Financial Crisis

[cloudhopper]

China newspaper warns of disaster over Fed move

Washington's latest move to print more money is a form of indirect currency manipulation that could lead to a new round of currency wars and even global economic collapse, a leading Chinese newspaper warned on Monday.

http://www.reuters.c...E6A704120101108

Well if you're going to continue indirectly pegging your currency to the USD by printing more Yuan then yes this is what will indeed happen, leading Chinese newspaper.

[midas]

Natives are getting restless. Payback starting....

The real payback is when they start finding the big fish with odd sized holes

Like .308 & .223 in their heads

maybe this will spur them along

NIA Projects Future U.S. Food Price Increases

The National Inflation Association today announced the release of its report about NIA's projections of future U.S. food price increases due to the massive monetary inflation being created by the Federal Reserve's $600 billion quantitative easing.NIA's President Gerard Adams, who believes food inflation will take over in 2011 as America's greatest crisis. According to Mr. Adams, making mortgage payments will soon be the last thing on the minds of all Americans. We currently have a currency crisis that could soon turn into hyperinflation and a complete societal collapse.

NIA projects that at the average U.S. grocery store it will soon cost

$11.43 for one ear of corn

$23.05 for a 24 oz loaf of wheat bread

$62.21 for a 32 oz package of Domino Granulated Sugar

$24.31 for a 32 fl oz container of soy milk

$77.71 for a 11.30 oz container of Folgers Classic Roast Coffee

$45.71 for a 64 fl oz container of Minute Maid Orange Juice

$15.50 for a Hershey's Milk Chocolate 1.55 oz candy bar.

NIA also projects that by the end of this decade, a plain white men's cotton t-shirt at Wal-Mart will cost $55.57.

http://www.inflation.us/foodpriceprojections.html

[Naam]

Well if you're going to continue indirectly pegging your currency to the USD by printing more Yuan then yes this is what will indeed happen, leading Chinese newspaper.

for the record: there is only one major reason that forces China to print more domestic currency and that is for the mandatory exchange of foreign currency earned by exporters. the currency peg in combination with the U.S. printing US-Dollars is no more a reason for China to print CNY as is the proverbial bag of rice which topples over in a warehouse located in Northern Manchuria.

[Naam]

NIA also projects that by the end of this decade, a plain white men's cotton t-shirt at Wal-Mart will cost $55.57.

new or second hand?

[midas]

NIA also projects that by the end of this decade, a plain white men's cotton t-shirt at Wal-Mart will cost $55.57.

new or second hand?

if that seems expensive Sir.....can i interest you in one of these ?

[jcon]

Natives are getting restless. Payback starting....

The real payback is when they start finding the big fish with odd sized holes

Like .308 & .223 in their heads

maybe this will spur them along

NIA Projects Future U.S. Food Price Increases

The National Inflation Association today announced the release of its report about NIA's projections of future U.S. food price increases due to the massive monetary inflation being created by the Federal Reserve's $600 billion quantitative easing.NIA's President Gerard Adams, who believes food inflation will take over in 2011 as America's greatest crisis. According to Mr. Adams, making mortgage payments will soon be the last thing on the minds of all Americans. We currently have a currency crisis that could soon turn into hyperinflation and a complete societal collapse.

NIA projects that at the average U.S. grocery store it will soon cost

$11.43 for one ear of corn

$23.05 for a 24 oz loaf of wheat bread

$62.21 for a 32 oz package of Domino Granulated Sugar

$24.31 for a 32 fl oz container of soy milk

$77.71 for a 11.30 oz container of Folgers Classic Roast Coffee

$45.71 for a 64 fl oz container of Minute Maid Orange Juice

$15.50 for a Hershey's Milk Chocolate 1.55 oz candy bar.

NIA also projects that by the end of this decade, a plain white men's cotton t-shirt at Wal-Mart will cost $55.57.

http://www.inflation...rojections.html

A) Hershey's is NOT chocolate. If anybody doesn't believe me, buy one and smell it. What does that smell remind you of?

So does that change the Wendy's 99-cent menu? Gotta love those fries.

C) Is there an NDA (National Deflation Association) and what do they have to say?

