Culture of Life News Mon 2010-04-05 09:07 EDT

China Buys Volvo--Yuan Will Be #1 Currency In Future

...the Chinese are cutting out the use of dollars as international trade settlements. Right now, for various reasons, OPEC still uses the dollar in this way but they are now openly talking about changing their own policies. And change will come, no matter how deluded we are. Already, currency players and international investors are running from the sinking US dollar and rowing like mad to get aboard the euro and yuan ships. The near sinking of the euro scared everyone to death since Europe has no powerful central government but is rather, a very loose confederation. Which is very, very, very unstable. [dollar losing reserve currency status]

1 Currency; China Buys Volvo; Culture; future; Life News; Yuan.

naked capitalism Sat 2010-04-03 09:55 EDT

Guest Post: Top Analyst Says ``Developed Market Governments Are Insolvent By Any Reasonable Definition''

Washington's Blog

Dylan Grice, a top analyst for European financial giant Société Générale, writes: Developed market governments are insolvent by any reasonable definition. Who could have known? Everyone, actually...Grice also says: Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK . Until it does, the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold.

developed market governments; Guest Post; insolvent; naked capitalism; reasonable definition; Top Analyst Says.

Jesse's Café Américain Sat 2010-04-03 09:48 EDT

Whistleblower Speaks Out On J. P. Morgan's Market Manipulation - Reports Violations to the CFTC

Jesse

Do we have another Harry Markopolos here, describing in detail the manipulation of the gold market by J.P. Morgan to the CFTC? How does this square with the testimony today from the CFTC Commissioners, who seem to indicate that the markets are functioning extremely well, and that investor can have full confidence in them? I am led to understand that Mr. McGuire had offered to testify before the CFTC today, and that he was refused admittance. I do not know him, or the position he is in within the trading community. I cannot therefore assess his credibility or the validity of any evidence which he may present or possess. But I have the feeling that nothing will come of this...What seems particularly twisted about this is that JPM is the custodian of the largest silver ETF (SLV). Is anyone auditing that ETF, and watching any conflicts of interest and self-trading? Multiple counterparty claims on the same bullion? If you ever wanted to see a good reason for the Volcker rule, this is it. These jokers are one of the US' largest banks, with trillions of dollars in unaudited derivatives exposure, and they seem to be engaging in trading practices like Enron did before it collapsed...

CFTC; J. P. Morgan's Market Manipulation; Jesse's Café Américain; reported violations; Whistleblowers speak.

naked capitalism Thu 2010-04-01 19:57 EDT

Top ten reasons you know China has a financial bubble on its hands

Edward Harrison

Edward Chancellor, author of the seminal book on financial speculation and manias ``Devil Take The Hindmost,'' is now turning his eyes to China. He sees a number of red flags which point to excess in China...The trouble is that China today exhibits many of the characteristics of great speculative manias. The aim of this paper is to describe the common features of some of the great historical bubbles and outline China's current vulnerability...Is China in a bubble blow-off top like Japan post-Plaza accord? I say yes. I believe anyone who thinks this will not end badly is in for a rude awakening.

Financial bubble; handing; know China; naked capitalism; reasons; Top.

naked capitalism Mon 2010-03-29 13:48 EDT

Thinking the Unthinkable: What if China Devalues the Renminbi?

Marshall Auerback

Conventional wisdom holds that the Chinese are due (as in overdue) for a revaluation of their currency, the renminbi...We question whether a revaluation is the right answer for them, and more important, whether the Chinese themselves see a revaluation as a plus. The government has engineered an enormous increase in money and credit in the past year. In fact, it seems to be as great as 5 years' growth in credit in the previous Chinese bubble. The increase in money and credit is so great and so abrupt that you tend to get a high inflation quite quickly even if there are under utilised resources. Add to this the fact that China simultaneously is providing massive fiscal stimulus...Inflation can take off and thereby begin to ERODE the competitiveness of Chinese exports. Nouriel Roubini pointed out this issue in 2007: if China didn't revalue, inflation would do the trick regardless. A continued high rate of inflation relative to its trade partners would push up the price of goods in home currency terms, which in turn translates into higher export prices. This might be the real reason why China is so reticent to revalue its currency. The Americans might go crazy if the Chinese devalued, but if the inflation is high enough, they might have to do it, as it will severely erode their terms of trade and cause their tradeables sector to collapse.

