Filed under: 2008 Election, Amero, angela merkel, asia, bailout, Bank of America, Big Banks, brad sherman, Britain, C-Span, Canada, Carroll Quigley, central bank, CFR, China, civil liberties, civil rights, CNBC, Congress, corporations, corporatism, Credit Crisis, DEBT, Dictatorship, Dollar, ECB, Economic Collapse, economic depression, Economy, Empire, Europe, european central bank, european union, Fascism, Federal Reserve, France, g8, George Bush, Germany, glenn beck, global economy, global elite, global government, Globalism, gordon brown, Great Depression, Greenback, Habeas Corpus, henry paulson, Hitler, House, hyperinflation, imf, Inflation, interest rate cuts, internationalist, internationalists, job market, John McCain, liquidation, london, Martial Law, Media, middle class, morgan stanley, mortgage, national socialism, Nazi, New World Order, paris, Paulson, peter schiff, Police State, Posse Comitatus, rate cut, Sarkozy, Senate, single currency, socialism, sovereignty, Stock Market, tax, Taxpayers, unemployment, United Kingdom, US Economy, us sovereignty, US Treasury, Wall Street, World Bank, WW2, Zimbabwe | Tags: Ewald Nowotny, fiat currency, global currency, global currency system, global financial order, globalists, globalization, international order, Jean-Claude Trichet, Jeffrey Garten, John Mack, José Manuel Barroso, new global monetary authority, one world currency, Timothy Geithner, weimar republic, world economic crisis, world financial system, world monetary system, world money system, world order
Globalists Exploit Financial Meltdown In Move Towards One World Currency
Paul Joseph Watson & Kurt Nimmo
Prison Planet
October 20, 2008
The swift and ruthless exploitation of the economic meltdown on behalf of globalists and central banks revolves around their drive to move towards a one world currency system and an unprecedented centralization of global financial power.
Statements on behalf of world leaders and central banks over the past two weeks have made it clear that the agenda to further collate economic power and control of currencies into the hands of the few is rapidly accelerating – all in the name of solving a financial crisis that was caused as a result of the same fiat money system that the elite themselves created and maintained.
The original Bretton Woods agreement in 1944, spurred by the depression of the 1930s and the second world war, created the International Monetary Fund, the World Bank and laid down common standards for markets around the world. Now with the current financial crisis EU leaders see another opportunity to impose global regulations on sovereign economies.
As the crisis reached its peak at the end of September, British Prime Minister Gordon Brown led the call for “a new global financial order” in which the world financial system would be built around a centrally coordinated policy of international regulation.
Morgan Stanley Chief Executive John Mack has also called for a new global body to oversee the financial crisis, warning that it is like nothing he’s ever seen before.
The sentiment echoes those of elite figures such as CFR member Jeffrey Garten and Timothy Geithner, president of the Federal Reserve Bank of New York, who have both recently called for a “new global monetary authority”, a de-facto global financial dictatorship, operating across borders and forcing nations and corporations to register and adhere to strict monitoring and regulations.
European Central Bank council member Ewald Nowotny told Bloomberg yesterday that the centrality of the U.S. dollar was in question and that a “tri-polar” global currency system is in development between the U.S., Asia and Europe to replace it.
This followed a call by French President to question whether a “worldwide currency system” should be introduced in response to the financial crisis.
“Another subject in tomorrow’s world is that of the great currencies. How many should there be? What should the agreement between these great currencies be? Should we organize a discussion? Should a country like India one day have a global currency?” Sarkozy told a news conference, reports Reuters.
Any discussion would be purely academic, as the ruling elite long ago decided to force a global currency down our throats. In fact, a global currency is at the very core of their plan to dominate the world. Control money and you control the destiny of states, you eliminate national sovereignty. “The control of money and credit strikes at the very heart of national sovereignty,” A.W. Clausen, president of Bank of America once observed.
As Georgetown professor and CFR historian Carroll Quigley noted, the goal of the banking families and their minions consists of “nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole… controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.”
It remains to be seen if the EU will realize its “solution” to the world economic crisis. In 2007, Robert Mundell, “the father of the euro,” noted that “international monetary reform usually becomes possible only in response to a felt need and the threat of a global crisis.”
Certainly, the elite cooked up an appropriate global crisis, now they will engage in a full court press to establish a global currency and eventually a global government.
EU Leaders Call for Global Currency
Kurt Nimmo
Infowars
October 18, 2008
If we are to believe the Washington Post, French president and current EU leader Nicolas Sarkozy has pledged to save us from nameless “freewheeling bankers and traders” who get the blame for the current economic crisis.
Sarkozy, Gordon Brown, and EU honcho José Manuel Barroso are talking up an international summit to discuss an “urgent overhaul of the world’s financial architecture,” that is to say a new Bretton Woods to establish a brand spanking new international economic order. Sarkozy has managed to grab George Bush’s ear and he will travel to Washington on Saturday to lay the groundwork for a conference.
In 1944, 44 allied nations met at a resort in Bretton Woods, New Hampshire, to fiddle with monetary standards, fix exchange rates, and create the IMF and World Bank. “Launching a remake of this old model — particularly in such a short time, with so many new participants — would represent a daunting challenge at any time, but particularly during the twilight of the Bush presidency and the crisis that is still jolting banks and stock markets around the world,” reports the Post.
Sarkozy and the EU leaders would have us believe this new Bretton Woods will call for “globally coordinated regulation of the financial industry, elimination of tax havens and a compensation system in which traders are not rewarded for dangerous risk-taking,” among other things.
It was the demise of Bretton Woods in 1971, insists European Central Bank president Jean- Claude Trichet, that led to the abandonment of regulation and subsequent market turmoil. “The explosion of the first Bretton Woods in a way could be interpreted as a rejection of discipline,” said Trichet, reports Bloomberg.
Gordon Brown, the former Chancellor of the Exchequer, wants to fix that turmoil with a new spate of regulations aimed at international finance. On October 13 in London, Brown said “we must devise new rules for a world of global capital flows” just as the founders of Bretton Woods “devised rules for a world of limited capital flows.”
“We now have global financial markets but what we do not have is anything other than national and regional regulation and supervision,” Brown lamented from Brussels.
All of this is nonsense. It should be obvious by now the bankers engineered the current crisis in order to consolidate their hold on the global economy and all the talk about rogue traders, tax havens, and over-compensated executives is merely that — talk, or more specifically a sales pitch, a slick parlor trick devised to fool the commoners.
Glossed over in all the corporate media coverage is the global elite demand that a global currency be established. “Europe wants to present a blueprint for a new worldwide currency system,” reports the AFP in the video here.
“Another subject in tomorrow’s world is that of the great currencies,” Reuters reported Sarkozy musing on October 16. “How many should there be? What should the agreement between these great currencies be? Should we organize a discussion?”
Glenn Beck On One World Currency
“There is a global meltdown coming, it is a global depression, a One World Currency and One World Financial System is the ENDGAME! China said last week said they want One Global Currency, France said yesterday or the day before that they want One World Order a New World Order at the end of this event!” – Glenn Beck
CNBC: The New World Order is in effect on wall street
http://www.prisonplanet.com/calls-for-new-global-financial-order-increase.html
Tri-Polor Global Currency A Possibility
http://www.bloomberg.com/apps..&sid=apjqJKKQvfDc&refer=home
http://www.nationalpost.com/news/story.html?id=885494
G-8 Announces Global Summit On Financial Crisis
http://news.yahoo.com/s/a..t=Ah6wNwIX5KlE5B1m5eFoDXlbbBAF
Bush & Allies Pledge Joint Action On Economy
http://www.youtube.com/watch?v=InFBnX87lzU
Brown: Use This Crisis To Create New Financial World Order
http://www.prisonplanet.com/..new-financial-world-order.html
Filed under: Britain, Central Banks, Credit Crisis, DEBT, Dollar, ECB, Economic Collapse, economic depression, Economy, Europe, european central bank, european union, global economy, gold, gold shortage, Great Depression, Greenback, hyperinflation, Inflation, london, silver, silver shortage, Stock Market, United Kingdom, US Economy, us mint, Wall Street | Tags: CTFC, gold bars, gold bricks, sweden, switzerland
Reuters
September 25, 2008
The U.S Mint said Thursday it was temporarily suspending sales of American Buffalo 24-karat gold one-ounce bullion coins because strong demand depleted its inventory.
“Demand has exceeded supply for American Buffalo 24-karat gold one-ounce bullion coins, and our inventories have been depleted. We are, therefore, temporarily suspending sales of these coins,” the Mint said in a memorandum to authorized American Buffalo dealers.
The Mint also told dealers that it would work to build up its inventory to resume sales shortly.
FT
September 29, 2008
European central banks have cut their sales of gold to the lowest level in almost a decade, reversing the practice of recent years when hefty sales helped depress prices.
Institutions bound by the Central Bank Gold Agreement – the banks of the eurozone plus Sweden and Switzerland – sold about 343 tonnes of gold in the year that expired on Friday, the lowest amount since the first CBGA was signed in 1999.
This compares with 475.8 tonnes in the year to the end of September 2007. Under the agreement, the banks are allowed to sell up to 500 tonnes of gold each year.
The European trend is part of a global movement of reduced central bank selling and increased investor buying that is helping to underpin high prices at a time of turmoil in financial markets.
GFMS, the precious metals consultancy, estimates global central banks will sell 269 tonnes of bullion in 2008, the lowest since 1995.
Much of the selling by European banks took place between October and December last year.
As central banks sell less, investors are rushing into bullion-backed exchange traded funds to such an extent that some analysts refer to the ETFs as the “people’s central bank” because they are now bigger than most countries’ official reserves.
Rich investors are snapping up gold bars
September 30, 2008
Investors in gold are demanding “unprecedented” amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen.
Industry executives and bankers at the London Bullion Market Association annual meeting said the extent of the move into physical gold was unseen and driven by the very rich.
“There is an enormous pick-up in investment demand. I have never seen a market like this in my 33-year career,” said Jeremy Charles, chairman of the LBMA. “The gold refineries cannot produce enough bars.”
Gold and silver dealer reports an ‘unprecedented’ shortage of metals
The Post
September 28, 2008
A surge for demand in gold and silver has resulted in an unprecedented shortage of the metals for retail investors in recent days, according to Gold and Silver Investments, a Dublin-based firm that allows retail investors to speculate on movements in the value of precious metals.
Gold and Silver Investments director Mark O’Byrne said the supply of gold and silver available for small retail investors suffered a dramatic deterioration within hours on Friday, as wholesalers reported that government mints and refiners, the primary suppliers of the metals, had stopped offering new supplies.
‘‘It’s absolutely unprecedented,” said O’Byrne, who said the shortages were likely to drive up the costs of gold and silver in the secondary market.
‘‘This did not happen even in the 1930s and the 1970s, and will result in markedly higher prices in the coming months.”
According to O’Byrne, gold and silver were now only easily accessible in the primary market, which consisted of central banks and other major traders of the precious metals.
However, he said that minimum transaction sizes in this market were out of reach for most retail investors – at approximately $350,000 for gold and $135,000 for silver.