D) I think these prices are the only way to control obesity in the USA (lord knows individuals aren't doing it). I'm gonna go out on a limb and say that your average American (some 40lbs overweight, and another 40 away from underweight, so about 80lbs from actually ''hungry'' - hmm better call it 100lbs) would be better off with prices like these. Add high oil prices and they may have to *gasp* walk. This would decrease health care costs dramatically and would have a positive knock-on effect. That is my health care policy proposal. Not 1000 pages. One paragraph. So simple it's borderline brilliant, I must say.

[midas]

A) Hershey's is NOT chocolate. If anybody doesn't believe me, buy one and smell it. What does that smell remind you of?

Ha ha ! I know it smells like vomit !

So does that change the Wendy's 99-cent menu? Gotta love those fries.

How can you talk about loving fries and the wisdom of controlling obesity in the same posting ?

C) Is there an NDA (National Deflation Association) and what do they have to say?

Yes there certainly is and their motto is great “Promoting benefits of declining prices and increased purchasing power of money in the hands of common people.”

See ;- http://ndainfo.wordpress.com/why-we-need-deflation/

But they don’t talk about commodity price increases because it’s also happening world wide.

D) I think these prices are the only way to control obesity in the USA (lord knows individuals aren't doing it). I'm gonna go out on a limb and say that your average American (some 40lbs overweight, and another 40 away from underweight, so about 80lbs from actually ''hungry'' - hmm better call it 100lbs) would be better off with prices like these. Add high oil prices and they may have to *gasp* walk. This would decrease health care costs dramatically and would have a positive knock-on effect. That is my health care policy proposal. Not 1000 pages. One paragraph. So simple it's borderline brilliant, I must say.

Americans may “ enjoy “ their food..... but I don’t think they love it with a passion....like Europeans ..?

I mean I compare your reaction to the possible need to compromise regarding what you eat with the way the Greeks reacted to the possibility that they will have to “ cut back “ on what food they buy …..

“ newspaper quoted a typical Greek after the austerity measures were announced: ““If you take away my family’s bread, I’ll take you down — the government needs to know that. And don’t call us anarchists if that happens! We’re heads of our families and we’re desperate.”

[flying]

NIA Projects Future U.S. Food Price Increases

While not as crazy as that list yet...I have been saying for some time now that while they claim no inflation

prices for certain food stuff has been going up considerably.

[flying]

Obama and the Congress has failed to reform the Too Big To Fail banks, and so this is the state the world now finds itself in with Wall Street and other big multinational banks taking record bonuses this year from their people. In the US alone Wall Street will be taking a record $144 billions in bonuses this year while the country suffers. To put this in context, M1 money supply is now about 1,800 billion. So Wall Street is taking about 8% of the national M1 money supply in personal bonuses this year not including subsidies both direct and indirect. That is not a financial system; that is racketeering. And any reform movement that does not address this need for reform is misguided at best.

http://jessescrossroadscafe.blogspot.com/

How come the Taiwanese understand it better than the US citizens?

Edited November 9, 2010 by flying

[Abrak]

There is a very good critique of Bernanke economics in this link (as well as a very good argument why the Fed might be acting beyond its jurisdiction.) If you simply read the first paragraph which is a quote from Bernanke on 4th November, it sums up his thinking, they way he has always thought and what he seems to believe.

(Particularly note the use of the phrase 'virtuous circle' in the quote!!)

http://www.hussmanfunds.com/wmc/wmc101108.htm

[Abrak]

Obama and the Congress has failed to reform the Too Big To Fail banks, and so this is the state the world now finds itself in with Wall Street and other big multinational banks taking record bonuses this year from their people. In the US alone Wall Street will be taking a record $144 billions in bonuses this year while the country suffers. To put this in context, M1 money supply is now about 1,800 billion. So Wall Street is taking about 8% of the national M1 money supply in personal bonuses this year not including subsidies both direct and indirect. That is not a financial system; that is racketeering. And any reform movement that does not address this need for reform is misguided at best.

http://jessescrossroadscafe.blogspot.com/

How come the Taiwanese understand it better than the US citizens?

To be honest the whole situation is so absurd all you can do is laugh.

Yesterday, Cameron on a visit to China with a bunch of UK freeloaders was approached by CEO or Chairman of RBS and told that if the UK imposed restrictions on banking bonuses they might 'move elsewhere'. Now bear in mind that RBS is 68% owned by the UK Government (83% including B shares) as a result of a massive bailout two years ago, it has a loan/deposit ratio of over 150% with, I suspect, its deposits and its loans to finance its loans guaranteed by the UK Government.