China Devalue; naked capitalism; renminbi; Think; unthinkable.

The Money Game Fri 2010-03-19 12:38 EDT

Kenneth Rogoff's Sovereign Debt Warnings Are So Wrong, It's Like He's Living In A Different Time Period

Marshall Auerback

We've persistently taken the view that there is no economic doctrine, no magic number, which would imply a firm external constraint as far as public spending goes, when dealing with a sovereign government issuing debt its own floating rate, non-convertible currency. At some point, we may indeed have a resource constraint, or an inflation constraint, but not a national solvency issue. Yet the hysteria surrounding fiscal policy has moved from the realm of rational debate and metamorphosed into a matter of national theology...A sovereign government is never hostage to the dictates of financial capital because it no longer faces the external constraint that was always present under a gold standard regime. A nation that adopts its own floating rate currency can always afford to put unemployed domestic resources to work. Its government may issue liabilities denominated in its own currency (for interest rate maintenance reasons or to offer its savers an interest-bearing alternative to cash), and will service any debt it issues in its own currency...

different time periods; Kenneth Rogoff's Sovereign Debt Warnings; lively; Money game; wrong.

Fri 2010-03-12 08:51 EST

AlterNet: The Business Roundtable: The Most Powerful Corporate Business Club Most Americans Have Never Heard of

David DeGraw, Amped Status

...At the center of this group is the Business Roundtable, an organization representing Fortune 500 CEOs that is also interlocked with several lead elite organizations. Most Americans have never heard of the Business Roundtable. However, in my analysis, it is the most influential and powerful Economic Elite organization...The Business Roundtable is the most powerful activist organization in the United States. Their leaders regularly lobby members of Congress behind closed doors and often meet privately with the President and his administration. Any legislation that affects Roundtable members has almost zero possibility of passing without their support...look at healthcare and financial reform, along with the military budget. The healthcare reform bill devolved into what amounts to an insurance industry bailout and was drastically altered by Roundtable lobbyists...Almost every aspect of financial reform has been D.O.A. thanks to Roundtable lobbyists...The drastic rise in military spending is also a result of Roundtable lobbyists pushing the interests of large military companies...the Business Roundtable, Chamber of Commerce and the American Bankers Association - along with the Federal Reserve, a secretive quasi-government private institution, form the center of the Economic Elite's power structure...The Economic Elite dominate US intelligence and military operations. Other than the obvious geo-strategic reasons, the never-ending and ever-expanding War on Terror's objective is to drain the US population of more resources and further rob US taxpayers, while using our tax money to create a private military that is more powerful than the US military...

AlterNet; American; Business Roundtable; Heard; Powerful Corporate Business Club.

naked capitalism Sun 2010-02-28 13:08 EST

Martin Wolf is Very Gloomy, and With Good Reason

Martin Wolf, the Financial Times' highly respected chief economics editor, weighs in with a pretty pessimistic piece tonight. This makes for a companion to Peter Boone and Simon Johnson's Doomsday cycle post from yesterday...With the private sector debt overhang as great as it is, I doubt there is a way out of our mess that does not involve a period of debt restructuring and writeoffs. That process, no matter how adeptly handled, results in dislocation and has a chilling effect on bystanders...Swedish Lex interestingly sees another possible brake that may become operative prior to another bubble/bust cycle. He believes that the EU has much less tolerance for underwriting zombie banks than the US. The EuroBanks have written off less in the way of losses than their US peers, are also exposed to any EU sovereign debt defaults, and yet the biggest are still crucial parts of the international capital markets infrastructure (and therefore still tightly coupled to the very biggest US/UK firms). While any EU sovereign debt defaults could morph into a full blown crisis, the EU responses to the joint sovereign/bank debt overhang could lead to more radical changes in EU banking rules and practices that could blow back to the very biggest US banks in unexpected ways.

gloomy; good reason; Martin Wolf; naked capitalism.

