From Bloomberg:
The yen slumped the most since 2008 against the dollar as Japan stepped in to foreign-exchange markets to weaken the currency for the third time this year after its gain to a postwar record threatened exporters.
The yen fell against its 16 most-traded counterparts tracked by Bloomberg after Japan’s Finance Minister Jun Azumi ordered the intervention.
The yen weakened as Japan’s Azumi pledged to keep selling the currency after it climbed to the postwar record versus the dollar earlier today. Japan last intervened to weaken the yen in August, when it sold 4.51 trillion yen ($57.8 billion), the largest monthly amount since March 2004.
“I’ve repeatedly said that we’ll take bold action against speculative moves in the market,” Azumi told reporters today after the government acted unilaterally.
http://www.bloomberg.com/news/2011-10-31/yen-tumbles-4-as-japan-intervenes-to-sell-currency-third-time-this-year.html
From Zero Hedge:
Just in time for the MF Global news, we have what appears the latest Yentervention episode, as the USDJPY has just soared over 250 pips.We have no confirmation as of yet and could be merely a risk off move on the MF Global headlines. Or, potentially, was MF short a few yards of USDJPY and now that the end is in sight, is promptly unwinding all legacy positions?
http://www.zerohedge.com/news/yentervention-time
Monday, October 31, 2011
Sunday, October 30, 2011
“Blessed be the name of the Lord, for wisdom and power are his. He changes the times and the seasons; he sets kings up and takes them down. He gives wisdom to the wise and knowledge to the understanding. He reveals deep and mysterious things; he knows what is hidden in darkness, and yet light dwells with him.”
Daniel 2: 20-22
Daniel 2: 20-22
Could Korean Politics and Economy Be Saved by Some Crusaders?
As posted, an independent candidate Park Won Soon won the Seoul mayoral election. The Seoul mayoral election drew attention in several regards, e.g., a preview for political battles in the next year’s presidential election and the public’s dissatisfaction with the ruling party over critical issues such as growing social inequality and unemployment.
Park was backed by Ahn Chul Soo, the founder of a top software business and possible presidential candidate. The New York Times notes that “Mr. Ahn’s backing was crucial to the victory of Mr. Park. Mr. Park won more than twice as many votes among the people in their 20s, 30s and 40s as Ms. Na did.” (http://www.nytimes.com/2011/10/27/world/asia/vote-on-seoul-mayor-seen-as-having-wider-implications.html)
On the other hand, Na Kyung Won, a candidate from the ruling party was supported by Park Geun Hye, the governing party’s likely presidential candidate, a daughter of former President Park, who engineered Korea’s economic miracle.
Many of the problems Korea is facing are structural in nature, as discussed on more than a few occasions. Moreover, those problems are intertwined with the U.S. policies like the Fed’s QEs and the world’s central banks’ actions. Are the presidential candidates up to the challenge of tackling those problems? Do they have moral obligation in the first place?
Chosun Ilbo reports this election “could signal a paradigm shift in Korean politics.”
From Chosun Ilbo:
Pent-up frustration with the political establishment among voters in their 20 to 40s, who experienced the 1997 Asian financial crisis, youth unemployment and the growing gap between rich and poor, clearly manifested itself. The results reflect voters' hunger for broad political reforms.
http://english.chosun.com/site/data/html_dir/2011/10/27/2011102700544.html
중앙선데이로부터:
한국과 일본의 차세대 의원 모임인 ‘한•일미래구상’ 세미나 참석차 방일 중인 남경필•이혜훈•구상찬•김세연•홍정욱 등 5명의 의원은 28일 도쿄에서 ‘밤샘 혁신토론’을 벌였다. 이혜훈 의원은 “한나라당이 변하지 않으면 혁명을 당한다는 위기감 속에 당 혁신 방향을 논의했다”며 “대대적인 당 혁신을 요구할 계획”이라고 전했다.
-서울에서 크게 진 이유는 뭔가.
“기본적으론 20~40대가 성났기 때문이다. 이들이 정권과 한나라당의 구정치 행태를 심판했다. 삶이 고달프고 미래가 불안해 화가 났는데 한나라당은 그들의 불안을 덜어주기는커녕 상대 후보 비방론에 몰두했다. 그런 행태는 젊은이들 입장에서 보면 개념 없고 후진 짓이다. 게다가 우리 후보는 이명박과 오세훈으로 연결되고 동일시됐다. 1% 상류층, 한나라당의 구태 정치 이미지가 이어졌다. 정권과 낡은 정치 심판 구도를 스스로 만든 셈이다.”
-박근혜 대세론은 여전히 유효한가.
“서울에선 이미 깨졌다. 영남 등 일부 지방엔 남아 있는 것 같다. 이번 선거는 내년 대선의 예비 투표였다. 안철수 등장으로 모든 과정이 그렇게 진행됐다. 그런데 진 것이다. 안철수 교수를 개인으로 보면 안 된다. 야권 대선주자는 문재인 노무현재단 이사장이라고 보지만 안철수 교수든 손학규 대표든 야권은 후보군이 중창단으로 움직일 것이다.”
-한나라당은 어떤 대책이 있나.
“물론 현실적으론 박근혜 전 대표 외에 다른 대안이 없다. 그러니 박 전 대표가 변화를 주도하는 리더십을 보여줘야 한다. 그렇지 않으면 상황이 점점 더 어려워져 한나라당은 정말로 영남 자민련이 될 수 있다. 유권자로부터 경고 사인을 그토록 많이 받았지 않나. 이번 선거는 레드 카드다. 먼저 박 전 대표 스스로가 획기적으로 자신의 모습을 바꿨으면 좋겠다. 젊은이들은 지금 박 전 대표를 낡은 정치인, 구정치인의 한 사람으로 보고 있다. 서민의 생활과 삶에 대한 교감이 안 되는 사람으로 비춰진다. 박 전 대표가 돈을 벌어 봤느냐 하는 얘기들을 많이 하는 게 그런 뜻에서다. 또 폐쇄적이고 권위적이며 측근들에 둘러싸인 모습을 바꿔야 한다. 그래야 소수 특권층 이미지를 깰 수 있다. 그러려면 대다수 서민과 차단된 삶을 살아온 점이 투명하게 공개돼야 하고 서민들의 삶을 품을 수 있어야 한다. 폐쇄적이고 권위주의적인 측근 문제를 정리해야 한다.”
http://sunday.joins.com/article/view.asp?aid=23618
Park was backed by Ahn Chul Soo, the founder of a top software business and possible presidential candidate. The New York Times notes that “Mr. Ahn’s backing was crucial to the victory of Mr. Park. Mr. Park won more than twice as many votes among the people in their 20s, 30s and 40s as Ms. Na did.” (http://www.nytimes.com/2011/10/27/world/asia/vote-on-seoul-mayor-seen-as-having-wider-implications.html)
On the other hand, Na Kyung Won, a candidate from the ruling party was supported by Park Geun Hye, the governing party’s likely presidential candidate, a daughter of former President Park, who engineered Korea’s economic miracle.
Many of the problems Korea is facing are structural in nature, as discussed on more than a few occasions. Moreover, those problems are intertwined with the U.S. policies like the Fed’s QEs and the world’s central banks’ actions. Are the presidential candidates up to the challenge of tackling those problems? Do they have moral obligation in the first place?
Chosun Ilbo reports this election “could signal a paradigm shift in Korean politics.”
From Chosun Ilbo:
Pent-up frustration with the political establishment among voters in their 20 to 40s, who experienced the 1997 Asian financial crisis, youth unemployment and the growing gap between rich and poor, clearly manifested itself. The results reflect voters' hunger for broad political reforms.
http://english.chosun.com/site/data/html_dir/2011/10/27/2011102700544.html
중앙선데이로부터:
한국과 일본의 차세대 의원 모임인 ‘한•일미래구상’ 세미나 참석차 방일 중인 남경필•이혜훈•구상찬•김세연•홍정욱 등 5명의 의원은 28일 도쿄에서 ‘밤샘 혁신토론’을 벌였다. 이혜훈 의원은 “한나라당이 변하지 않으면 혁명을 당한다는 위기감 속에 당 혁신 방향을 논의했다”며 “대대적인 당 혁신을 요구할 계획”이라고 전했다.
-서울에서 크게 진 이유는 뭔가.
“기본적으론 20~40대가 성났기 때문이다. 이들이 정권과 한나라당의 구정치 행태를 심판했다. 삶이 고달프고 미래가 불안해 화가 났는데 한나라당은 그들의 불안을 덜어주기는커녕 상대 후보 비방론에 몰두했다. 그런 행태는 젊은이들 입장에서 보면 개념 없고 후진 짓이다. 게다가 우리 후보는 이명박과 오세훈으로 연결되고 동일시됐다. 1% 상류층, 한나라당의 구태 정치 이미지가 이어졌다. 정권과 낡은 정치 심판 구도를 스스로 만든 셈이다.”
-박근혜 대세론은 여전히 유효한가.
“서울에선 이미 깨졌다. 영남 등 일부 지방엔 남아 있는 것 같다. 이번 선거는 내년 대선의 예비 투표였다. 안철수 등장으로 모든 과정이 그렇게 진행됐다. 그런데 진 것이다. 안철수 교수를 개인으로 보면 안 된다. 야권 대선주자는 문재인 노무현재단 이사장이라고 보지만 안철수 교수든 손학규 대표든 야권은 후보군이 중창단으로 움직일 것이다.”
-한나라당은 어떤 대책이 있나.
“물론 현실적으론 박근혜 전 대표 외에 다른 대안이 없다. 그러니 박 전 대표가 변화를 주도하는 리더십을 보여줘야 한다. 그렇지 않으면 상황이 점점 더 어려워져 한나라당은 정말로 영남 자민련이 될 수 있다. 유권자로부터 경고 사인을 그토록 많이 받았지 않나. 이번 선거는 레드 카드다. 먼저 박 전 대표 스스로가 획기적으로 자신의 모습을 바꿨으면 좋겠다. 젊은이들은 지금 박 전 대표를 낡은 정치인, 구정치인의 한 사람으로 보고 있다. 서민의 생활과 삶에 대한 교감이 안 되는 사람으로 비춰진다. 박 전 대표가 돈을 벌어 봤느냐 하는 얘기들을 많이 하는 게 그런 뜻에서다. 또 폐쇄적이고 권위적이며 측근들에 둘러싸인 모습을 바꿔야 한다. 그래야 소수 특권층 이미지를 깰 수 있다. 그러려면 대다수 서민과 차단된 삶을 살아온 점이 투명하게 공개돼야 하고 서민들의 삶을 품을 수 있어야 한다. 폐쇄적이고 권위주의적인 측근 문제를 정리해야 한다.”
http://sunday.joins.com/article/view.asp?aid=23618
China Lays Out Conditions in EU Rescue
From Zero Hedge:
Naturally, being the biggest import partner for China's goods, the topic of providing vendor financing to Europe has always been a critical one.
According to the FT: "China is very likely to contribute to the eurozone’s bail-out fund but the scope of its involvement will depend on European leaders satisfying some key conditions, two senior advisers to the Chinese government have told the Financial Times." So what are the conditions: "Any Chinese support would depend on contributions from other countries and Beijing must be given strong guarantees on the safety of its investment, according to Li Daokui, an academic member of China’s central bank monetary policy committee, and Yu Yongding, a former member of that committee." Obviously, Europe will promise the latter. As for the former it could be a tad problematic because as observed previously Brazil has voiced against rescuing Europe in the form of non-IMF participation. But there are more conditions: "It is in China’s long-term and intrinsic interest to help Europe because they are our biggest trading partner but the chief concern of the Chinese government is how to explain this decision to our own people,” said Professor Li. “The last thing China wants is to throw away the country’s wealth and be seen as just a source of dumb money.” Alas, that is precisely how the entire world sees China. As for the final condition: "He added that Beijing might also ask European leaders to refrain from criticising China’s currency policy, a frequent source of tension with trade partners." And this is how you declare political check mate and shut up all voices that threaten to protest against mercantilist policies. And since it is only a matter of time before China will have to rescue the US, we hope Senate enjoys the time remaining in which it can debate whether or not China manipulates the CNY. That time is about to end.
http://www.zerohedge.com/news/china-lays-out-conditions-under-which-it-will-bail-out-europe-does-not-want-be-seen-source-dumb
Naturally, being the biggest import partner for China's goods, the topic of providing vendor financing to Europe has always been a critical one.
