Daily Digest - March 20

• The Story Of Stuff
• Yuan Poised to Become Reserve Currency, Goldman’s O’Neill Says
• GATA To Speak At UUS CFTC Hearing March 25th
• Dick Bove: Housing Market Will Fall 10%-15% When Fed Stops Subsidizing Home Prices
• Fannie/Freddie/FHA Loan Volume Falling Fast
• New College Graduates To Be Cryogenically Frozen Until Job Market Improves (Humor)
• Advanta Bank, Six Other U.S. Lenders Collapse Amid Bad Loans
• Latvia Government Collapses Amid Economic Crisis
• Bread and Games
• Money Out Of Thin Air: Now Federal Reserve Chairman Ben Bernanke Wants To Eliminate Reserve Requirements Completely?

Economy

The Story Of Stuff (Alan H.)

A brilliant video, free for viewing on the website.

Yuan Poised to Become Reserve Currency, Goldman’s O’Neill Says (mhoop)

The Chinese government will “eventually” allow the yuan, or renminbi, to trade freely on foreign-exchange markets, dropping the system under which it controls its value, O’Neill wrote in an essay that formed part of a report published today for Chatham House, a London-based foreign affairs research organization.

GATA To Speak At UUS CFTC Hearing March 25th (Word document) (Claire H.)

The formal statement Gold Anti-Trust Action Committee Chairman Bill Murphy plans to submit as a witness at the U.S. Commodity Futures Trading Commission's hearing next week on position limits in the precious metals futures and options markets has been posted at GATA's Internet site, complete with footnotes

Dick Bove: Housing Market Will Fall 10%-15% When Fed Stops Subsidizing Home Prices (mhoop)

No one knows what mortgage rates would be if the Fed weren't subsidizing them. No one knows where house prices would be if the Treasury and other government agencies weren't modifying mortgages and trying to bail homeowners out. No one knows what would happen if taxpayers weren't funding tens of billions of dollars of losses at bankrupt Fannie and Freddie to provide yet another housing subsidy.

Fannie/Freddie/FHA Loan Volume Falling Fast (joemanc)

Fannie Mae took a big scissors to its forecast for residential investment (mortgage funding) this quarter. A month ago they thought the it would rise 2.8 percent in Q1, but now they're saying it could drop 17.2 percent. That's some change. On top of that they slashed their forecast for mortgage originations for 2010 to 1.31 trillion from 1.97 trillion in 2009 (a 33 percent plunge!). That forecast is also a drop from their February forecast of 1.34 trillion.

New College Graduates To Be Cryogenically Frozen Until Job Market Improves (Humor) (Nickbert)

When reached for comment, a spokesman for loan provider Sallie Mae said that educational loans taken out by graduates in cryogenic storage would continue to accrue interest indefinitely at 6.5 percent.

Advanta Bank, Six Other U.S. Lenders Collapse Amid Bad Loans (Nickbert)

Advanta Bank Corp., owned by the bankrupt credit-card issuer, was shut by regulators along with three lenders in Georgia as the number of failed banks this year climbed to 37.

Latvia Government Collapses Amid Economic Crisis (Nickbert)

The People's Party, the largest group in a five-party coalition, walked out amid disputes over how to cope with the country's severe problems. Unemployment has now hit 20 per cent and the economy contracted by 18 per cent last year.

Bread and Games (pinecarr)

Ben Bernanke says the Fed didn't know about Lehman's Repo 105 creative accounting. Even though the Fed (the New York Fed under Tim Geithner, to be precise), already alarmed over Bear Stearns' demise, had people, supposedly "experts", inside Lehman's offices, who, again supposedly, had access to all relevant books. Maybe they didn't find the quarterly reports relevant to Lehman's situation? The Fed was not alone: the SEC also had placed a team inside Lehman's organization. And the SEC also claims it had no knowledge of Lehman's repos.

Money Out Of Thin Air: Now Federal Reserve Chairman Ben Bernanke Wants To Eliminate Reserve Requirements Completely? (pinecarr)

If there were no minimum reserve requirements, what kind of chaos would that lead to in our financial system? Not that we are operating with sound money now, but is the solution to have no restrictions at all? Of course not - the truth is that Bernanke is making a mess of the U.S. financial system.

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