Obama: Iran 'Year or So Away From Nuclear Weapon', US Will 'Use All Options'

While we are enjoying the diversion of watching Carl Levin go through the JPM witnesses like a wrecking ball, this particular story caught my eye.

As a reminder, Matt Taibbi is live-blogging the JPM testimony event and is providing colorful commentary. 

But meanwhile, the world muddles on...

ABC News
Obama: Iran a Year Away From Nuclear Weapon
By Devin Dwyer
March 15, 2013

In an interview with Israeli TV ahead of his visit to the region next week, President Obama says he believes Iran is "over a year or so" away from being able to develop a nuclear weapon and that the U.S. will use "all options" to stop it.

"Right now, we think it would take over a year or so for Iran to actually develop a nuclear weapon, but obviously we don't want to cut it too close," Obama told Israeli Channel 2.

"They are not yet at the point I think where they've made a fundamental decision to get right with the international community," he said, "but I do think that they're recognizing that there's a severe cost for them to continue on the path that they're on and that there's another door open."

Read the entire article here.

As they say about all real estate: location, location, location.

Greenspan: No Irrational Exuberance, Stocks 'Undervalued' - The Rake's Progress

 

“I recognise that there is a stock market bubble problem at this point, and I agree with Governor Lindsey that this is a problem that we should keep an eye on....We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it.”

Alan Greenspan, September 24, 1996 FOMC Minutes


"Where a bubble becomes so large as to pose a threat the entire economic system, the central bank may appropriately decide to use monetary policy to counteract a bubble, notwithstanding the effects that monetary tightening might have elsewhere in the economy.

But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability."

Alan Greenspan, December 5, 1996, Speech to the American Enterprise Institute


"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home."

Alan Greenspan, February 23, 2004, Speech to Credit Union National Association


"Although a "bubble" in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels...

The apparent froth in housing markets may have spilled over into mortgage markets...

Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications."

Alan Greenspan, June 9, 2005, Economic Outlook


"I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk."

Alan Greenspan, September 2007, The Age of Turbulence


"...the problem at its root is a flawed business model, and that business model is the product of a government regulatory decision to repeal Glass-Steagall administratively and legislatively, and to seek this tremendous concentration of power; and then the abuse of that power by the investment houses...

What we want to do is clean up the system and hold the individuals accountable, and that is what we have tried to do...But there was an understanding that if we were to seek criminal sanctions against either the institution or the most senior people of the institution, the practical impact in our regulatory environment would have been to destroy those institutions, and then structural reform would be meaningless...because the harm to our economy that would result from eliminating a Citigroup or a Merrill Lynch is enormous, and it's disproportionate to the remedy that we want.....

It was incredible. It was distressing to me how simple and outrageous it was. It wasn't so complicated that you said, "Wow, at least they're smart in the way they're doing it." It was simple. It was brazen. The evidence of it was overwhelming. It's just that it hadn't been revealed to the public, and that's why could get away with it...

Over the past decade we've wanted to deregulate, and we've said, "Let's get government out of the business of looking at these issues, and permit industry to control itself, because we can trust them." Maybe that's been a very good thing in some ways.

One of the things that is eminently clear from our investigation is that all the compliance departments, all the self-regulation is nothing. They watched it, but they did nothing. So we've got to think this through, and it's not only the financial community. There are a lot of sectors where we have said self-regulation is the answer. We've got to think about it."

Eliot Spitzer, The Wall Street Fix, March 16, 2003


"The vast majority of privately negotiated OTC contracts are settled in cash rather than through delivery.

Cash settlement typically is based on a rate or price in a highly liquid market with a very large or virtually unlimited deliverable supply, for example, LIBOR or the spot dollar-yen exchange rate.

To be sure, there are a limited number of OTC derivative contracts that apply to nonfinancial underlying assets. There is a significant business in oil-based derivatives, for example. But unlike farm crops, especially near the end of a crop season, private counterparties in oil contracts have virtually no ability to restrict the worldwide supply of this commodity. (Even OPEC has been less than successful over the years.)

Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.

To be sure, a few, albeit growing, types of OTC contracts such as equity swaps and some credit derivatives have a limited deliverable supply. However, unlike crop futures, where failure to deliver has additional significant penalties, costs of failure to deliver in OTC derivatives are almost always limited to actual damages.

There is no reason to believe either equity swaps or credit derivatives can influence the price of the underlying assets any more than conventional securities trading does."

Alan Greenspan, July 24, 1998, Testimony on the Regulation of OTC Derivatives

Hubris has no shame.

CNN
Greenspan: No irrational exuberance, stocks undervalued
By Chris Isidore
March 15, 2013

NEW YORK (CNNMoney)
Former Federal Reserve Chairman Alan Greenspan said that even with record-high stock prices, investors don't need to worry about "irrational exuberance" this time.

In fact, his current view is that stocks are still "significantly undervalued."

Read the entire article here.

Related: Michael Hudson and Pierre Rinfret: The Myth of Alan Greenspan

SP 500 Rally - Same Time Last Year

As you may recall, 2012 started out with a fairly steady stock market rally.

It was quite similar to the rally which we have seen so far this year.

The chart below shows how the rally ended in 2012.

It lasted until the end of March when it reached almost thirteen percent.

It chopped sideways through the month of April, and then gave up almost two thirds of its gains by the end of May.

Perhaps it will be different this time. Change you can believe in.

Gold Daily and Silver Weekly Charts - Stocks To Record Highs on Complacency

Gold held in rather well considering the new lows in the VIX and the new highs in stocks.

As a reminder, tomorrow is the March stock option expiration.

SP 500 and NDX Futures Daily Charts - 10th Rally Day, SP Nears Record - Complacency

Another new record high on the Dow Jones Industrials, as the SP 500 approaches its all time high set in 2007.

Bernanke is creating another asset bubble, once again in equities.

Check out the VIX. I bought some VIX as insurance. Tomorrow is stock option expiration for March.

I rolled my futures charts over to the June contract today. The new objective for the SP is in the 1565 to 1570 range.

 

Gold Daily and Silver Weekly Charts

As a reminder this Friday is the option expiration for US equities.

Monday March 25 will be the option expiration for gold and silver on the Comex. This year's calendar is included below.

Today the miners were sold as the metals retreated a bit.

SP 500 and NDX Futures Daily Charts - Recurrent Complacency Into Option Expiration

VIX fell back as the Dow moved to another record high intraday led by IBM.

SP managed to rally back into the close, but the NDX continued to show a divergence.

As you know I have a chart objective of 1570 working on the March SP futures, which will be rolling over to June shortly, and the target will be about five points lower at 1565. June closed at 1550 today.

This Friday will be the March option expiration for stocks.

 

White Smoke Over the Vatican

Jorge Bergoglio of Argentina has been elected pope, Francis I.

Jorge Bergoglio was born in Buenos Aires, Argentina, one of the five children of an Italian railway worker and his wife. After studying at the seminary in Villa Devoto, he entered the Society of Jesus on March 11, 1958. Bergoglio obtained a licentiate in philosophy from the Colegio Máximo San José in San Miguel, and then taught literature and psychology at the Colegio de la Inmaculada in Santa Fe, and the Colegio del Salvador in Buenos Aires. He was ordained to the priesthood on December 13, 1969, by Archbishop Ramón José Castellano. He attended the Philosophical and Theological Faculty of San Miguel, a seminary in San Miguel. Bergoglio attained the position of novice master there and became professor of theology.

As Cardinal, Bergoglio became known for personal humility, doctrinal conservatism and a commitment to social justice. A simple lifestyle has contributed to his reputation for humility. He lives in a small apartment, rather than in the palatial bishop's residence. He gave up his chauffeured limousine in favor of public transportation, and he reportedly cooks his own meals.

His motto as a cardinal is 'miserando ateque eligendo' which is a phrase from the writings of Venerable Bede.
Vidit ergo Jesus publicanum, et quia miserando atque eligendo vidit, ait illi, Sequere me.