2!

A lot of what I have learned since I started following financial media, is that you have to track comments of the few that ‘know what they are talking about’ and just disregard the rest.
Look for consistency and a solid track record.
Do take a look at my blogroll and list of Links of websites I read.

Following the advice of ‘experts’ who have been wrong all along is injurious to your financial health.

THE SLIPPERY CRUDE OIL MARKET

A year ago, almost no one would expect Crude Oil to trade below $40 by Christmas 2008!!

The world was preoccupied with growing Indian and Chinese Oil consumption, Peak Oil and a never ending demand for refined petroleum products.
With drastically slowing GDP growth rates the world over, prospects for Crude Oil are not too bright.

Prices are expected to slide further as inventories build up.

Longer term I am an Bullish on Crude Oil, and would exercise caution while taking aggressive short positions in Crude Oil.
THE END OF CHEAP OIL?
Analysing Fundamentals: While cheap credit and availability of financing may have encouraged almost ''wasteful'' oil consumption recently; on the supply side - there has been no addition of ' Easy Oil' to exising oil fields. Moreover, recent discoveries like the Tupi oil field off the coast of Brazil are unviable at current prices.

As the world battles deflation (read: unemployment + bank failures + debt defaults + credit contraction), geopolitical tensions are likely to flare up.

The USD and other 'paper' currencies are battling a toxic cocktail of bailouts & stimulus packages. Currency Volatility and Currency Crisis could result in higher nominal Crude Oil prices.

I am keeping a close watch on Crude Oil prices and will put up some more analysis on the Gold-Oil Ratio soon.

NON USD GOLD AT NEW HIGHS

Gold is at record levels in every currency except US Dollars & JPY!

Reality check - Dating A Banker Anonymous !

Here's a link I came across at Naked Capitalism .
http://www.nytimes.com/2009/01/28/nyregion/28daba.html?_r=2&ref=business
The Blog: http://dabagirls.wordpress.com/

Just in case the FED didn't notice, this is one party that has indeed ended!!

Meanwhile, """The U.S. Treasury Secretary is considering a “range of options” for its financial rescue plan, with the goal of preserving the private banking system. """
Other headlines include this one on Bloomberg:
'''Obama Leaves `Sober' Meeting With CEOs Confident of an Economic Turnaround'''

The Financial Gurus at Davos are perplexed, and its gradually becoming clear that no one has a clue how to get us out of this financial mess.
As the experts debate inflation vs deflation, I think a bigger worry is going to be UNEMPLOYMENT!
As companies continue to cut jobs to bolster bottomlines, mortgage and credit card defaults are going to increase.
In the developing world this situation is going to be particularly difficult to tackle as factories shut down or run reduced shifts, and governments could be faced with breakdown of law and order.
An example: try explaining to factory workers in China or India, that the American Consumer is tapped out & no longer needs automobile components or textiles manufactured locally!!

While bankers may have to learn to live without their bonuses, for many people in the developing world, its going to be a struggle for survival as government stimulus packages struggle to work their way through the endless bureaucracy and red tape, to meet the needs of the poor in the rural areas of the developing world.

GOLD CHART

As gold creeps over $900, here is a chart I came across in the Jan 2009 Gold Investment Digest ( a quarterly report by the World Gold Council).

GOLD : BACK AT $900

Trader Dan Norcini at Jim Sinclair’s MineSet has an interesting take on Gold's latest move.

*****

“The battle for Helms-Deep is over; the battle for Middle Earth has begun”!
So says Gandolph the Wizard in the second of Lord of the Rings trilogy, “The Two Towers”.
Gold has beaten back the Orcs and Uruk-Hai to regain the critical $880 level and must now deal with the Ringwraiths (the bullion banks) and Sauron (the monetary lords) as they attempt to defend Mordor (the unbacked paper money system – the root of all economic woes in the global universe). If Frodo can just make it to the fires of Mt. Doom and throw the golden ring of power into the volcanic flow (reintroduce gold into the monetary system), the system will topple freeing the masses from the tyranny of the money masters!

*****

While the $880 level is technically important, its encouraging to see Gold rise even as the USD has continued to strengthen. Gold has been extremely volatile recently, but the worsening crisis gives support to prices everytime they threaten to break down.

SHRINKING BANKS !

A friend of mine sent me this link recently.
http://www.invokemedia.com/wp-content/uploads/2009/01/shrinkingbanks.png
Even if the size of the circles is not accurate, the numbers don't lie.The colossal loss in Market Capitalization is stunning. Just take a look at Citigroup !!!
The regulators and Central Banks have no idea how to clean up this mess!
This reminds me of a quote I read on Jesse's Café Américain

'It isn’t that they can’t see the solution. It is that they can’t see the problem'
– G.K. Chesterton.

AWAITING THE OBAMA BOUNCE !

As I write this, the DJIA threatens to break 8,000 on the downside.
Gold Prices are trading at $852. Interestingly, both the USD and Gold are up today, as the GBP continues to get pounded!!
While it may not be fair to read too much into a single trading session, we are faced with turmoil in the financial sector and a total Crisis of Confidence.

Obama's speech was both uplifting and hopeful for a better tomorrow.
He is going to have to take some tough calls soon, as losses at the banks and a spiking unemployment rate may threaten his stimulus plans that may work only over the longer term.

While I wish him well as he starts firefighting, he has his work cut out for him.