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Email- BIS, The Central Bank of all Central Bankers: The Central Bank WAS Warned in 2003 (Repost)
- FSN News Hour Part 3A
- Ambrose Evans-Pritchard Says End of the Financial World is Nigh
- Ending the week on a positive note...
- Persistent Ignorance
- Denninger on CNBC Follow Up
- White House putting off budget update
- Bailouts could cost U.S. $23 trillion
- Fed member Lockhart calling a mea culpa on Fed policy
- CRE: I Think The Other Shoe Just Dropped (Chart on Page)
- USPS May Be Unable to Make Payroll in October and Retiree Health Plan Costs, Unions' Letter to White House Says
Economy
BIS, The Central Bank of all Central Bankers: The Central Bank WAS Warned in 2003 (Repost)
I respectfully suggest reading the entire piece.
FSN News Hour Part 3A July 18, 2009 | WinAmp | Windows Media | Mp3
25% Unemployment & Underemployed
Bank or Hedge Fund
Beware of the Allure of Debt
Ambrose Evans-Pritchard Says End of the Financial World is Nigh
One of the good things about those of the Austrian persuastion is that they serve to protect the flanks of the merely skeptical like me.
I am not exactly keen Ambrose Evan-Pritchard's prescription, which is greater monetary easing with more fiscal restraint. I put banking industry reform (of the root and branch sort) very high on the list, but the sort needed will never happen in the absence of another breakdown. So we patch the system with duct tape and see how long it holds together. Failing that, I have doubts of the efficacy of monetary measures.
But that aside, I do agree with his more general points, that the current policy mix is not a good one, and that too many people are making the dangerous and often self serving assumption that we are out of the woods.
Ending the week on a positive note...
Below is an email I just received from NFTRH subscriber Steve Dore, a man who I consider a friend even though we have not met - yet. I first came upon his work at Financial Sense and thought 'who is this musician - way ahead of his time - singing about gold, silver, inflation and the Fed?'. This was long before the Ron Paul phenomenon kicked in. Steve, in his way was a kindred spirit of mine in that we were using different media to put out a similar message.
Yeh, he is crazy. Just like me. Just like all the crazies out there that nobody wanted to listen to when things appeared okay, conventional or dare I say, normal. We have come a long way indeed. One of the real crazies, Peter Schiff, is exploring a run against Chris Dodd for a Connecticut US Senate seat. A disciple of Austrian economics in the US Senate? Another (Dr. Paul) in Congress? What's this country coming to?! :-) I talked to Schiff on the phone once and I will tell you I got an ear full in just 2 minutes. That guy can TALK... and argue. The time is now for a new debate.
It's funny -- or sad, depending on your perspective -- how those who supposedly know best -- the highly paid "experts" on Wall Street -- keep misreading what is happening in the real economy.
For example, all signs point to the fact that what we have been going through these past few years is not just a garden-variety recession, but a full-fledged meltdown spawned by the bursting of the biggest credit/housing bubble in history.
Yet the "Wrong Way' Corrigans" who never saw the unraveling coming, who insisted that the crisis would remain "contained" or otherwise end quickly, who kept seeing rebounds and bottoms that never quite materialized, and who are now proclaiming an end to the "recession" -- their word -- persist in trying to mislead or confuse the masses with their profoundly ignorant assurances.
The latest delusion is the notion that allegedly "good" earnings from corporate America herald the beginnings of an economic recovery. In "The Thesis Continues To Validate: GE," The Market Ticker's Karl Denninger puts paid to this silly theory.
Denninger on CNBC Follow Up (Video)
White House putting off budget update
WASHINGTON (AP) - The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today's bleak landscape.
The administration's annual midsummer budget update is sure to show higher deficits and unemployment and slower growth than projected in President Barack Obama's budget in February and update in May, and that could complicate his efforts to get his signature health care and global-warming proposals through Congress.
Bailouts could cost U.S. $23 trillion
A series of bailouts, bank rescues and other economic lifelines could end up costing the federal government as much as $23 trillion, the U.S. government’s watchdog over the effort says – a staggering amount that is nearly double the nation’s entire economic output for a year.
Fed member Lockhart calling a mea culpa on Fed policy
I believe for the very first time, a Fed member is admitting that it was an artificially low fed funds rate that ‘helped create the housing bubble’ (I’m quoting Bloomberg). Voting member Lockhart just made the comment in a Q&A after a speech on the US economy. He took office as head of the Atlanta Fed in 2007 so he of course was not party to the Greenspan/Bernanke Fed that cut rates to 1% and left it there for one year. While I’d love to say ‘the first step to recovery is to acknowledge the problem,’ Lockhart went on to say a low rate policy will likely hold ‘for some time,’ today’s low rate is not repeating history and the low rate will not lead to a bad outcome. This time is different is always scary to hear, specifically so with Fed policy.
CRE: I Think The Other Shoe Just Dropped (Chart on Page)
The letter, which the FederalTimes.com blog provided a scanned copy late last week, says:
"[USPS] top executives are now saying that the USPS will default on a $5.4 billion payment to prefund future retiree health benefits on September 30, 2009. And its government affairs representative are now telling Congressional staff that the Postal Service may not be able to make payroll in October and will be forced to issue IOUs instead."
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Vacation @ Block Island
Monday, July 21st, 1930
Captain Sheeple
Sweet view Davos!!!! Hope you had a relaxing time.
Brazil, Canada pull money out of Treasurys
http://www.marketwatch.com/story/story/p...
