There are limits to how much aid the Federal Reserve can provide to the U.S. economy, Fed Chairman Ben Bernanke warned on Wednesday as he urged politicians to tackle a year-end fiscal cliff that could derail the country's gradual recovery.

"We have innovated quite a bit in the last few years, and (it) is always possible we could find new ways to provide support for the economy," he told a news conference after the Fed announced another round of bond buying to spur growth.

"But it is certainly true ... that with interest rates near zero and the (Fed's) balance sheet already large, that the ability to provide additional accommodation is not unlimited."

This story showed up on the moneynews.com Internet site on Wednesday afternoon...and I thank West Virginia reader Elliot Simon for our first story in today's column. The link is here

Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said the Federal Reserve’s latest round of monetary stimulus will enable the Treasury department to issue debt for no cost.

The central bank said yesterday it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, and for the first time linked the outlook for its main interest rate to unemployment and inflation targets. The purchases will add to the $40 billion a month it is buying of mortgage debt.

“What really happens, and this is critically important, is that the Treasury issues bonds and the Fed buys them and then it remits interest to the Treasury,” Gross, who runs the $285 billion Total Return Fund, said in an interview on Bloomberg Television with Betty Liu. “It means the Treasury is issuing debt for free. There are complications. Inflation is one of the complications.”

This Bloomberg story was posted on their website early yesterday morning...and it's courtesy of Manitoba reader Ulrike Marx. The link is here.

At the Dealbook conference, Ray Dalio, Steve Schwarzman and David Rubinstein just wrapped up a panel on investing and markets.

Of particular interest was Ray Dalio, the hedge fund god who has been killing it throughout the crisis.

And so you have to be intrigued that he's bearish.

He's not wildly so (thinks stocks will do better than bonds) but his basic idea is that risk premiums are maxed out, and have to come down. In other words, people have paid up max dollar for all risk assets thanks to the Fed dropping rates to rock bottom. Now that will reverse.

This short, but interesting read, was posted on the businessinsider.com Internet site on Wednesday afternoon...and I found it in yesterday's edition of the King Report. The link is here.

Home seizures in the U.S. rose 5.4 percent last month, the first annual gain in two years, as lenders seek to manage the flow of distressed properties without disrupting the housing recovery, according to RealtyTrac.

Banks repossessed 59,134 homes, up from 56,124 from November 2011, the Irvine, California-based data firm said today in a report. The increase was the first since October 2010, when foreclosures slowed after allegations that lenders were using faulty practices to take property from delinquent homeowners. Seizures climbed 11 percent from the previous month.

“Lenders have figured out how to play the foreclosure game in this new world where they’re getting a lot more scrutiny,” Daren Blomquist, RealtyTrac vice president, said in a telephone interview. “Everybody involved in the foreclosure industry has finally got a good handle on how to manage these properties to create a more managed and stable flow.”

This Bloomberg story showed up on their Internet site late on Wednesday evening Mountain Time...and it's courtesy of Phil Barlett. The link is here.

If you haven’t switched away from one of the big banks, chances are you’ve at least considered it. Many Americans, fed up with hidden fees and excessive charges, have said goodbye to the big banks in favor of credit unions in recent years. Here in Seattle, that shift has been dramatic.

Twenty-eight percent of Seattle-area households bank primarily with a credit union now, up from 21.5 percent in 2008, according to market data firm Scarborough Research. That is a 30 percent jump in credit union banking, the ninth largest increase out of 96 metro areas around the nation. About half of all households banking with a credit union in the Seattle-Bellevue-Everett area are with BECU.

The story from The Seattle Times was posted on their website early on Tuesday morning....and naturally enough, it's courtesy of Washington state reader S.A. The link is here.

Major central banks acted Thursday to try to shore up confidence in the global financial system by extending a program that makes it easier for banks to borrow U.S. dollars.

Thursday's move renews for a year a program that was expanded in November 2011 in response to Europe's debt crisis. It had been set to expire in February.

The program lets central banks swap their currencies at the U.S. Federal Reserve in exchange for dollars. Commercial banks can then borrow dollars, the dominant currency of trade, at low rates. Central banks pay the Fed interest on the dollars they lend to commercial banks.

The move is intended to help stabilize a global financial system straining from Europe's financial crisis and slowing growth worldwide. The alliance of 17 European countries that use the euro is in recession, with unemployment at a record high 11.7 percent.

This AP story showed up in the Miami Herald yesterday...and I found it hiding in a GATA release. The link is here.

George Osborne's economic credibility suffered a fresh blow on Thursday when Standard and Poor's became the third of the major credit ratings agency to put the UK's AAA rating on negative outlook.

In a statement issued just after the London markets closed, S&P warned there was a one-in-three chance that it would strip the UK of its cherished AAA status within the next two years.

"We believe this could occur in particular as a result of a delayed and uneven economic recovery, or a weakening of political commitment to consolidation," it said.

This story appeared on The Guardian website early yesterday evening GMT...and I thank Elliot Simon for alerting me to this news item. The link is here.

