In China, ghost cities are starting to pervade the landscape like some kind of cancerous growth, void of human presence … They are not abandoned towns reflecting ghosts of the past. Instead, they are large abandoned cities reflecting ghosts of times that would never come. – TopSecretWriters (5/1/2012) China cuts reserve requirements as economy slumps … The People’s Bank of China will cut the reserve requirement ratio for banks as it moves to stabilise growth. China’s central bank said it would cut banks’ reserve requirements on Friday, after a set of disappointing trade data. Effective May 18, it will cut the reserve requirement ratio for banks by 50bp to 20%, which it hopes will free up lending and stimulate a recovery — or at least avert a hard landing. – Finance Asia (5/14/2012) Beware Of The Massive Bubble In Emerging Markets … Amid the excitement over the rise of China, investors and economic commentators have been eagerly scouring the world for “The Next China” – or at least the next country to supply the raw materials that China needs for its boom (and construction of empty cities!) … Soaring asset prices and easy money is creating “luxury fever” as emerging market nations copy the spendthrift ways that led to the West’s downfall just a few years earlier. In its essence, the emerging markets bubble is a derivative of the commodities and China bubbles and is highly vulnerable to their inevitable popping. – Seeking Alpha (5/13/2012)

The Bilderberg Group is terrified that Greece’s potential exit from the eurozone could lead to a dramatic economic recovery and provide a template for other countries to follow suit, threatening to torpedo the euro single currency and the entire agenda for a European federal superstate. One of the primary discussion topics at this year’s upcoming Bilderberg Group meeting in Chantilly, Virginia will revolve around how the elite plan to address the issue that threatens to bring their agenda for global governance crashing down – the euro crisis. The increasing threat of Greece abandoning its promise to honor draconian bailout terms agreed with Brussels and Berlin last night led German chancellor Angela Merkel to acknowledge for the first time that Greece could exit the euro, a likelihood that has sent the single currency along with financial markets plunging in recent days.

The situation in the euro zone has become so bleak that it is giving rise to the most improbable rumours. The latest to make the rounds of European hedge fund managers suggests that the euro will be tied to the dollar at close to parity, a dramatic fall from its current level of just under $1.30 and one that would involve the printing of hundreds of billions of euros. However unlikely, the speculation is an indication of Europe’s plight in a world with little growth and every government looking at exports as a way to grow. A cheap currency giving an artificial boost to competitiveness is more palatable than austerity.

What we are all watching unfold right now is a complete and total financial nightmare for Italy. Italian bond yields are soaring to incredibly dangerous levels, and now the yield curve for Italian bonds is turning upside down. So what does that mean? Normally, government debt securities that have a longer maturity pay a higher interest rate. There is typically more risk when you hold a bond for an extended period of time, so investors normally demand a higher return for holding debt over longer time periods. But when investors feel as though a major economic downturn or a substantial financial crisis is coming, the yield on short-term bonds will often rise above the yield for long-term bonds. This happened to Greece, to Ireland and to Portugal and all three of them ended up needing bailouts. Now it is happening to Italy and Spain may follow shortly, but the EU cannot afford to bail out either of them. An inverted yield curve is a major red flag. Unfortunately, there does not seem to be much hope that there is going to be a solution to this European debt crisis any time soon. We are witnessing a crisis of confidence in the European financial system. All over Europe bond yields went soaring today. When I finished my article aboutthe financial crisis in Italy on Tuesday night, the yield on 10 year Italian bonds was at 6.7 percent. I awoke today to learn that it had risen to 7.2 percent.

Brent crude futures are up $1.17 a barrel to $115.73 on continued word that Israel may go it alone and bomb Iran’s nuclear facilities. It is their highest level in nearly two months. Iranian boats take part in naval war game in the Persian Gulf and the Strait Hormuz. But it would be nothing compared to the cost if Israel attacks. In 2006, as Israel and the U.S. began to rattle sabers over Iran’s nuclear program, Iran’s Revolutionary Guards deployed bottom-tethered mines in the Strait of Hormuz, according to a defector. “The plan is to stop trade,” the source told Newsmax. One third of the world’s oil passes through the Strait of Hormuz. The deployment was mentioned in a plan produced by the Strategic Studies Center of the Iranian Navy in 2005. It also called for a single operational headquarters integrated with Revolutionary Guards missile units, strike aircraft, surface and underwater naval vessels, Chinese-supplied C-801 and C-802 anti-shipping missiles, mines, and coastal artillery, according to the intelligence office of the Ministry of Defense in Iran.

