The Full Feed from HuffingtonPost.com Tue 2010-03-09 17:30 EST

Janet Tavakoli: Washington Must Ban U.S. Credit Derivatives as Traders Demand Gold

Janet Tavakoli

Congress should act immediately to abolish credit default swaps on the United States, because these derivatives will foment distortions in global currencies and gold. Failure to act now will only mean the U.S. will be forced to act after these "financial weapons of mass destruction" levy heavy casualties. These obligations now settle in euros, but the end game is to settle them in gold. This is so ripe for speculative manipulation that you might as well cover the U.S. map with a bull's-eye...

Ban U.S. Credit Derivatives; com; full Feeds; HuffingtonPost; Janet Tavakoli; Traders Demand Gold; WASHINGTON.

Fri 2010-02-05 11:29 EST

Michael Hudson: Myths of Recovery

...Obama's most dangerous belief is in the myth that the economy needs the financial sector to lead its recovery by providing credit. Every economy needs a means of payment, which is why Wall Street has been able to threaten to wreck the economy if the government does not give in to its demands. But the monetary function should not be confused with predatory lending and casino gambling, not to mention Wall Street's use of bailout funds on lobbying efforts to spread its gospel...The pro-financial mass media reiterate that deficits are inflationary and bankrupt economies. The reality is that Keynesian-style deficits raise wage levels relative to the price of property (the cost of obtaining housing, and of buying stocks and bonds to yield a retirement income). The aim of running a ``Wall Street deficit'' is just the reverse: It is to re-inflate property prices relative to wages. A generation of financial ``ideological engineering'' has told people to welcome asset-price inflation (the Bubble Economy). People became accustomed to imagine that they were getting richer when the price of their homes rose. The problem is that real estate is worth what banks will lend -- and mortgage loans are a form of debt, which needs to be repaid.

Michael Hudson; myth; recovery.

Culture of Life News Sun 2010-01-31 11:46 EST

US Dollar No Longer Main FOREX Currency

Elaine Supkis

A meteorite came crashing through the stratosphere on Tuesday. A reminder about what real danger is all about. The US dollar is breaking apart in the stratosphere, too. The FOREX holdings of all our major trade rivals is rapidly changing from sucking in US dollars to sucking in yen and euros. Both Japan and the EU hate this but can't stop it. As I predicted in July, 2007, the final result of the US, EU and Japan demanding China strengthen the yuan while not demanding Japan strengthen the yen, has led to this global shift in dollar holdings.

Culture; Dollar; Life News; Longer Main FOREX Currency.

Ambrose Evans-Pritchard - Finance and business comments Thu 2010-01-07 19:00 EST

Global bear rally of 2009 will end as Japan's hyperinflation rips economy to pieces

The contraction of M3 money in the US and Europe over the last six months will slowly puncture economic recovery as 2010 unfolds, with the time-honoured lag of a year or so. Ben Bernanke will be caught off guard, just as he was in mid-2008 when the Fed drove straight through a red warning light with talk of imminent rate rises -- the final error that triggered the implosion of Lehman, AIG, and the Western banking system. As the great bear rally of 2009 runs into the greater Chinese Wall of excess global capacity, it will become clear that we are in the grip of a 21st Century Depression -- more akin to Japan's Lost Decade than the 1840s or 1930s, but nothing like the normal cycles of the post-War era. The surplus regions (China, Japan, Germania, Gulf ) have not increased demand enough to compensate for belt-tightening in the deficit bloc (Anglo-sphere, Club Med, East Europe), and fiscal adrenalin is already fading in Europe. The vast East-West imbalances that caused the credit crisis are no better a year later, and perhaps worse. Household debt as a share of GDP sits near record levels in two-fifths of the world economy. Our long purge has barely begun.

2009; Ambrose Evans Pritchard; Business Comment; ending; finance; Global Bear Rally; Japan's hyperinflation rips economy; pieces.

Mon 2009-12-28 15:56 EST

Provide A Public Service With Small Profits, Or Destroy It With Large Ones? | The Agonist

...I don't buy all the hype that the internet is even the primary culprit of the demise of journalism. The primary culprit is the same as it is all over the country, in every industry and in government: equity extraction...You can provide a public service with small profits for a long, long time, but if you demand large ones you will destroy it. Just ask the big banks.

Agonist; destroyed; large ones; provided; Public services; small profit.

naked capitalism Mon 2009-12-21 16:36 EST

The China Decoupling Myth?