We have to remember that every single thing that every one of us does has possible ramifications for life on earth. We are all part of a web of events and choices that ultimately determine the future. - Jesus H. Chris (Propagandhi)
Funny...
http://www.zerohedge.com/article/jon-stewart-takes-goldman-sachs
Re: Block Island...looks like all you need now is golf balls, tees and driver...
"If the American people ever allow private banks to control the issue of their currency...the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered." Thomas Jefferson 1802
While suffering through the Fed testimony, it was interesting to come across this blatantly truthful article in Forbes (emphasis mine).
http://www.forbes.com/2009/07/21/britain-tax-revenues-markets-economy-deficit.html?feed=rss_markets
The collapsing property market, high numbers of bankruptcy claims and a slide in consumer spending has cost the U.K.'s coffers $10 billion, $8.2 billion and $10.5 billion in stamp duty, corporation tax and value-added tax, respectively, in the last year.
The National Audit Office, a public body responsible for auditing the government's finances, found that in the 2008-2009 tax year, $7.5 billion of outstanding debts owed to the government had been written off because they were unrecoverable. Meanwhile, the amount of "doubtful debt," or debt that the government doesn't expect to reclaim, rose to $27.1 billion from $12.9 billion, partly as a result of self-assessment tax forms and fraud.
Tony Dolphin, senior economist at the Institute for Public Policy Research, believes that there's little the British government can do to patch up its finances in the short term. "The interest rate is almost at zero, fiscal stimulus has been all but used up," he said. "It's now down to the Bank of England and quantitative easing."
Trust in God but row for shore.
from: http://www.cnbc.com/id/32043649
Gold production is going down and dollar production is going up... isn't there only one thing that can happen? Gold is money.
Hello Jeff: Last time I played golf it was cold and the iron flew out of my hand and I took out a picture window, I'll leave the golf to little Davos now...
from: http://www.ft.com/cms/s/0/6317cbc4-7608-11de-9e59-00144feabdc0.html?nclick_check=1
I think some quotes here qualify for Dr. M's "quotable quotes/DOW graph". By the way, have any updates been made to that graph?
Treasury yields fall on Fed exit strategy
By Sarah O’Connor and Tom Braithwaite in Washington and Michael Mackenzie in New York
Published: July 21 2009 16:28 | Last updated: July 21 2009 19:10
function floatContent(){var paraNum = "3" paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName("div").length> 0){if (nl.getElementsByTagName("p").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagName("p")[paraNum]);}else {if (nl.getElementsByTagName("p").length == 3){nl.insertBefore(tb,nl.getElementsByTagName("p")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName("p")[0]);}}}}Yields on US Treasuries fell sharply on Tuesday as Ben Bernanke outlined the Federal Reserve’s plan to extricate itself from its policy of near-zero interest rates but stressed the economy was too fragile to implement it soon.
In response to increasing pressure from investors and politicians, Mr Bernanke set out the Fed’s “exit strategy” for its policies, which have pumped huge amounts of liquidity into the economy and prompted fears about inflation.
But the Fed chairman stressed that in spite of glimmers of improvement in the economy, the Fed intended to keep interest rates extremely low for an “extended period”.“I want to be clear that we have a very long haul here because even if the economy begins to turn up in terms of production, unemployment is going to stay high for quite a while, so it’s not going to feel like a really strong economy,” he said in his bi-annual report to Congress.
The Fed expects the economy to start growing again at the end of this year but thinks the unemployment rate – now at 9.5 per cent – will remain elevated through 2011.
His testimony boosted the price of Treasuries and sunk the yield on the 10-year note by 12 basis points to 3.46 per cent as investors were persuaded that rates would stay low for a long time.
Marco Annunziata, chief economist at UniCredit Group, said that reaction might not last. “Long-term yields will again face upward pressures from a combination of inflation fears and recovery hopes,” he said. “Inflation will not be a risk for some time but inflation fears could still complicate the Fed’s job sooner than it would like.”
The Fed has lowered interest rates to close to zero to support the recession-ravaged economy and greatly increased the amount of bank reserves in the system as a by-product of its programmes, including the purchase of $300bn of Treasuries.
“We…believe that it is important to assure the public and the markets that the extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed,” Mr Bernanke said in testimony to the House Financial Services committee.
The Fed could raise the interest paid on reserve balances to help set a floor under interest rates, Mr Bernanke said, and use “reverse-repo” agreements in which it would sell securities from its portfolio with an agreement to buy them back at a later date. It could even simply sell off long-term securities should that prove necessary, he added.
Barney Frank, Democratic chairman of the committee, was satisfied: “I am persuaded by the chairman and others that we are able, in an orderly way, to undo what we had to do so that there will not be that inflationary impact.”
However, Mr Bernanke faced scepticism and some outright criticism from other lawmakers, many of whom have become concerned about the major role the Fed has assumed during the crisis.
Ron Paul, the Texan Republican, said the Fed’s policies had caused the financial crisis and would lead to a weaker dollar, a loss of confidence from foreign governments and ”political turmoil”.
”Doubling the monetary supply didn’t work; quadrupling it won’t either,” he said.
Mr Paul, a long-time critic of the Fed, wants to give Congress oversight of monetary policy in a bill that has gathered the support of more than half the members of the House of Representatives.
Mr Bernanke mounted a defence of the independence of the Fed amid such calls for greater scrutiny. “A perceived loss of monetary policy independence could raise fears about future inflation, leading to higher long-term interest rates and reduced economic and financial stability,” he said.
Gold production is going down and dollar production is going up... isn't there only one thing that can happen? Gold is money.