Business activity in the U.S. unexpectedly contracted in September for the first time in three years, adding to signs manufacturing will contribute less to the economic recovery.

The Institute for Supply Management-Chicago Inc. said today its business barometer fell 49.7 this month from 53 in August. A reading of 50 is the dividing line between expansion and contraction.

Uncertainties surrounding domestic fiscal policy and weakening economies in Europe and China may prevent companies from adding to headcount and ramping up production. Slow growth prospects prompted the Federal Reserve to announce more accommodation measures earlier this month in a bid to help spur the three-year-old expansion.

This Bloomberg story was posted on their website mid-morning on Friday...and I thank Ulrike Marx for our first story of the day. The link is here.

Bank of America Corp. agreed to pay $2.43 billion to investors who suffered losses during its acquisition of Merrill Lynch & Co. in the largest settlement yet of a class-action shareholder lawsuit stemming from 2008’s financial crisis.

The bank will incur a $1.6 billion litigation expense in the third quarter, the Charlotte, North Carolina-based company said yesterday in a statement. The firm may post a loss for the period after projecting that legal costs, valuation adjustments and tax charges will reduce earnings per share by about 28 cents.

Bank of America has faced regulatory probes, investor lawsuits and criticism from lawmakers over claims it didn’t warn shareholders about spiraling losses at Merrill before they voted to buy the brokerage in January 2009 for $18.5 billion. Under yesterday’s settlement, Bank of America promised to overhaul corporate-governance policies.

This is another story from Bloomberg...and this one was posted on their website late yesterday afternoon...and I thank Donald Sinclair for his first offering in today's column. The link is here.

Manhattan’s Plaza district, the area near Central Park that commands the nation’s highest office rents, has a glut of space as financial firms cut back and tenants seek trendier neighborhoods south of Midtown.

The availability rate for offices in the Plaza submarket reached 12.3 percent last month, a two-year high, as space leased to Citigroup Inc. and General Motors Co. went on the market, according to data from brokerage Colliers International. It was 10.5 percent in the third quarter of last year.

The Plaza district -- the area between Sixth Avenue and the East River from 47th to 65th streets, anchored by the landmark Plaza Hotel at Fifth Avenue and Central Park South -- is home to some of the nation’s most expensive and prestigious office towers, including the General Motors Building and 9 W. 57th St. About 30 percent of the market is financial-service firms, which have announced about 60,000 job cuts worldwide this year, according to data compiled by Bloomberg.

“The Plaza’s weakness is symptomatic of a larger problem,” said Michael Knott, a real estate investment trust analyst with Green Street Advisors Inc. in Newport Beach, California. “Manhattan’s economic engine is not firing, and that, of course, is finance.”

This another story from Bloomberg. This one was posted on their website just before lunch Eastern time...and I thank Donald Sinclair for sending it. The link is here.

More than one in 10 borrowers defaulted on their federal student loans, intensifying concern about a generation hobbled by $1 trillion in debt and the role of colleges in jacking up costs.

The default rate, for the first three years that students are required to make payments, was 13.4 percent, with for-profit colleges reporting the worst results, the U.S. Education Department said today.

The Education Department has revamped the way it reports student-loan defaults, which the government said had reached the highest level in 14 years. Previously, the agency reported the rate only for the first two years payments are required. Congress demanded a more comprehensive measure because of concern that colleges counsel students to defer payments to make default rates appear low.

“Default rates are the tip of the iceberg of borrower distress,” said Pauline Abernathy, vice president of The Institute for College Access & Success, a nonprofit based in Oakland, California.

This is the third story in a row from Bloomberg...and this one was posted on their Internet site in mid-afternoon on Friday...and I thank Ulrike Marx for her second story in today's column...and the link is here.

Wow! You can't make this stuff up. Here's an ABC News video from a few days ago that will take your breath away...and if this hadn't shown up in the main stream media, I would have been skeptical about it. The video clip runs for 2:56...and I thank reader Randall Reinwasser for sharing it with us. It's definitely worth the time to watch...and it's posted over at the youtube.com Internet site...and the link is here. You have to ask yourself why this guy isn't in jail somewhere.

Europe remains an unfolding disaster, although the region’s bonds and stocks remain speculating vehicles of choice under the assumptions that Draghi is about to lend hundreds of billions of support and, at the end of the day, the Germans will backstop the European debt markets. As for the Draghi Plan, I’ll presume many on the governing council hope that the ECB is never called upon to use its bazooka. Indeed, the true capacity of the Draghi Plan is much in doubt. The Bundesbank is adamantly opposed to the OMT, while questions remain as to its legality. And in Germany, it appears there is mounting political opposition to the ECB and other transfer mechanisms.