One of the motherhood and apple pie items in econ-land is that the world needs global rebalancing, which is code for China has to stop being a mercantilist and currency manipulator, and the US has to quit borrowing a ton and overconsuming (or underproducing, which is another way to frame the same problem). But once everyone agrees that that's a swell idea, no one seems particularly inclined to do anything about it, except complain about the consequences.One of the things that has led to somewhat less attention to this elephant in the room is the perception that China has ``decoupled.'' If it has managed to fare reasonably well in this global upheaval, then surely it is becoming more self sufficient and therefore less dependent on US demand, so the situation is already righting itself, correct? Wrong, says Dror Poleg...

China Decoupling Myth; naked capitalism.

naked capitalism Mon 2009-12-21 15:58 EST

Obama's demand that fat cats lend is no ode to Samuelson

Edward Harrison

...to-do about President Obama's fat cat remarks and his meeting with bankers exhorting them to lend...we are getting a bunch of populist rhetoric which is pure politics to induce banks to lend recklessly and save the economy when basic economics would tell you that there is a deficit of lending capacity and demand for credit. It is the absurd kabuki theater of depression economics...David Rosenberg...sees something altogether more cynical -- an orchestrated campaign to shame and bully banks into going against their fiduciary responsibility and lending irresponsibly again!...Easy money is not the solution, it is the problem. Jobs are the solution...fiscal policy is more effective than monetary policy in a depressionary environment. Quantitative easing is overrated.

fat cats lend; naked capitalism; Obama s demands; Ode; Samuelson.

zero hedge Wed 2009-11-25 11:40 EST

Neil Barofski's AIG Counterparty Payment Report Released; Demands Federal Reserve Transparency

The full SIGTARP report on AIG and its counterparty payments has been released. It contains all you need to know about the NYFED's bailout of Goldman Sachs. We are currently going through the report, and will post our findings as we have them...the most critical conclusion presented by Neil Barofsky: The SIGTARP blasts the Fed's ongoing desire to keep everything hidden and under a layer of opacity, as it keeps on lying to taxpayers that all is fine with the US economy, and urges investors to part with their hard-earned dollars and "invest" in toxic husks of zombie companies, when it knows full well that the entire financial system is constantly on the cusp of yet another collapse, and the market ponzi scheme could collapse at any minute.

Demands Federal Reserve Transparency; Neil Barofski's AIG Counterparty Payment Report Released; Zero Hedge.

naked capitalism Wed 2009-11-25 11:37 EST

Marc Faber: ``I don't think that you'll see gold below $1,000 per ounce probably ever''

Edward Harrison of Credit Writedowns

...cash is now trash with zero interest rates. So holding cash means underperforming. Bonds present an unfavourable risk/reward. Therefore, commodities and precious metals look attractive. One must also have equities exposure. Interestingly, he makes a fairly explicit statement in favour of peak oil from about 1:40 in the second video below. The world is adding less in oil reserves than it consumes. That necessarily means a tighter supply/demand dynamic, especially given the demand in emerging economies for oil.

000; 1; Marc Faber; naked capitalism; ounce probably; see gold; Think.

The Guardian World News Fri 2009-11-20 09:45 EST

US pressure distorted oil figures, says whistleblower

Terry Macalister

Exclusive: Watchdog's estimates of reserves inflated says top official The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying. The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves. The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow -- which is used by the British and many other governments to help guide their wider energy and climate change policies.

Guardian World News; pressure distorted oil figures; says whistleblowers.

The Big Picture Fri 2009-10-23 09:03 EDT

Dick Alford on Opportunities Lost by the Fed

Richard Alford (via Chris Whalen)

Against a backdrop of continued financial fragility and extraordinary policy actions, policymakers are discussing re-balancing global growth, restoring financial stability, and the future of the Dollar as the world's reserve currency. In 2005, Edwin Truman proposed a list of policy measures that if followed would have reduced the US external imbalance and placed the reserve status of the Dollar on better footing. Truman's proposal differed from the standard litany of US fiscal discipline, Dollar adjustment, and increased demand in surplus countries. It called upon the Federal Reserve to slow the growth in US demand. More recent research, by Shin and Adrian, suggests that if the Fed had heeded Truman's prescription, then monetary policy would have also mitigated the recent turmoil in financial markets...

Big Picture; Dick Alford; Fed; opportunity lost.