If you've ever been arrested on a drug charge, if you've ever spent even a day in jail for having a stem of marijuana in your pocket or "drug paraphernalia" in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

The banks' laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows."

Matt is steaming mad...and rightfully so. The usual "pithy prose" warning is issued for this absolute must read commentary. It was posted on the Rolling Stone magazine website yesterday afternoon...and I thank Ulrike Marx for her second offering in today's column. The link is here.

Swiss bank UBS faces a combined fine of about $1 billion to settle charges of rigging the LIBOR interest rate benchmark early next week, a person familiar with the situation said on Thursday.

Such a penalty would be more than double the $450 million fine levied on British bank Barclays in June by U.S. and British regulators and would be the third massive U.S. fine to hit big European banks this week.

"The global settlement is about $1 billion. It's expected early next week, on Monday or Tuesday," the source said. UBS declined to comment.

This Reuters story showed up on the cnbc.com Internet site just after the markets closed in New York yesterday afternoon...and it's courtesy of Elliot Simon. The link is here.

Five hundred officials with the German Federal Criminal Office (BKA), the federal police and tax investigators searched Deutsche Bank's headquarters on Wednesday morning. A short while later, the finance giant declared that its CEO Jürgen Fitschen had become the subject of an investigation. Officials are looking into possible value-added tax evasion by Fitschen and the company's chief financial officer Stefan Krause.

Specifically, investigators are examining whether the company conducted illegal trade in carbon emissions certificates. The Frankfurt public prosecutor's office has accused 25 of the bank's employees of serious tax evasion, money laundering and obstruction of justice. On Wednesday, they ordered the arrest of five suspects.

Now Fitschen is also the subject of investigation. Is there a chance of him losing his job, though? Probably not.

Unless something radical happens, we've now discovered that the large banks are basically above the law. A slap-on-the-wrist fine, but nobody goes to jail, no matter how egregious the crime. As I said yesterday, it has become just another cost of doing business. This story was posted on the German website spiegel.de yesterday...and it's courtesy of Roy Stephens. The link is here.

European Union officials reached a tentative deal with lawmakers to ban banker bonuses that are more than double annual salaries.

Negotiators from the European Parliament and Cyprus, which holds the rotating presidency of the EU, brokered the draft agreement during a meeting today, said Sharon Bowles, chairwoman of the assembly’s economic and monetary affairs committee. The deal is contingent on compromises being confirmed on some other parts of an EU law on bank capital.

The accord would cap a banker’s bonus at the same level as fixed salary, while giving room for larger awards with shareholder approval, Bowles said in an e-mail after the meeting in Strasbourg, France. A maximum limit would be set forbidding awards of more than twice fixed pay.

This story was posted on the Bloomberg website mid-morning yesterday Mountain Time...and it's Ulrike Marx's third and final offering in today's column. The link is here.

The minister compares his office with a position on the battlefield, one that you only leave as a fallen soldier -- or when the last bullet has been shot.

Arnaud Montebourg, the French minister of industrial renewal, carries his head high. In his mind, politics is a combat sport. A shiny, decorative sword hangs on the wall behind him in his office on the third floor of the enormous Ministry of the Economy, Finances and Industry in Paris. The 50-year-old combative politician tends to rush headlong into battle, but he is often left with no choice but to carry out the maneuver he despises the most: retreat.

That was the case last weekend, after Montebourg had become locked in a spectacular wrestling match with the steel giant ArcelorMittal, which employs 20,000 people at 150 sites in France. In Florange, north of the city of Metz, which sits near the borders with Germany and Luxembourg, the company planned to permanently shut down two blast furnaces and lay off 630 workers.

This longish essay is a must read in my opinion. It was posted on the spiegel.de Internet site yesterday...and it's another article courtesy of Roy Stephens. The link is here.

Germany's Angela Merkel and other centre-right leaders have indicated they would like to see Mario Monti to keep on running Italy instead of Silvio Berlusconi.

The centre-right leaders - as well as the two Italian political adversaries - met in Brussels ahead of an EU summit on Thursday (13 December) in an event designed to prevent Italy's political turmoil from stirring up the euro-crisis once again.

The centre-right European People's Party (EPP) chief Hans Martens admitted to journalists he stage managed the whole thing so that neither Monti nor Berlusconi knew the other would be there until the last minute to make sure that both men showed up.

"It was a clarifying meeting in which we wanted to hear about the political situation and to express our massive support for the policies pursued by Monti, not only for Italy, but for the stability of the eurozone as a whole," Martens said.

This story was posted on the euobserver.com Internet site early yesterday evening in Brussels...and I thank Roy once again for bringing it to our attention. The link is here.

As the Eurozone flails about to keep its chin above the debt crisis that is drowning periphery

countries, and as the European Union struggles to duct-tape itself together with more “integration,” Sweden is having second thoughts: never before has there been such hostility toward the euro.

Sweden is a special case. It joined the EU in 1995 after its people had graciously been allowed to express their will in a referendum in 1994—with 52.3% voting in favor.

As every country that joins the EU, Sweden signed an accession treaty that obligates it to adopt the euro, but without deadline. So in 2003, the government thought time had come to make the move. It asked the people in a non-binding referendum if they wanted to accede to the Eurozone. September 14th was the day.