According to the FT: "China is very likely to contribute to the eurozone’s bail-out fund but the scope of its involvement will depend on European leaders satisfying some key conditions, two senior advisers to the Chinese government have told the Financial Times." So what are the conditions: "Any Chinese support would depend on contributions from other countries and Beijing must be given strong guarantees on the safety of its investment, according to Li Daokui, an academic member of China’s central bank monetary policy committee, and Yu Yongding, a former member of that committee." Obviously, Europe will promise the latter. As for the former it could be a tad problematic because as observed previously Brazil has voiced against rescuing Europe in the form of non-IMF participation. But there are more conditions: "It is in China’s long-term and intrinsic interest to help Europe because they are our biggest trading partner but the chief concern of the Chinese government is how to explain this decision to our own people,” said Professor Li. “The last thing China wants is to throw away the country’s wealth and be seen as just a source of dumb money.” Alas, that is precisely how the entire world sees China. As for the final condition: "He added that Beijing might also ask European leaders to refrain from criticising China’s currency policy, a frequent source of tension with trade partners." And this is how you declare political check mate and shut up all voices that threaten to protest against mercantilist policies. And since it is only a matter of time before China will have to rescue the US, we hope Senate enjoys the time remaining in which it can debate whether or not China manipulates the CNY. That time is about to end.
http://www.zerohedge.com/news/china-lays-out-conditions-under-which-it-will-bail-out-europe-does-not-want-be-seen-source-dumb
Norway’s Sovereign Wealth Fund Sold All U.S. MBS
From Bloomberg:
Norway’s $570 billion sovereign wealth fund sold all its holdings in U.S. mortgage-backed securities as part of a shift of its fixed-income portfolio.
The fund holds no mortgage bonds issued by Fannie Mae and Freddie Mac, the U.S.-controlled mortgage financiers, and an “insignificant” amount of private home loan-backed bonds, said Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, today in an interview in Oslo.
“We’ve reduced our holdings of mortgage-backed securities,” he said. “MBS has been taken out of our internal policy benchmark. This means that we don’t have mortgage-backed securities issued by Freddie Mac and Fannie Mae any longer.”
http://www.bloomberg.com/news/2011-10-28/norway-s-sovereign-wealth-fund-sold-all-u-s-mortgage-bonds.html
Norway’s $570 billion sovereign wealth fund sold all its holdings in U.S. mortgage-backed securities as part of a shift of its fixed-income portfolio.
The fund holds no mortgage bonds issued by Fannie Mae and Freddie Mac, the U.S.-controlled mortgage financiers, and an “insignificant” amount of private home loan-backed bonds, said Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, today in an interview in Oslo.
“We’ve reduced our holdings of mortgage-backed securities,” he said. “MBS has been taken out of our internal policy benchmark. This means that we don’t have mortgage-backed securities issued by Freddie Mac and Fannie Mae any longer.”
http://www.bloomberg.com/news/2011-10-28/norway-s-sovereign-wealth-fund-sold-all-u-s-mortgage-bonds.html
Wednesday, October 26, 2011
Korean Ruling Party’s Defeat in Seoul Mayoral Election
From Yonhap:
The ruling party's bruising defeat in Wednesday's by-election for Seoul mayor represents yet another blow to the unpopular party, a setback to its leading presidential contender and, more broadly, a punishment of the existing political establishment, analysts said.
With nearly all ballots counted, opposition-backed candidate Park Won-soon, a lawyer-turned-activist, defeated his rival Na Kyung-won of the ruling Grand National Party (GNP) to win the mayoralty with 53.3 percent of the vote against Na's 46.3 percent.
Though technically a small regional election, Wednesday's vote was considered a crucial test of voter sentiment ahead of next year's two big polls -- the parliamentary elections in April and the presidential vote in December. It will be the first time in 20 years that the two major elections happen in the same year.
The mayoral race was also closely watched as a test of whether GNP's leading presidential contender Park Geun-hye would be able to keep her previously near-unchallenged lead, now that prominent computer software entrepreneur Ahn Cheol-soo has emerged as a possible strong challenger to her in recent months.
Analysts and media dubbed this week's election a "proxy battle" between the two, as Park Geun-hye campaigned on behalf of her party's candidate Na -- an unusual move that breaks away from her usual hands-off approach to party affairs -- and Ahn gave up his mayoral bid to give way for Park Won-soon.
Ahn, a former medical doctor, gained fame in the 1990s after establishing South Korea's No. 1 anti-virus software firm. He is widely popular, especially among young Koreans, due largely to his clean and upright image.
After Ahn suggested he might run for Seoul mayor, he immediately took an unrivaled lead in opinion polls. But Ahn later decided not to run, saying he would instead back Park Won-soon. Even after he withdrew his mayoral bid, Ahn remained hugely popular.
http://english.yonhapnews.co.kr/national/2011/10/27/13/0301000000AEN20111027000100315F.HTML
The ruling party's bruising defeat in Wednesday's by-election for Seoul mayor represents yet another blow to the unpopular party, a setback to its leading presidential contender and, more broadly, a punishment of the existing political establishment, analysts said.
With nearly all ballots counted, opposition-backed candidate Park Won-soon, a lawyer-turned-activist, defeated his rival Na Kyung-won of the ruling Grand National Party (GNP) to win the mayoralty with 53.3 percent of the vote against Na's 46.3 percent.
Though technically a small regional election, Wednesday's vote was considered a crucial test of voter sentiment ahead of next year's two big polls -- the parliamentary elections in April and the presidential vote in December. It will be the first time in 20 years that the two major elections happen in the same year.
The mayoral race was also closely watched as a test of whether GNP's leading presidential contender Park Geun-hye would be able to keep her previously near-unchallenged lead, now that prominent computer software entrepreneur Ahn Cheol-soo has emerged as a possible strong challenger to her in recent months.
Analysts and media dubbed this week's election a "proxy battle" between the two, as Park Geun-hye campaigned on behalf of her party's candidate Na -- an unusual move that breaks away from her usual hands-off approach to party affairs -- and Ahn gave up his mayoral bid to give way for Park Won-soon.
Ahn, a former medical doctor, gained fame in the 1990s after establishing South Korea's No. 1 anti-virus software firm. He is widely popular, especially among young Koreans, due largely to his clean and upright image.
After Ahn suggested he might run for Seoul mayor, he immediately took an unrivaled lead in opinion polls. But Ahn later decided not to run, saying he would instead back Park Won-soon. Even after he withdrew his mayoral bid, Ahn remained hugely popular.
http://english.yonhapnews.co.kr/national/2011/10/27/13/0301000000AEN20111027000100315F.HTML
Wall Street Isn't Winning – It's Cheating
From Rolling Stone Blog:
At last count, there were 245 millionaires in congress, including 66 in the Senate. And we hate the rich?
Come on. Success is the national religion, and almost everyone is a believer. Americans love winners. But that's just the problem. These guys on Wall Street are not winning – they're cheating. And as much as we love the self-made success story, we hate the cheater that much more.
http://www.rollingstone.com/politics/blogs/taibblog/owss-beef-wall-street-isnt-winning-its-cheating-20111025
At last count, there were 245 millionaires in congress, including 66 in the Senate. And we hate the rich?
Come on. Success is the national religion, and almost everyone is a believer. Americans love winners. But that's just the problem. These guys on Wall Street are not winning – they're cheating. And as much as we love the self-made success story, we hate the cheater that much more.
http://www.rollingstone.com/politics/blogs/taibblog/owss-beef-wall-street-isnt-winning-its-cheating-20111025
Monday, October 24, 2011
Head of China Sovereign Wealth Fund Blames Europeans’ Lazy Work Ethic and Dependence on Welfare
From the Telegraph:
Jin Liqun, chairman of China Investment Corporation (CIC), the nation's sovereign wealth fund, warned that Europeans should "work a bit harder" if they want to pull the eurozone out of recession.
He said people in the West are too reliant on welfare payments and the benefits system, looking for external solutions to the debt crisis rather than tackling the problem from within.
Mr Jin also said the long-term economic slide could only be solved by amending the restrictive labour laws that mean Western workers are unable to compete in global markets.
He told Channel Four News: "Europe is not really short of money. Europe needs to give a clear picture to the Europeans themselves and to the rest of the world that their problems could be worked out.
"The root cause of the trouble is the over-burdened welfare system, built up since the Second World War in Europe - the sloth-inducing, indolence-inducing labour laws.
"People need to work a bit harder, they need to work a bit longer, and they should be more innovative. We (the Chinese) work like crazy.
"European countries have a lot of advantages. They just need to tap these advantages and they will be back on their feet."
He told guests he was "sorry if I have ruffled feathers", adding: "China cannot be expected to buy into high risk in the eurozone without a clear picture of debt work-out programmes."
Mr Jin, a graduate of Boston University, was formerly China's deputy finance minister and vice-president of the Asian Development Bank.
He is now chairman of CIC, China's sovereign wealth fund, which has a budget of around $300 billion.
http://www.telegraph.co.uk/news/uknews/8837768/Britons-are-lazy-and-addicted-to-benefits-China-claims.html
Jin Liqun, chairman of China Investment Corporation (CIC), the nation's sovereign wealth fund, warned that Europeans should "work a bit harder" if they want to pull the eurozone out of recession.
He said people in the West are too reliant on welfare payments and the benefits system, looking for external solutions to the debt crisis rather than tackling the problem from within.
Mr Jin also said the long-term economic slide could only be solved by amending the restrictive labour laws that mean Western workers are unable to compete in global markets.
He told Channel Four News: "Europe is not really short of money. Europe needs to give a clear picture to the Europeans themselves and to the rest of the world that their problems could be worked out.
"The root cause of the trouble is the over-burdened welfare system, built up since the Second World War in Europe - the sloth-inducing, indolence-inducing labour laws.
"People need to work a bit harder, they need to work a bit longer, and they should be more innovative. We (the Chinese) work like crazy.
"European countries have a lot of advantages. They just need to tap these advantages and they will be back on their feet."
He told guests he was "sorry if I have ruffled feathers", adding: "China cannot be expected to buy into high risk in the eurozone without a clear picture of debt work-out programmes."
Mr Jin, a graduate of Boston University, was formerly China's deputy finance minister and vice-president of the Asian Development Bank.
He is now chairman of CIC, China's sovereign wealth fund, which has a budget of around $300 billion.
http://www.telegraph.co.uk/news/uknews/8837768/Britons-are-lazy-and-addicted-to-benefits-China-claims.html
Sunday, October 23, 2011
How Argentina Survived Its Default?
As a commenter in the following post commented, the comments seem to be better than the initial post.
From Naked Capitalism:
Even notice nothing is ever said in the mainstream media about Argentina’s economy, save that it had a big default? You’d never know the following about Argentina:
What is particularly striking is how quickly Argentina’s economy rebounded after its default.
Notice the Argentinian example disproves one of the Big Lie about default, that foreign capital will take a hike and the consequences will be dire.
Shorter version: sacrificing your economy on the altar of the Bond Gods may not be such a good idea.
http://www.nakedcapitalism.com/2011/10/the-verboten-story-of-argentinas-economic-success.html
From Naked Capitalism:
Even notice nothing is ever said in the mainstream media about Argentina’s economy, save that it had a big default? You’d never know the following about Argentina:
What is particularly striking is how quickly Argentina’s economy rebounded after its default.
Notice the Argentinian example disproves one of the Big Lie about default, that foreign capital will take a hike and the consequences will be dire.