Sun 2009-10-11 18:48 EDT

The Ongoing Plight of the U.S. "Nightcrawler" - Part 2 | zero hedge

We're just as scroomed as we were a year ago--skying stock markets and gold-hating trolls posting "Gold isn't money" notwithstanding. There is absolutey ZERO chance that the Fed raises their Fed Funds Politburo rates, and a ONE HUNDRED PERCENT CERTAINTY that both the Fed and Uncle Sugar MUST continue their monetizations, back stops and being the "lenders, insurers, and market of last resort" for all things credit, but especially the McHousing market where they have multi-trillion fiatsco exposure. So, it is little wonder that the U.S. fiatsco is getting pounded in the currency casino and that people are piling into PMs in droves--even going so far as to DEMAND physical delivery from the corrupt exchanges, even as the jawboning and pie-holing by the Fed Heads and Treasury twerps continues unabated. Because we are still very much in the midst of the "convulsions" of collapse AND the massive monetary and fiscal insanity the Fed and Uncle are undertaking to fight them.

nightcrawlers; Ongoing Plight; Part 2; U.S.; Zero Hedge.

zero hedge Sun 2009-10-11 16:45 EDT

Interview With A Mad Hedge Fund Trader

...Mad Hedge: Stay away from natural gas. The volatility will kill you. If you are a masochist, then buy it only when it's cheap, on big dips, in the $3/MBTU range. In the last three years, thanks to the new ``fracting'' technology used in oil shales, we have discovered a 100 year supply of natural gas sitting under the US, and the producers have not been able to cut back fast enough. So now we have a supply glut, and we are almost out of storage. This is what took us down from $13 to $2.40 in 18 months. The lack of hurricanes has not helped demand either. Producers have been cutting back like crazy, trying to balance supply and demand, with a breakeven point of $2. They need a cold winter to help bring things back into balance. If the industry gets organized, then gas can become the 20 year bridge we need, until energy alternatives kick in. That makes me a big supporter of the ``Pickens Plan.''

interview; Mad Hedge Fund Trader; Zero Hedge.

The Baseline Scenario Thu 2009-10-08 16:52 EDT

The Problem with Securitization

James Kwak

The New York Times has a story on ``Paralysis in the Debt Markets'' which says, basically, that credit has dried up because of lack of demand for asset-backed securities. In English, that means that since no one wants to invest in securities that are made out of home mortgages, the people who originate mortgages have no place to sell the mortgages to, so they don't have any money to lend. And this is also true of commercial real estate, student loans, and so on. For example, ``A once-thriving private market in securities backed by home mortgages has collapsed, from $744 billion in 2005, at the peak of the housing boom, to $8 billion during the first half of this year.''...the private market may never recover. The boom in securitization was based on investors' willingness to believe what investment banks and credit rating agencies said about these securities.

Baseline Scenario; problem; securitizations.

naked capitalism Thu 2009-10-08 16:47 EDT

Latvia in Crisis; Threatens to Stiff Swedish Banks With Mini-Jubilee

Latvia and to a lesser extent Estonia and Lithuania had a massive and unsustainable current account deficit...Foreign benefactors have just put the choke collar on Latvia. The government was unable to roll over its debt this week...Sweden on Tuesday put pressure on the tiny Baltic nation to fulfill required spending cuts, threatening to withhold payments [from a] euro rescue loan put together by Nordic countries...But Latvia does not appear to be ready to accede to Sweden's demands. The immediate cause for concern is that Latvia will simultaneously devalue its currency and provide a mechanism for its consumers to partially default on mortgages held by foreign banks.

Crisis; Latvia; Mini-Jubilee; naked capitalism; Stiff Swedish Banks; threatens.

Mon 2009-10-05 11:23 EDT

New Bubble Threatens a V-Shaped Rebound

Andy Xie

...What we are seeing now in the global economy is a pure liquidity bubble. It's been manifested in several asset classes. The most prominent are commodities, stocks and government bonds. The story that supports this bubble is that fiscal stimulus would lead to quick economic recovery, and the output gap could keep inflation down. Hence, central banks can keep interest rates low for a couple more years...I think the market is being misled. The driving forces for the current bounce are inventory cycle and government stimulus. The follow-through from corporate capex and consumption are severely constrained by structural challenges. These challenges have origins in the bubble that led to a misallocation of resources. After the bubble burst, a mismatch of supply and demand limited the effectiveness of either stimulus or a bubble in creating demand...he structural challenges arise from global imbalance and industries that over-expanded due to exaggerated demand supported in the past by cheap credit and high asset prices. At the global level, the imbalance is between deficit-bound Anglo-Saxon economies (Australia, Britain and the United States) and surplus emerging economies (mainly China and oil exporters)...The old equilibrium cannot be restored, and many structural barriers stand in the way of a new equilibrium. The current recovery is based on a temporary and unstable equilibrium in which the United States slows the rise of its national savings rate by increasing the fiscal deficit, and China lowers its savings surplus by boosting government spending and inflating an assets bubble.

New Bubble Threatens; Shaped Rebound.