Anger at Goldman Sachs is growing after it was claimed the taxman let the banking giant off a £10million bill for fear of reopening a £30m legal dispute over bonuses. Goldman received a ‘sweetheart’ deal in which HM Revenue and Customs waived interest on a bill for National Insurance contributions on bankers’ bonuses, according to the Financial Times. The bank owed the Government £30m in back taxes after moving bonuses offshore – and this amounted to £40m including interest. The HMRC admits to errors over governance procedures and to failing to collect the £10m interest – in the mistaken belief there was a ‘legal impediment’ to doing so.

Do you hear that sound? It is the sound of Europe being hit with a cold dose of financial reality. The air has been let out of the balloon, and investors all over the world are realizing that absolutely nothing has been solved in Europe. The solutions being proposed by the politicians in Europe are just going to make things worse. You don’t solve a sovereign debt crisis by shredding confidence in sovereign debt. But that is exactly what the “voluntary 50% haircut” has done. You don’t solve a sovereign debt crisis by pumping up your “bailout fund” with borrowed money from China, Russia and Brazil. More debt is just going to make things even worse down the road. You don’t solve a sovereign debt crisis by causing a massive credit crunch. By giving European banks only until June 2012 to dramatically improve their credit ratios, it is going to force many of them to seriously cut back on lending. A massive credit crunch would significantly slow down economic activity in Europe and that is about the last thing that the Europeans need right now. If the deal that was reached last week was the “best shot” that Europe has got, then we are all in for a world of hurt. On Monday, investors all over the globe began to understand the situation that we are now facing. The Dow was down 276 points, and the euphoria of late last week had almost entirely dissipated.

The Vatican has called for a “global public authority” and a world central bank to rule over financial affairs in the wake of the engineered economic collapse. A document released by the Vatican’s Justice and Peace department “should be music to the ears of the ‘Occupy Wall Street’ demonstrators and similar movements around the world who have protested against the economic downturn,” according to CNBC. Condemning the “idolatry of the market,” the document states that the “economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence.” The planned implosion of the global economy “has revealed behaviors like selfishness, collective greed and hoarding of goods on a great scale.”

It could then be that this is the top of the stock market, which is fundamentally very overpriced. The latest rallies are the result of statements by French President Sarkozy and German chancellor Mrs. Merkel that a financial solution is at hand for Europe. This announcement named the end of the month as the date for release of this information. Thus far there has been no further comment. This was the justification for a very strong rally. In the wings there are large short and put positions, which tell us that there is a body of speculators that believe the fundaments are not in place, nor was the recent rally justified. In relation to Europe we see two possibilities; countries bailing out their own financial sectors and the use of leverage to extend bailout funds into trillions of dollars to assist the six insolvent nations. Some nations currently prohibit the use of leverage. Needless to say, rules do not impede adventurous politicians in the control of elitist interests such as the banking community. We will have to wait for this new formula, but in the meantime its results have already been discounted, or military action increases in the Middle East, perhaps in connection with Iran? Debt problems are endemic worldwide. We all know of the problems in the US, UK and Europe, but they extend all over the world. We are in a major financial crisis, which is as bad and will be as damaging as the credit crisis of three years ago. In fact we never exited that crisis. Debt is the problem and creating more debt does not solve the problem. We have written often about debt and currency problems and as yet nothing is being done to solve these problems. It is as if these powers wanted a collapse. How long can the US dollar continue to take this thrashing? Unfortunately it is not only the dollar. Over the past 1-1/2 years nine major currencies have fallen on average more than 20% vs. gold and silver.

A two-day general strike has shut down public transport, schools and shops in Greece as over 50,000 protesters converge in central Athens. Unions representing around half of the country’s four million-strong workforce have called the walkout. They are protesting against a sweeping package of austerity measures which are due to be voted on in parliament on Thursday. All sectors, from dentists, state hospital doctors and lawyers to shop owners, tax office workers, pharmacists, teachers and dock workers walked off the job. http://www.youtube.com/watch?v=Bdw0K0u2tLI&feature=player_embedded