Shorter version: sacrificing your economy on the altar of the Bond Gods may not be such a good idea.
http://www.nakedcapitalism.com/2011/10/the-verboten-story-of-argentinas-economic-success.html
Ron Paul: Blame the Fed for the Financial Crisis
From the WSJ:
To know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster.
http://online.wsj.com/article/SB10001424052970204346104576637290931614006.html?mod=wsj_share_tweet
To know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster.
http://online.wsj.com/article/SB10001424052970204346104576637290931614006.html?mod=wsj_share_tweet
Thursday, October 20, 2011
In a Way, the U.S. and Asian Mercantilist Countries Are in the Same Boat.
The Asian mercantilist countries have pegged their currencies to the USD. As USD loses its value, so does theirs. Pegging a nation’s currency to another nation’s currency is corrosive to a free market.
This peg has been one of the reasons they could rise so fast. They have exported their goods to the U.S. and have bought the U.S. treasuries. They can’t sell the U.S. treasuries since it will have adverse effects on their export economy.
The U.S. wants a steady flow in exports, so it can emit more credits.
Moreover, the U.S. corporations have benefitted from the peg since it has kept their goods manufactured in the Asian mercantilist countries cheap.
It has been a reciprocal relationship, serving the best interests of a chosen few on both sides.
This peg has been one of the reasons they could rise so fast. They have exported their goods to the U.S. and have bought the U.S. treasuries. They can’t sell the U.S. treasuries since it will have adverse effects on their export economy.
The U.S. wants a steady flow in exports, so it can emit more credits.
Moreover, the U.S. corporations have benefitted from the peg since it has kept their goods manufactured in the Asian mercantilist countries cheap.
It has been a reciprocal relationship, serving the best interests of a chosen few on both sides.
Different Views As To Who Financed Hitler: The Relationship between Hitler and the Bankers
From a chapter in “Wall Street and the Rise of Hitler":
...The critical point is that the German industrialists financing Hitler were predominantly directors of cartels with American associations, ownership, participation, or some form of subsidiary connection. The Hitler backers were not, by and large, firms of purely German origin, or representative of German family business. Except for Thyssen and Kirdoff, in most cases they were the German multi-national firms —i.e., I.G. Farben, A.E.G., DAPAG, etc. These multi-nationals had been built up by American loans in the 1920s, and in the early 1930s had American directors and heavy American financial participation.
http://www.reformed-theology.org/html/books/wall_street/chapter_07.htm
From Abdul Alhazred's blog:
Many people take joy in saying Wall Street and Jewish bankers "financed Hitler." There is plenty of documented evidence that Wall Street and Jewish bankers did indeed help finance Hitler at first, partly because it allowed the bankers to get rich (as I will describe below) and partly in order to control Stalin. However, when Germany broke free from the bankers, the bankers declared a world war against Germany.
When we look at all the facts, the charge that "Jews financed Hitler" becomes irrelevant. Los Angeles Attorney Ellen Brown discusses this topic in her book Web Of Debt…
Economist Henry C K Liu writes of Germany's remarkable transformation:
“The Nazis came to power in 1933 when the German economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies, into the strongest economy in Europe within four years, even before armament spending began.” (Henry C. K. Liu, "Nazism and the German Economic Miracle," Asia Times (May 24, 2005).
In Billions for the Bankers, Debts for the People (1984), Sheldon Emry commented:
“Germany issued debt-free and interest-free money from 1935 on, which accounts for Germany’s startling rise from the depression to a world power in five years. The German government financed its entire operations from 1935 to 1945 without gold, and without debt. It took the entire Capitalist and Communist world to destroy the German revolution, and bring Europe back under the heel of the Bankers.”
These facts do not appear in any textbooks today, since Jews own most publishing companies. What does appear is the disastrous runaway inflation suffered in 1923 by the Weimar Republic, which governed Germany from 1919 to 1933. Today’s textbooks use this inflation to twist truth into its opposite. They cite the radical devaluation of the German mark as an example of what goes wrong when governments print their own money, rather than borrow it from private cartels.
http://wakeupfromyourslumber.com/node/6720
...The critical point is that the German industrialists financing Hitler were predominantly directors of cartels with American associations, ownership, participation, or some form of subsidiary connection. The Hitler backers were not, by and large, firms of purely German origin, or representative of German family business. Except for Thyssen and Kirdoff, in most cases they were the German multi-national firms —i.e., I.G. Farben, A.E.G., DAPAG, etc. These multi-nationals had been built up by American loans in the 1920s, and in the early 1930s had American directors and heavy American financial participation.
http://www.reformed-theology.org/html/books/wall_street/chapter_07.htm
From Abdul Alhazred's blog:
Many people take joy in saying Wall Street and Jewish bankers "financed Hitler." There is plenty of documented evidence that Wall Street and Jewish bankers did indeed help finance Hitler at first, partly because it allowed the bankers to get rich (as I will describe below) and partly in order to control Stalin. However, when Germany broke free from the bankers, the bankers declared a world war against Germany.
When we look at all the facts, the charge that "Jews financed Hitler" becomes irrelevant. Los Angeles Attorney Ellen Brown discusses this topic in her book Web Of Debt…
Economist Henry C K Liu writes of Germany's remarkable transformation:
“The Nazis came to power in 1933 when the German economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies, into the strongest economy in Europe within four years, even before armament spending began.” (Henry C. K. Liu, "Nazism and the German Economic Miracle," Asia Times (May 24, 2005).
In Billions for the Bankers, Debts for the People (1984), Sheldon Emry commented:
“Germany issued debt-free and interest-free money from 1935 on, which accounts for Germany’s startling rise from the depression to a world power in five years. The German government financed its entire operations from 1935 to 1945 without gold, and without debt. It took the entire Capitalist and Communist world to destroy the German revolution, and bring Europe back under the heel of the Bankers.”
These facts do not appear in any textbooks today, since Jews own most publishing companies. What does appear is the disastrous runaway inflation suffered in 1923 by the Weimar Republic, which governed Germany from 1919 to 1933. Today’s textbooks use this inflation to twist truth into its opposite. They cite the radical devaluation of the German mark as an example of what goes wrong when governments print their own money, rather than borrow it from private cartels.
http://wakeupfromyourslumber.com/node/6720
Wednesday, October 19, 2011
How’s This for Social Unrest?
From Zero Hedge:
In his seminal work The Rise and Fall of the Third Reich, William Shirer recounts how the struggling Weimar Republic printed its way out of reparation debt from World War I. Out-of-control printing caused the German mark to fall from 75 per dollar in 1921, to more than 4 billion just 3-years later.
Talk about chaos. After a brief period of credit-fueled economic respite, the onset of the global depression in 1929 had people in the streets clamoring for change. Hitler's National Socialism promised the world... and under such economic distress, people believed him.
There are two important lessons here. First is that hyperinflation comes very quickly. Confidence languishes for months, even years... until one day the currency begins to slide, slowly at first, then exponentially.
The second is what followed. Economic disaster begets social unrest, the two are inextricably linked. Populist rebellions and roving gangs became a constant presence in the republic.
It's at this point, when people are really hurting, they're the most impressionable. They're looking for somebody, anybody, to lead them out of the turmoil. What they got was a charismatic leader with a grand plan.
History is full of examples of governments taking draconian action in times of economic-fueled social turmoil. Faced with terrible circumstances, people cry out for their governments to 'do something'. Politicians happily oblige.
It's concerning right now to see the early stages of economic decline spawning populist uprisings; most are being met with unconscionable force by the police state.
Mark Twain used to say that while history may not repeat itself, it certainly rhymes. I'd encourage you to think clearly about what's really happening in the world, and not simply write off such events as temporary aberrations.
http://www.zerohedge.com/news/guest-post-hows-social-unrest
In his seminal work The Rise and Fall of the Third Reich, William Shirer recounts how the struggling Weimar Republic printed its way out of reparation debt from World War I. Out-of-control printing caused the German mark to fall from 75 per dollar in 1921, to more than 4 billion just 3-years later.
Talk about chaos. After a brief period of credit-fueled economic respite, the onset of the global depression in 1929 had people in the streets clamoring for change. Hitler's National Socialism promised the world... and under such economic distress, people believed him.
There are two important lessons here. First is that hyperinflation comes very quickly. Confidence languishes for months, even years... until one day the currency begins to slide, slowly at first, then exponentially.
The second is what followed. Economic disaster begets social unrest, the two are inextricably linked. Populist rebellions and roving gangs became a constant presence in the republic.
It's at this point, when people are really hurting, they're the most impressionable. They're looking for somebody, anybody, to lead them out of the turmoil. What they got was a charismatic leader with a grand plan.
History is full of examples of governments taking draconian action in times of economic-fueled social turmoil. Faced with terrible circumstances, people cry out for their governments to 'do something'. Politicians happily oblige.
It's concerning right now to see the early stages of economic decline spawning populist uprisings; most are being met with unconscionable force by the police state.
Mark Twain used to say that while history may not repeat itself, it certainly rhymes. I'd encourage you to think clearly about what's really happening in the world, and not simply write off such events as temporary aberrations.
http://www.zerohedge.com/news/guest-post-hows-social-unrest
Chinese Toddler Run Over and Ignored by Passersby
From the Telegraph:
Video footage of the incident involving 2-year-old Wang Yue – known by her pet family name Yueyue – caused outrage in China and around the world on Tuesday, prompting questions about whether China's economic miracle had left a moral vacuum in its wake.
The girl, who was eventually scooped up and rescued by the nineteenth passer-by remains in a critical condition in the intensive care unit of Guangzhou military hospital in China's industrial heartland of Guangdong.
http://www.telegraph.co.uk/news/worldnews/asia/china/8833993/Chinese-toddler-run-over-and-ignored-to-remain-in-vegetative-state.html
A video Mish posted is graphic. The family has been in my prayers.
From Mish’s blog:
http://globaleconomicanalysis.blogspot.com/2011/10/must-see-heart-wrenching-video-of-moral.html
Video footage of the incident involving 2-year-old Wang Yue – known by her pet family name Yueyue – caused outrage in China and around the world on Tuesday, prompting questions about whether China's economic miracle had left a moral vacuum in its wake.
The girl, who was eventually scooped up and rescued by the nineteenth passer-by remains in a critical condition in the intensive care unit of Guangzhou military hospital in China's industrial heartland of Guangdong.
http://www.telegraph.co.uk/news/worldnews/asia/china/8833993/Chinese-toddler-run-over-and-ignored-to-remain-in-vegetative-state.html
A video Mish posted is graphic. The family has been in my prayers.
From Mish’s blog:
http://globaleconomicanalysis.blogspot.com/2011/10/must-see-heart-wrenching-video-of-moral.html
Nassim Taleb on #OccupyWallStreet and Global Banking System
From Bloomberg:
Nassim Taleb, author of "The Black Swan" and a New York University professor, discusses the "Occupy Wall Street" protest and his view of the global banking system. Taleb, speaking with Erik Schatzker on Bloomberg Television's "InsideTrack," also discusses the need to apply the principles of "Hammurabi's Code" to the banking system.
http://www.bloomberg.com/video/78027552/
From Jesse’s Café:
I have had this link up, but I wanted to feature it here because so many have missed it, or missed the key message which is that the economic system is broken and that there can be no sustained recovery unless this is repaired.
When even so-called liberal economists decried the resistance to TARP, and categorized concerns about moral hazard as a kind of economic Puritanism, I knew things were worse than I had expected.
The most recent performances and reactions from politicians, especially on the right, merely confirms the intransigence of the monied interests. They have given themselves over in the service of greed, and care little or nothing for their country except as a source of power and income.
The silence of the traditionally progressive classes and institutions is deafening. They are preoccupied and conflicted by their own narrow interests, scandals and aspirations, both at home and abroad, and fail to rise in defense of the many. And that is a tragedy.
http://jessescrossroadscafe.blogspot.com/2011/10/nassim-taleb-on-moral-hazard-and-broken.html
Nassim Taleb, author of "The Black Swan" and a New York University professor, discusses the "Occupy Wall Street" protest and his view of the global banking system. Taleb, speaking with Erik Schatzker on Bloomberg Television's "InsideTrack," also discusses the need to apply the principles of "Hammurabi's Code" to the banking system.
http://www.bloomberg.com/video/78027552/
From Jesse’s Café:
I have had this link up, but I wanted to feature it here because so many have missed it, or missed the key message which is that the economic system is broken and that there can be no sustained recovery unless this is repaired.