I know, when the faltering markets place the barrel of a gun to Ms. Merkel and others’ heads, mouths open and market-friendly utterances pop out. Yet, once again, we’re witnessing how it is incredibly difficult to go from talk to actual bailout program implementation. Meanwhile, the politics seem to only get more difficult by the week – if that’s even possible. Right now, markets are focused on the inevitability of a Spain bailout and the unleashing of the vaunted ESM and OMT programs. I’m not sure whether it will be weeks or months, but I do expect we’re heading in a direction where the markets will turn attention to sinking Italian and French economies and worry that these bailout programs are not going to be up to the task.

Doug's Friday missive is always a must read for me...and I therefore humbly suggest it should be a must read for you as well. It's posted over at the prudentbear.com Internet site...and I thank reader U.D. for bringing it to our attention. The link is here.

From the financial repression and encumbrance of the central banker to the wild speculators and their angry 'fast-money' flows, we continue to hang on every tick in Europe's bond markets (for both validation of a political leader's view or confirmation of his asininity).

The sadder truth is that Europe's secondary bond trading market has shriveled. Spain's Treasury just released August's daily average Spanish government bond trading volumes and they have plunged over 40% YoY - now at levels (under EUR40bn per day) not seen since 1996 (pre-Euro-zone).

It strikes us that once they lose the secondary market then the primary market will be very close behind (thanks to liquidity concerns among other things) - unless of course the ECB really does soak up all future issuance and hold-to-maturity...and just as with US equity trading volumes, European bond trading volumes are falling inexorably...

You've just read the entire Zero Hedge story...but the link to the must view graph embedded in that story is here...and I thank Washington state reader S.A. for providing this item for us.

Martin Wheatley, head of conduct at the Financial Services Authority, will announce major reforms to the way Libor is set, but will argue that despite evidence of “shocking behaviour” by “unscrupulous traders” the current system can be “fixed”.

“The disturbing events we have uncovered in the manipulation of Libor have severely damaged our confidence and our trust – it has torn the very fabric that our financial system is built on,” Mr Wheatley will say in a speech at Mansion House following the publication of his report into the issue.

Mr Wheatley will recommend that responsibility for Libor is stripped from the British Bankers’ Association (BBA) and given to the new Financial Conduct Authority, which he will become chief executive of when it comes into operation next year.

This story showed up on The Telegraph's website at 10:13 a.m. BST on Friday...and I thank Donald Sinclair for finding it for us. The link is here.

Spain has pushed through €40bn of fresh austerity measures in the teeth of recession, despite violent protests across the country and separatist crises in Catalonia and the Basque region that threaten to break the country apart.

Premier Mariano Rajoy has frozen public pay in 2013 for the third year in a row. The agriculture ministry and culture expenses will be cut by 30pc and the defence bureaucracy by 15pc. It comes on top of a €62bn squeeze already in the pipeline.

He brushed aside warnings that fiscal overkill – at a time when unemployment is already 25pc – could push the country into turmoil, saying he would listen only to the “silent majority” of responsible citizens.

Bowing to pressure from Brussels, the government has agreed to an independent budget office and a clampdown on early retirement. Pensions will rise by 1pc, paid for by raiding the social security reserve fund. The closed professional guilds and old-boy networks dating back to the Franco era will, in theory, be shaken up. There will be a lottery tax.

This Ambrose Evans-Pritchard offering is the first of four stories in a row from Roy Stephens. This one was posted on the telegraph.co.uk Internet site late on Thursday night BST...and is well worth reading. The link is here.

President Francois Hollande's Socialist government unveiled sharp tax hikes on business and the rich on Friday in a 2013 budget aimed at showing France has the fiscal rigour to remain at the core of the eurozone.

The package will recoup €30bn (£23.9bn) for the public purse with a goal of narrowing the deficit to 3pc of national output next year from 4.5pc this year - France's toughest single belt-tightening in 30 years.

But with record unemployment and a barrage of data pointing to economic stagnation, there are fears the deficit target will slip as France falls short of the modest 0.8pc economic growth rate on which it is banking for next year.