Analyst: Dollar May Sink, So Look to $1,500 Gold
http://www.cnbc.com/id/26970932
Central banks favor gold as crisis unfolds
http://www.reut..02?virtualBrandChannel=10338&pageNumber=2
CFTC Relents and Probes Silver Market
http://endthefed.blogspot.com/2008/09..rket.html
Filed under: bailout, bernanke, Big Banks, Central Banks, Congress, Credit Crisis, DEBT, Dollar, ECB, Economic Collapse, economic depression, Economy, european central bank, Federal Reserve, global economy, Great Depression, Greenback, henry paulson, house senate, housing market, hyperinflation, Inflation, interest rate cuts, liquidation, middle class, mortgage, mortgage companies, mortgage lenders, nationalization, Paulson, rate cut, real estate, Ron Paul, Stock Market, subprime, subprime lending, tax, Taxpayers, Uncategorized, US Economy, US Treasury, Wall Street
Banks borrowed $940 Billion Last Week
Bank Borrowing From Fed Already Exceeded Bailout Total in Last Week
Steve Watson
Infowars.net
September 26, 2008
U.S. banks borrowed $188 billion per day on average in the latest week from the Federal Reserve, meaning that the Fed loaned out more money than the Treasury’s proposed bailout in just one week, still barely managing to keep the economy afloat.
Federal Reserve data showed on Thursday the total amount banks borrowed nearly quadrupled the previous record of $47.97 billion per day notched just the week before, Reuters reports.
$188 billion per day on average over the course of five days means that the total amount borrowed from the Fed in the week ending the 24th September stood at $940 billion – a figure that easily eclipses the proposed $700 billion bailout.
As we have already reported, the $700 billion number was simply pulled out of thin air by the Treasury.
The Treasury’s fact sheet about the bailout states, “The Secretary will have the discretion, in consultation with the Chairman of the Federal Reserve, to purchase other assets, as deemed necessary to effectively stabilize financial markets.”
This gives the government and the Federal Reserve carte blanche to do whatever they want to long as it is done in the name of stabilizing financial markets, they can nationalize any company or industry and use taxpayer money, above and beyond the initial $700 billion, for whatever purpose is deemed necessary, without any oversight. Paulson’s bailout plan is also unreviewable by any court, it will remain in perpetuity.
Paulson’s draft bailout plans says: “The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.”
As Chris Martenson writes, “This means that $700 billion is NOT the cost of this dangerous legislation, it is only the amount that can be outstanding at any one time. After, say, $100 billion of bad mortgages are disposed of, another $100 billion can be bought. In short, these four little words assure that there is NO LIMIT to the potential size of this bailout. This means that $700 billion is a rolling amount, not a ceiling.”
If the bailout bill passes it is just the beginning of something much larger. $700 billion is a meaningless figure that will do nothing to shore up the economy. It is not a bailout, it is a giveaway that will allow insiders to purge themselves of bad bets and free to continue where they left off. The real reason for the bill is the unprecedented transfer of power to the Executive Branch and into the hands of the global corporate elite.
Fed Pumps $630 Billion Into Global Banking System
Bloomberg
September 29, 2008
The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.
The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed’s emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.
The Fed’s expansion of liquidity, the biggest since credit markets seized up last year, comes as Congress prepares to vote on a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.
“Today’s blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,’’ said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, “the Fed’s balance sheet is about to explode.’’
Stocks around the world plunged the most since 1997 today and credit markets deteriorated further as authorities scrambled to save more financial institutions from collapse.
Bailout by Stealth
While the public is distracted by the “bailout bill” and its rejection, trillions are pumped in to keep financial balloon inflated
James Corbett
The Corbett Report
September 30, 2008
The media is falling all over itself to report on every minutiae of the so-called Wall Street “bailout bill” and its rejection by Congress yesterday (just a few of the thousands of examples can be seen here and here and here and here). And why not? The media’s breathless coverage of the bill has produced a furious backlash by the public and hysteria on Wall Street in a self-justifying feedback loop that makes the media attention seem merited.
The startling truth which the controlled corporate media is not reporting, however, is that a bailout is actually taking place right now, completely out of the public spotlight. This program has already pumped trillions of dollars into Wall Street (compared to the mere $700 billion proposed in the legislation that the media is focusing on) to help prop up the faltering investment banks and promises to pump in even more, every dime of it to the detriment of the taxpayer though the public will have no stake in its success. Why, then, is this program not being talked about in the media?
Slipping under the radar last week amidst the hullabaloo in Washington over the bailout bill was this story noting that in the past week alone, the Federal Reserve had pumped an astonishing $188 billion per day into the system in the form of emergency credit. This means that in just four days, the Fed injected as much money into the system as the entire $700 billion bailout proposal. After the proposal was rejected, the Fed responded by immediately announcing it would pour another $630 billion into the global financial system.
The Federal Reserve, of course, is America’s central bank and although the above story conjures the reassuring image of a national bank lending out some of its vast reserves to help Wall Street weather the storm, the fact is that the Federal Reserve is not Federal and has doubtful reserves. In fact, the trillions of dollars that have been lent to the banks in the last few weeks were created out of nothing by the privately-owned Federal Reserve. When the Federal Reserve “lends” money to a bank through repurchase agreements (repos), credit auction or other method, it is not actually lending out money from its vaults. It is simply creating the money it “lends” out as electronic credits created in the recipient banks account. It is literally money out of thin air.
That the general public is on the hook for this money created out of nothing is not an exaggeration. It is paid for in a dimly-understood mechanism often known as the “inflation tax.”
Inflation is nothing more than an indication that the ratio of money to products that can be purchased with that money has been increased. Since the overall number of dollars has gone up without any corresponding increase in economic production (as happens when the Federal Reserve creates money out of thin air), the value of each individual dollar goes down. That means that the value of the money in each individuals’ bank account (not to mention their pension and social security dividends) can be reduced simply by the flick of a pen of a Federal Reserve paper-pusher. (Unless of course that individual just happens to be a billionaire investment mogul or a Vice President who can divest themselves of U.S. dollars in time for this inflation not to affect them.) This is sometimes known as an inflation tax because its overall effect is the same as if the government came in and took that value out of the individuals’ bank account. Watch Ron Paul explain the inflation tax in the video below:
The most insidious part of this inflation tax is that the inflation does not begin until the new money begins to circulate in the system. In other words, the first person (or, more likely, giant corporate conglomerate) to use the money receives its full value, while those at the bottom of the pyramid retrieve the diminished returns of a devaluing dollar.
Why, then, is the public not furious about this stealth bailout, now taking place at the blistering pace of nearly $1 trillion a week, and all to the taxpayer’s detriment? The obvious answer is that the media is not whipping the public into a frenzy about it, instead focusing its attention on a $700 billion program and allowing the public to feel like they scored a blow against Wall Street when the program gets rejected. If so, it’s time the public got wise to how the system is really being run by and for the benefit of private bankers and at the expense of the average taxpayer. Otherwise, the fleecing of the public will continue unabated even as the public thinks they’ve won the battle.
Filed under: AIG, bankruptcy, Big Banks, Britain, Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, Europe, european central bank, european union, Federal Reserve, foreign aid, foreign banks, foreign investors, global economy, Goldman Sachs, Great Depression, Greenback, hyperinflation, Inflation, interest rate cuts, london, rate cut, Stock Market, Taxpayers, United Kingdom, US Economy, Wall Street | Tags: run on banks, swiss national bank
U.S. Taxpayers Paying To Bail Out Foreign Banks
George Washington’s Blog
September 21, 2008
We all know that the Fed is trying to stick the American taxpayers with trillions of dollars in debt (direct or through inflation) to bail out the Wall Street robber barons.
But did you know that they are also trying to get you to bail out foreign gamblers?
An article in the Telegraph states:
“The Fed has also just offered another $125bn of liquidity to banks outside the US that are desperate for dollars and can’t access America’s frozen credit markets”
“Another” $125 billion? How much has the Fed already given to foreign banks?
Why are American taxpayers who are already drowning in debt due to U.S. gamblers also being asked to also bail out foreign speculators?
This isn’t a pro-America anti-everyone-else post. If I lived in England, or Canada or Japan, I would resent being asked to bail out America, too.
Central Banks Offer Extra Funds to Calm Money Markets
Bloomberg
September 18, 2008
The Federal Reserve almost quadrupled the amount of dollars central banks can auction around the world to $247 billion in a coordinated bid to ease the worst crisis facing financial markets since the aftermath of the 1929 Wall Street crash.
The Fed increased the amount of dollars that the European Central Bank, the Bank of Japan and other counterparts can offer from $67 billion “to address the continued elevated pressures in U.S. dollar short-term funding markets.’’ The Bank of England, the Bank of Canada and the Swiss National Bank also participated. Several of them lent funds in their own currencies as well with the Fed adding a record $105 billion in temporary reserves.
Policy makers have struggled to revive confidence in markets this week as investors stockpiled money on concern more financial institutions would fail after the bankruptcy of Lehman Brothers Holdings Inc. and the U.S. government bailout of American International Group Inc. The cost to hedge against losses on U.S. government debt climbed to a record yesterday.
“There’s a complete lack of faith in the markets,’’ said Jim O’Neill, chief economist at Goldman Sachs Group Inc. in London. “There’s a lot of cash hoarding and people losing trust in banks, so the central banks are acting to relieve that. This might not be the last time they have to act.’
http://news.yahoo.com/s/nm/20080921/bs_nm/financial_bailout_paulson_dc
Bailout Eligibility Expanded to Foreign Institutions
http://calculatedrisk.blogspot.com/..oreign.html
Filed under: bernanke, Big Banks, BIS, Britain, central bank, Credit Crisis, DEBT, Dollar, Dow, ECB, Economic Collapse, economic depression, Economy, Euro, Europe, european central bank, european union, Federal Reserve, food prices, Fox News, gas prices, GDP, general motors, global economy, gold, Great Depression, Greenback, imf, Inflation, interest rate cuts, Iran, job market, neil cavuto, Oil, Paulson, peter schiff, Petrol, rate cut, Ron Paul, Saudi Arabia, Stock Market, United Kingdom, US Economy, US Treasury, utah, World Bank | Tags: indymac, inland empire, starbucks
Fed Auctions $75 Billion to Big Banks
AP
July 1, 2008
The Federal Reserve has auctioned another $75 billion in loans to squeezed banks to help them overcome credit problems and announced it will provide a fresh batch of the loans this month.
The central bank on Tuesday released the results of its most recent auction — the 15th since the program began in December. It’s part of an ongoing effort to ease financial turmoil and credit stresses.
In the latest auction, commercial banks paid an interest rate of 2.340 percent for the 28-day loans. There were 77 bidders. The Fed received bids for $90.88 billion worth of the loans. The auction was conducted on Monday with the results made public on Tuesday.
The Fed also said it will conduct two auctions in July. Banks will have an opportunity to bid on a slice of $75 billion in short-term loans in each auction.
In mid-December the Fed announced it was creating an auction program that would give banks a new way to get short-term loans from the central bank and to help them over the credit hump. A global credit crunch has made banks reluctant to lend to each other, which has crimped lending to individuals and businesses.
Europe May Push The Fed To Raise Rates
CNN
July 1, 2008
The fireworks may come a day early for the financial markets if the European Central Bank, as expected, raises interest rates on Thursday.
If the ECB, Europe’s counterpart to the Federal Reserve, hikes rates, that could put even further pressure on the anemic dollar and send commodity prices even higher.
The ECB will announce its decision on interest rates early the morning of July 3 and will hold a press conference shortly thereafter to discuss the decision.