Thu 2010-01-07 19:24 EST

Precious Metals Derivatives: Louder Music, Fewer Chairs

...The weight of gold and silver represented by derivatives on the precious metals has grown so large relative to all reasonable measures of physical supply that more and more questions and doubts are being raised about not only the integrity of the price discovery mechanisms for these metals, primarily among LBMA members and on the COMEX, but also the reliability of many paper claims to the physical delivery of them.

chair; Louder Music; Precious Metals Derivatives.

zero hedge Tue 2010-01-05 20:24 EST

Guest Post: Apocalypse Not: The Dollar

The apocalyptic flavor of the month is dollar crisis. One should take the possibility seriously. The data does offer reasonable assurance that it won't happen anytime soon. Yes, even in spite of massive (but not unprecedented) fiscal and monetary craziness, a socialist president, a populist legislature, and seething people just itching for the whole outhouse to go up in flames. Why doesn't it make sense that the dollar should be out on its rear while gold or oil and their devotees dance in the street?

Apocalypse; Dollar; Guest Post; Zero Hedge.

Culture of Life News Mon 2010-01-04 16:52 EST

The Horrors Of The Carbon Trade Derivatives Beast

Elaine Supkis

There are many ways of fixing things. Using the right tools is important. The international bankers have chosen a very nasty tool for fixing both global warming and dealing with the Hubbert Oil Peak: wild derivative futures markets modeled on the goofy OTC --CDS market! The thing that just destroyed international banking. We mustn't forget that the reason we had a banking meltdown was due to the sudden climb in energy prices beginning with the invasion of Iraq.

Carbon Trade Derivatives Beast; Culture; horror; Life News.

The Money Game Mon 2009-12-28 16:44 EST

Here's The Secret Reason We Eliminated The Bailout Caps On Fannie And Freddie (FNM, FRE)

On Christmas Eve, when the news was assured of getting no coverage whatsoever, The White House announced that it had eliminated the maximum bailout cap for Fannie Mae (FNM) and Freddie (FRE). As some observers have pointed out, all the move really did was formalize what everyone has figured for decades, that the two zombie GSEs were truly organs of the federal government, and that their debts would be backed up ad infinitum. So, why the move, and why then? Credit analyst Edwart Pinto shares his theories.

Bailout Caps; eliminate; Fannie; FNM; FRE; Freddie; Money game; s; secret reasons.

zero hedge Mon 2009-12-28 15:57 EST

What Came First: The Federal Reserve Or Economic Bubbles? A Brief History Of The Federal Reserve's Creation

A fantastic history of the reasons for, and the creation of, the Federal Reserve, courtesy of Murray Rothbard and our friends at Mises Institute, with the article originally appearing in Quarterly Journal of Austrian Economics, Vol. 2, No. 3 (Fall 1999), pp. 3--51. It is also reprinted in A History of Money and Banking in the United States and as a monograph. This is a must read for anyone who is curious why the Federal Reserve (with or without Goldman) is the sole organization responsible for not only perpetuating the interests of a select few of financial oligarchs, but in essence shaping monetary, fiscal, financial and political policy in the entire developed world.

Brief History; CAME; economic bubbles; Federal Reserve; Federal Reserve's Creation; Zero Hedge.

naked capitalism Wed 2009-12-23 10:03 EST

Guest Post: The Real Reason Newspapers Are Losing Money, And Why Bailing Out Failing Newspapers Would Create Moral Hazard in the Media

Washington's Blog

Conventional wisdom is that the Internet is responsible for destroying the profits of traditional print media like newspapers. But Michael Moore and Sean Paul Kelley are blaming the demise of newspapers on simple greed.

bailed; creating moral hazard; Failing Newspaper; Guest Post; lose money; media; naked capitalism; real reason newspapers.

Mish's Global Economic Trend Analysis Mon 2009-12-21 19:32 EST

Fictional Reserve Lending And The Myth Of Excess Reserves

Michael Shedlock

...The chart shows an unprecedented amount of excess reserves, almost $1.2 trillion. According to Money Multiplier Theory (MMT) and Fractional Reserve Lending, this amount may be lent out as much as 10 times over and when it does, massive inflation will result. The above hypotheses regarding "Excess Reserves" are wrong for five reasons. 1) Lending comes first and what little reserves there are (if any) come later. 2) There really are no excess reserves. 3) Not only are there no excess reserves, there are essentially no reserves to speak of at all. Indeed, bank reserves are completely "fictional". 4) Banks are capital constrained not reserve constrained. 5) Banks aren't lending because there are few credit worthy borrowers worth the risk.

excess reserves; Fictional Reserve Lending; Mish's Global Economic Trend Analysis; myth.

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.