When even so-called liberal economists decried the resistance to TARP, and categorized concerns about moral hazard as a kind of economic Puritanism, I knew things were worse than I had expected.
The most recent performances and reactions from politicians, especially on the right, merely confirms the intransigence of the monied interests. They have given themselves over in the service of greed, and care little or nothing for their country except as a source of power and income.
The silence of the traditionally progressive classes and institutions is deafening. They are preoccupied and conflicted by their own narrow interests, scandals and aspirations, both at home and abroad, and fail to rise in defense of the many. And that is a tragedy.
http://jessescrossroadscafe.blogspot.com/2011/10/nassim-taleb-on-moral-hazard-and-broken.html
Tuesday, October 18, 2011
Greek Unions Warn of Austerity “Death Spiral”
From Reuters:
Greece risks sliding into a "death spiral" if the government continues to slash salaries and lay off workers instead of cracking down on tax evasion and raising money from the rich, the head of the biggest public sector union said Tuesday.
Speaking ahead of a 48-hour general strike called to protest tough new austerity measures, due to be approved this week, Costas Tsikrikas, head of the 500,000-strong ADEDY union, accused Prime Minister George Papandreou's Socialist government of blindly pursuing austerity measures that would plunge Greece deeper into recession.
"This will exacerbate recession, unemployment and state revenues will continue to fall, creating a death spiral. It must not continue," Tsikrikas told Reuters in an interview and urged lawmakers to reject the package when it is voted in parliament Wednesday and Thursday.
Tsikrikas said the latest measures, which include tax hikes and pay and pensions cuts, would wipe out any hope of growth for the stricken Greek economy, crushed by debt and now in its third year of recession.
"All we're doing every time is waiting for the troika to release the next tranche," he said, referring to inspectors from the European Union, the European Central Bank and the International Monetary Fund which visit Athens every three months to assess whether Greece deserves new bailout loans.
"The government has to call on the rich to contribute. Workers look more like squeezed lemons now, they can't take it anymore," he said.
"The state must take the money from those who have the income to pay the taxes. The rich, the big companies that use the workforce of this country," Tsikrikas said. "Don't they owe the country and its people something?"
http://www.reuters.com/article/2011/10/18/us-greece-unions-idUSTRE79H39120111018
Greece risks sliding into a "death spiral" if the government continues to slash salaries and lay off workers instead of cracking down on tax evasion and raising money from the rich, the head of the biggest public sector union said Tuesday.
Speaking ahead of a 48-hour general strike called to protest tough new austerity measures, due to be approved this week, Costas Tsikrikas, head of the 500,000-strong ADEDY union, accused Prime Minister George Papandreou's Socialist government of blindly pursuing austerity measures that would plunge Greece deeper into recession.
"This will exacerbate recession, unemployment and state revenues will continue to fall, creating a death spiral. It must not continue," Tsikrikas told Reuters in an interview and urged lawmakers to reject the package when it is voted in parliament Wednesday and Thursday.
Tsikrikas said the latest measures, which include tax hikes and pay and pensions cuts, would wipe out any hope of growth for the stricken Greek economy, crushed by debt and now in its third year of recession.
"All we're doing every time is waiting for the troika to release the next tranche," he said, referring to inspectors from the European Union, the European Central Bank and the International Monetary Fund which visit Athens every three months to assess whether Greece deserves new bailout loans.
"The government has to call on the rich to contribute. Workers look more like squeezed lemons now, they can't take it anymore," he said.
"The state must take the money from those who have the income to pay the taxes. The rich, the big companies that use the workforce of this country," Tsikrikas said. "Don't they owe the country and its people something?"
http://www.reuters.com/article/2011/10/18/us-greece-unions-idUSTRE79H39120111018
Sunday, October 16, 2011
Chinese Banks Need a Pre-emptive Bailout
From the WSJ:
Beijing can tackle tough reforms now, or wait until problems grow more severe.
China's banks are much unloved these days. The government is pressing them to maintain small-business lending even as Beijing scales back broader credit creation to fight inflation. Analysts fret about the growing risks of nonperforming loans. Last week, an arm of the sovereign wealth fund Central Huijin had to buy bank shares in an effort to arrest a sell-off that has seen share prices fall some 30% this year.
China is not suffering a banking crisis now, but there's growing cause for concern. The only way to avert more serious problems is a new wave of reform.
What ails China's banks? First, China's growth has slowed, thanks largely to tight monetary policy since the beginning of 2011. This inevitably will push some of the banks' borrowers into difficulties.
Second, China's real-estate industry is in the midst of a cyclical correction. This is a victory for the government's anti-speculation efforts, but not a cost-free one. After 18 months of various regulatory controls, developers' sales volumes have become weak and their finances are tight. Inventories of unsold apartments are accumulating. Apartment prices will have to come down. Some small developers will go under.
Finally, some 20% of outstanding bank loans are to entities established by local governments to fund infrastructure projects. This—alongside all that inflation–is one of the legacies of China's 2009-10 stimulus package. These local-government funding vehicles leveraged up on bank credit, and built new metro systems, roads and airports. But it's unlikely all these projects are going to be able to repay those loans.
http://online.wsj.com/article/SB10001424052970204479504576634253935680650.html?mod=googlenews_wsj
Beijing can tackle tough reforms now, or wait until problems grow more severe.
China's banks are much unloved these days. The government is pressing them to maintain small-business lending even as Beijing scales back broader credit creation to fight inflation. Analysts fret about the growing risks of nonperforming loans. Last week, an arm of the sovereign wealth fund Central Huijin had to buy bank shares in an effort to arrest a sell-off that has seen share prices fall some 30% this year.
China is not suffering a banking crisis now, but there's growing cause for concern. The only way to avert more serious problems is a new wave of reform.
What ails China's banks? First, China's growth has slowed, thanks largely to tight monetary policy since the beginning of 2011. This inevitably will push some of the banks' borrowers into difficulties.
Second, China's real-estate industry is in the midst of a cyclical correction. This is a victory for the government's anti-speculation efforts, but not a cost-free one. After 18 months of various regulatory controls, developers' sales volumes have become weak and their finances are tight. Inventories of unsold apartments are accumulating. Apartment prices will have to come down. Some small developers will go under.
Finally, some 20% of outstanding bank loans are to entities established by local governments to fund infrastructure projects. This—alongside all that inflation–is one of the legacies of China's 2009-10 stimulus package. These local-government funding vehicles leveraged up on bank credit, and built new metro systems, roads and airports. But it's unlikely all these projects are going to be able to repay those loans.
http://online.wsj.com/article/SB10001424052970204479504576634253935680650.html?mod=googlenews_wsj
Brandon Smith: Breaking Points: Recognizing the Signs of Painful Cultural Shift
From Alt-Market:
Through the ages, nations and cultures of spectacular proportion and prominence have risen to prosperity, and fallen to chaos, on very particular and fundamental principles. In some cases, these great and terrible declines have taken centuries to culminate (as was the story of the Roman Empire), and only a few years in others (the Soviet Union comes to mind). In every example of societal destabilization, however, there were many signs of danger long before the final plunge; some unique to each particular culture, and some common to all. One of the most enduring and frightening similarities between crumbling nations is an overwhelming belief amongst the people that they have somehow “advanced” beyond the need for concern. Each self-destructing society presumed itself invincible. Each country thought itself the pinnacle of human potential, only to discover yet again that in abandoning or subverting the principles of freedom, and the bedrock pillars of conscience, reason, and wisdom, they had become merely another footnote in a long marathon of footnotes.
Ultimately, the vast and sordid history of collapse could be summarized simply as a series of breaking points; moments at which opposing ideals and forces hyperextend the prevailing mechanics of a system, changing it entirely.
To predict the exact timing of a breaking point is impossible, but there are signals to watch for; social and political attitudes to monitor and examine. After analyzing the shifts of multiple nations and cultures over thousands of years of human record, a pattern does, indeed, emerge. Similar developments in our times should not be taken lightly…
http://www.alt-market.com/articles/305-breaking-points-recognizing-the-signs-of-painful-cultural-shift
Through the ages, nations and cultures of spectacular proportion and prominence have risen to prosperity, and fallen to chaos, on very particular and fundamental principles. In some cases, these great and terrible declines have taken centuries to culminate (as was the story of the Roman Empire), and only a few years in others (the Soviet Union comes to mind). In every example of societal destabilization, however, there were many signs of danger long before the final plunge; some unique to each particular culture, and some common to all. One of the most enduring and frightening similarities between crumbling nations is an overwhelming belief amongst the people that they have somehow “advanced” beyond the need for concern. Each self-destructing society presumed itself invincible. Each country thought itself the pinnacle of human potential, only to discover yet again that in abandoning or subverting the principles of freedom, and the bedrock pillars of conscience, reason, and wisdom, they had become merely another footnote in a long marathon of footnotes.
Ultimately, the vast and sordid history of collapse could be summarized simply as a series of breaking points; moments at which opposing ideals and forces hyperextend the prevailing mechanics of a system, changing it entirely.
To predict the exact timing of a breaking point is impossible, but there are signals to watch for; social and political attitudes to monitor and examine. After analyzing the shifts of multiple nations and cultures over thousands of years of human record, a pattern does, indeed, emerge. Similar developments in our times should not be taken lightly…
http://www.alt-market.com/articles/305-breaking-points-recognizing-the-signs-of-painful-cultural-shift
Thursday, October 13, 2011
The Success of Korean Chaebols Comes with a Cost
The Korean chaebol system was born in line with Korea’s growth strategy driven by Korea’s political economy. It has served as a tool to grow the means of production, build Korea’s industrial base, maintain and extend the political regime, and pursue the mercantile export drive. Korea’s economic development and innovation endeavor have revolved around the chaebol system to a significant extent.
And yet, despite some positive aspects that the chaebol system has brought about, its success has come with a cost.
The shortcomings of the chaebol system are much deeper in the context of the long-term economic prosperity and innovation capacity building. They have been concealed due to…
The chaebol system has fostered the concentration of power, wealth and innovation capacity at a few hands…
Technology transfer to Korea has been mostly absorbed by chaebols. Technology spillover effect has been limited…
Korean chaebols have played at globalization…
Corporate borrowing was one of the culprits for the 1997 financial crisis. This problem got compounded by Korea’s weak financial structure…
Chaebols are not the engine of hiring. Unless there is hiring, consumer spending wouldn’t likely to pick up. This means that Korea’s domestic consumption won’t be boosted much as long as chaebol’s dominance persists.
Monopolization even hinders political democracy. Spreading growth around through the continued growth of productive capacity would make the democracy work…
Korea’s policy apparatus has favored chaebols’ growth and dominance through subsidies, taxation and regulations…Some policy choices have been squandered on the few chaebols…
As noted before, Korea’s power elites should have considered that the competitive advantage Korea had in the early stage of industrialization could wane and should have prepared Korea’s economic and innovation engines accordingly. The chaebol system is a big part of that…
(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)
And yet, despite some positive aspects that the chaebol system has brought about, its success has come with a cost.
The shortcomings of the chaebol system are much deeper in the context of the long-term economic prosperity and innovation capacity building. They have been concealed due to…
The chaebol system has fostered the concentration of power, wealth and innovation capacity at a few hands…
Technology transfer to Korea has been mostly absorbed by chaebols. Technology spillover effect has been limited…
Korean chaebols have played at globalization…
Corporate borrowing was one of the culprits for the 1997 financial crisis. This problem got compounded by Korea’s weak financial structure…
Chaebols are not the engine of hiring. Unless there is hiring, consumer spending wouldn’t likely to pick up. This means that Korea’s domestic consumption won’t be boosted much as long as chaebol’s dominance persists.