Global economy faces deep slowdown and deflation threat, BIS warns
Telegraph
July 1, 2008
The global economy may be heading for a far deeper crisis than is expected and a bout of deflation in the world’s biggest economies is now a possibility, according to one of the world’s most highly regarded economic institutions.
The Bank for International Settlements has warned that many in the City and elsewhere may have underestimated the scale of the coming economic downturn in one of its most sombre portraits yet of the international financial system.
The Swiss institution – known as the central bankers’ bank – issued the alert in its annual report, released today.
Peter Schiff Demonized On Fox Business
Recent News:
http://news.xinhuanet.com/english/2008-07/03/content_8478565.htm
Ron Paul Calls For Hearings On Falling Dollar
http://www.fortbendno..t=push&instance=home_news_bullets&open=&
Thieves Stealing Manhole Covers
http://www.usatoday.com/printedition/news/20080630/a_manhole30.art.htm
Bank Giving Debit Cards To 11 Year Olds
http://www.telegraph.co.uk/mone..?xml=/money/2008/06/30/cnvisa130.xml
U.S. Stocks Tumble
http://www.bloomberg.com/a..d=aF4fDOUXmP2k&refer=worldwide
LA Times To Cut 250 Jobs
http://biz.yahoo.com/ap/080702/la_times_cuts.html?.v=1&printer=1
Forecast for U.S. workers: Gloom
http://www.iht.com/articles/2008/07/02/business/02jobs.php
U.S. Treasury’s Paulson: Downturn has ’further to go’
http://www.marketwatch.com/news/story/us-trea..7D&dist=msr_6
Starbucks to cut as many as 12,000 positions
http://news.yahoo.com/s/nm/20080701/bs_nm/starbucks_dc_1
Analyst sees ‘ghost town’ in Inland Empire
http://latimesblogs.latimes.com/laland/2008/07/analyst-sees-gh.html
Oil Prices Rise To Record Highs Above $144
http://www.breitbart.com/article.php?id=D91LTE8O0&show_article=1
Utah company puts operations on hold due to food and fuel prices
http://www.ksl.com/?nid=148&sid=3637972
CBS Story On $7 Gas
http://rawstory.com/rawreplay/?p=1365
Dow Has Worst 1st Half Since 1970
http://www.reuters.com/article/newsOne/idUSL1764662020080630?sp=true
Saudi king urges consumers to get used to high oil prices
http://www.breitbart.co..24505.gb3mxog6&show_article=1
Merrill says General Motors bankruptcy possible
Ron Paul On Financial Crisis: Something Big is Going On
Paulson: Banking Regulations Need Overhaul
IndyMac denies that it’s close to collapse
Dow Jones breaks Great Depression record for poor performance
Oil Rises to Record on Concern Iran Supplies May Be Disrupted
Euro Inflation Highest In 16 Years
IMF To Investigate The Federal Reserve
Filed under: central bank, Credit Crisis, DEBT, Dollar, ECB, Economic Collapse, economic depression, Economy, energy, Euro, european central bank, Federal Reserve, gas prices, Great Depression, Greenback, Inflation, interest rate cuts, Oil, OPEC, Petrol, rate cut, Saudi Arabia, spain, Stock Market, US Economy, Venezuela | Tags: Jean-Claude Trichet, Rafael Ramirez
OPEC Leader Says Dollar Will Drive Oil to $170
Bloomberg
June 28, 2008
OPEC President Chakib Khelil predicted that the price of oil will climb to $170 a barrel before the end of the year, citing the dollar’s decline and political conflicts.
“Oil prices are expected to reach $170 as demand for fuel is growing in the U.S. during the summer period and the dollar continues to weaken against the euro,’’ Khelil said today in a telephone interview. The leader of the Organization of Petroleum Exporting Countries also serves as Algeria’s oil minister.
Political pressure on Iran and the depreciation of the U.S. currency have caused a surge in oil prices, Khelil said. New York- traded crude has more than doubled in a year and touched a record $142.99 a barrel yesterday on the New York Mercantile Exchange.
OPEC ministers generally say that oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. “The market is completely supplied,’’ Venezuelan Oil Minister Rafael Ramirez said yesterday. Libya announced possible production cuts, calling the market oversupplied.
The rising cost of crude is not linked to supply, Khelil said today. “There is more than enough oil in the market to meet the international demand,’’ added the OPEC president, who will take part June 30 in an international energy forum in Madrid.
Prices, which are up 38 percent this quarter, are heading for the biggest quarterly gain since the first three months of 1999, when oil traded between $11 and $17.
Declining Dollar
“The decisions made by the U.S. Federal Reserve and the European Central Bank helped the devaluation of the dollar, which pushed up oil prices,’’ Khelil said.
Oil may extend gains if the ECB boosts rates on July 3, further weakening the U.S. currency. The dollar has declined 15 percent against the euro in 12 months.
ECB President Jean-Claude Trichet reiterated June 25 that policy makers may increase the main refinancing rate by a quarter-percentage point next month to contain inflation. The Federal Reserve left the benchmark U.S. rate at 2 percent on June 25. On Sept. 18 the Fed began cutting rates to bolster an economy already reeling from the credit crisis.
Filed under: bernanke, BIS, Britain, central bank, China, Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, Europe, european central bank, european union, Federal Reserve, food crisis, food market, food prices, food shortage, gold, Great Depression, Greenback, housing market, imf, Inflation, Japan, morgan stanley, real estate, Stock Market, United Kingdom, US Economy | Tags: corn, OTC, royal bank of scotland
RBS issues global stock and credit crash alert
London Telegraph
June 18, 2008
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.
“A very nasty period is soon to be upon us – be prepared,” said Bob Janjuah, the bank’s credit strategist.
A report by the bank’s research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as “all the chickens come home to roost” from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
BIS Warns Of Great Depression
Banking Times
June 11, 2008
The Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.
In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart.
According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.
The report points out that between March and May of this year, interbank lending continued to show signs of extreme stress and that this could be set to continue well into the future.
It also raises concerns about the Chinese economy and questions whether China may be repeating mistakes made by Japan, with its so called bubble economy of the late 1980s.
Notional Value Of Derivatives Hits One Quadrillion
Jim Sinclair
JS Mineset
June 11, 2008
The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION.
This appears to be Bank of International Settlement Spin to announce the largest gain in derivatives outstanding since they started to report. As of the last report it appeared that both listed and OTC derivatives was under $600 trillion. Now listed credit derivatives alone stood at $548 Trillion. The OTC derivatives are shown as $596 trillion notional value, as of December 2007. One can only imagine what number they are at now.
Well we hit a QUADRILLION. We have more than $1000 trillion dollars in all derivatives outstanding. That is simply NUTS because notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. $548 trillion plus $596 trillion means $1.144 quadrillion.
It would be an interesting piece of research to see what the breakdown is of listed derivatives according to exchange to see if it adds up to the reported number. Spin is now everywhere.
This means that no OTC derivative house can be allowed to go broke. This means that whatever funds are required to rescue failing international investment banks, banks and financial entities will be provided.
Keep this economic law in mind. Monetary inflation proceeds price inflation and is its primary cause in economic history from Rome to present.
Nothing can stop the juggernaut of price inflation heading towards every nation like a runaway freight train down a mountain.
Gold is going to at least $1650. I am probably way too low with that estimate.
The US dollar will trade down to at least .5200 as measured by the USDX.
Policy-makers around the globe declared soaring inflation a top threat on Monday, with pressure rising for central banks to raise interest rates amid protests against higher costs of living.
Gold is the easiest market to trade for the aggressive investor. Sell 1/3 when the market looks like a Rhino Horn which you will see with your French Curves at the point of the rollover.
Buy 1/3 back when the price of gold looks like a fishing line hanging off a fishing rod. Your maximum power down trend line will give you this.
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Filed under: Big Banks, central bank, Credit Crisis, DEBT, Dow, ECB, Economic Collapse, economic depression, Economy, european central bank, fannie mae, Federal Reserve, freddie mac, Great Depression, Greenback, Inflation, interest rate cut, interest rate cuts, liquidation, rate cut, Stock Market, US Economy, US Treasury, Wall Street | Tags: swiss national bank, Term Securities Lending Facility, TSLF
Fed pumps up liquidity in funding markets to ease credit crunch
AP
March 11, 2008
Fed Announces Further Steps to Ease Credit Crunch WASHINGTON (AP) — The Federal Reserve on Tuesday ramped up efforts to provide more relief to squeezed financial institutions, a coordinated action with other central banks aimed at easing a global credit crises that threatens to push the U.S. economy into its first recession since 2001.
The Fed said it will make up to $200 billion in Treasury securities available to big Wall Street investment houses and banks. The new action is designed to ensure that there is an ample supply of Treasury securities. With strains in financial markets, demand has grown for Treasury securities, considered the safest investment in the world because they are backed by the U.S. government.
On Wall Street, the Fed’s action propelled stocks upward. The Dow Jones industrials jumped more than 250 points in morning trading.
The move comes as banks and other financial institutions face cash crunches.
“Pressures in some of these markets have recently increased again,” the Fed said in a statement. “We all continue to work together and will take appropriate steps to address those liquidity pressures.” The other banks involved are the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank.
The Fed announced the creation of a new tool, called the Term Securities Lending Facility (TSLF), geared to provide primary dealers — big Wall Street investment firms and banks that trade directly with the Fed — with 28-day loans of Treasury securities, rather than overnight loans. They would pledge other securities — including federal agency residential-mortgage-backed securities, such as those of mortgage giants Fannnie Mae and Freddie Mac — as collateral for the loans of Treasury securities.
“This will not turn the economy around or fix all the problems in the markets but it should reduce the liquidity issue, at least for now,” said Ian Shepherdson, chief economist at High Frequency Economics. The odds of a deep, three-quarters of a percentage point cut in the Fed’s key interest rate next Tuesday have dropped sharply as the Fed’s new relief seemed to calm market turmoil, he said.
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Filed under: bernanke, Britain, central bank, Credit Crisis, Dana Perino, DEBT, ECB, Economic Collapse, economic depression, Economy, Euro, Europe, european central bank, Federal Reserve, food prices, gas prices, George Bush, global economy, Great Depression, Greenback, Inflation, interest rate cut, interest rate cuts, Iraq, marc faber, Oil, Petrol, rate cut, russian mafia, S&P, Stock Market, United Kingdom, US Economy, Wall Street, War On Terror, Warren Buffett, Yen | Tags: Standard & Poor
Dollar Declines, Fed May Cut Rates 75 Points
Bloomberg
March 10, 2008
The dollar weakened against the euro and approached an eight-year low versus the yen as traders bet the Federal Reserve will lower interest rates by at least 75 basis points to avert a recession.
The currency traded within a cent of a record low against the euro as futures indicated 96 percent odds the Fed will cut its benchmark rate to 2.25 percent on March 18, 175 basis points more than the Bank of Japan’s and 175 basis points less than the European Central Bank’s. The U.S. currency weakened against a basket of major trading partners to near the lowest since the index began in 1973.
“What’s been driving the market is U.S. economic developments and expected interest-rate differentials,” said Thanos Papasavvas, head of currency management at Investec Asset Management in London. “This is a weak-dollar story. We would expect the Japanese yen and euro to continue appreciating.”
The dollar fell to 102.33 yen by 7:24 a.m. in New York, from 102.67 yen on March 7, when it slid to 101.43, the lowest since January 2000. It dropped to $1.5364 per euro, from $1.5355 at the end of last week, when it declined to $1.5459 a euro, the weakest level since the European single currency’s debut in 1999.