Cameron should have asked for his passport, ripped it into shreds and told the Chinese he was a pedophile.

[Abrak]

Getting back to the financial crisis. Although things may seem remarkably quiet in Euroland, the problems havent been going away - in fact, there are signs of renewed excitement.

Irish sovereign debt yields have gone parabolic in the last two months rising from 5% to as high as 8.4% yesterday. Ireland is a piddly shit little economy (smaller than Greece) but it is in one hel_l of a mess. The main problem is the banking disaster which is of a scale that might actually be unprecedented in history. By that I mean that bank losses by 2012 are estimated at Euro85bn or 55% of this years GDP (which is heavily overinflated - Irish GDP per capita is the highest in Euroland after Luxembourg.)

It seems likely that they will eventually call in the IMF, simply on the basis that a Government that oversaw such a financial disaster, couldnt really be trusted to organize a piss up in a brewery. This raises some interesting questions. What would the IMF do differently? Ireland has been a model of austerity. And unlike Greece, with a high trade element in their economy, partial default, exit the Euro and devaluation is a potential option. (I say that incredibly loosely and only the basis that it really wasnt a conceivable option for Greece.)

As I say it is easy to write off Ireland as being of no economic relevance but Portugal's sovereign debt yields have moved massively higher too. Will Spain be far behind? And at the core of these disruptions appears to be Merkel who is looking at ways to insulate Germany's economy from the economic problems of her former best friends.

The Euroland crisis hasnt gone away, it is merely sleeping.

[Naam]

The Euroland crisis hasnt gone away, it is merely sleeping...

and Merkel as well as her finance minister Schäuble are doing their best to wake up the sleeping "beauty".

[lannarebirth]

The Euroland crisis hasnt gone away, it is merely sleeping...

and Merkel as well as her finance minister Schäuble are doing their best to wake up the sleeping "beauty".

That's my sense of it too, but why is that? To talk down the Euro? Or is there some greater plot afoot?

Edited November 11, 2010 by lannarebirth

[Naam]

The Euroland crisis hasnt gone away, it is merely sleeping...

and Merkel as well as her finance minister Schäuble are doing their best to wake up the sleeping "beauty".

That's my sense of it too, but why is that? To talk down the Euro? Or is there some greater plot afoot?

no plot afoot just the announcemnt of the teenie weenie minor problem around the corner that creditors will have to accept haircuts when sovereign (€U) debtors default.

[Abrak]

The Euroland crisis hasnt gone away, it is merely sleeping...

and Merkel as well as her finance minister Schäuble are doing their best to wake up the sleeping "beauty".

That's my sense of it too, but why is that? To talk down the Euro? Or is there some greater plot afoot?

no plot afoot just the announcemnt of the teenie weenie minor problem around the corner that creditors will have to accept haircuts when sovereign (€U) debtors default.

Yeah right... that is like the French saying there is no recipe, I am simply cooking a bouillabaisse.

[LaoPo]

The Euroland crisis hasnt gone away, it is merely sleeping...

and Merkel as well as her finance minister Schäuble are doing their best to wake up the sleeping "beauty".

...if you're referring to a sleeping beauty in the Far West, it's not only Germany's Merkel and Schäuble trying to wake up the "beauty" but the sleeping beauty doesn't want to be disturbed; after all this beauty is always correct.....is she?

Horror

And when German leaders see the US Federal Reserve pushing money into the banking system to the tune of a further $600bn (£350bn, 430bn euro), they - citizens of a country allergic to credit - throw up their hands in horror.

Mr Schaeuble said he did not "recognise the economic argument behind this measure".

"The Fed's decisions bring more uncertainty to the global economy," he argued.

"They make it more difficult to achieve a reasonable balance between industrialised and emerging economies, and they undermine US credibility when it comes to fiscal policy.

"It's inconsistent for the Americans to accuse the Chinese of manipulating exchange rates and then to artificially depress the dollar exchange rate by printing money."

From:

Hands off our trade surplus, 'stingy' Germans tell US

http://www.bbc.co.uk...europe-11717020

LaoPo

[Naam]

The Euroland crisis hasnt gone away, it is merely sleeping...

and Merkel as well as her finance minister Schäuble are doing their best to wake up the sleeping "beauty".

