Silver Hits $39! Greece in the Toilet, China Raising Interest Rates, and 111 Banks Took Fed Money and Failed

Precious metals hit a brand new high today:

Gold for December 2016 delivery hits $1,709:

So why did this happen?  Let's see, from EPJ:

A new report from Roubini Global Economics concludes:

IMF officials have denied the veracity of an April 2 Der Spiegel article that claimed the IMF was pushing for a Greek debt restructuring behind the scenes; S&P downgraded Greece to BB- on March 29, and in RGE’s view, a Greek debt rescheduling is inevitable.

Restructuring = bankruptcy.

Mish also has this e-mail from Roubini on a post today:

I’m writing on the heels of two trips to China during which I met with senior policy makers, bank executives and academics, just as the government launched its 12th Five-Year Plan, intended to rebalance the long-term growth model. My meetings deepened my own impression and RGE’s long-standing house view of a potentially destabilizing contradiction between short- and medium-term economic performance: The economy is overheating here and now, but I’m convinced that in the medium term China’s overinvestment will prove deflationary both domestically and globally.Once increasing fixed investment becomes impossible—most likely after 2013—China is poised for a sharp slowdown.

The next step shouldn't come as a surprise to anyone.  From Bloomberg:

China raised interest rates for the fourth time since the end of the global financial crisis to restrain inflation and limit the risk of asset bubbles in the fastest-growing major economy. 

The benchmark one-year lending rate will increase to 6.31 percent from 6.06 percent, effective tomorrow, the People’s Bank of China said on its website at the end of a national holiday. The one-year deposit rate rises to 3.25 percent from 3 percent.

4th rate hike since October?  China is clearly overheating faster than their government and central bank expect.

Remember the NYT article about GE's non-existent tax bill?  Well Fortune tried debunking it today:

Now, we'll give you brief answers to the main questions, but you'll have to bear with us afterward for the full explanation.

Did GE get a $3.2 billion tax refund? No.

Did GE pay U.S. income taxes in 2010? Yes, it paid estimated taxes for 2010, and also made payments for previous years. Think of it as your having paid withholding taxes on your salary in 2010, and sending the IRS a check on April 15, 2010, covering your balance owed for 2009.

Will GE ultimately pay U.S. income taxes for 2010? After much to-ing and fro-ing -- the company says it hasn't completed its 2010 tax return -- GE now says that it will pay tax. (For more on GE's tax strategies, see GE's taxes: A case study)

Pay a tax huh?  Why would GE ever admit to not paying taxes?  Though I doubt GE got a $3.2 billion refund,  I am sure most employees paid income taxes.  As far as I am concerned, the corporate tax code is such a mess (tax breaks, subsidies, solar/green investment handouts) that GE probably isn't paying taxes because it would cost way too much time and effort for the I.R.S. to investigate the matter.

The New York Times provides another great example of the unintended consequences of high taxation.  This time, it's a black market operation:

Itinerant cigarette vendors have long been a fixture in some parts of the city, like bodegas that sell individual cigarettes in violation of state law. But with cigarette prices up and the number of smoke-friendly places down, the black market for loosies is now thriving on the streets.

The administration of Mayor Michael R. Bloomberg has outlawed smoking in restaurants, bars and playgrounds, and outside hospital entrances. Even city parks, beaches and pedestrian plazas are now off limits to smokers. Then there have been successive rounds of taxes — the most recent one, a $1.60 rise in the state tax in July — that raised the price of a pack of cigarettes to $12.50 at many Midtown newsstands.

Mr. Warner said he bought his cigarettes — almost always Newports — for a bit over $50 a carton from smugglers who get them in states like Virginia, where the state tax is well under a dollar a pack. He then resells them for 75 cents each, two for $1 or $8 for a pack ($7 for friends).

Mr. Warner said he and each of his two partners took home $120 to $150 a day, profit made from selling about 2,000 cigarettes, mostly two at a time. Each transaction is a misdemeanor offense.

Among all of Midtown’s cigarette vendors, Mr. Warner stands out, partly because he seems to get arrested more frequently than others. That may be because his style of salesmanship is hardly furtive.

Kudos to Lonnie Warner for embracing the entrepreneurial spirit and providing a good in high demand at a cheap price.  Screw Mayor Bloomberg and his cohorts who think they can tax "morality" into the citizens.  You gotta love places that send people to jail for selling an item people voluntarily consume.  I guess New York City is desperate enough for that tax money.

Also in the NYT today, there is a great article on 111 banks that borrowed from the Fed's discount window and still filed for bankruptcy anyway.  Check out some of the banks:

I will end with a rather funny quote from a Zerohedge guest post.  For all those Paul Krugmans and Robert Reichs out there who continue to complain about a lack of "aggregate demand" in the economy, here is why:

Demand is slack because everyone who could afford more crap already owns more crap than they need or even want.

A simple explanation, but apt nonetheless.  Of course demand never goes away completely, even in an extreme downturn.  But you can't expect sufficient demand for things such as cruise lines when food and energy prices are on the rise.