Hoenig Doesn't See a Return to Capitalism on the Horizon, Silver Hits $42 on Threat of Bolivian Nationalization, Leak of China Econ Data, and More Signs of Inflation

George Will's column has a quasi interview with almost-former Kansas City Fed Prez and lone hawk Tom Hoenig today. He has some dire predictions:

Hoenig, an Iowa native, says the provinces have not cornered the market on provincialism. He warns "end the Fed" advocates to be careful what they wish for. The Fed will not go away; under "reform," regional banks such as his might. This, he says, would make the New York-Washington financial axis more powerful relative to "this part of the country."

"In 1999, the five largest U.S. banking organizations controlled $2.3 trillion in assets, or about 38 percent of all banking industry assets. Currently, Bank of America by itself . . . has the same level of assets - $2.3 trillion . . . and the top five now have 52 percent of all banking industry assets. . . . Creditors and uninsured depositors at too-big-to-fail organizations believe that there is almost no chance that they will have to take a loss."
With all this, could we ever get back to capitalism? "Not," he says, "in my lifetime."

This is why Robert Wenzel points out that those crazy "End the Feders" want to eliminate the thing all together, not settle for reform.  Notice who he thanks in at the end of the post.

Just when I thought the good times may have peaked for the time being, I am once again proven wrong:
Silver Hits $42!

This is probably the reason why though:

a far more troubling report from Bolivian daily La-Razon states that Bolivia's president Evo Morales is now planning on expropriating zinc, silver and tin mines sold off by previous governments. Bloomberg reports that "Morales will announce a decree May 1 to “dismantle the privatization model,” said Nicolas Fernandez, a spokesman for state mining company Corp. Minera de Bolivia, known as Comibol. "The government is recovering all the privatized companies,” Fernandez said today in a telephone interview from La Paz. “When the decision is taken, Comibol will be ready to manage these mines.”" Among the contracts to be affected are those with Glencore International AG, Pan American Silver Corp., and most importantly, Coeur d’Alene Mines Corp., which is operator of the San Bartolome mine: the world's largest pure silver mine.

The days of paying $26-$27 for an ounce are long gone ladies and gentlemen.

Nouriel Roubini has a column out today on Project Syndicate where he says what many know already, China's stimulus efforts are not at all sustainable and a crash is coming.  He predicts the party ending in 2013 yet homes prices in Beijing fell 27% in March alone.  Here is some leaked data on China that just came out today from Zerohedge:

Completing the trifecta of posts focusing on China, here is the (un)official leak of Chinese GDP data to Phoenix TV which is due out at 10 pm. In the past this has been roughly 100% accurate. So without further ado...
RTRS-CPI 5.3-5.4%         (BBERG est is 5.2%)                 
RTRS-PPI 7.4%             (BBERG est is 7.2%)                       
RTRS-IP  14.8%            (BBERG est is 14%)           
RTRS-RETAIL SALES +17.4%  (BBERG est is 16.5%)
RTRS-FIXED ASSET +25%     (BBERG est is 24.8%)               

* GDP also appears to be coming at 9.4%

9.4% GDP? Incredible, simply incredible.

Some new inflation numbers came out today, first we have the Bureau of Labor and Statistics reporting that the Producer Price Index has increased 5.8% for the year while the World Bank reports that food prices increased 36% compared to last year.  So what does this mean, well Joe LaGorna of the Deutsche Bank cut down Q2 GDP predictions:

Consequently, we are cutting our Q1 real GDP estimate another half of a point to +2.8%. Remember that we started the week at +3.8% on Q1 real GDP and then lowered it to +3.3% following weaker than anticipated net exports. We also decided to trim current quarter output by half of a point as well, reducing our forecast from +4.2% to +3.7%. Rising inflation is lowering real output, and the risk is that we may have to trim our second half forecast as well. But for now, we are keeping our Q3 and Q4 projections at 4.1% and 4.3%, respectively.

Greek 10-Year yields have passed 13% and Portugal's yield reaches 8.8%:

And now CEO of FX Concepts is calling for a recession toward the end of the year:




There is a little bit of hope though:

Ron Paul quietly took another step toward a presidential run recently, creating a so-called “testing the waters” account that allows him to start raising money toward a White House bid and could eventually become his official campaign account, a Paul aide confirmed to POLITICO.

If a recession does take hold (it probably will) it may last through the 2012 election cycle and may be the impetus for Ron Paul to make big strides.  A man can hope right?

I will end with some rather disturbing news from Neo-Con central The National Review:

The $38.5 billion includes real cuts, but also a dog’s breakfast of budgetary legerdemain. According to the Associated Press, the deal purports to save $2.5 billion “from the most recent renewal of highway programs that can’t be spent because of restrictions set by other legislation.” It gets another $4.9 billion by capping a reserve fund for the victims of crime that also wasn’t going to be spent this year — a long-standing trick of appropriators. The Washington Post reports that a notional $3.5 billion cut from the Children’s Health Insurance Program “would affect only rewards for states that make an extra effort to enroll children. But officials with knowledge of the budget deal said that most states were unlikely to qualify for the bonuses and that sufficient money would be available for those that did.” And so on.

According to the CBO, the real budget deal will only cut $353 MILLION, not billion.  Paul must take this and run with it when it comes to the Republican primaries.  John Boehner can swing on it for pulling this kind of crap.