The budget will also disappoint pro-reform lobbyists by merely freezing France's high public spending rather than daring to attack ministerial budgets as Spain did this week in a bid to avoid the conditions of an international bailout.

This Reuters story was picked up by The Telegraph early yesterday afternoon in London...and is Roy's second offering in a row. The link is here.

Up to 30,000 members of two of Italy’s biggest unions gathered for a general strike in Rome, protesting recent austerity measures. The demonstration came days after crowds hit the streets of Athens and Madrid for similar protests.

­Throngs of protesters – ranging from university professors, public administration and health employees, and garbage collectors – took to the streets of Italy on Friday as part of a strike organized by the Italian General Confederation of Labor (CGIL) and the Italian Union of Labor (UIL).

"Stop hitting the weakest. We have already given enough," the unions wrote on their websites.

Staff at the Coliseum and the Roman Forum walked off their jobs, causing two of the city’s major tourist attractions to close.

Roy Stephens found this story posted over at the Russia Today website yesterday...and the link is here.

Italy's blighted south is heading for social and economic meltdown as a result of job losses, a massive exodus of people and "industrial desertification", according to an alarming new report.

Unemployment in the "Mezzogiorno" is around 25pc compared with the national average of 10pc, according to Svimez, a think tank on economic development for the region.

Less than one in four women work, 147,000 jobs were lost between 2007 and 2011 and 1.35m southerners fled the region in the last decade in search of better opportunities.

This story, which originally appeared in The Telegraph, found a home at the businessinsider.com website very early yesterday morning. It's Roy Stephens fourth offering in a row...and the link is here.

Mario Draghi's promise to do “whatever it takes” to save the euro never did look like inducing any more than a temporary lull in the storm; still less did the German Constitutional Court’s thumbs up to the European bail-out fund and the trouncing that eurosceptic parties received in the Dutch election.

Yet the eurozone crisis has sparked back into life more swiftly than even I would have anticipated, with the epicentre returning to a fast-shrinking Spanish economy. Political and economic developments are once more threatening to combine into an uncontrollable firestorm.

To understand why, it is first necessary to explode some myths about the nature of the eurozone debt crisis. This is not at root either an isolated banking crisis or indeed a fiscal one, though that’s how public policy in Europe attempts to define it.

As many of us have long argued, both these phenomena are but symptoms of what in essence is just a good old fashioned balance-of-payments crisis. This has been greatly exaggerated by monetary union, which is also preventing the application of time-honoured solutions. Utopian pursuit of the single currency is damning Europe to economic oblivion. Political hubris has eclipsed economic common sense.

No shades of gray in this commentary...and it's worth reading if you have the time, or the interest. I thank Donald Sinclair for another contribution in today's column. It was posted over at The Telegraph on Thursday evening BST...and the link is here.

"No one cares about the Palestinians," I wrote in this space two years ago [1], and since then the world has stopped funding them. As a result, the Palestine Authority is collapsing, comments Khalid Elgindy, a former PA adviser, on the website of the Council on Foreign Relations, about "the wave of Palestinian protests that swept through the Israeli-occupied West Bank this month [and] ... virtually paralyzed life in Palestinian cities, with scenes reminiscent of the first intifada".

[But the big] question is: when will the world also grow weary of Egypt? With liquid cash reserves down to a month or two worth of imports in July, Egypt began bouncing checks to oil suppliers in August, and has stopped importing some urgently needed items. The latest shortage to plague the Egyptian economy is infant vaccines.

It's hard to get accurate readings on Egypt's economic free-fall, but according to the country's importers association, the reluctance of banks to provide trade financing to Egyptian firms has cut imports in half since the January 2011 revolution, and now threatens essential food supplies. The government claims to have six months' of wheat stockpiled and recently bought additional supplies, but other staples, including beans, sugar and cooking oil.

This short must read story was posted on the Asia Times Internet site early this morning Hong Kong time. It's a must read, because when the proverbial hits the fan over there, you'll know why. It's another Roy Stephens offering of course...and the link is here.

The confusion in the American mind about Egypt ended this past weekend, a mere nine days since President Barack Obama made the famous remark in a television interview that he wasn't sure of post-Hosni Mubarak Egypt being the United States' ally.

The confusion actually arose when US National Security Council spokesman Tommy Vietor scrambled to clarify that "ally" is a "legal term of art", whereas Egypt is a "long-standing and close partner" of the United States, and, thereupon, State Department spokeswoman Victoria Nuland butted in to contradict both Obama and Vietor by insisting Egypt was indeed a "major non-NATO ally".