Monopolization even hinders political democracy. Spreading growth around through the continued growth of productive capacity would make the democracy work…
Korea’s policy apparatus has favored chaebols’ growth and dominance through subsidies, taxation and regulations…Some policy choices have been squandered on the few chaebols…
As noted before, Korea’s power elites should have considered that the competitive advantage Korea had in the early stage of industrialization could wane and should have prepared Korea’s economic and innovation engines accordingly. The chaebol system is a big part of that…
(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)
Art Cashin: The Most Important History Lesson of the Last Century
From Zero Hedge:
Today, instead of the traditional market observations by the Chairman of the Fermentation Committee, we share with readers a critical historical lesson from Art Cashin, focusing on an event that took place 89 years ago, which as Cashin says is "one of the most devastating economic events in recorded history and an important backdrop to Europe today. It all began with the efforts of a few, well-intentioned government officials." Many will know what we are talking about already...
http://www.zerohedge.com/news/art-cashin-most-important-history-lesson-last-century
Today, instead of the traditional market observations by the Chairman of the Fermentation Committee, we share with readers a critical historical lesson from Art Cashin, focusing on an event that took place 89 years ago, which as Cashin says is "one of the most devastating economic events in recorded history and an important backdrop to Europe today. It all began with the efforts of a few, well-intentioned government officials." Many will know what we are talking about already...
http://www.zerohedge.com/news/art-cashin-most-important-history-lesson-last-century
Wednesday, October 12, 2011
John Daly: Putin’s New Vision of Eurasia
From Oilprice:
Many western politicians have harbored deep suspicions of Russian Prime Minister Vladimir Vladimorovich Putin since he first emerged on the Russian political stage in 1999.
This is hardly surprising, given his KGB background, though those with longer historical memories will recall that Yuri Andropov came from the same organization and that the West grudgingly found a way to work with him.
While the worst aspects of the Cold War faded away with the peaceful collapse of the USSR in late 1991, twenty years later, trying to figure out Kremlin politics remains as vital an exercise as ever, and the “Putin era” has provided Washington analysts desperately reinventing themselves to hang on to their jobs with rich fodder.
Is Putin a democrat?
Stalinist?
Or something in between?
Place your bets.
http://oilprice.com/Geo-Politics/International/Putins-New-Vision-of-Eurasia.html
Many western politicians have harbored deep suspicions of Russian Prime Minister Vladimir Vladimorovich Putin since he first emerged on the Russian political stage in 1999.
This is hardly surprising, given his KGB background, though those with longer historical memories will recall that Yuri Andropov came from the same organization and that the West grudgingly found a way to work with him.
While the worst aspects of the Cold War faded away with the peaceful collapse of the USSR in late 1991, twenty years later, trying to figure out Kremlin politics remains as vital an exercise as ever, and the “Putin era” has provided Washington analysts desperately reinventing themselves to hang on to their jobs with rich fodder.
Is Putin a democrat?
Stalinist?
Or something in between?
Place your bets.
http://oilprice.com/Geo-Politics/International/Putins-New-Vision-of-Eurasia.html
Is a Rising Yuan Inevitable?
From MacroBusiness:
Let’s face it, China is manipulating its currency. You can call it whatever you want, but China is manipulating its currency.
As part of its trade policy, China has been trying to prevent they Yuan from appreciating quickly. They have also taken the lesson from 1985 Plaza Accord in which the US and others forced Japan to float Yen, and are quite determined not to repeat that. Of course, that did not help with the US’s trade deficit, and Japan is still running trade surpluses two and a half decades later.
Because of the allegedly undervalued yuan, China has been running a persistent trade surplus. And because of its capital control which favours in-flow and limits out-flow, it also has surpluses in the capital account. As a result, we seem to always have too much money sloshing around in China, and the growth of its money supply makes the effect of quantitative easing in the United States looks insignificant (that also means that China has to intervene in the market by buying foreign currencies and assets, and hence the large foreign exchange reserve). That’s particularly true when the $US weakens. As I have shown previously, even though Chinese Yuan has been creeping higher against the $US dollar, it has not appreciated against many other currencies.
http://www.macrobusiness.com.au/2011/10/is-a-rising-yuan-inevitable/
Let’s face it, China is manipulating its currency. You can call it whatever you want, but China is manipulating its currency.
As part of its trade policy, China has been trying to prevent they Yuan from appreciating quickly. They have also taken the lesson from 1985 Plaza Accord in which the US and others forced Japan to float Yen, and are quite determined not to repeat that. Of course, that did not help with the US’s trade deficit, and Japan is still running trade surpluses two and a half decades later.
Because of the allegedly undervalued yuan, China has been running a persistent trade surplus. And because of its capital control which favours in-flow and limits out-flow, it also has surpluses in the capital account. As a result, we seem to always have too much money sloshing around in China, and the growth of its money supply makes the effect of quantitative easing in the United States looks insignificant (that also means that China has to intervene in the market by buying foreign currencies and assets, and hence the large foreign exchange reserve). That’s particularly true when the $US weakens. As I have shown previously, even though Chinese Yuan has been creeping higher against the $US dollar, it has not appreciated against many other currencies.
http://www.macrobusiness.com.au/2011/10/is-a-rising-yuan-inevitable/
Tuesday, October 11, 2011
#OccupyWallStreet Visits the Upper East Side
From Naked Capitalism:
What a pleasant surprise. I was on the phone and heard chanting and drumbeats outside, and lo and behold, it was OccupyWallStreet across the street from me (on the west side of Park Avenue). Unfortunately, I have meetings this PM and so I could only run out briefly to see them on the street, but this was a perfect day to come this far uptown. The police told me they had walked up from Zuccotti Park, that’s a good 7-8 mile hike.
Quick impressions: the marchers were fairly densely packed on the sidewalk, extending 2-3 blocks, so I’d say at least 300 people, probably closer to 500.
The cop coverage was intense: several paddy wagons, lost on motorcycles and in the little cars (not standard issue cop cars, a form factor more like little Postal Service delivery people). The policing was doing much more to disrupt traffic than the marchers were.
People on the street seemed mainly bemused, a lot of picture taking and people standing on corners across the street to watch. Some seemed to be chatting to people they didn’t necessarily know well. A few perplexed faces and a few genuinely sour faces.
http://www.nakedcapitalism.com/2011/10/occupywallstreet-visits-the-upper-east-side.html
What a pleasant surprise. I was on the phone and heard chanting and drumbeats outside, and lo and behold, it was OccupyWallStreet across the street from me (on the west side of Park Avenue). Unfortunately, I have meetings this PM and so I could only run out briefly to see them on the street, but this was a perfect day to come this far uptown. The police told me they had walked up from Zuccotti Park, that’s a good 7-8 mile hike.
Quick impressions: the marchers were fairly densely packed on the sidewalk, extending 2-3 blocks, so I’d say at least 300 people, probably closer to 500.
The cop coverage was intense: several paddy wagons, lost on motorcycles and in the little cars (not standard issue cop cars, a form factor more like little Postal Service delivery people). The policing was doing much more to disrupt traffic than the marchers were.
People on the street seemed mainly bemused, a lot of picture taking and people standing on corners across the street to watch. Some seemed to be chatting to people they didn’t necessarily know well. A few perplexed faces and a few genuinely sour faces.
http://www.nakedcapitalism.com/2011/10/occupywallstreet-visits-the-upper-east-side.html
Monday, October 10, 2011
Chinese Version of Bank and Stock Market Bailout
From Zero Hedge:
To anyone still believing that capital markets around the world express something other than government policy, the latest news out of China may come as a surprise: "Beijing will buy more shares in China’s biggest banks, in an expression of support for the beleaguered stock market and most concrete state action to date to shore up confidence in the slowing economy." The FT reports further: "Central Huijin, the domestic arm of China’s sovereign wealth fund, will buy the shares to help stabilise the pillars of the country’s financial system, the official Xinhua news agency said on Monday. Coming as the Chinese stock market closed at a 30-month low, the move was the strongest sign that Beijing wants to engineer a restoration of confidence in share prices and the economy. It paid instant dividends with a rally in the final minutes of trading on Monday." And there you have it: stocks are now nothing more than a means for governments to validate their "success" in something, since they have no more control left over either employment or inflation, or public expression of affection with capitalism as per #OWS. So why not ramp up the DJIA to 36,000? Granted that will happen as all global currencies get terminally davalued against gold, but so what - after all that only thing that matters now is whose stock market is the biggest.
http://www.zerohedge.com/news/not-be-left-out-china-announces-its-own-bank-and-stock-market-bail-out?page=1
To anyone still believing that capital markets around the world express something other than government policy, the latest news out of China may come as a surprise: "Beijing will buy more shares in China’s biggest banks, in an expression of support for the beleaguered stock market and most concrete state action to date to shore up confidence in the slowing economy." The FT reports further: "Central Huijin, the domestic arm of China’s sovereign wealth fund, will buy the shares to help stabilise the pillars of the country’s financial system, the official Xinhua news agency said on Monday. Coming as the Chinese stock market closed at a 30-month low, the move was the strongest sign that Beijing wants to engineer a restoration of confidence in share prices and the economy. It paid instant dividends with a rally in the final minutes of trading on Monday." And there you have it: stocks are now nothing more than a means for governments to validate their "success" in something, since they have no more control left over either employment or inflation, or public expression of affection with capitalism as per #OWS. So why not ramp up the DJIA to 36,000? Granted that will happen as all global currencies get terminally davalued against gold, but so what - after all that only thing that matters now is whose stock market is the biggest.
http://www.zerohedge.com/news/not-be-left-out-china-announces-its-own-bank-and-stock-market-bail-out?page=1
Sunday, October 9, 2011
“You were chosen to be free, but not to use freedom as an excuse to live in sin and self indulgence. Instead, serve love, and care for one another. The whole of the law is found in a single command: Love your neighbor as yourself. And if you gouge and bite each other, watch out, that you are not devoured.”
Galatians 5: 13-15
Galatians 5: 13-15
Friday, October 7, 2011
Another U.S. Subprime Contagion Looming
From Zero Hedge:
Several years ago Paolo Pellegrini, Kyle Bass, Michael Burry and several other visionaries were well ahead of the conventional wisdom groupthink curve by not only sensing that the housing market was massively overvalued and riding on the crest of a huge leverage bubble (many others agreed) but by finding a ridiculously cheap, low theta way of expressing an uber-bearish long-term outlook with negligible downside and virtually unlimited upside by purchasing billions in ABX index notional at a cost of a few basis points, and watching it explode as one after another asset manager figured out just what "subprime" means and why it may not be conducive to a healthy career in finance. Virtually all of them ended up being very, very rich in just a few short years having had the foresight and, more importantly, the way to express that vision. Lightning may be about to strike twice as the Subprime implosion of 2007 becomes the Prime implosion of 2011. Back in December 2009, when musing on the very interesting topic of the advent of a new ABX-like index, this time tracking Prime mortgages, we asked, rhetorically as so often happens, "Will The New ABX Prime Index Be The Reason For The Next RMBS (And Thus, FHA/GSE) Collapse?" (for more on this index which MarkIt now markets as PrimeX see here). And while the rest of the world is fretting about Europe, Morgan Stanley, lack of decisive political decision-making in a pseudo union of 17 different countries, lack of decisive monetary intervention, a Chinese hard landing and everything else that makes front pages these days, slowly our prediction is starting to come true. But you won't hear about it anywhere else, because if the market understands that in addition to a global solvency crisis, America has another Subprime contagion on its hands actually being expressed in the markets as we type, and potentially costing banks, pension funds and various asset managers billions in losses behind the scenes, that may well be the last straw.