That's my sense of it too, but why is that? To talk down the Euro? Or is there some greater plot afoot?

no plot afoot just the announcemnt of the teenie weenie minor problem around the corner that creditors will have to accept haircuts when sovereign (€U) debtors default.

France Joins Germany Ganging Up on Bondholders: Euro Credit

Nov. 11 (Bloomberg) -- French Finance Minister Christine Lagarde said investors must share the cost of sovereign debt restructurings, backing a German call that helped send yields on Irish and Portuguese bonds to record highs.

“All stakeholders must participate in the gains and losses of any particular situation,” Lagarde said during an interview yesterday in Paris for Bloomberg Television’s “On the Move” with Francine Lacqua. “There are many, many ways to address this point of principle.”

Portuguese bonds led declines today with the yield on 10- year bonds rising 21 basis points to 7.37 percent and the risk premium over benchmark German bunds reaching a record 483 basis points. Greek and Spanish debt fell. Irish 10-year bonds moved between gains and losses after dropping for 12 days. Their risk premium over bunds climbed to 651 basis points, the most ever.

Lagarde’s comments mark France’s most explicit backing of German proposals to make bondholders contribute in bailouts, which deepened the slump in bonds of the so-called euro peripherals. Risk premiums that investors demand to buy their debt have risen since an Oct. 29 European Union summit when German Chancellor Angela Merkel sparred with European Central Bank President Jean-Claude Trichet over forcing bondholders to take losses in restructurings, so-called haircuts.

“We do have differing approaches,” Merkel told reporters after the summit.

The clash continued during the past two weeks, pummeling European bond markets.

‘Nail in the Coffin’

“Lagarde’s comments mentioned restructuring, and that’s another nail in the coffin” for peripheral debt, said Steven Major, global head of fixed-income research at HSBC Holdings Plc in London. “There’s still a big constituency of investors and traders who have not recognized until now that restructuring could happen.”

The spread between yields of Irish 10-year bonds and German bunds has widened more than 200 basis points since Merkel began her push for burden sharing.

German officials are sticking to their guns amid the bond market rout.

“We do also need creditors to be involved in the costs of restructuring,” Merkel said today in Seoul, where she’s attending a summit of the Group of 20 leaders. “There may be a conflict here between the interests of the financial world and the interests of politicians. We can’t constantly explain to our voters that taxpayers have to be on the hook for certain risks, rather than those who make a lot of money taking those risks. I ask the markets sometimes to bear politicians in mind, too.”

Trichet’s Stance

Trichet says such talk risks exacerbating the situation for indebted nations as they struggle to cut their budget deficits.

“The more you talk about restructuring debt, the harder it is to obtain debt,” Irish Finance Minister Brian Lenihan said Nov. 2. “That is the reality.”

“They are making it more likely that countries like Ireland and Portugal will be forced to restructure their debt,” said John Stopford, head of fixed income at London-based Investec Asset Management Ltd., which oversees $65 billion. “There should potentially be some conditionalities, otherwise it will become a self-fulfilling prophecy.”

The cost of insuring Irish debt gained 20 basis points to a record 617 basis points, according to data provider CMA. Credit default swaps for Portugal added 17 basis points to 494. Fallout from the slump in Ireland and Portugal pushed up the default risk on Spanish debt 12 basis points to 289.

Irish and Portuguese debt has suffered the biggest declines this month among the world’s government bonds. Ireland has dropped 8.6 percent since the Oct. 29 EU summit and Portuguese bonds have shed 5.9 percent.

Portugal Bid

Portuguese Finance Minister Fernando Teixeira dos Santos urged the EU yesterday to clarify how the so-called crisis mechanism will operate.

EU leaders plan to map out by December how a permanent bailout facility might work, and also study how to treat private bondholders and whether to involve the International Monetary Fund. The new system would kick in when temporary measures, set up this year to rescue Greece and protect the euro, expire in 2013.

“We have to make an appeal at the European level for the European institutions to rapidly, with the greatest possible urgency, clarify the terms in which this mechanism will function,” Teixeira dos Santos told reporters in Lisbon.

Lagarde cited several ways in which investors would share the losses in a bond scheduling with taxpayers.