The yen advanced 0.4 percent to 157.20 per euro as the Cabinet Office said Japan’s equipment orders jumped 19.6 percent in January, the fastest pace in more than seven years.
The U.S. currency declined to $2.0197 against the pound, from $2.0134 on March 7, after a government report showed factory-gate in February inflation matched the fastest annual pace since 1991. The dollar also dropped 0.2 percent to 1.0233 against the Swiss franc and 0.5 percent to 5.1361 Norwegian krone.
Faber: Bernanke Will Destroy Dollar
Market Watch
March 9, 2008
Federal Reserve Chairman Ben S. Bernanke will “destroy the U.S. dollar” by cutting interest rates, investor Marc Faber said.
Bernanke’s reduction in the target rate for overnight loans between banks to 3 percent has spurred a rout in U.S. stocks and gains in oil and gold prices, said Faber, the Gloom, Boom & Doom report publisher who told investors to buy gold at the start of its six-year rally.
The U.S. is now in a “de-leveraging” phase where banks make fewer loans, stunting economic growth, Faber said. He estimated that a U.S. recession began two or three months ago.
“In the U.S., they pursue essentially economic policies that target consumption, which in my opinion is misguided,” Faber said in an interview with Bloomberg Television from Chicago. “They should pursue economic policies that stimulate capital investment and capital formation.”
The Standard & Poor’s 500 Index is down 9.7 percent since Sept. 18, when the Fed began cutting the fed funds target to 3 percent from 5.25 percent. The dollar has lost 9.2 percent of its value versus the euro, crude oil futures gained more than 29 percent and gold added 34 percent during that time.
Further interest-rate cuts may spur inflation and reduce the value of 10- and 30-year Treasuries, Faber said, calling the bonds “a disaster waiting to happen.” Ten-year notes fell to a four-year low of 3.44 on Jan. 22.
Press Secretary Perino: I’ll Be Fired If I Talk About the Dollar
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Filed under: Big Banks, Britain, carlyle group, central bank, citigroup, CNN, Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, Euro, Europe, european central bank, Federal Reserve, food prices, gas prices, global economy, gold, Great Depression, Greenback, housing market, imf, Inflation, interest rate cut, interest rate cuts, job market, JP Morgan, New York, Oil, OPEC, peter schiff, Petrol, rate cut, Stock Market, subprime, subprime lending, trilateral commission, United Kingdom, US Economy
Golds Hit Record $992, Current Price is $979
Goldseek
March 6, 2008
THE PRICE OF PHYSICAL gold bullion moved in a tight 0.8% range early Thursday, re-touching yesterday’s new all-time high above $992 per ounce as the US Dollar sank once again.
As the opening drew near in New York – where a small bomb damaged an army recruitment center in Times Square overnight – crude oil jumped to a new record above $105 per barrel.
European stock markets meantime ticked 0.3% lower as the Euro single currency leapt to a new all-time high of $1.5345 after the central bank in Frankfurt kept its interest rates on hold at 4.0%.
“We could see Gold Prices spike this year and hit $1,500 per ounce,” reckons Jay Taylor, editor of the Gold & Technology Stocks newsletter.
Peter Spina of Goldseek.com, also speaking to Reuters, agrees that $1,500 or even $2,000 gold is “definitely possible” in the next year, while Peter Schiff of Euro Pacific Capital says “gold has a shot at $1,200 or even $1,500 this year.
“It is a measure of the value of currencies and will go up as long as central banks continue to devalue currencies.”
Euro Breaks $1.54 Mark, Drops back to $1.53
AP
March 7, 2008
The euro on Friday exceeded US$1.54 for the first time, after the European Central Bank left its benchmark rate unchanged a day earlier and signaled that rate cuts are not expected in the near term.
That sentiment pushed the euro to a new high in European morning trading; it reached US$1.5429 before dropping back slightly to US$1.5395, above the US$1.5370 it bought in New York late Thursday. It was the latest in a string of records for the 15-nation euro this week.
“The euro-dollar has taken another significant level this morning, having breached US$1.5400, and although this may be initiating a degree of profit-taking in the short term, many will remain mindful of Trichet’s hawkish stance and tacit acceptance of a stronger euro at yesterday’s ECB rate-setting meeting,” said James Hughes of CMC Markets, referring to ECB president Jean-Claude Trichet.
European Union businesses said they were starting to feel the pinch, notably from U.S.-based buyers who assert that the high euro makes European goods more expensive.
Meanwhile, the British pound stayed above the US$2 mark for a second day, buying US$2.0132 in European trading, above the US$2.0092 it bought in late New York trading the night before. Like the euro, it jumped higher after the Bank of England kept its own interest rate unchanged at 5.25 percent.
The dollar drifted lower to 101.96 Japanese yen from 103.09 yen on Wednesday.
Oil Prices Hit Record Near $106, Steadies at $105
AP
March 7, 2008
Oil prices were steady Friday after jumping to a trading record near $106 a barrel in the previous session as the dollar’s slide to new lows prompted investors to pump more money into commodities.
Analysts believe the steadily weakening dollar is the reason oil prices have jumped to a number of new inflation-adjusted record highs this week. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
“There are expectations that the dollar will go lower, and that’s driving money into commodities,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “Traders now have this mantra: sell the dollar and buy oil, or buy commodities.”
Light, sweet crude for April delivery fell 3 cents to $105.44 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.
The contract rose 95 cents Thursday to settle at a record $105.47 a barrel after earlier spiking to a trading record of $105.97.
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Filed under: bernanke, Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, Euro, european central bank, Federal Reserve, food prices, foreclosures, gas prices, George Bush, gold, Great Depression, Greenback, housing market, Inflation, interest rate cut, interest rate cuts, Iraq, Oil, palladium, Petrol, platinum, rate cut, silver, south africa, stagflation, sterling, Stock Market, US Economy, wheat
Gold powers to record on oil, eyes $1,000
Reuters
February 29, 2008
Gold powered to a new high near $980 an ounce on Friday after crude oil set an all-time high of above $103 a barrel, igniting inflation worries and another round of buying from investors and speculators.
Palladium jumped to its highest level in more than six years and silver hit a 27-year peak. Platinum rebounded from its lows but given the absence of new developments in South Africa’s supply problems, gains are likely to be capped.
Gold jumped as high as $975.90 an ounce, up from $968.90/969.70 late in New York on Thursday. Gold has gained more than 16 percent this year, and the next upside target pegged by dealers is $1,000.
Record high oil and expectations of more interest rate cuts in the United States add to inflation pressures, elevating gold’s appeal as a hedge against rising prices, while volatile stock markets have encouraged investors to shift some of their money into gold and other precious metals.
“The target is $1,000. I personally hope it will be $1,000 within a month,” said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo, adding that gold was likely be driven by movements in oil in coming weeks. Crude oil rallied to another record above $103 a barrel as Ecuador shut a key export pipeline and a fire hit a major European natural gas plant.
While oil is at a record price in inflation-adjusted as well as nominal terms, gold has lagged. According to analysts at GFMS gold’s inflation-adjusted record is $2,079 an ounce.
“Most of the funds are buying inflation hedges such as gold, silver and oil. It’s still a bull market, where hedge funds and banks buy precious metals,” said William Kwan, a dealer at Phillip Futures in Singapore.
“I think inflation is really getting out of hand. I am looking at $955 for support and resistance at $985,” said Kwan, who pegged upside target for silver at $20.
Silver rose as high as $19.92 an ounce, its highest in 27 years, up from $19.74/19.79 an ounce in New York.
Oil Tops $103 For The First Time In History
AP
February 29, 2008
Oil prices briefly surpassed $103 a barrel for the first time Friday as persistent weakness in the U.S. dollar and the prospect of lower interest rates attracted fresh money to the oil market.
Light, sweet crude for April delivery on the New York Mercantile Exchange jumped to a new trading record of $103.05 a barrel in electronic trading before slipping back to $102.02 a barrel, down 57 cents, by midday in Europe.
On Thursday, the contract jumped $2.95 to a record settlement price of $102.59 a barrel.
Prices were supported by comments Thursday from Federal Reserve Chairman Ben Bernanke, who said the American economy is not immediately threatened with stagflation, a combination of economic weakness and rising inflation.
Investors chose to see the comments as confirmation of their beliefs that the Fed will continue cutting interest rates to try to shore up the economy.
“It seems that further interest rate cuts, additional dollar weakness and more investment buying will anchor oil to higher prices,” energy risk management firm Cameron Hanover said in its daily report. “It can’t go on forever, but it looks like it can go on for a while.”
Euro hits fresh high against dollar
Financial Times
February 29, 2008
The dollar hit another record low against the euro on Friday, as data continued to support the view that the European Central Bank will keep interest rates on hold for the foreseeable future.
Headline inflation in the eurozone stood at 3.2 per cent in January, tallying with earlier estimates and market expectations as food and energy prices leapt. Meanwhile, unemployment in the eurozone held at a record low of 7.1 per cent in January.
“With headline inflation running at a 14-year high and the lingering threat of second round effects, it is premature for the ECB to switch to an easing bias in their policy stance just yet,” said Martin van Vliet at ING.
While the ECB remained unlikely to cut eurozone interest rates at its next policy meeting on Thursday, markets were fully pricing in a cut of 50 basis points at the US Federal Reserve’s meeting on March 18.
“Markets are probably wisely bracing themselves for further monetary policy divergence between the US and eurozone over the next few months,” added Mr van Vliet.
The euro rose to a record high of $1.5238, before retreating to $1.5206, little changed on the session.
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Filed under: Alan Greenspan, bernanke, black monday, Britain, Canada, central bank, Credit Crisis, DEBT, Dow, ECB, Economic Collapse, economic depression, Economy, Europe, european central bank, european union, global economy, gold, Great Depression, Greenback, Inflation, interest rate cut, interest rate cuts, John McCain, liquidation, Paul Craig Roberts, platinum, rate cut, Stock Market, United Kingdom, US Economy
Forget 1987, This Could Be 1929 All Over Again
Analyst says economic winter could last 8 years, worst is yet to come
Paul Joseph Watson
Prison Planet
January 24, 2008
The huge debt bubble, which has artificially propped up the stock market since the turn of the millennium, could cause a new great depression according to one expert, who also predicts that investors will flock to buy gold as the dollar continues to plummet.
Financial analysts have been drawing comparisons between this week’s chaos and the October 19 1987 crash, known as Black Monday, when the Dow Jones Industrial Average dropped by over 22 per cent and markets sunk worldwide.
But Vancouver-based investment adviser Ian Gordon has gone a step further, seeing clear parallels between current events and those that foreshadowed the 1929 crash and ensuing depression.
“We’re really seeing a mirror image of what happened following the [19]29 peak in equity prices in the United States, and the subsequent crash in equities,” Gordon told the Georgia Straight. “We’re seeing really the mirror of…the huge debt bubble that was built into the economy in the ’20s in the United States. We’re now seeing the collapse of the debt bubble that was built into the world economies, but principally in the United States.”
Gordon levels the blame at Alan Greenspan for creating a huge bubble by injecting too much money into the system in an attempt to offset the “economic winter” that inevitably arrives as part of the boom and bust cycle of the fiat money system, arguing that the realistic peak in the stock market occurred in 2000.
