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Reader Mail, Bundesbank Frustration, and Impressed by an Elder...

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Posted by Jack Crooks

on Friday, 13 April 2012 12:44

“A fool thinks himself to be wise, but a wise man knows himself to be a fool.”  

- William Shakespeare

 
Reader Mail Commenting on the “Pavlovian QE-Barking Dog”

[Thank you JCD; well said.]  

“Watching the current behavior of the markets as a sign-post pointing to something more that is behind its irrational mania, perhaps we can see that there are also problems that we are witnessing today involving the structural challenges in government and our economy.  The oppressive condition we are under when it comes to how the market is behaving is - in my opinion - the result of legally-sanctioned organized crime.  In order for the FED to do what it is doing to prop the market up presumably requires some degree of legislation allowing what would otherwise be illegal and unethical behavior; i.e., legally-sanctioned fraud.
 
“If the FED is legally obliged to answer to Congress, then how can it continue with this fraudulent show of a false recovery unless Congress is also complicit in the act? The current economic policies under which we now suffer are those that (by any other description) can be defined as the policies of an organized crime syndicate.  In the belief that it can buy more time until a truly sustainable recovery can be installed is like believing that so long as we ignore the bad weather all around by sticking our heads in the sand it will go away.

To Read More CLICK HERE

wise fool



Currency

China's Reminbi: The World's Next Reserve Currency?

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Posted by Christopher Funston of The Longwave Group

on Tuesday, 10 April 2012 19:24

Screen shot 2012-04-10 at 4.04.17 PM-2

The Fed bought 61 per cent of the net new debt the US government issued last year. Before the financial crisis, the Federal Reserve used to buy small amounts, but not the lion’s share of the US government’s debt. This is quantitative easing like we have never seen before. This is more money than it cost to fight World War II, the first Gulf War, put a man on the moon and the entire African aid budget for the past 30 years – all put together.



Currency

Not If But When....

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Posted by David McWilliams via Peter Grandich

on Monday, 09 April 2012 08:06

Is there anything else driving up the price of petrol at the pumps that could be closer to home?

The answer is yes. At the moment, the central banks of the world are responding to this mega-debt crisis and huge de-leveraging everywhere with lower and lower interest rates. Earlier this month, a report from the US Federal Reserve (www.federalreserve.gov) on the flow of funds in the US made for quite shocking reading if you are someone who worries about what central banks all around the world are doing.

The report reveals that the Fed bought 61 per cent of the net new debt the US government issued last year. Before the financial crisis, the Federal Reserve used to buy small amounts, but not the lion’s share of the US government’s debt. This is quantitative easing like we have never seen before.

One way of putting all this into context is to examine how much this is in terms of US total income. This is particularly important right now in order to ascertain whether the US recovery is real or temporary.

Net treasury debt amounts to 8.6 per cent of GDP. If 61 per cent of that figure is caused by printing money, it means that about 5.3 per cent of US economic output is now being driven by the Federal Reserve’s printing presses. This is reminiscent of Argentina in its 1980s heyday, and is extremely worrying.

....read more HERE

ConfederateInflationRates



Currency

If it works for the ECB it can work for the Fed. Be happy!

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Posted by Jack Crooks

on Wednesday, 04 April 2012 15:55

04031220cartoon-resized-600

"The only thing that saves us from bureaucracy is its inefficiency."

– Eugene McCarthy

We foolishly find ourselves asking: when will Federal Reserve quantitative easing reach its limit?

Considering the consequent boost to risk appetite that flows from QE, enriching those who hold financial assets while doing little for those holding welding torches and spatulas, we are happy to tell you that the Fed has plenty of room to maneuver the printing presses still.

And if you’re wondering just how much credit they can pump into banks or how much government debt they can buy up in order to keep the Keynesian desperados operating, it’s at least 26% more of total government debt – that would take them to even with the ECB efforts that have to this point “succeeded” in suppressing severe risks:

To read full article CLICK HERE

 



Currency

DJIA and USDJPY: Is this correlation telling us something?

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Posted by Jack Crooks: Black Swan Capital

on Monday, 02 April 2012 09:57

Interesting how tight this correlation has become lately.  I have removed the labels to allow you to focus on the visual only at first look. Can you name these two price series? 

040212 dji jy-resized-600.jpg

If you said Dow Jones Industrial Average and Japanese yen, you nailed it!  Below, DJIA is in black (right scale), the USD-Japanese yen in blue (left scale): 

040212 dji jy scaled-resized-600.jpg

Now take a look at the same relationship, around the same time of year back in 2011.  Back then, USD-JPY peaked in early April and led US stocks lower; eventually dragging the Dow down about 2000 points into September 2011 where it bottomed:  

040212 dji jy scaled long-resized-600.jpg

You may be asking: Well, what about 2010?  Well, we saw a similar pattern back in 2010 also! USD/JPY topped in early May, the market topped in late April, both moved sharply lower together:    

Just saying ... stay tuned!

“I grieved to think how brief the dream of the human intellect had been. It had committed suicide. It had set itself steadfastly towards comfort and ease, a balanced society with security and permanency as its watchword, it had attained its hopesto come to this at last. Once, life and property must have reached almost absolute safety. The rich had been assured of his wealth and comfort, the toiler assured of his life and work. No doubt in that perfect world there had been no unemployed problem, no social question left unsolved. And a great quiet had followed. It is a law of nature we overlook, that intellectual versatility is the compensation for change, danger, and trouble. An animal perfectly in harmony with its environment is a perfect mechanism. Nature never appeals to intelligence until habit and instinct are useless. There is no intelligence where there is no change and no need of change. Only those animals partake of intelligence that have to meet a huge variety of needs and dangers.”

- H.G. Wells, The Time Machine (1895)



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