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Currency

April Fears Ahead of Fed, Spain & China

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Posted by Ashraf Laidi

on Wednesday, 18 April 2012 22:21

 Ashraf Laidi

Forced Liquidation or Improved Sentiment?

Recent intermittent bounces in EURUSD in the face of surging Eurozone spreads are said to be reflecting possible liquidation by European banks unloading US assets to relieve an ensuing shortage of US dollars. Other explanations were attributed to the IMF buying Irish and Portuguese bailout tranches during the late European trading hours, taking advantage of cheaper levels (lowest since Feb 15). But as long as traders find no confidence in battling the coordinated efforts of asset-buying central banks and the Fed produces no new dissenters to the ultra low rates til 2014 mantra, risk currencies may be assured to find support.

Spanish government bonds are now the latest victim of bond traders typical one-country assault amid speculation that Spain will be the 4th recipient of a Eurozone bailout. At a time of deepening recession, Spanish authorities have selected education and health sectors for 10 billion in budget cuts. Cuts in these sectors have yet to prove successful or sustainable the he Eurozone. Little surprise that the biggest yield gainers are of nations, which have not yet been bailed outSpain and Italy. Considering that Greece, Ireland and Portugal were each bailed out when their 10-year yields crossed the 7% level, we ought to watch Spanish yields, currently at 5.9%.

The chart below shows how zero purchases from the ECBs Securities Market Programme (SMP) was replaced by the LTRO-1/2 program and Greek Private Sector Initiative deal (PSI), all of which were effective in shorting up risk appetite and the euro at the expense of sovereign yields. Unless the ECB acts with the next dosage of stimulus (LTRO, SMP or swap operations with the Fed, EURUSD is most likely to finally break the $1.2950 floor.

CLICK HERE to Read More

ECB SMPs EURUSD Apr 17.JPG 640W



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Currency

Of Debt, Gold and Okun’s Law

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Posted by Rick Mills via Resource Investor

on Tuesday, 17 April 2012 11:19

Is gold’s run over? Let’s look at some facts.

The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion. That's roughly equal to the value of all goods and services the US economy produces in one year: $15.17 trillion as of September, 2011.

Among advanced economies, only Greece, Iceland, Ireland, Italy, Japan and Portugal have debts larger than their economies.

The US government spent over $454 billion just on interest on the national debt during fiscal 2011.

The debt ceiling stands at nearly $16.4 trillion. Some predict the US will run out of money by September 2012. The next increase to the debt ceiling could be as high as $2 trillion.

4-16-12-aoth-1-image001

zerohedge.com

Since Barack Obama was elected, the US government has added $5 trillion more to the national debt.

The United States government is responsible for more than a third of all the government debt in the entire world.

Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011.

 


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Currency

Is Paper Money Legal

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Posted by Martin Armstrong

on Sunday, 15 April 2012 11:10

One of the fascinating aspects of all the controversy about paper money v hard money, has been the
lack of knowledge of just how did it come about? Oh we can go back to paper money being a receipt
from bullion dealers offering money storage, and we can go the American Colonial Period and point to
the drastic shortage of coin that necessitated paper money issues. But those stories are fairly common
knowledge. What isn’t talked about even in school is the manipulation of the Supreme Court AFTER it
declared that PAPER MONEY WAS UNCONSTITUTIONAL!

Armstrong-Economics new-129x73



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Currency

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



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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.



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