The people rebelled...and demolished the euro, with 55.9% voting against it and 42% for it. They didn’t want to trade in their beloved krona for the newfangled currency. They didn’t want to give up sovereignty over their monetary policy.

It shook up eurocrats, member governments, finance ministers, and heads of state around the continent. And the European power structure learned a lesson: don’t let the riffraff decide; it was the last time that people in the EU had been allowed to vote on the euro.

This op-ed piece showed up on the businessinsider.com Internet site early yesterday morning...and it's definitely worth reading if you have the time. It's Roy Stephens final offering in today's column...and the link is here.

The first blog is with Rick Rule...and it's headlined "Largest Capital in the World Now Entering Gold & Silver Space". Next is Michael Pento. It's entitled "Fed's Balance Sheet to Hit a Shocking $6 Trillion". The last blog bears the title "KWN Friday Gold Chart Mania"...and all the charts are courtesy of Nick Laird. The audio interview is with GATA's Chris Powell...and it's a must listen.

Jim Sinclair wrote yesterday that gold price suppression via the U.S. Federal Reserve, Exchange Stabilization Fund, and their agent, investment house Goldman Sachs, has been blatant "for months." He adds: "They were so obvious between $1,775 and $1,800 that Petunia can call the strategy. ...

"Right now the geniuses in charge of the ESF are driving gold via the paper market directly into Eastern hands. There is much speculation about the amount of gold the United States holds and about its deliverability, as much gold and silver were used in the Manhattan Project and no audit has ever been carried out."

Sinclair encourages reading of the law establishing the ESF.

The agency's purported purpose is to maintain "orderly exchange arrangements and a stable system of exchange rates," which is a polite way of describing market rigging. As GATA often has noted, the law says the ESF "may deal in gold, foreign exchange, and other instruments of credit and securities the secretary [of the treasury] considers necessary" -- that is, to trade in anything, including silver, and to do so in secret, as "decisions of the secretary are final and may not be reviewed by another officer or employee of the government."

There's a lot more to this GATA release than Jim's commentary...and the link to it. It's worth your time to run through this entire GATA release from yesterday...and the link is here.

This very short [1:23 minutes] video clip was posted on the bloomberg.com Internet site yesterday...and it's worth watching. I thank Washington state reader S.A. for his second item in today's column...and the link is here.

Perhaps you shouldn’t show these pictures to your partner lest they have a zeal for diamonds and you a weak hand on a (well stocked) credit card.

Below are pictures of Stornoway Diamonds' latest high value diamond finds at its Renard diamond project from an ongoing bulk sample test.

The first picture shows the largest two of the high value batch. To the left, the diamond is nearly 10 carats while the one on the right has about six and a half carats to it.

The estimated values are quite astounding. The larger of the two per Stornoway estimates would go for some C$70,000 (C$7,000 a carat). The right is the poorer cousin, worth a paltry C$30,000 (C$4,700 a carat).

Not all eye candy is made from gold and silver...and the photos embedded in this article are proof of that. This was posted on the mineweb.com Internet site earlier this morning in London...and I found it on their website in the wee hours of this morning. The link is here.

In spite of rapid development in the Chinese silver market over the past decade, both silver demand and supply are expected to achieve further growth, says a Thomson Reuters GFMS study released Thursday by the Silver Institute.

Meanwhile, investment demand from Chinese silver investors has jumped in recent years, making China the world’s largest market for both physical investment and paper trading of silver future and other similar contracts, says the study.

In 2011, China’s demand for silver bars and coins soared to 17 million ounces, accounting for 8% of worldwide net purchases of physical silver.

This must read story was filed from Reno just after midnight...and Ulrike Marx found it on the mineweb.com Internet site shortly after it was posted. The link is here.

Maybe it's just a coincidence but maybe instead it's a propaganda campaign launched by the British government and the Bank of England to assuage growing international concern about the oversubscription, lending, and swapping of Western central bank reserves...because the Bank of England welcomed Queen Elizabeth II herself for a grand tour of its gold vault, which attracted all the major British news organizations and instantly became a sensation throughout the United Kingdom.

WTF??? My jaw hit the floor when I read this...and you could have knocked me over with a feather. The Bank of England and the LBMA et al must be terrified to the core to pull off a ballsy publicity stunt of this magnitude. I wonder if you have any idea, dear reader, of just how highly placed one would have to be to ask a Royal Favour of this size? It would come from the very top....the Prime Minister and/or Sir Mervyn King himself...amongst others...as Her Majesty would certainly have never come up with this idea on her own.

Based on this act, I'd say that the problems in the physical market at the LBMA and the Bank of England are orders of magnitude worse than even we at GATA could have possibly imagined. As far as I'm concerned, all bets are off going forward...despite what JPMorgan et al are doing to the price in the paper market just now.

Not in my wildest dreams did I think it would come to this. This absolute must read story from The Guardian was posted on the gata.org Internet site yesterday...and the link is here. You couldn't make this up if you tried.