http://www.zerohedge.com/news/primex-time-next-subprime-trade-has-come
Several years ago Paolo Pellegrini, Kyle Bass, Michael Burry and several other visionaries were well ahead of the conventional wisdom groupthink curve by not only sensing that the housing market was massively overvalued and riding on the crest of a huge leverage bubble (many others agreed) but by finding a ridiculously cheap, low theta way of expressing an uber-bearish long-term outlook with negligible downside and virtually unlimited upside by purchasing billions in ABX index notional at a cost of a few basis points, and watching it explode as one after another asset manager figured out just what "subprime" means and why it may not be conducive to a healthy career in finance. Virtually all of them ended up being very, very rich in just a few short years having had the foresight and, more importantly, the way to express that vision. Lightning may be about to strike twice as the Subprime implosion of 2007 becomes the Prime implosion of 2011. Back in December 2009, when musing on the very interesting topic of the advent of a new ABX-like index, this time tracking Prime mortgages, we asked, rhetorically as so often happens, "Will The New ABX Prime Index Be The Reason For The Next RMBS (And Thus, FHA/GSE) Collapse?" (for more on this index which MarkIt now markets as PrimeX see here). And while the rest of the world is fretting about Europe, Morgan Stanley, lack of decisive political decision-making in a pseudo union of 17 different countries, lack of decisive monetary intervention, a Chinese hard landing and everything else that makes front pages these days, slowly our prediction is starting to come true. But you won't hear about it anywhere else, because if the market understands that in addition to a global solvency crisis, America has another Subprime contagion on its hands actually being expressed in the markets as we type, and potentially costing banks, pension funds and various asset managers billions in losses behind the scenes, that may well be the last straw.
http://www.zerohedge.com/news/primex-time-next-subprime-trade-has-come
Thursday, October 6, 2011
IMF Advisor: We Face a Worldwide Financial Meltdown
From Zero Hedge:
In an interview with IMF advisor Robert Shapiro, the bailout expert has pretty much said what, once again, is on everyone's mind: "If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected. All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world. This would be a crisis that would be in my view more serrious than the crisis in 2008.... What we don't know the state of credit default swaps held by banks against sovereign debt and against European banks, nor do we know the state of CDS held by British banks, nor are we certain of how certain the exposure of British banks is to the Ireland sovereign debt problems."
http://www.zerohedge.com/news/bbc-does-it-again-absence-credible-plan-we-will-have-global-financial-meltdown-two-three-weeks-
In an interview with IMF advisor Robert Shapiro, the bailout expert has pretty much said what, once again, is on everyone's mind: "If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected. All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world. This would be a crisis that would be in my view more serrious than the crisis in 2008.... What we don't know the state of credit default swaps held by banks against sovereign debt and against European banks, nor do we know the state of CDS held by British banks, nor are we certain of how certain the exposure of British banks is to the Ireland sovereign debt problems."
http://www.zerohedge.com/news/bbc-does-it-again-absence-credible-plan-we-will-have-global-financial-meltdown-two-three-weeks-
Steve Jobs Has Passed Away
May he rest in peace.
Some Quotes from Steve Jobs:
"Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it."
“Innovation distinguishes between a leader and a follower.”
“I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”
"The cure for Apple is not cost-cutting. The cure for Apple is to innovate its way out of its current predicament.” (1999)
"Almost everything -- all external expectations, all pride, all fear of embarrassment or failure -- these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart."
“Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world?”
Some comments on his life posted on Zero Hedge:
Fukushima Sam wrote:
Most of ZH disagrees with central planning. Apple is probably the most secretive and authoritarian central planner of the IT industry. Jobs created some great things, but the way they were implemented were anathema to the founding spirit of the Internet, which believes in free and equal access for all. Jobs was the quintessential late Boomer; idealistic and creative as a youth, a tyrant in mid-life. Like the rest of the Boomers Jobs was always convinced of the superiority of his vision, and once he had the power to implement it he did so without compassion and a "ends justifies the means" mentality.
I would say that most ZH readers view Jobs as I do; with a certain respect for his innovations and accomplishments and an absolute dismay for most of the results.
Cynical Sidney wrote:
steve jobs lived in a time when corporations did NOT engage in massive anti-competitive practices like patent abuse, to kill all competition. the 'internet' was not copyrighted, apple/microsoft was not sued for taking ideas from xerox os/unix commandline os, and there were no patent wars between apple and samsung. steve lived in a time when apple didn't try to control every aspect of the user experience, when the youth of their generation had great mobility to freely innovate, there were no leveraged buyouts to rob genius creations from their creators, so anyone could start a business from their garage without the support of VC.
fast forward 35 years, what steve did is just not possible in the world we live in today.
http://www.zerohedge.com/news/guest-post-if-you-want-more-jobs-look-steve-jobs
Some Quotes from Steve Jobs:
"Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it."
“Innovation distinguishes between a leader and a follower.”
“I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”
"The cure for Apple is not cost-cutting. The cure for Apple is to innovate its way out of its current predicament.” (1999)
"Almost everything -- all external expectations, all pride, all fear of embarrassment or failure -- these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart."
“Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world?”
Some comments on his life posted on Zero Hedge:
Fukushima Sam wrote:
Most of ZH disagrees with central planning. Apple is probably the most secretive and authoritarian central planner of the IT industry. Jobs created some great things, but the way they were implemented were anathema to the founding spirit of the Internet, which believes in free and equal access for all. Jobs was the quintessential late Boomer; idealistic and creative as a youth, a tyrant in mid-life. Like the rest of the Boomers Jobs was always convinced of the superiority of his vision, and once he had the power to implement it he did so without compassion and a "ends justifies the means" mentality.
I would say that most ZH readers view Jobs as I do; with a certain respect for his innovations and accomplishments and an absolute dismay for most of the results.
Cynical Sidney wrote:
steve jobs lived in a time when corporations did NOT engage in massive anti-competitive practices like patent abuse, to kill all competition. the 'internet' was not copyrighted, apple/microsoft was not sued for taking ideas from xerox os/unix commandline os, and there were no patent wars between apple and samsung. steve lived in a time when apple didn't try to control every aspect of the user experience, when the youth of their generation had great mobility to freely innovate, there were no leveraged buyouts to rob genius creations from their creators, so anyone could start a business from their garage without the support of VC.
fast forward 35 years, what steve did is just not possible in the world we live in today.
http://www.zerohedge.com/news/guest-post-if-you-want-more-jobs-look-steve-jobs
Wednesday, October 5, 2011
Robert Reich: Behind Europe’s Debt Crisis Lurks Another Giant Bailout of Wall Street
Dr. Reich is a public policy professor at U.C.Berkeley.
From his blog:
The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements. That’s no big deal.
But a default by Greece or any other of Europe’s debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.
That’s where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle.
The Street’s total exposure to the euro zone totals about $2.7 trillion. Its exposure to to France and Germany accounts for nearly half the total.
And it’s not just Wall Street’s loans to German and French banks that are worrisome. Wall Street has also insured or bet on all sorts of derivatives emanating from Europe – on energy, currency, interest rates, and foreign exchange swaps. If a German or French bank goes down, the ripple effects are incalculable.
Get it? Follow the money: If Greece goes down, investors start fleeing Ireland, Spain, Italy, and Portugal as well. All of this sends big French and German banks reeling. If one of these banks collapses, or show signs of major strain, Wall Street is in big trouble. Possibly even bigger trouble than it was in after Lehman Brothers went down.
That’s why shares of the biggest U.S. banks have been falling for the past month. Morgan Stanley closed Monday at its lowest since December 2008 – and the cost of insuring Morgan’s debt has jumped to levels not seen since November 2008.
It’s rumored that Morgan could lose as much as $30 billion if some French and German banks fail. (That’s from Federal Financial Institutions Examination Council, which tracks all cross-border exposure of major banks.)
$30 billion is roughly $2 billion more than the assets Morgan owns (in terms of current market capitalization.)
But Morgan says its exposure to French banks is zero. Why the discrepancy? Morgan has probably taken out insurance against its loans to European banks, as well as collateral from them. So Morgan feels as if it’s not exposed.
But does anyone remember something spelled AIG? That was the giant insurance firm that went bust when Wall Street began going under. Wall Street thought it had insured its bets with AIG. Turned out, AIG couldn’t pay up.
Haven’t we been here before?
Republicans and Wall Street executives who continue to yell about Dodd-Frank overkill are dead wrong. The fact no one seems to know Morgan’s exposure to European banks or derivatives – or that of most other giant Wall Street banks – shows Dodd-Frank didn’t go nearly far enough.
Regulators still don’t know what’s happening on the Street. They have no clear picture of the derivatives exposure of giant U.S. financial institutions.
Which is why Washington officials are terrified – and why Treasury Secretary Tim Geithner keeps begging European officials to bail out Greece and the other deeply-indebted European nations.
Several months ago, when the European debt crisis first became apparent, Wall Street banks said not to worry. They had little or no exposure to Europe’s problems. The Federal Reserve said the same. In July, Ben Bernanke reassured Congress the exposure of U.S. banks to European nations in trouble was “quite small.”
Now we’re hearing a different tune.
Make no mistake. The United States wants Europe to bail out its deeply indebted nations so they can repay what they owe big European banks. Otherwise, those banks could implode taking Wall Street with them.
One of the many ironies here is some badly-indebted European nations (Ireland is the best example) went deeply into debt in the first place bailing out their banks from the crisis that began on Wall Street.
Full circle.
In other words, Greece isn’t the real problem. Nor is Ireland, Italy, Portugal, or Spain. The real problem is the financial system - centered on Wall Street. And we still haven’t solved it.
http://robertreich.org/post/11033625495
From his blog:
The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements. That’s no big deal.
But a default by Greece or any other of Europe’s debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.
That’s where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle.
The Street’s total exposure to the euro zone totals about $2.7 trillion. Its exposure to to France and Germany accounts for nearly half the total.
And it’s not just Wall Street’s loans to German and French banks that are worrisome. Wall Street has also insured or bet on all sorts of derivatives emanating from Europe – on energy, currency, interest rates, and foreign exchange swaps. If a German or French bank goes down, the ripple effects are incalculable.
Get it? Follow the money: If Greece goes down, investors start fleeing Ireland, Spain, Italy, and Portugal as well. All of this sends big French and German banks reeling. If one of these banks collapses, or show signs of major strain, Wall Street is in big trouble. Possibly even bigger trouble than it was in after Lehman Brothers went down.
That’s why shares of the biggest U.S. banks have been falling for the past month. Morgan Stanley closed Monday at its lowest since December 2008 – and the cost of insuring Morgan’s debt has jumped to levels not seen since November 2008.
It’s rumored that Morgan could lose as much as $30 billion if some French and German banks fail. (That’s from Federal Financial Institutions Examination Council, which tracks all cross-border exposure of major banks.)
$30 billion is roughly $2 billion more than the assets Morgan owns (in terms of current market capitalization.)
But Morgan says its exposure to French banks is zero. Why the discrepancy? Morgan has probably taken out insurance against its loans to European banks, as well as collateral from them. So Morgan feels as if it’s not exposed.
But does anyone remember something spelled AIG? That was the giant insurance firm that went bust when Wall Street began going under. Wall Street thought it had insured its bets with AIG. Turned out, AIG couldn’t pay up.
Haven’t we been here before?
Republicans and Wall Street executives who continue to yell about Dodd-Frank overkill are dead wrong. The fact no one seems to know Morgan’s exposure to European banks or derivatives – or that of most other giant Wall Street banks – shows Dodd-Frank didn’t go nearly far enough.
Regulators still don’t know what’s happening on the Street. They have no clear picture of the derivatives exposure of giant U.S. financial institutions.
Which is why Washington officials are terrified – and why Treasury Secretary Tim Geithner keeps begging European officials to bail out Greece and the other deeply-indebted European nations.
Several months ago, when the European debt crisis first became apparent, Wall Street banks said not to worry. They had little or no exposure to Europe’s problems. The Federal Reserve said the same. In July, Ben Bernanke reassured Congress the exposure of U.S. banks to European nations in trouble was “quite small.”
Now we’re hearing a different tune.
Make no mistake. The United States wants Europe to bail out its deeply indebted nations so they can repay what they owe big European banks. Otherwise, those banks could implode taking Wall Street with them.
One of the many ironies here is some badly-indebted European nations (Ireland is the best example) went deeply into debt in the first place bailing out their banks from the crisis that began on Wall Street.
Full circle.