“I’m not specially focused on haircuts,” she said. “We can insist on having in any issuance and in any agreements a collective action clause under which any lender agrees that if something goes wrong, the lender will actually participate in the plan that will solve the difficulty, in the same way that you can have rescheduling over time.”

[flying]

It is funny to watch Bernanke when Greenspan said there was illegal,criminal,fraud... 1 minute vid

[Abrak]

I am not surprised that Trichet is choking on his croissant. My guess (I dont know if they publish the actual figures) is that the ECB will be found to be by far the largest 'bondholder' that has to take a 'haircut'.

[Abrak]

I like this quote from George Papaconstantinou (yeah I know you have never heard of him but he is supposed to be the Greek Finance Minister.)

'Greece is not Ireland....'

[lannarebirth]

The Dealer holds his cards face up:

http://www.ny.frb.org/markets/tot_operation_schedule.html

[flying]

The Dealer holds his cards face up:

http://www.ny.frb.org/markets/tot_operation_schedule.html

So it starts today then all the way till Dec 10th an 8 billion a day avg.

Then the next schedule release.

Gotta like his little breather on 11/23&29 only 2 billion a day.

Nice budget he has there,...For those countries holding large USD reserves A lump of coal for xmas?

Edited November 12, 2010 by flying

[lannarebirth]

The Dealer holds his cards face up:

http://www.ny.frb.or...n_schedule.html

So it starts today then all the way till Dec 10th an 8 billion a day avg.

Then the next schedule release.

Gotta like his little breather on 11/23&29 only 2 billion a day.

Nice budget he has there,...For those countries holding large USD reserves A lump of coal for xmas?

I could be wrong but given the full and complete disclosures of all that is about to occur (which he may be forced to curb), I'd say its probably pretty well priced into the market. Take this commodity for instance. Clearly a case of buy the rumor sell the news.

[lannarebirth]

The Dealer holds his cards face up:

http://www.ny.frb.or...n_schedule.html

So it starts today then all the way till Dec 10th an 8 billion a day avg.

Then the next schedule release.

Gotta like his little breather on 11/23&29 only 2 billion a day.

Nice budget he has there,...For those countries holding large USD reserves A lump of coal for xmas?

I could be wrong but given the full and complete disclosures of all that is about to occur (which he may be forced to curb), I'd say its probably pretty well priced into the market. Take this commodity for instance. Clearly a case of buy the rumor sell the news.

Oh. and apparently margin requirements were raised on a nymber of commodities this week, including Silver. That tends to quell the animal spirits.

[flying]

Oh. and apparently margin requirements were raised on a nymber of commodities this week, including Silver. That tends to quell the animal spirits.

I had heard that a day or two ago so expected a pull back but.....The other thing with Bernanke I would have thought would cause a rise in commodities no?

[churchill]

Can somebody explain in plain English what QE is meant to achieve and if it is working as Trichet and Bernanke seem to talk a different language /

'The European Central Bank's crisis support measures are temporary in nature and should not be confused with quantitative easing, European Central Bank President Jean-Claude Trichet said on Saturday.

"All our non-standard measures help restore a more normal monetary policy transmission mechanism which is necessary to fulfil our primary mandate of accomplishing price stability," Trichet said in a speech at a conference organised by Germany's Political Club.

"It is not to be confused with quantitative easing policies that aim to reduce longer-term interest rates."'

http://uk.finance.yahoo.com/news/trichet-ecb-support-temporary-not-qe-backs-recovery-reuters_molt-424d383b35b5.html?x=0&utm_source=twitterfeed&utm_medium=twitter

So QE is meant to reduce longer-term interest rates - but in fact they are rising ?

'Since the QE pre-announcement at the end of August, the long bond has gone from below 3.6% to above 4.2%, a huge move. Can owners of large positions get out fast enough? This is PIMCO's nightmare come to life.'

http://yelnick.typepad.com/yelnick/2010/11/qe-stumbles-at-the-starting-blocks.html

Edited November 13, 2010 by churchill

[Abrak]

The Dealer holds his cards face up:

http://www.ny.frb.or...n_schedule.html

So it starts today then all the way till Dec 10th an 8 billion a day avg.

Then the next schedule release.

Gotta like his little breather on 11/23&29 only 2 billion a day.