There is hardly any excuse left now for the American mind to remain confused about the bitter harvest of the Arab Spring on Tahrir Square. The spin doctors who prophesied that Egypt under the Muslim Brotherhood would ipso facto pursue the Mubarak track on foreign policies have scurried away.

This is especially so after watching Morsi's astounding televised interview on Saturday, his first to the Egyptian state TV since his election in June. He spoke at some length on the Iran question, which has somehow come to be the litmus test to estimate where exactly Egypt stands as a regional power.

This is a story from the Asia Times on Tuesday that I'd been saving for today's column...and here it is. I thank Roy Stephens for sending it...and the link is here.

The first concern of the Emir of Qatar is the prosperity and security of the tiny kingdom. To achieve that, he knows no limits.

Stuck between Iran and Saudi Arabia is Qatar with the third largest natural gas deposit in the world. The gas gives the nearly quarter of a million Qatari citizens the highest per capita income on the planet and provides 70 percent of government revenue.

How does an extremely wealthy midget with two potentially dangerous neighbors keep them from making an unwelcomed visit? Naturally, you have someone bigger and tougher to protect you.

Of course, nothing is free. The price has been to allow the United States to have two military bases in a strategic location. According to Wikileak diplomatic cables, the Qataris are even paying sixty percent of the costs.

This story about Qatar, the American Empire...and the "New Great Game" showed up on the oilprice.com website about ten days ago...and is another Saturday story. I thank U.D. for sending it...and the link is here.

Make no mistake; the Emir of Qatar is on a roll.

What an entrance at the UN General Assembly in New York; Sheikh Hamad bin Khalifa al-Thani called for an Arab coalition of the willing-style invasion of Syria, no less. [1]

In the words of the Emir, "It is better for the Arab countries themselves to interfere out of their national, humanitarian, political and military duties, and to do what is necessary to stop the bloodshed in Syria." He stressed Arab countries had a "military duty" to invade.

What he means by "Arab countries" is the petro-monarchies of the Gulf Counter-Revolution Club (GCC), previously known as Gulf Cooperation Council - with implicit help from Turkey, with which the GCC has a wide-ranging strategic agreement. Every shisha house in the Middle East knows that Doha, Riyadh and Ankara have been weaponizing/financing/providing logistical help to the various strands of the armed Syrian opposition engaged in regime change.

This is an update of the previous article on Qatar...and is more must read material for students of the "New Great Game". Not surprisingly, it's another story courtesy of Roy Stephens...and the link is here.

Tuesday's edition of the Casey Daily Dispatch is a must read piece by Casey Research's in-house energy expert, Marin Katusa.

Marin has a crystal clear understanding of the history of the Middle East, certainly as it applies to Saudi Arabia...and probably beyond. This essay is an extension of the must read book by author David Fromkin..."A Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East"...and if you haven't read it, you owe it to you to do so!

Marin gives you just a quick taste of the history...and what a history it is! As I said, it's a must read...and the link is here.

It may be hard to believe, but this series of photographs posted over at Zero Hedge on Tuesday, fit like a hand in a glove with all the other stories about the "New Great Game" posted above. They are stunningly beautiful...and more than worth your time. The link is here...and I thank Marshall Angeles for bringing them to our attention.

When Britain and France launched pre-emptive military strikes last year that would eventually depose Libyan leader Moammar Gadhafi and his regime, one of President Barack Obama's most senior advisers described U.S. involvement as "leading from behind," a most unfortunate descriptor that haunted the administration much as George W. Bush's "mission accomplished" label early in the 2003 Iraq war repeatedly hounded him.

This January, in announcing a new defense strategy, the White House made another blunder. This strategy was proclaimed as "a strategic pivot to Asia."

Almost immediately, the administration reversed gears. No one easily accepts responsibility for a major gaffe and "rebalancing" became the palliative excuse.

Yet, the damage was done. And the real reason for the pivot, namely an "emerging" China -- another offensive reference -- was unmentioned by the White House as if it were a bizarre relative hidden in the attic so as not to frighten the kiddies.

This UPI story was posted on their website on Wednesday...and is right out of the "New Great Game" playbook...and is a must read for sure. I thank Roy Stephens for his final offering in today's column...and the link is here.

Most Chinese staff at the giant Aynak copper deposit appear to have been spooked by consistent Taliban attacks and left the country.