Gordon predicts that the “economic winter” will last another 7 or 8 years and that the worst is yet to come, with the continued meltdown of the dollar causing people to flock to the safe haven of gold.
“As this whole collapse in paper assets begins to unfold, causing tremendous strain on the banking system, we will see a tremendous rush to gold, to own gold,” he said. “But I think the worst is definitely in front of us, and not behind us.”
Gordon slammed the huge 75 points rate cut as ineffective, arguing that neither banks or consumers want to engage because of the crippling problems of their existing debts.
The analyst’s conclusions are in line with those of Paul Craig Roberts, the father of Reaganomics, who on Tuesday warned that the mess could result in the dollar losing its status as the world reserve currency.
Roberts also cautioned that the rush to diversify into gold could make people’s assets a target for government confiscation, as happened in 1933, four years after the great depression.
SocGen raises questions over Fed rate cut
FT
January 24, 2008
The Federal Reserve had no inkling about Société Générale’s firesale of stock futures following the discovery of a rogue trader when the US central bank made its emergency interest rate cut.
The question being asked by some in the markets is: was the Fed duped into a clumsy and panicked move by the clean-up operation for Jérôme Kerviel’s mammoth losses for the French bank?
There are many prepared to believe that, without SocGen’s huge derivatives sales, the mood in the stock markets would not have been half as bleak.
“It is now clear that the Fed was panicked into a 75 basis point rate cut by the actions of a rogue trader and the bank’s unwinding of his positions,” said one London-based hedge fund manager. “The action also clearly suggests that their French and ECB counterparts did not tell them what had happened at SocGen.”
Read Full Article Here
Purchasing Power Of The DOW
http://www.youtube.com/watch?v=SjS60TaD_J8
http://www.telegraph.co.uk/money/m..01/24/bcnstig124.xml
A full-blown, prolonged recession in America is now inescapable
http://business.timesonline.co.uk/tol/business/markets/article3239801.ece
Crisis far from over, even with emergency cut
http://www.reuters.com/article/reutersEdge/idUSN2254342920080123
Home Prices Fell in ’07 for First Time in Decades
http://topics.nytimes.com/top/..michael_m_grynbaum/index.html?inline=nyt-per
Central Bankers Confront A New Inflation Calculus
http://online.wsj.com/article/SB120120201437714141.html
John McCain: ‘Underpinnings Of Economy Are Strong’
http://thinkprogress.org/2008/01/23/mccain-economy-strong/
Offers Buyouts In U.S.
http://lfpress.ca/newsstand/Business/2008/01/25/4792939-sun.html
Power Cuts Hits Platinum Production
http://www.platinum.matthey.com/media_room/1201266015.html
Bernanke In Hot Seat As Turmoil Spikes
http://www.breitbart.com/article..0057.eedjec8e&show_article=1
U.S. budget deficit likely to hit $250 billion this year as economy weakens
http://canadianpress.google.com/ar..kEBzG_OtLzsyA
Mad Money Cramer Wants Investigation of Federal Reserve
http://youtube.com/watch?v=Uj5t-O2mHH0
Top Economist Warns Of “Serious Breakdown” In World Financial System
http://www.prisonplanet.c.._serious_breakdown.htm
Bank of England Governor hints at rate cut as global markets bounce back
http://www.dailymail.co.uk/pages..489&in_page_id=1770&ct=5
Filed under: Alan Greenspan, central bank, China, Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, european central bank, Federal Reserve, gas prices, gas tax, global economy, gold, Goldman Sachs, Great Depression, Greenback, housing market, Inflation, interest rate cut, interest rate cuts, job market, john paulson, Northern Rock, Oil, Petrol, rate cut, Stock Market, subprime, subprime lending, unemployment, US Economy, US Treasury, Wall Street, Yen
Greenspan joins firm that made billions betting against the housing market
Reuters
January 15, 2008
Hedge fund manager John Paulson, who earned billions of dollars last year by betting against the housing market, said on Tuesday that former Federal Reserve board chairman Alan Greenspan will advise his firm.
Greenspan, whose words can still move financial markets, will advise Paulson on the global economy for an undisclosed amount of money, the hedge fund said in a statement.
By joining the New York-based fund, Greenspan becomes the latest former Washington insider to work in the fast growing $2 trillion hedge fund industry. Former Treasury Secretaries Lawrence Summers and John Snow provide advice to D.E. Shaw and Cerberus.
Goldman Sachs Hints at $1000 Gold and $135 Oil
24/7 Wallstreet
January 16, 2008
Goldman Sachs is RAISING ITS 2008 GOLD FORECASTS factoring for a recession in the U.S. in both Q2 and Q3 2008, leading to a weaker U.S. Dollar target of $1.51/Euro (up from $1.35) over the next six months. The prior $800/ounce gold target is now put at an average of $915/ounce for all of 2008, with an exit 2008 commodity price of $850 (up from $825 prior). The call is based on support from investment demand, purchases from emerging market central banks, and the ongoing declining mine supplies.
Goldman Sachs is also raising its 2009 and 2010 gold prices:
2009 prices are now expected to be $870/ounce (up from $852);
2010 prices are now expected to be $940/ounce (up from $907);
Near-term Goldman Sachs notes a possibility of a spike past $1,000.00 that could be the effect of further credit events and increases in oil prices.
http://money.cnn.com/200..llar.ap/index.htm?postversion=2008011605
Shares in freefall as recession hits
http://www.financemarkets.c..s-in-freefall-as-recession-hits/
ECB warns crashing dollar may stop Fed cuts
http://www.telegr..14/bcnfedcut114.xml&CMP=ILC-mostviewedbox
Top economist blames Fed for sub-prime crisis
http://www.telegraph.co.u..=/money/2008/01/13/ccschwartz113.xml
Inflation Up by Largest Amount in 17 Years
http://www.foxbusiness.com/mar..se-03-december_438734_3.html
Citigroup May Write Down Up To $24 Billion, Lay Off 20,000 Workers
http://www.cnbc.com/id/22639976/
Wall Street braces for more losses
http://money.cnn.com/..m?postversion=2008011608
Shadow spreads across the US economy
http://www.theaustralian.new..197,23046413-5015025,00.html
Transit Panel Urges Gas Tax Increase
http://news.aol.com/story/_a/tran..rease/n20080115033009990021
Bankers Throw In Towel On Northern Rock
http://www.telegraph.co.u..oney/2008/01/12/cnnrock112.xml
“U.S. Economy Screwed”: Henry Blodget
http://www.alleyinsider.com/2008/01/us-economy-screwedexperts.html
Largest Saudi Bank Urges Dollar Depeg
http://www.ft.com/cms..ac.html?nclick_check=1
Crisis may make 1929 look a ‘walk in the park’
Wholesale Prices Up 6.7% In 2007
Breaking phase ahead for the global financial system in 2008
Traders betting oil will hit $200 a barrel in 2008
Gold Futures Rise to Record $900.10
Weaker dollar likely to push gold over $1,000-mark
Filed under: Benazir Bhutto, Big Banks, Britain, central bank, China, Chrysler, credit card, Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, Euro, Europe, european central bank, FBI, Federal Reserve, gas prices, gold, gold confiscation, google, Great Depression, Greenback, housing market, Inflation, interest rate cuts, Iraq, liberty dollar, Oil, Pakistan, Petrol, pound, rate cut, Rawalpindi, Saudi Arabia, Stock Market, subprime, subprime lending, United Kingdom, US Economy
Gold rises above $830 over Pakistan
The Times
December 28, 2007
Gold put in a stellar performance again after fears of political instability in Pakistan in the wake of the assassination of opposition leader Benazir Bhutto sparked a flight to safety.
Gold has traditionally performed well in times of uncertainty and has maintained its reputation as a safe-haven investment despite recent price volatility.
The precious yellow metal was trading $11.47 firmer at $836.77 at 17:35 after safe-haven buying triggered a new test of previous multi-decade highs.
Spot prices had been languishing well below the US$830 an ounce mark when they were jolted from a month-long slumber yesterday afternoon as news of Bhutto’s death aroused concerns over heightened geopolitical tension.
The metal climbed to US$830.50 on the news but a brief round of profit taking saw it finish slightly easier yesterday at $827.50.
Bhutto died when an attacker shot her and then blew himself up as she left a political rally in Rawalpindi, a city near the capital where Pakistan’s army has its headquarters.
It was the second suicide attack against her since her tumultuous homecoming from an eight-year exile in October.
Her assassination has sparked nationwide grief and fury, while unrest risks tipping the volatile country into chaos.
Bhutto was buried earlier today and along with her the promise of restoring democracy in Pakistan.
“For the moment resistance at the $830 level appears to be capping gold, however with the dollar under pressure and violent protests seen in Pakistan it is likely that gold could see further safe-haven investment demand, and potentially rise to challenge this years high around $845.60,” said James Moore of TheBullionDesk.
With political tensions providing the environment of uncertainty that gold enjoys, the momentum in gold prices remains to the upside for now.
Oil steady near $97 on lower US stocks, Bhutto
Reuters
December 28, 2007
Oil rose on Friday on U.S. supply concerns, the slumping dollar and mounting tensions in Pakistan and northern Iraq.
U.S. crude traded up 23 cents to $96.85 a barrel by 12:05 p.m. EST. London Brent gained 12 cents to $94.90 a barrel.
A U.S. government report on Thursday showed unexpectedly large draws in crude and distillate inventories in the world’s top consumer. U.S. crude inventories are now at their lowest level in nearly three years, adding to winter supply worries that helped push oil to nearly $100 in November.
“Escalating geopolitical tensions, tightening oil supplies and a weakening dollar would seem to stack the deck in favor of further upward movement,” said Mike Fitzpatrick, vice president at MF Global.
The assassination of Pakistani opposition leader Benazir Bhutto on Thursday stoked geopolitical concerns, although Pakistan is not a major crude producer and unrest is unlikely to directly affect oil flows.
“The Bhutto story will keep being a factor into next week, and it should help keep a floor under the market, along with the other geopolitical uncertainties,” said a New York broker.
Forex – Dollar falls continue on weak US data; Euro at record high vs pound
Thompson Financial
December 28, 2007
The dollar fell across the board, coming under further pressure after a string of weak US data, while yet another disappointing report on the UK housing market pushed the euro to fresh record highs against the pound.
Yesterday’s unexpectedly weak US durable goods orders data added to fears about the state of the US economy and increased the likelihood that the Federal Reserve will need to cut interest rates further next year.
‘US economic data continues to disappoint the market with yesterday’s worse-than-expected durable goods orders for November adding further downside pressure to the greenback,’ said James Hughes, market analyst at CMC Markets.
The European Central Bank by contrast is not expected to temper its hawkish rhetoric any time soon, particularly with regional German inflation figures suggesting that the inflation pressures it warned of have not gone away.
The euro rose to a 15-day high against the dollar of 1.4682 usd, but it also staged fresh gains against the pound, hitting a new record high of 0.7350 stg.
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Chrysler CEO: We Are Operationally Bankrupt
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Growing Credit Card Debt In US Prompting Warnings Of Worse To Come
http://www.businessweek.com/ap/financialnews/D8TNB7E00.htm
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No Trial, No Conviction: FBI Steals Millions of Dollars Worth of Gold
http://cryptogon.com/?p=1731
China’s New Oil World Order
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Denmark Bank predicts Ron Paul presidency and U.S. depression
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Saudi Arabia fatwa against the dollar
http://blogs.telegraph.co.uk/busine..ber07/fatwa.htm
Goodbye to the $2 pound in 2008
Fed promises as much money as the banks want
Ethanol Blamed For Food Price Hikes
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Gold climbs above $800 in London as dollar drops; silver gains
Northern Rock Rescue Cost $100B
US Inflation Soars – Largest Rise in Producer Prices Since 1973!