Nice budget he has there,...For those countries holding large USD reserves A lump of coal for xmas?

I could be wrong but given the full and complete disclosures of all that is about to occur (which he may be forced to curb), I'd say its probably pretty well priced into the market. Take this commodity for instance. Clearly a case of buy the rumor sell the news.

Yes.... I mean once you have the order book, timing and maturity of assets to be purchased if peoples expectations of the effect of QE are not priced into the market, it is difficult to know what more can be done. So as you say 'buy on rumor, sell on fact'. (Incidentally QE in Japan always seemed to work this way price wise.)

Of course the 'real' effects of QE are not known but given some incredibly sharp moves since QE2 was first 'announced' on August 26th (that sugar price had moved 60%), expectations vaguely along the highly inflationary, end of the dollar, commodity and asset price bubble are fairly high. When the 'expected effects' are substantial and the 'real' effects 'unknown', then the risk with QE2 is that it will also prove another cliche which it is often 'better to travel than arrive.'

[Abrak]

Can somebody explain in plain English what QE is meant to achieve and if it is working as Trichet and Bernanke seem to talk a different language /

'The European Central Bank's crisis support measures are temporary in nature and should not be confused with quantitative easing, European Central Bank President Jean-Claude Trichet said on Saturday.

"All our non-standard measures help restore a more normal monetary policy transmission mechanism which is necessary to fulfil our primary mandate of accomplishing price stability," Trichet said in a speech at a conference organised by Germany's Political Club.

"It is not to be confused with quantitative easing policies that aim to reduce longer-term interest rates."'

http://uk.finance.yahoo.com/news/trichet-ecb-support-temporary-not-qe-backs-recovery-reuters_molt-424d383b35b5.html?x=0&utm_source=twitterfeed&utm_medium=twitter

So QE is meant to reduce longer-term interest rates - but in fact they are rising ?

'Since the QE pre-announcement at the end of August, the long bond has gone from below 3.6% to above 4.2%, a huge move. Can owners of large positions get out fast enough? This is PIMCO's nightmare come to life.'

http://yelnick.typepad.com/yelnick/2010/11/qe-stumbles-at-the-starting-blocks.html

Yes the thing about the long bond is all a bit embarrassing but really PIMCO is about the only institution who thinks that long term along with future French pensioners. Unfortunately in order to keep Ron Paul and Midas happy, Bernanke thought it would be great and publish his US$150bn buy order so that people would see the Fed is transparent (and make primary dealers wet dreams a reality.) If you look at Lanna's link you can see they have various US$2bn days when they purchase the long end of the curve but it only amounts to about 14% of the total.

[churchill]

Can somebody explain in plain English what QE is meant to achieve and if it is working as Trichet and Bernanke seem to talk a different language /

'The European Central Bank's crisis support measures are temporary in nature and should not be confused with quantitative easing, European Central Bank President Jean-Claude Trichet said on Saturday.

"All our non-standard measures help restore a more normal monetary policy transmission mechanism which is necessary to fulfil our primary mandate of accomplishing price stability," Trichet said in a speech at a conference organised by Germany's Political Club.

"It is not to be confused with quantitative easing policies that aim to reduce longer-term interest rates."'

http://uk.finance.yahoo.com/news/trichet-ecb-support-temporary-not-qe-backs-recovery-reuters_molt-424d383b35b5.html?x=0&utm_source=twitterfeed&utm_medium=twitter

So QE is meant to reduce longer-term interest rates - but in fact they are rising ?

'Since the QE pre-announcement at the end of August, the long bond has gone from below 3.6% to above 4.2%, a huge move. Can owners of large positions get out fast enough? This is PIMCO's nightmare come to life.'

http://yelnick.typepad.com/yelnick/2010/11/qe-stumbles-at-the-starting-blocks.html

Yes the thing about the long bond is all a bit embarrassing but really PIMCO is about the only institution who thinks that long term along with future French pensioners. Unfortunately in order to keep Ron Paul and Midas happy, Bernanke thought it would be great and publish his US$150bn buy order so that people would see the Fed is transparent (and make primary dealers wet dreams a reality.) If you look at Lanna's link you can see they have various US$2bn days when they purchase the long end of the curve but it only amounts to about 14% of the total.

Thanks , still seems quite a gamble with so many differing views /