Afghan officials are battling to convince nervous Chinese investors to restart work at a landmark $3 billion (1.8 billion pounds) mine project and not to worry unduly about insurgent rocket attacks to salvage one of the country's big hopes of economic independence.

Western donors have focused on Aynak, the largest foreign investment project in its history which could help the country, now reliant on development aid, find its feet after most foreign combat troops leave in 2014.

But the giant Aynak copper deposit, among the world's largest, is situated in Logar province, one of the country's most dangerous, southeast of Kabul and insurgents aiming to wreck the government's flagship project have stepped up attacks.

This Reuters story was filed from Kabul...and it found its way into a posting over at the mineweb.com yesterday...and I thank Donald Sinclair for his last offering in today's column as well. The link is here.

Grandiose statements about the “Asian Century” are now being followed by warnings that the days of rivers of gold from China are over. Economic growth needs growing quantities of oil. Where will it come from? Not from South East Asia which peaked in 2000 as will be shown in this article.

Hubbert's Peak is alive and well in South East Asia and Australia. As I...and many others...have carefully pointed out for the last number of years, we are already on the down-side slope of Hubbert's Peak. The "New Great Game" is all about oil...and who controls it.

This must read commentary [which is mostly charts] was posted over at the crudeoilpeak.info Internet site on September 10th...and I thank reader U.D. for his third and final offering in today's column. The link is here.

The first is with Egon von Greyerz...and it's headlined "High Net Worth Investors Pouring Money Into Gold". Next is this blog with Jeffrey Saut, who is Chief Investment Strategist for Raymond James. It's entitled "Gold Close To A Major Breakout Which Will Send It To $1,900+". The audio interview is with Pierre Lassonde.

Here's an open challenge to the world's gold producers: Start snapping up your rivals.

After all, gold is going higher, isn't it? Commerzbank AG believes it will hit $2,000 (U.S.) an ounce next year due to ongoing economic risks. And Bank of America believes it will rise to $2,400 an ounce by the end of 2014, thanks to ongoing economic stimulus efforts by the U.S. Federal Reserve Board.

Even gold executives, by nature usually conservative on gold prices, believe it will top $2,000 an ounce by this time next year, according to Bloomberg News.

If they're right, gold's winning streak will extend to 14 straight years. Its price has risen from a mere $272 an ounce at the end of 2000 to more than $1,750 today, for a total gain of about 550 per cent.

This story showed up in Toronto's Globe and Mail newspaper on Thursday...and I found it in a GATA release yesterday...and the link is here.

Better than stocks, better than gold, silver this year has been a sterling performer, rising more than 23% since January. We spoke with Phil Baker, CEO of Hecla Mining & started by asking him where the bulk of silver is coming from.

Nowhere in this Nightly Business Report interview does Phil mention anything about the 31% short-side corner that JPMorgan has on the silver market. It must have slipped his mind. This 3:30 minute video showed up on thestreet.com website yesterday morning...and I thank West Virginia reader Elliot Simon for his only offering in today's column. The link is here.

As the chart below shows, investors and those worried about fiat currencies resorted to precious metals in the third quarter. Silver outperformed all asset classes, with platinum, gold and palladium all making large moves as well.

One can only fantasize about the price move that silver would make if not was not under the thumb of JPMorgan et al. There's not much substance to this wallstcheatsheet.com story...but the graph is worth the trip...and the link is here. I thank Manitoba reader Ulrike Marx for her last story in today's column.

The International Monetary Fund said today it agreed to distribute $2.7 billion in windfall profits from gold sales to subsidize loans to poor countries.

The IMF's 188 members will receive a payment in proportion to their weight within the institution, the IMF said in an e-mailed statement today. As a pre-condition, countries must give assurances that they'll make at least 90 percent of the $2.7 billion available to a trust fund that lends to low-income countries at zero interest rates.

The gold sales took place in 2009-2010 as part of the fund's plan to shore up its finances. It brought in about $3.8 billion more than expected because of higher than anticipated gold prices.

This Bloomberg story is imbedded in a GATA release...and the link to that is here. It's worth the read.

This Reuters story went viral in the precious metals community yesterday. I rather doubt that it means much at the moment, but it's certainly back to the drawing board for the CFTC on this issue.

CFTC Commissioner Bart Chilton made a short statement about it yesterday. It, and the link to the Reuters piece, is embedded in this GATA release...and both are must reads. The link is here.