US foreclosure filings up 68 pct in Nov.
U.S. Dollar’s Credibility Being `Stretched,’ UBS Economist Says
US Federal Reserve’s subprime regulations shield Wall Street banks
Economy teeters on brink, says Resler
GAO Says Government Failed Yet Another Financial Audit
One in Five Americans Must Borrow to Heat Homes This Winter
Morgan Stanley secures $5bn from China
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ECB Offers Banks Unlimited Funds
Overstock.com CEO warns of depression
Filed under: central bank, Credit Crisis, DEBT, Dow, ECB, Economic Collapse, economic depression, Economy, european central bank, fannie mae, Great Depression, Greenback, housing market, Inflation, Stock Market, subprime, subprime lending, US Economy, Wall Street
Housing construction drops
AP
December 18, 2007
WASHINGTON – Housing construction fell in November with single-family activity dropping to the lowest level in more than 16 years. Analysts said the recession in housing showed no signs of a turnaround.
The Commerce Department reported Tuesday that construction of new homes and apartments dropped by 3.7 percent last month to a seasonally adjusted annual rate of 1.187 million units.
Construction of single-family homes fell by 5.5 percent to an annual rate of 829,000 units. It was the eighth consecutive drop in single-family starts, pushing activity in this area to the lowest level since April 1991. Apartment building rose last month by 4.4 percent to an annual rate of 332,000 units.
In an ominous sign for future activity, the government reported that applications for building permits fell for a sixth straight month, dropping by 1.5 percent to a seasonally adjusted annual rate of 1.15 million units, the slowest pace for building permits since June 1993.
On Wall Street, investors were buffeted by the continued bad news on housing and an encouraging move by the European Central Bank to inject the equivalent of $500 billion into the European banking system to combat the global credit crunch that has been triggered by the meltdown in subprime mortgages in the United States. After a rollercoaster day, the Dow Jones industrial average finished up 65.27 points at 13,323.47.
The overall construction decline left home building 24.2 percent below the level of activity a year ago. After five straight years of record sales and soaring prices, housing has been in a serious downturn for two years.
Analysts expect the weakness to intensify in coming months, possibly becoming enough of a drag to push the country into a full-blown recession.
“The housing recession continues to grind away,” said Brian Bethune, an economist at Global Insight. “The housing market is now navigating through perfect storm conditions.” He said a downward spiral in sales is being exacerbated by the severe credit crunch and rising mortgage foreclosures which are dumping more homes on an already glutted market.
U.S. Housing Crash Deepens in 2008 After Record Drop
Bloomberg
December 14, 2007
For U.S. homeowners, builders, bankers and realtors, the crash of 2007 will only get worse in 2008.
Everyone from mortgage-finance company Fannie Mae to Lehman Brothers Holdings Inc. expects declines next year. Existing home sales will drop 12 percent and existing home prices will fall 4.5 percent, Washington-based Fannie Mae says. Lehman analysts estimate almost 1 million mortgage loans will default in 2008, up from about 300,000 this year.
“We’re only halfway through the housing shock,” said Ethan Harris, chief U.S. economist at New York-based Lehman, the fourth- biggest U.S. securities firm by market value. “It’s just a matter of time before the weakness spreads to the rest of the economy.”
The housing market collapse has been anything but the “soft landing” that Federal Reserve Bank of San Francisco President Janet Yellen and David Lereah, former chief economist at the National Association of Realtors in Chicago, predicted for real estate at the start of 2007.
Median home prices declined in the U.S. this year, the first annual drop since the Great Depression, according to forecasts from the National Association of Realtors.
“I’m not going to sit here and tell you it’s going to turn real strong next year,” said Jim Gillespie, chief executive officer of Coldwell Banker Real Estate LLC, the largest U.S. residential brokerage, according to Franchise Times. “It’s not going to turn real strong next year.” Gillespie said he doesn’t make housing market forecasts.
Filed under: central bank, Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, Euro, european central bank, global economy, Great Depression, Greenback, Inflation, interest rate cut, rate cut, Stock Market, United Kingdom, US Economy
ECB Injects $500B into Euro Money Markets
CSF
December 18, 2007
“Money market rates tumbled after the European Central Bank injected an unprecedented $500 billion into the banking system as part of a global effort to ease gridlock in the credit market.”
The ECB injected $500B into the euro money markets which brought down the rates on euro loans through the end of the year. Or the banks should now have enough cash at reasonable rate to get them through the end of the year (accounting period). With all that said, the central banks in the UK and US have not had that level of luck yet. Text in bold is my emphasis. From Bloomberg:
The cost to borrow in euros through the end of the year plunged after the European Central Bank added an unprecedented $500 billion to the banking system as part of a global effort to ease gridlock in the credit market.
The amount banks charge each other for two-week loans in euros dropped a record 50 basis points to 4.45 percent, the European Banking Federation said today. The rate had soared 83 basis points in the past two weeks as banks anticipated a squeeze on credit through year-end.
“These are strong-arm tactics intended to show the market they’re seriously committed to breaking the deadlock,” said Marc Ostwald, a fixed-income strategist at Insinger De Beaufort SA in London. ``The ECB is helping to bankroll banks out of a problem that they themselves created.”
MAD MONEY: ECB $502 Billion Money Bomb
Economics Briefing
December 18, 2007
ECB has lent an incredible €348.6 billion ($501.7 billion) for two weeks at below market interest rates.
The big question, of course, is what happens in two weeks when the funds are to be paid back. If the money is simply paid back in two weeks, the operation is a Christmas joke. If a sizable amount of the loans are extended in some fashion, central banks have clearly signalled they will risk major inflation to protect financial institutions in trouble.
There is some need for additional reserves to be added during the holiday season, given the way central banks currently operate, but how can this half-trillion money bomb be viewed as anything but MADNESS?
Filed under: Arnold Schwarzenegger, Bank of England, California, Canada, central bank, Credit Crisis, DEBT, despotism, ECB, Economic Collapse, economic depression, Economy, european central bank, Federal Reserve, gas prices, global economy, gold, Great Depression, Greenback, housing market, Inflation, interest rate cuts, Iran, Northern Rock, Oil, OPEC, Petrol, rate cut, Russia, Stock Market, United Kingdom, US Economy, Venezuela
World stocks plummet after global banks take action in bid to avoid recession
Daily Mail
December 13, 2007
Stocks worldwide have plummeted in the wake of yesterday’s unprecedented decision by leading central banks to pump billions into money markets in a bid to avoid a worldwide recession.
The Bank of England has joined the U.S. Federal Reserve, the European Central Bank and their counterparts in Canada and Switzerland to pump at least £55billion into money markets.
However this morning the FTSE 100 fell more than 70 points to 6458.7 and the markets in Japan, Hong Kong and Taiwan all suffered nervous starts to the day’s trading.
Investors are worried that the shock decision by the world’s banks could mean that the credit crisis is likely to get worse.
It is hoped that the loans – £ 22.7billion of which will go to the UK – will help make lending between banks easier, avoiding any repeat of the Northern Rock crisis.
The Rock ran into trouble because the current economic climate has encouraged banks to hoard their cash, rather than lend it to each other.
Russia to dump waning dollar
Press TV
December 14, 2007
Russian oil firm Rosneft will follow the lead of Gazprom and LUKOIL to sell crude in rubles amid the ongoing depreciation of the dollar.
“Our specialists are looking at all possibilities that could be beneficial for the company,” Rosneft Spokesman Nikolai Manvelov said. “Everything depends on economic viability.”
Russia’s largest independent oil producer, LUKOIL earlier announced that the company will switch to the ruble in its gas and crude deals within two years.
“Selling for rubles is much more attractive,” Deputy Chief Executive Officer Leonid Fedun said on December 12. “Gazprom is considering introducing ruble-denominated contracts and I think that technically Russian companies can do it by 2009 if the banks are ready.”
“We consider the idea of selling our resources for rubles to be quite possible,” Gazprom’s Vice President Alexander Medvedev said at a recent conference in New York.
Last month, Iran and Venezuela proposed to the Organization of Petroleum Exporting Countries (OPEC) to switch to a basket of currencies in its oil deals.
Iran, the world’s fourth most prolific oil exporter, has already abandoned the dollar, Iran’s Oil Minister Gholam-Hossein Nozari said on December 9, describing the currency as unreliable.
U.S. Stocks Decline as Fed Fails to Assuage Recession Concern
http://www.bloomberg.com/a…yi2xynL0&refer=us
Report Says That the Rich Are Getting Richer Faster, Much Faster
http://www.nytimes.com/2007/…ThcWg&oref=slogin
LA Times Says Gold For Conspiracy Theorists
http://www.latimes.com/wireless/avantgo/la-fi-gold16dec16,0,465745.story
Fed To Announce New Mortgage Rules
http://www.washingtonpost.co…007121401875.html
‘A financial tsunami is upon us’: Schultz sees an apocalypse now
http://www.marketwatch.com/new.34-A49..dist=TNMostRead
Mortgage Crisis Inflicts Collateral Damage
http://www.msnbc.msn.com/id/22246203
Schwarzenegger To Declare Fiscal Emergency
http://www.nbc11.com/news/14858065/detail.html
Russia may dump weakening US dollar in its energy deals
http://www.dailyti…2007%5C12%5C15%5Cstory_15-12-2007_pg5_43
Money-Market Rates Fail to Respond to Bank Measures
http://www.bloomberg.com/apps/news?…d=a9anSVhH.NOQ&refer=home
November Consumer Prices Rise More than Forecast
http://www.bloomberg.com…4BNlo&refer=home
Greenspan: Odds of recession ‘clearly rising’
http://noworldsystem.com/2007/…ession-clearly-rising/
Central Banks to Pump Billions into World Financial System
http://www.nytimes.com/200..8-8QuVU5oMlm5w8E6dIl7JlQ
GAO: “USA is living beyond its means”
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U.S. Economic Collapse News Archive
Filed under: 9/11, Alan Greenspan, central bank, China, Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, european central bank, Federal Reserve, foreclosure, GAO, global economy, Great Depression, Greenback, housing market, Inflation, interest rate cuts, New Hampshire, pound, rate cut, Stock Market, subprime, subprime lending, United Kingdom, US Economy
Central Banks to Pump Billions into World Financial System
NY Times
December 13, 2007
A day after the Federal Reserve disappointed investors with a modest cut in interest rates, central banks in North America and Europe on Wednesday announced the most aggressive infusion of capital into the banking system since the terrorist attacks of September 2001.
Most market specialists and economists welcomed the effort but concluded that it would probably have only limited success in addressing broader problems in the global economy and the credit markets.
In response, stocks initially surged in New York, but most of the early gains dissipated in afternoon trading as the market moved wildly up and down through the day.
The effort to grease the wheels of bank lending suggested that policy makers were increasingly concerned about the risk that economies could fall into recession because of failures in the credit markets, which have seized up again in the last couple of weeks after they overcame a bout of panic in August and September.
Economists and market specialists say policy makers are trying to reassure bankers that they will stand firm as the lenders of last resort. The coordinated action is being led by the Fed, which will lend $40 billion this month. The European Central Bank, the Bank of England, the Swiss National Bank and the Bank of Canada will lend $50.2 billion this month and next.