In other words, Greece isn’t the real problem. Nor is Ireland, Italy, Portugal, or Spain. The real problem is the financial system - centered on Wall Street. And we still haven’t solved it.
http://robertreich.org/post/11033625495
Tuesday, October 4, 2011
Jim Quinn: What the U.S. Needs Now Is Hope
From Burning Platform:
Millions of middle class citizens in the U.S. sink deeper into despair every day. Day by day hope is being lost that the future for our children will be better than our past. The political, financial, and corporate leaders of our country are intellectually and morally bankrupt. The major Wall Street banks are bankrupt. Social Security is bankrupt. Medicare is bankrupt. The whole damned world is bankrupt. Anyone with an unbiased view of our planet would conclude that we are in unfathomable danger. The list of impending catastrophic issues that will blow up the world for millions in the U.S. and across the globe is virtually endless...
When I started to detail the issues facing our country today, I expected to come up with 10 to 20 bullet points of key concerns. As I methodically worked through the categories of challenges facing the American Empire, the total reached 76 bullet points. The facts as presented above paint a picture of impending doom for America. The slogans and vapid “solutions” proposed by political candidates and entrenched Washington politicians do not even scratch the surface of what would need to be done to save this country from economic collapse. Many of these problems took decades to create and are not solvable in a reasonable time frame. With the country still delusion, overleveraged, and underemployed, it seems like the existing economic and social structure will need to be blown up to restore hope in this country.
http://www.theburningplatform.com/?p=22172
Millions of middle class citizens in the U.S. sink deeper into despair every day. Day by day hope is being lost that the future for our children will be better than our past. The political, financial, and corporate leaders of our country are intellectually and morally bankrupt. The major Wall Street banks are bankrupt. Social Security is bankrupt. Medicare is bankrupt. The whole damned world is bankrupt. Anyone with an unbiased view of our planet would conclude that we are in unfathomable danger. The list of impending catastrophic issues that will blow up the world for millions in the U.S. and across the globe is virtually endless...
When I started to detail the issues facing our country today, I expected to come up with 10 to 20 bullet points of key concerns. As I methodically worked through the categories of challenges facing the American Empire, the total reached 76 bullet points. The facts as presented above paint a picture of impending doom for America. The slogans and vapid “solutions” proposed by political candidates and entrenched Washington politicians do not even scratch the surface of what would need to be done to save this country from economic collapse. Many of these problems took decades to create and are not solvable in a reasonable time frame. With the country still delusion, overleveraged, and underemployed, it seems like the existing economic and social structure will need to be blown up to restore hope in this country.
http://www.theburningplatform.com/?p=22172
U.S.- China Currency and Trade Wars: China Adamantly Opposes U.S. Currency Bill & Warns of Trade War If It Passes
As noted, for mercantilist countries like China, the currency matter is one of the sovereign matters. China is not the cause of America’s downfall. The peg has been there for a reason. It has to end at some point. Both countries have screwed over their own people (most citizens). Again, we are at the early stage of the global depression. This is not a cyclical recession.
From Reuters:
China warned Washington it is "adamantly opposed" to a proposed U.S. bill aimed at forcing Beijing to let its currency rise, saying its passage could lead to a trade war between the world's top two economies.
In a coordinated response, the Chinese central bank and the ministries of commerce and foreign affairs accused Washington of "politicizing" global currency issues.
The bill to be debated in the United States this week violates World Trade Organization rules and forcing the yuan to appreciate would weaken joint efforts to revive the global economy, the foreign ministry said.
"By using the excuse of a so-called 'currency imbalance', this will escalate the exchange rate issue, adopting a protectionist measure that gravely violates WTO rules and seriously upsets Sino-U.S. trade and economic relations," foreign ministry spokesman Ma Zhaoxu said in a statement posted on China's official government website (www.gov.cn) on Tuesday.
U.S. senators voted on Monday to open a week of debate on the Currency Exchange Rate Oversight Reform Act of 2011, which would allow the U.S. government to slap countervailing duties on products from countries found to be subsidizing their exports by undervaluing their currencies.
U.S. lawmakers, eyeing 2012 elections, said the undervaluing of China's currency had cost American jobs and that a fairer exchange rate would help cut an annual trade gap of $250 billion.
Ma urged U.S. legislators to "proceed from the broader picture of Sino-U.S. trade and economic cooperation" and "forsake protectionism."
He repeated Beijing's position that it will continue to gradually reform its currency policy, "strengthening the flexibility of the renminbi exchange rate."
China's central bank said in a statement that the bill failed to address the underlying issues in the U.S. economy.
"The yuan bill passed by the U.S. senate will not solve its problems, such as insufficient savings, high trade deficit and high unemployment rate, but it may seriously affect the whole progress of China's reform of its yuan exchange rate regime and may also lead to a trade war which we would not like to see."
China's currency has appreciated 7 percent since June 2010, when the central bank decided to adopt a more flexible exchange rate, said foreign minister spokesman Ma, adding that Beijing would continue "proactive" and "gradual" reform.
The central bank added that Chinese inflation had already pushed the real yuan exchange rate further "toward the equilibrium."
Ministry of Commerce spokesman Shen Danyang said the United States was trying to pass on the blame for its own failings.
"Trying to turn domestic disputes onto another country is both unfair and in violation of standard international rules, and China expresses its concern," he said in a statement issued on the ministry's website.
Shen said any move by the United States to force the yuan to appreciate would undermine joint efforts to revive global economic growth, which took another blow on Monday with data showing that global manufacturing shrank in September for the first time in over two years.
"It will weaken China-U.S. efforts to join hands and together promote global economic recovery," he said. "The global economic is in a complex, sensitive and changeable period, and so even more needs a stable international monetary environment."
The Senate decision was a sign that China was being made a scapegoat by struggling western economies, said Wang Jun, a researcher at the China Center for International Economic Exchanges.
"Maybe the United States will not be the only and last country to do so. With the worsening of the European sovereign debt crisis, we must also be on high alert that euro zone countries could also press China on the exchange rate issue.
"We need to launch some pre-emptive measures to hit back against any more attacks," Wang said.
http://www.reuters.com/article/2011/10/04/us-usa-china-currency-idUSTRE7911TD20111004
From Reuters:
China warned Washington it is "adamantly opposed" to a proposed U.S. bill aimed at forcing Beijing to let its currency rise, saying its passage could lead to a trade war between the world's top two economies.
In a coordinated response, the Chinese central bank and the ministries of commerce and foreign affairs accused Washington of "politicizing" global currency issues.
The bill to be debated in the United States this week violates World Trade Organization rules and forcing the yuan to appreciate would weaken joint efforts to revive the global economy, the foreign ministry said.
"By using the excuse of a so-called 'currency imbalance', this will escalate the exchange rate issue, adopting a protectionist measure that gravely violates WTO rules and seriously upsets Sino-U.S. trade and economic relations," foreign ministry spokesman Ma Zhaoxu said in a statement posted on China's official government website (www.gov.cn) on Tuesday.
U.S. senators voted on Monday to open a week of debate on the Currency Exchange Rate Oversight Reform Act of 2011, which would allow the U.S. government to slap countervailing duties on products from countries found to be subsidizing their exports by undervaluing their currencies.
U.S. lawmakers, eyeing 2012 elections, said the undervaluing of China's currency had cost American jobs and that a fairer exchange rate would help cut an annual trade gap of $250 billion.
Ma urged U.S. legislators to "proceed from the broader picture of Sino-U.S. trade and economic cooperation" and "forsake protectionism."
He repeated Beijing's position that it will continue to gradually reform its currency policy, "strengthening the flexibility of the renminbi exchange rate."
China's central bank said in a statement that the bill failed to address the underlying issues in the U.S. economy.
"The yuan bill passed by the U.S. senate will not solve its problems, such as insufficient savings, high trade deficit and high unemployment rate, but it may seriously affect the whole progress of China's reform of its yuan exchange rate regime and may also lead to a trade war which we would not like to see."
China's currency has appreciated 7 percent since June 2010, when the central bank decided to adopt a more flexible exchange rate, said foreign minister spokesman Ma, adding that Beijing would continue "proactive" and "gradual" reform.
The central bank added that Chinese inflation had already pushed the real yuan exchange rate further "toward the equilibrium."
Ministry of Commerce spokesman Shen Danyang said the United States was trying to pass on the blame for its own failings.
"Trying to turn domestic disputes onto another country is both unfair and in violation of standard international rules, and China expresses its concern," he said in a statement issued on the ministry's website.
Shen said any move by the United States to force the yuan to appreciate would undermine joint efforts to revive global economic growth, which took another blow on Monday with data showing that global manufacturing shrank in September for the first time in over two years.
"It will weaken China-U.S. efforts to join hands and together promote global economic recovery," he said. "The global economic is in a complex, sensitive and changeable period, and so even more needs a stable international monetary environment."
The Senate decision was a sign that China was being made a scapegoat by struggling western economies, said Wang Jun, a researcher at the China Center for International Economic Exchanges.
"Maybe the United States will not be the only and last country to do so. With the worsening of the European sovereign debt crisis, we must also be on high alert that euro zone countries could also press China on the exchange rate issue.
"We need to launch some pre-emptive measures to hit back against any more attacks," Wang said.
http://www.reuters.com/article/2011/10/04/us-usa-china-currency-idUSTRE7911TD20111004
Monday, October 3, 2011
U.S. Closes 2010-2011 Fiscal Year with the Unprecedented $14,790,340,328,557.15 in Debt
From Zero Hedge:
America has now officially closed the books on the 2010-2011 fiscal year. It is only fitting that the last day of the year saw the settlement of all outstanding and recently auctioned off debt. The result: a surge of $95 billion in total government debt overnight, and a fiscal year closing with the absolutely unprecedented $14,790,340,328,557.15 in debt. Net net, in the past fiscal year, the US has issued a total of $1.228 trillion in new debt and has accelerated over time. At a rate of $125 billion per month, total US debt to GDP will pass 100% in just over a month. Incidentally, one may inquire about the benefits of centrally planned fiscal stimulus (cough Solyndra cough): the US economy added over 3$ trillion in debt in the past two years and the stock market is almost back to where it was back then. Perhaps it is about time someone demanded that all those lunatics who say that issuing debt for the sake of growth (and pushing the S&P higher of course) be finally locked away in perpetuity, and the key dropped into the deepest volcano in Mordor.
http://www.zerohedge.com/news/us-closes-2010-2011-fiscal-year-1479034032855715-debt-95-billion-jump-day-12-trillion-increase-
Update:
From Zero Hedge:
US Starts New Fiscal Year With $14.837 Trillion In Debt, $142 Billion Increase In Two Days
Anyone tearing their hair out trying to answer how it is that this great Keynesian experiment of a nation managed to sneek by with so little new incremental debt over the past month can now relax. As Zero Hedge reported yesterday, the US closed out Fiscal 2010-2011 with a $95 billion surge in debt in one day brining the total to just under $14.8 trillion. That, however was not nearly enough to settle all outstanding debt, and on the first day of the next fiscal year, Timmy G added another $47 billion in debt, to have a closing balance of $14.837 trillion on the first day of the 2011-2012 fiscal year. In other words, in just the past two work days, America has technically settled a whopping $142 billion in debt. There was a time when a year was needed to issue this much debt. Then, a month. Now, we are officialy down to two days. What is ironic is that the recently expanded debt ceiling of $15.194 trillion has just $400 billion of additional dry powder. At this rate, it won't last the US until the end of the calendar year.
http://www.zerohedge.com/news/us-starts-news-fiscal-year-14837-trillion-debt-142-billion-increase-two-days
Update:
From Zero Hedge:
Total US Debt Update: $14.86 Trillion; $162 Billion Increase In Three Days; 98.9% Debt/GDP
Little to say here: total debt is now at, obviously, a new record high of $14,856,859,498,405.73, which is a $20 billion increase overnight, $67 billion in the past two days, and $162 billion in the last three days. We will repeat the last part: total US debt has increased by $162 billion in three days. Said otherwise, total US Debt/GDP is now 98.9%. Please carry on.
