Oh yeah you read that correctly. It has been a little more than a month since our last Greece bond update and it looks like the rates have almost double since then. For a brief catch up on what has been happening you can check out here and here.

Here is a great rough outline for where gold could go within the next couple of years. It’s based on the Elliot Wave Principle on bull markets driven by Fibonacci Sequences and the Golden Mean. I stumbled onto this chart via Ed Steer’s free gold and silver newsletter from Casey Research.

Click on the image to enlarge.

I recently stumbled onto this article the other day and I would have to say it went completely under my radar. Back when Congressman Ron Paul and Alan Grayson audited the Fed in mid-2011, it was discovered that the US Federal Reserve issued approximately $26 Trillion dollars in loans and “currency swops” during a 4 year window between 2007 and 2011. Below is a letter written to John Hively from Congressman Alan Grayson describing some of the findings from that audit.

Dear John,

I think it’s fair to say that Congressman Ron Paul and I are the parents of the GAO’s audit of the Federal Reserve. And I say that knowing full well that Dr. Paul has somewhat complicated views regarding gay marriage.

Anyway, one of our love children is a massive 251-page GAO report technocratically entitled “Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance.” It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed’s 99-year history.

Feel free to take a look at it yourself, it’s right here. It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you’ve heard about.

I wouldn’t want anyone to think that I’m dramatizing or amplifying what this GAO report says, so I’m just going to list some of my favorite parts, by page number.

Page 131 – The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000. That’s right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.

Page 205 – Separate and apart from these “broad-based emergency program” loans were another $10,057,000,000,000 in “currency swaps.” In the “currency swaps,” the Fed handed dollars to foreign central banks, no strings attached, to fund bailouts in other countries. The Fed’s only “collateral” was a corresponding amount of foreign currency, which never left the Fed’s books (even to be deposited to earn interest), plus a promise to repay. But the Fed agreed to give back the foreign currency at the original exchange rate, even if the foreign currency appreciated in value during the period of the swap. These currency swaps and the “broad-based emergency program” loans, together, totaled more than $26 trillion. That’s almost $100,000 for every man, woman, and child in America. That’s an amount equal to more than seven years of federal spending — on the military, Social Security, Medicare, Medicaid, interest on the debt, and everything else. And around twice American’s total GNP.

Page 129 – In October 2008, the Fed gave $60,000,000,000 to the Swiss National Bank with the specific understanding that the money would be used to bail out UBS, a Swiss bank. Not an American bank. A Swiss bank.

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If you want to view an official copy of the audit, you can find it at the bottom of this page.

And so the latest inevitable outcome of the French downgrade from AAA has arrived, after the S&P just downgraded the EFSF, that pillar of European stability, from AAA to AA+. S&P adds: “if we were to conclude that sufficient offsetting credit enhancements are, in our opinion, not likely to be forthcoming, we would likely change the outlook to negative to mirror the negative outlooks of France and Austria. Under those circumstances we would expect to lower the ratings on the EFSF if we lowered the long-term sovereign credit ratings on the EFSF’s ‘AAA’ or ‘AA+’ rated members to below ‘AA+‘.” In other words, as everyone but Europe apparently knew, the EFSF is only as strong as the rating of its weakest member. And now the rhetoric on how AAA is not really necessary for the EFSF, begins, to be followed by AA, next A, then BBB and finally how as long as the EFSF is not D-rated all is well.

– ZeroHedge

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Standard & Poor’s will cut the credit ratings of Italy, Spain and Portugal by two notches and downgrade France and Austria by one notch, a French newspaper said Friday, without citing its sources.

The newspaper, Les Echos, said that S&P would spare Germany, the Netherlands, Finland and Luxembourg in its long-awaited adjustment of euro zone sovereign ratings.

It said the announcement would come at around 4:30 pm ET, after the US stock market has closed.
– Antonia van de Velde, CNBC

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Sébastien Bertrand, Wikipedia

Fresh off the presses, Italy’s time has come. S&P warned of a potential downgrade of several European countries back in December of last year. And since nothing has changed or improved at all since then, S&P has decided to pull the trigger. The question is will France be next?

It only took a few years, but we can finally move from A to B:

• ITALY CUT TWO LEVELS TO BBB+ BY S&P, EU OFFICIAL SAYS

Somehow ItBBB+ly doesn’t quite have the same ring to it… Oh well, it will still work as pristine collateral with the ECB.
- ZeroHedge

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Well it didn’t take that much time to jump to 400% since our last post. Greece is just taking a beating as their 1 year bonds continue to climb at rapid pace. I am still surprised that the country has yet to default.

Continue to link for real-time updates

Here is a great video of Mike Maloney explaining the current state of precious metals.

Chicago Skyline, Wikipedia

Just when I thought the beginning of 2012 was going to be dull.

Moody’s Investment Service downgraded Illinois’ credit rating to A2 from A1 on Friday as the state sets out to sell $800 million on bonds. Moody’s said the decision to downgrade the state’s credit rating came as a result of “a legislative session in which the state took no steps to implement lasting solutions to its severe pension underfunding or to its chronic bill payment delays,” according to the report.
– Progress Illinois

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