GAO: “USA is living beyond its means”
http://www.youtube.com/watch?v=KjZBOCAgR64
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Filed under: Credit Crisis, DEBT, ECB, Economic Collapse, economic depression, Economy, Euro, european central bank, eurozone, Federal Reserve, foreclosure, gold, Great Depression, Greenback, housing market, Inflation, interest rate cuts, Oil, rate cut, Stock Market, subprime, subprime lending, US Economy, Wall Street
Fed Pumps $8 Billion More Into market
The Independent
November 27, 2007
Central bankers are becoming nervous that a renewed credit crunch could destabilise financial markets around the end of next month, and the US Federal Reserve has pumped an initial $8bn (£3.9bn) into the market to help ease the mounting pressure.
Wall Street banks have been hoarding cash rather than lending it out, fearful that losses on US mortgages and related products are undermining the strength of their balance sheets.
And the Federal Reserve said that the problem could become acute before 31 December, when many institutions close their books on the financial year and when many important accounting calculations are made.
In a highly unusual move, the Federal Reserve Bank of New York said yesterday that it was putting an additional $8bn into the financial system through 43-day loans, money that won’t have to be paid back until 10 January. The duration of the loans is substantially longer than that in normal market operations by the Fed.
If Wall Street’s banks become unwilling or unable to lend to each other, there could be knock-on consequences throughout the financial system, with high street lenders and other businesses finding it impossible or punitively expensive to find the short-term money required to fund their operations. It was just such a credit crunch that led to the problems at Northern Rock at the height of the crisis in the summer.
ECB injects £35bn into markets
Telegraph
November 29, 2007
The European Central Bank pumped a further €50bn (£35bn) into the money markets yesterday but it did little to alleviate funding fears, pushing the inter-bank lending rate back towards record highs.
At auction, the ECB lent banks less than half the amount they bid for to cover their funding needs as the year-end credit squeeze intensified. They paid an average 4.65pc, the highest in six-and-a-half years, and well above the ECB’s base rate of 4pc.
Despite the move, three-month inter-bank lending rates in the eurozone climbed for the 11th consecutive day to 4.75pc.
Banks are reluctant to lend across the New Year period as they do not want to jeopardise their year-end figures by exposing themselves to further shocks. To date, banks have revealed writedowns of more than $50bn (£24bn) related to US sub-prime mortgages.
The US Federal Reserve plans a series of repurchase agreements into 2008, starting with an $8bn operation yesterday.
Gold Slips Under $800, Oil Plummets $94 on Firmer Dollar
Reuters
November 28, 2007
LONDON (Reuters) – Gold slid under the $800 mark in increasingly volatile conditions on Wednesday, as softer oil prices and a firmer dollar against the euro dented the metal’s wider appeal for investors.
Spot gold hit an intraday high of $815.30 but later fell sharply, losing more than 2 percent at one point to a low of $792.10.
Bargain hunters stepped in at the lower levels to pare losses to $798.05/798.75 an ounce by 1150 GMT from $811.90/812.70 quoted late in New York on Tuesday.
The dollar edged up to one-week highs against the euro on Wednesday as investors took profit from the U.S. currency’s tumble to multi-year lows, while oil prices softened to below $94 a barrel .
A stronger dollar makes gold dearer for non-U.S. buyers while easing oil prices take the heat out of gold’s role as a hedge against oil-led inflation.
“Selling today was initially triggered by the strengthening dollar and increased speed after pivotal chart points were broken,” said Alexander Zumpfe, precious metals trader at Heraeus in reference to gold dipping below support at $800.
However, traders generally remained confident on the metal’s ability to contain losses below $800 due to expectations for further dollar losses as investors anticipated cuts in U.S. borrowing costs that would dent the dollar’s yield appeal.
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Filed under: Australia, Britain, central bank, China, credit card, Credit Crisis, Credit Suisse, DEBT, Dow, Economic Collapse, economic depression, Economy, Empire, Euro, european central bank, european union, Federal Reserve, food prices, George Bush, global economy, gold, Great Depression, Greenback, Inflation, interest rate cuts, NYSE, Oil, pound, rate cut, Sarkozy, Stock Market, subprime, subprime lending, US Economy, Wall Street
Ready for a rout? : The dollar’s decline accelerates – Economist
Economist
November 8, 2007
YOU know that nerves are taut when a couple of stray comments set off a flurry of selling. The dollar fell sharply on Wednesday November 7th after mid-ranking Chinese officials, not actually responsible for foreign-exchange policy, made remarks that were seized upon by already jittery markets. A Chinese parliamentarian called for his country to diversify its reserves out of “weak” currencies like the dollar and another official suggested that the dollar’s status as a reserve currency was “shaky”. The greenback reached $2.10 against the pound and a new record of $1.47 against the euro, before recovering slightly. A widely traded index, which tracks the dollar’s value against six major currencies, also fell to a new low.
The sliding dollar, along with record losses from General Motors, the threat of $100-a-barrel oil and more bad news from the mortgage industry, spooked Wall Street. On November 7th the Dow Jones Industrial Average fell by 2.6% and the S&P 500 index by almost 3%. To add to the worries, Nicolas Sarkozy, France’s president, ramped up the political rhetoric on a visit to Washington.
Alarmed that the weak dollar boosts America’s competitiveness relative to Europe’s, he told Congress that George Bush’s administration needed to do something about the dollar or risk an “economic war”. Wall Street seers wondered whether official intervention to prop up the dollar was on the cards.
A true dollar crisis has long been one of the more frightening possibilities for the world economy. If foreign investors suddenly abandon America’s currency and the dollar collapses, financial markets could crash while the plunging currency constrains the Federal Reserve’s ability to cut interest rates. That fear is exacerbated by rising concerns about higher crude oil and food prices.
For now, the dollar nightmare is still unlikely. The currency’s decline is neither surprising nor, at least until this week, alarmingly rapid. The gaping current-account deficit and interest-rate differentials between America and other big economies point to a weaker currency. The Fed has cut short-term interest rates by 0.75 percentage points in the past two months. Given the scale of the credit mess and rising fears of recession, expectations are growing that the central bank will cut rates once again when its rate-setting committee next meets on December 11th.
Elsewhere, central bankers have stood pat or tightened. The Reserve Bank of Australia raised short-term rates to 6.75% on November 6th, citing inflationary pressure. The European Central Bank and the Bank of England, meeting on November 8th, are both expected to keep short-term rates on hold, at 4% and 5.75% respectively.
If cyclical considerations point to a weaker dollar, the most recent nervousness seems to be driven more by structural worries. Judging by the dollar’s slump in the wake of the Chinese officials’ comments, investors are fretting that central banks in emerging economies will abandon the ailing greenback. In the short term at least, that fear is easily exaggerated. The share of global foreign-exchange reserves held in dollars has fallen in recent years, but only gradually.
Central banks are unlikely to accelerate a dollar rout by making dramatic changes in their reserve portfolios. That said, many long-standing dollar bulwarks are looking weaker. Many countries that link their currencies to the dollar, from Arab oil exporters to China, face inflationary pressure. As the greenback slumps, these countries have ever-stronger domestic reasons to allow their currencies to rise.
So far, the dollar’s decline has caused little alarm among American policymakers. There is scant sign that the depreciation has aggravated price pressures. And inflation expectations, though up slightly, have not soared. Instead, the weaker currency, along with strong growth abroad, has boosted exports, helping to support output growth and unwind external imbalances faster than many thought possible.
America’s current-account deficit fell to 5.5% of GDP in the second quarter, from a peak of 7% at the end of 2005. For all the official talk of a “strong dollar”, most American policymakers have lost little sleep over the sliding greenback. A dramatic fall in the dollar, however, would be a different story. If this week’s ructions are a sign of things to come, the weak dollar could become a big headache.
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Filed under: bernanke, central bank, Credit Crisis, Economic Collapse, economic depression, Economy, Euro, european central bank, european union, Federal Reserve, food prices, foreclosure, gold, Great Depression, Greenback, henry paulson, housing market, Inflation, interest rate cuts, Japan, middle class, morgan stanley, rate cut, sterling, Stock Market, subprime, subprime lending, US Economy
Dollar’s decline may prompt joint intervention, Morgan Stanley says
Stanley White
Bloomberg News
November 5, 2007
The decline of the dollar to record lows might turn into a “more violent correction” that requires the United States, the European Union and Japan to intervene in foreign exchange markets, analysts at Morgan Stanley say.
Coordinated intervention could occur after the U.S. Federal Reserve has finished cutting interest rates and the European Central Bank has ceased raising them, according to Morgan Stanley, the investment bank.
Japan might act if the dollar approached ¥100, the bank added. But the three major economies are unlikely to intervene as long as the euro stays below $1.50, it said.
“The dollar could potentially weaken meaningfully further,” two Morgan Stanley analysts, Stephen Jen and Charles St-Arnaud, wrote in a note sent to clients late last week. “Though coordinated interventions may not be an immediate threat, they should now be on our radar screen.”
The dollar index, a measure of the U.S. currency against six others, fell to 76.331 on Friday, the lowest reading since it was created in 1973 and down from 77.03 at the end of the previous week.
The euro traded at $1.4505 at the close of trading in New York, up from $1.4393 a week ago. The dollar bought ¥114.853, little changed on the week.
Veteran investor calls Bernanke `a nut’ over rate cut
Bloomberg
November 4, 2007
US Federal Reserve Chairman Ben Bernanke is “a nut” and interest-rate cuts by the central bank are harming the US economy by fueling inflation, investor Jim Rogers said.
“Bernanke loves printing money,” Rogers said in an interview in New York. “This man is a nut. The dollar is collapsing, commodities are going through the roof, which means inflation’s going through the roof. These people are leading us to terrible problems down the line.”
Rogers, the 65-year-old chairman of Beeland Interests Inc, also said he was selling short shares of Citigroup Inc, the biggest US bank, and Fannie Mae, the largest provider of money for US home loans.
Investors should buy commodities and the Chinese currency, Rogers said.
The Fed this week cut its benchmark interest rate by a quarter point to 4.5 percent. Policymakers have now lowered their target rate for overnight loans between banks by 0.75 percentage points in six weeks, the most aggressive easing since the economy was emerging from its last recession in 2001.
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Dollar drops to record low after Fed rate cut
Simon Rabinovitch
Reuters
October 31, 2007
NEW YORK (Reuters) – The dollar fell to a record low against the euro on Wednesday after the Federal Reserve cut its benchmark interest rate by a quarter percentage point and said the pace of U.S. economic growth will slow this year.
Even though Fed policymakers said in a statement that inflation risks are now roughly equal to the possibility of slower growth, the weight of negative sentiment on the dollar was enough to lift the euro to an all-time high for the fourth consecutive session. It briefly pushed above the psychologically important $1.45 level.
“It will take more than the Fed effectively making statements to change the broader trend of dollar weakness,” said Flavia Cattan-Naslausky, currency strategist with RBS Greenwich Capital in Greenwich, Connecticut.
“It will need strong data rather than words to squeeze positions,” she wrote in a note.
The euro jumped to $1.4504, a record high, according to Reuters data, and up nearly 10 percent so far this year. It later settled back at $1.4466, up 0.2 percent on the day.
The euro’s gains were broad and deep, rising more than 1 percent against the yen to 167.29 yen.