http://www.zerohedge.com/news/total-us-debt-update-1486-trillion-162-billion-increase-three-days
America has now officially closed the books on the 2010-2011 fiscal year. It is only fitting that the last day of the year saw the settlement of all outstanding and recently auctioned off debt. The result: a surge of $95 billion in total government debt overnight, and a fiscal year closing with the absolutely unprecedented $14,790,340,328,557.15 in debt. Net net, in the past fiscal year, the US has issued a total of $1.228 trillion in new debt and has accelerated over time. At a rate of $125 billion per month, total US debt to GDP will pass 100% in just over a month. Incidentally, one may inquire about the benefits of centrally planned fiscal stimulus (cough Solyndra cough): the US economy added over 3$ trillion in debt in the past two years and the stock market is almost back to where it was back then. Perhaps it is about time someone demanded that all those lunatics who say that issuing debt for the sake of growth (and pushing the S&P higher of course) be finally locked away in perpetuity, and the key dropped into the deepest volcano in Mordor.
http://www.zerohedge.com/news/us-closes-2010-2011-fiscal-year-1479034032855715-debt-95-billion-jump-day-12-trillion-increase-
Update:
From Zero Hedge:
US Starts New Fiscal Year With $14.837 Trillion In Debt, $142 Billion Increase In Two Days
Anyone tearing their hair out trying to answer how it is that this great Keynesian experiment of a nation managed to sneek by with so little new incremental debt over the past month can now relax. As Zero Hedge reported yesterday, the US closed out Fiscal 2010-2011 with a $95 billion surge in debt in one day brining the total to just under $14.8 trillion. That, however was not nearly enough to settle all outstanding debt, and on the first day of the next fiscal year, Timmy G added another $47 billion in debt, to have a closing balance of $14.837 trillion on the first day of the 2011-2012 fiscal year. In other words, in just the past two work days, America has technically settled a whopping $142 billion in debt. There was a time when a year was needed to issue this much debt. Then, a month. Now, we are officialy down to two days. What is ironic is that the recently expanded debt ceiling of $15.194 trillion has just $400 billion of additional dry powder. At this rate, it won't last the US until the end of the calendar year.
http://www.zerohedge.com/news/us-starts-news-fiscal-year-14837-trillion-debt-142-billion-increase-two-days
Update:
From Zero Hedge:
Total US Debt Update: $14.86 Trillion; $162 Billion Increase In Three Days; 98.9% Debt/GDP
Little to say here: total debt is now at, obviously, a new record high of $14,856,859,498,405.73, which is a $20 billion increase overnight, $67 billion in the past two days, and $162 billion in the last three days. We will repeat the last part: total US debt has increased by $162 billion in three days. Said otherwise, total US Debt/GDP is now 98.9%. Please carry on.
http://www.zerohedge.com/news/total-us-debt-update-1486-trillion-162-billion-increase-three-days
Sunday, October 2, 2011
“If you have any fellowship in Christ, any solace in love, any consolation in the spirit, any compassion and mercy, complete my joy by being of the same mind, with the same love, united in heart, thinking in harmony, do nothing out of selfishness, out of vanity or pride; rather, in humility regard others as more important than yourselves, with each of you looking out not for his own interests only, but also for those of others.”
Philippians 2:1-2
기도 속에 결정해야 할 일들에 대해 인도하여 주시고 판단에 함께 하여 주시기를, 여정 중에 같이 하여주시기를 간구하곤 하는데 이번 주에 든 생각 중의 하나가 영어로 책 쓰는 작업과 더불어 한국말로도 아주 쉽게 독자들이 읽을 수 있는 책을 쓸 필요성이 있지 않느냐는 것이다. 왜냐하면 한국이 같은 정책 실패를 반복하지 않고 외세에 휘둘리지 않고 독자적인 평화와 번영, 또 국민들의 안녕이 지속되려면 critical mass가 올바른 교육을 받아서 enlightened 되는 것이 중요하기 때문이다. 그래야지 올바른 리더들이 사회를 이끌어 갈 수 있는 토대가 마련될 수 있다. 사실 더 이상 한국말로 책을 쓸 생각이 없었다. 발간 한 책 중 개정판을 내기로 해서 올해 말까지 원고 써 달라고 요청을 받았는데 조금 밖에 진행을 못 한 상태이다. 대학 교재로 팔리는 책인데 개정판 내자는 출판사 요청을 번번이 거절해 다른 저자에게 부탁해 새 책을 낸 모양인데 반응이 좋질 않아 다시금 전화를 주셨기에 원고 작업을 하겠다고 약속을 했는데…
지난 봄 이래 블로그에 한국으로부터 들어오는 트래픽이 꽤 늘었다고 얘기한 적이 있다. 특히 정기적으로 들어와 주시는 분들이 클릭하시는 포스팅들을 볼 때 현 상황을 잘 이해하시고 영어가 자유롭고 전문직에 종사하시는 분들이 아닌가 싶다. 개개인의 안녕이 사회적 안녕과 직결된다는 것을 우리는 역사를 통해 알고 있다. 내 블로그를 방문해 주시는 분들이 본인들의 안녕을 위해서라도 국민 대다수가 현실에 대한 정확한 인식과 통찰을 할 수 있게 무언가를 하셨으면 하는 소망을 품어본다. 내가 블로그를 운영하고 있는 이유 중의 하나이다. 여러 가지 이유에서 영어로 쓰고 있다 보니 읽을 수 있는 분들이 제한적이라 언젠가는 한국말로 아주 쉽게 지금 블로그에 쓰고 있는 주제들을 책으로 내는 게 좋지 않을까.(예를 들어 급속한 경제성장이 가져온 득과 실, 수출 위주 경제개발 정책의 문제점, 재벌위주 산업정책의 장기적 손실, IMF 위기 이후의 잘못된 정책들, 제조와 혁신을 바탕으로 한 생산적 역량이 한국경제 발전의 원동력이었는데 이것이 무엇으로 대체되고 있는가, 한국기업들이 하이테크 경쟁력을 어떻게 축적했으며 어떤 도전을 맞고 있는가, 왜 한국의 기술집약적 중소기업들이 어려움을 겪어왔는가, 생산적 역량이 국가 경제의 기반일진대 이를 어떻게 키울 것인가, 왜 아시아 국가들이 미국과의 특이한 관계를 통해서 급성장을 할 수 있었는가, 일본은 한국과 중국의 경제모델이 되었는데 왜 쇠퇴하게 되었는가, 미국경제가 어떻게 해서 오늘날의 난관에 봉착했는가, 중국이 어떤 발전 경로를 거치고 있으며 어디로 가고 있는가 등등)
블로그에 글을 올리는 것은 하나님의 사랑을 실천하려는 작은 몸짓이다. 지난 7월에 블로그에 글 쓰는 것을 중단하리라 생각한 적이 있었다. 그러다가 깨달았던 것이 이것도 인도하심이 있지 않느냐는 것이었다. 어떤 형태로든 사회에 기여해야 한다는 생각은 20대부터 줄곧 해왔고 기도 해 온 내용이다. 30대부터 책을 낸 것도 이러한 맥락에서였다. 다행히 글 쓰는 것을 좋아하고, 후에 부끄럽지 않은 좋은 책을 쓰고 싶다는 생각을 많이 하고 있다. 한국여자로서 동양과 서양 양쪽에서 교육을 받고 일을 할 수 있었던 경험은 하늘의 은총과 축복이 있었기 때문이고 이를 한국과 다른 나라들에게도 도움이 되는 의미있는 일에 써야 한다는 생각에는 변함이 없다.
하나님의 사상과 복음을 한마디로 요약한다면 사랑이라 생각한다. 이러한 하나님의 사랑을 삶에서 실천하신 고 김인수 교수님이나 고 이태석 신부님은 참으로 예외적인 귀하신 분들이셨다.
Philippians 2:1-2
기도 속에 결정해야 할 일들에 대해 인도하여 주시고 판단에 함께 하여 주시기를, 여정 중에 같이 하여주시기를 간구하곤 하는데 이번 주에 든 생각 중의 하나가 영어로 책 쓰는 작업과 더불어 한국말로도 아주 쉽게 독자들이 읽을 수 있는 책을 쓸 필요성이 있지 않느냐는 것이다. 왜냐하면 한국이 같은 정책 실패를 반복하지 않고 외세에 휘둘리지 않고 독자적인 평화와 번영, 또 국민들의 안녕이 지속되려면 critical mass가 올바른 교육을 받아서 enlightened 되는 것이 중요하기 때문이다. 그래야지 올바른 리더들이 사회를 이끌어 갈 수 있는 토대가 마련될 수 있다. 사실 더 이상 한국말로 책을 쓸 생각이 없었다. 발간 한 책 중 개정판을 내기로 해서 올해 말까지 원고 써 달라고 요청을 받았는데 조금 밖에 진행을 못 한 상태이다. 대학 교재로 팔리는 책인데 개정판 내자는 출판사 요청을 번번이 거절해 다른 저자에게 부탁해 새 책을 낸 모양인데 반응이 좋질 않아 다시금 전화를 주셨기에 원고 작업을 하겠다고 약속을 했는데…
지난 봄 이래 블로그에 한국으로부터 들어오는 트래픽이 꽤 늘었다고 얘기한 적이 있다. 특히 정기적으로 들어와 주시는 분들이 클릭하시는 포스팅들을 볼 때 현 상황을 잘 이해하시고 영어가 자유롭고 전문직에 종사하시는 분들이 아닌가 싶다. 개개인의 안녕이 사회적 안녕과 직결된다는 것을 우리는 역사를 통해 알고 있다. 내 블로그를 방문해 주시는 분들이 본인들의 안녕을 위해서라도 국민 대다수가 현실에 대한 정확한 인식과 통찰을 할 수 있게 무언가를 하셨으면 하는 소망을 품어본다. 내가 블로그를 운영하고 있는 이유 중의 하나이다. 여러 가지 이유에서 영어로 쓰고 있다 보니 읽을 수 있는 분들이 제한적이라 언젠가는 한국말로 아주 쉽게 지금 블로그에 쓰고 있는 주제들을 책으로 내는 게 좋지 않을까.(예를 들어 급속한 경제성장이 가져온 득과 실, 수출 위주 경제개발 정책의 문제점, 재벌위주 산업정책의 장기적 손실, IMF 위기 이후의 잘못된 정책들, 제조와 혁신을 바탕으로 한 생산적 역량이 한국경제 발전의 원동력이었는데 이것이 무엇으로 대체되고 있는가, 한국기업들이 하이테크 경쟁력을 어떻게 축적했으며 어떤 도전을 맞고 있는가, 왜 한국의 기술집약적 중소기업들이 어려움을 겪어왔는가, 생산적 역량이 국가 경제의 기반일진대 이를 어떻게 키울 것인가, 왜 아시아 국가들이 미국과의 특이한 관계를 통해서 급성장을 할 수 있었는가, 일본은 한국과 중국의 경제모델이 되었는데 왜 쇠퇴하게 되었는가, 미국경제가 어떻게 해서 오늘날의 난관에 봉착했는가, 중국이 어떤 발전 경로를 거치고 있으며 어디로 가고 있는가 등등)
블로그에 글을 올리는 것은 하나님의 사랑을 실천하려는 작은 몸짓이다. 지난 7월에 블로그에 글 쓰는 것을 중단하리라 생각한 적이 있었다. 그러다가 깨달았던 것이 이것도 인도하심이 있지 않느냐는 것이었다. 어떤 형태로든 사회에 기여해야 한다는 생각은 20대부터 줄곧 해왔고 기도 해 온 내용이다. 30대부터 책을 낸 것도 이러한 맥락에서였다. 다행히 글 쓰는 것을 좋아하고, 후에 부끄럽지 않은 좋은 책을 쓰고 싶다는 생각을 많이 하고 있다. 한국여자로서 동양과 서양 양쪽에서 교육을 받고 일을 할 수 있었던 경험은 하늘의 은총과 축복이 있었기 때문이고 이를 한국과 다른 나라들에게도 도움이 되는 의미있는 일에 써야 한다는 생각에는 변함이 없다.
하나님의 사상과 복음을 한마디로 요약한다면 사랑이라 생각한다. 이러한 하나님의 사랑을 삶에서 실천하신 고 김인수 교수님이나 고 이태석 신부님은 참으로 예외적인 귀하신 분들이셨다.
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