The Fed’s somewhat benign inflation outlook contrasted with an official estimate that euro zone consumer inflation in October was well above the European Central Bank’s target, increasing the likelihood of higher interest rates there.
The dollar index (.DXY: Quote, Profile, Research), a measure of the U.S. currency’s value against a basket of major currencies, fell to a record low of 76.465. The index was down 1.6 percent in October, contracting for the fourth month in the last five.
US Economy in “Relentless” Decline
Analysts say dollar will continue to slide no matter what
Steve Watson
Infowars.net
October 31, 2007
Economic experts have predicted a continuing slump for the dollar, no matter what the federal reserve does. Others have suggested the dollar’s decline is now relentless and will only be accelerated as other countries abandon it for stronger reserve currencies.
“The relentless slide in the dollar against other major currencies, notably the euro, is encouraging speculation that Asian countries and oil producers will step up diversification of their reserve assets out of the US currency, accelerating its decline,” Capital Economics’ Julian Jessop has written today.
While Jessop states that the The dollar’s fall has been and will be further driven by a slowing US economy and not by reserve asset diversification, others are not so convinced.
Despite the fact that the Fed has today cut interest rates by a quarter point, analysts at Market Watch believe the dollar is to continue on a downward spiral now, no matter what:
“Whether the Fed cuts its benchmark a quarter percentage point, as expected, or a half-point –or even not at all — the dollar is likely to bear the near-term brunt of the market’s kneejerk reaction either way, and then move in one direction: down.” Lisa Twaronite states.
Regardless of whether or not the Fed cuts rates, “the dollar is in for a beating,” said Marilyn McDonald, marketing director at Interbank FX.
“The U.S. dollar is finally in trouble. For quite some time now, it has been one of the top five yielding currencies among the [Group of 10 industrialized] nations, which is why it has been used in the carry trade for so long,” she said.
Carry trades involve borrowing lower-yielding currencies, such as the yen, and investing it in higher-yielding assets. The dollar has long benefited from such trades, but the benefits are dropping in line with U.S. interest rates.
While the vast majority of analysts agree that the markets are in deep trouble and the dollar is weak due to relatively poor economic fundamentals, U.S. Treasury Secretary Henry Paulson has said that financial markets are recovering from the subprime crisis.
Paulson again echoed previous sentiments of the IMF, Alan Greenspan and Ben Bernanke, stating that while it was “definitely the case” that innovation in U.S. capital markets had gotten ahead of regulatory controls, contributing to the crisis, such innovation remained desirable.
“I don’t think we would want it the other way around. If we had it the other way around, we’d be sacrificing growth and efficiency in the markets.”
They have all continually badmouthed the dollar, claiming it is “overvalued” despite the fact it has lost over half of its value against the Euro since 2001. The IMF, despite acknowledging “the likelihood of a disorderly plunge in the dollar” and contrary to pleas from Europe has given the green light for traders to continue to sell the dollar.
In their World Economic Outlook brief, the IMF brazenly states that the agenda in continually badmouthing the dollar is to exalt the Chinese Renminbi in order to contribute to “a necessary rebalancing of demand and to an orderly unwinding of global imbalances.”
In layman’s terms, this means lowering the living standards of the American middle class by tanking the dollar and sending oil prices skyrocketing towards $200, as part of the “post-industrial revolution” agreed upon by the Bilderberg Group. This would eviscerate the middle class and create a two-caste system based upon the Chinese model, where the super-rich live in opulence and the rest of the population are forced to struggle on the poverty line.
Meanwhile analysts at EconomicsBriefing.com have pointed out that while the UN is warning of ballooning food prices and the possibility of food riots, no one is saying or doing anything about the primary cause, US federal reserve encouraged, worldwide central bank monetary expansion.
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Dollar Sinks To New Low
AP
October 26, 2007
FRANKFURT, Germany (AP) — The dollar fell to another new low against the euro Friday in midmorning trading on speculation that U.S. interest rates will be cut again.
After rising to a record $1.4375, the euro slipped back to $1.4369, higher than the $1.4319 it bought in late Thursday trading in New York.
The euro last hit a record high against the dollar Monday, rising to $1.4348.
The euro was lifted higher by a spate of sour economic reports from the United States, including a report that showed U.S. orders for durable goods dropped 1.7 percent in September, after an even bigger 5.3 percent plunge in August.
That was the first back-to-back decline in more than a year and took economists by surprise.
The data exacerbated concern about the health of the U.S. economy and has caused investors to sell their dollars in a climate of market nervousness ahead of next week’s U.S. Federal Reserve Bank meeting on interest rates.
“Yesterday’s run of downbeat economic data out of the U.S. is underlining the fact that the Fed’s last rate cut of 50 basis points clearly hasn’t been sufficient to kick start demand,” said James Hughes, a market analyst with CMC Markets in London.
He said traders and markets are expecting the bank to cut its benchmark rate from 4.75 percent next week. That, in turn, has caused the dollar to lose value because of speculation that the European Central Bank will increase its interest rates.
Although lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.
In other trading, the British pound bought $2.0564, up slightly from the $2.0511 it bought on Thursday.
Meanwhile, the dollar was up against the yen, rising to 114.31 yen on Friday compared with 144.06 yen on Thursday.
‘Mr. Yen’ warns that dollar could plunge in 2008
Bloomberg News
October 19, 2007
TOKYO: The dollar could “plunge” in 2008, prompting the United States, the European Union and Japan to intervene in foreign exchange markets, Eisuke Sakakibara, the former top currency official of Japan, said Thursday.
U.S. economic growth may slow to less than 1 percent next year as losses on loans to homeowners with poor credit erode consumer spending and bank earnings, he said in an interview in Tokyo. Sakakibara was known as Mr. Yen because of his ability to influence the currency market during his time at the Ministry of Finance from 1997 to 1999.
“Should growth fall below 1 percent, we could see a plunge in the dollar,” said Sakakibara, now a professor at Waseda University in Tokyo. “Some form of intervention would be necessary to stop it, and that would require coordinated effort from all three major economies.”
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New credit crunch looms
Telegraph
October 24, 2007
Fresh turmoil in the global debt markets has set off sharp falls in commodity prices and high-risk assets as investors scrambled for safety.
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German team damn UK economic ‘miracle’ as a sham
The dollar soared as US investors liquidated foreign holdings, ending at $1.4129 against the euro and £2.0276 against the pound, in one of the most dramatic currency moves this year.
Libor spreads in Europe’s interbank market jumped to 64 basis points, roughly the level that set off the credit crisis last summer and prompted a liquidity rescue by the European Central Bank. The iTraxx Crossover index that measures spreads on corporate bonds has jumped 100 basis since last week to 364 yesterday.
“It’s the summer that won’t end,” said Peter Berezin, a strategist at Goldman Sachs.
He said investors were shaken by last week’s drop in US home-builder sentiment to an all-time low and by fresh falls in the ABX index for sub-prime debt. “We continue to learn that it pays to respect the sell-offs in ABX and housing-related credit. This has elements of the February and August sell-offs, where credit markets signalled problems,” he said.
The lowest tier of ABX debt has fallen to a record low of 20.72 – from par of 100 – pointing to huge losses that have yet to surface.
Wall Street yesterday avoided a repeat of Black Monday, eking out a recovery after the Dow’s 368-point dive on Friday. The fall-out triggered tumbles in Tokyo, Shanghai, Hong Kong, Indonesia, Korea, Taiwan, and Turkey. Lead, copper, zinc, and nickel all fell hard on growing fears of a global economic slowdown, while gold dropped $13 to $754 an ounce. Brent crude fell 61 cents to $83.18.
There are concerns that a $75bn (£37bn) rescue operation put together by US Treasury Secretary Hank Paulson to stabilise the sub-prime market is intended to mask the scale of the crisis.
“This rescue has back-fired,” said Hans Redeker, currency chief at BNP Paribas. “The central banks don’t want anything to do with it. There is a fear that the big four US banks are trying to hide their debts,” he said.
The US market for asset-backed commercial paper (ABCP) contracted a further $11bn last week as lenders refused to roll over short-term debt. This form of paper has shrunk by 25pc since August, cutting off almost $300bn of funding.
Dr Suki Man, an analyst at Société Générale, said “shutters” had gone up across the debt markets. “Has it just got ugly again? The jury’s out, but it’s enough to make one feel the chill. All this is offset by a US economy still expected to grow by more than 2pc, and China and India still growing at breakneck speed,” he said.
Mr Redeker said yesterday’s dollar spike was caused by US investors pulling money out of Turkey, South Africa, Hungary and other emerging markets. They had invested $300bn in bonds and stocks over the last year.
“This is just profit-taking on risky assets. The dollar is going to fall further because long-term funding for US assets has collapsed since the sub-prime crisis,” he said.
Outgoing IMF chief Rodrigo Rato warned yesterday that the adjustment may be brutal. “An abrupt fall in the dollar could either be triggered by, or itself trigger, a loss of confidence in dollar assets,” he said.
Existing U.S. homes sales plunge in largest decline since 1999
Sales of Existing Homes Fall by Largest Amount on Record in September
AP
October 24, 2007
WASHINGTON (AP) — Sales of existing homes plunged by a record amount in September as turmoil in mortgage markets added more problems to a housing industry in its worst slump in 16 years.
The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record.
The weakness in sales translated into further pressure on prices. The median price — the point at which half the homes sold for more and half for less — fell to $211,700 in September, down by 4.2 percent from the sales price a year ago. It marked the 13th time out of the past 14 months that the year-over-year sales price has decreased.
The 8 percent decline in sales was bigger than the 4.5 percent decline that had been expected.
Analysts blamed the bigger-than-expected slump on the turmoil that hit credit markets and mortgage markets in August as worries increased over rising mortgage foreclosures.
Those worries resulted in a drying up of the availability of so-called jumbo mortgages, loans over $417,000, which are particularly important in high-cost areas such as California.
“Mortgage problems were peaking back in August when many of the September closings were being negotiated and that slowed sales notably in higher priced areas that rely more on jumbo loans,” said Lawrence Yun, senior economist for the Realtors.
By region of the country sales were down 10 percent in the Northeast, 9.9 percent in the West, 7 percent in the Midwest and 6 percent in the South.
The slowdown in sales meant that the inventory of unsold homes rose to 4.4 million units in September. At the September sales pace, it would 10.5 months to eliminate the overhang of unsold homes, a record length of time.
Economists are worried that the huge levels of unsold existing and new homes will put further downward pressure on prices.
Yun said that the price declines should be put into perspective in that they are occurring after a five-year housing boom which pushed prices up to record levels.
He forecast that prices will decline by about 1.5 percent this year. That would be the first annual price decline on Realtors’ records going back four decades.
The troubles in housing have been a drag on overall economic growth, increasing worries that the housing slump and related credit market troubles could become so severe that they will push the country into a recession.
However, many private economists believe that the Federal Reserve, which cut a key interest rate for the first time in four years last month, will continue cutting rates in a campaign to make sure that the weakening economy does not tumble into a full-blown recession.
Analysts said the price declines will worsen in coming months until inventories are reduced to more sustainable levels. Ian Shepherdson, chief U.S. economist at High Frequency Economics, predicted that the housing troubles will prompt the Fed to cut rates by a quarter-point at its meeting next week.
“The housing crunch is accelerating. The Fed can’t stand by and watch,” Shepherdson said.
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