From the bullshit detector we find the following in today's headlines:
Home construction jumps 10.5 pct in August- AP
Home construction increased last month and applications for building permits also grew. The gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector.
Clearly the headline is used to deceive. Actual "home" construction grew by only 4%.
Paul Dales, U.S. economist with Capital Economics, said the high number of vacant homes, mounting expectations of renewed price falls and economic constraints on households will continue to weigh on the industry.
"Homebuilding activity remains at an astoundingly weak level," Dales said, adding that construction has to be more than double current levels for the market to be considered healthy.
Nothing has changed...
Ah, the wonders of the rigged Precious Metals markets continues. The Dollar is again weaker today, struggling to keep it's head above 81 on the US Dollar Index. The Euro is up big on the news of successful bond sales in Ireland, the Japanese Yen is up, and the Chinese Yuan is up. Yet the Precious Metals flounder as the LMBA and the CRIMEX print more paper to stifle their rise in price, and protect the Fed ahead of their meaningless interest rate announcement this afternoon.
Certainly Silver is overbought on it's daily chart, but in very short supply. Gold is somewhat less overbought, but in equally short supply... A pause in their advance in price is warranted, but unlikely to result in a "correction". Some consolidation in price appears evident, before prices move higher.
Support in Gold kicks in first at $1268, and $1260 and $1245 below that. Silver is testing support at $20.55 this morning, and has support below here at $20.30 and $20. Both of these precious Metals are in strong bullish posture on their weekly charts and should be bought aggressively at support.
Recession Officially Ended in June 2009- AP
The longest recession the country has endured since World War II ended in June 2009, a group that dates the beginning and end of recessions declared Monday.
Yeah, right... And Santa Claus is real. More bunk released into the headlines in the hopes that voters will bite on President Obama's plea yesterday to follow his path to economic recovery.
Obama defends econ effort, pleads for voters' help
JULIE PACELIZ SIDOTI Associated Press
"Something that took ten years to create is going to take a little more time to solve," Obama said.
"Even though economists may say that the recession officially ended last year, obviously for the millions of people who are still out of work, people who have seen their home values decline, people who are struggling to pay the bills day to day, it's still very real for them," Obama said.
The group assembled for the session included large and small business owners, teachers, students and unemployed people.
A woman who said she was the chief financial officer for a veterans' service organization told Obama, "I'm exhausted of defending you, defending your administration, defending the mantle of change that I voted for, and deeply disappointed with where we are right now."
"Is this my new reality?" she asked.
Obama told her, "My goal is not to convince you that everything is where it ought to be. It's not." Still, Obama said that things were "moving in the right direction" under policies he has put in place.
Republican Party chief Michael Steele panned Obama's TV performance. "Once again, President Obama trotted out the same old worn-out reassurances on the economy, but Americans are still waiting for the promised recovery that never arrived," Steele said.
A 30-year old law school graduate who said he couldn't find a job and couldn't even make interest payments on his student loans told Obama he was inspired by Obama's 2008 campaign but "that inspiration is dying away."
"The most important thing we can do right now is grow our economy," Obama said. "What we can't do is go back to the same old things we were doing."
http://www.newsok.com/obama-defends-econ-effort-pleads-for-voters-help/article/feed/193028?custom_click=headlines_widget
The same old song and dance from a President unqualified to lead a horse to water, let alone a country drying up and blowing away under his stewardship. November can't get here soon enough.
Gold and Silver Are Sounding The Alarm
The Battle for $21 Silver Begins
By James Turk
September 18, 2010 – There is a battle beginning as silver approaches $21, its highest price in 30-years. There is a lot at stake.
Those who are short silver don’t want their losses to become any bigger than they already are. On the other side of the trade, everyone who is long silver wants to see silver appreciate to a fair market value.
This new battle beginning as silver nears $21 is no different than those that have been fought many times over the past decade. When a resistance level is reached, the shorts have repeatedly ‘circled the wagons’ in an attempt to keep silver from climbing higher. They will probably do it again.
Nevertheless, given that silver has risen from $4.03 early this decade to Friday’s close of $20.79, it is obvious that the shorts have not been successful over the long-term. But market battles are fought day-to-day and even hour-to-hour. Plenty can happen in the short-term to cause one to take their eye off-the-ball, but don’t let it happen. Instead always focus on the long-term...
http://www.fgmr.com/battle-for-usd-21-silver-begins.html
Gold Market Update[SMART READ]
By: Clive Maund
In recent days many commentators proclaimed that gold and silver have "broken out", but THIS IS NOT TRUE, so what is the current situation?
In the last update we looked at both the bullish and bearish case for gold and silver, what you might otherwise call the best and worst case scenarios. Some interpreted this as fence sitting, but it was no such thing - it was dispassionate pragmatic analysis the result of which is that we won't get caught by surprise whatever happens. However, whilst we have defined what will constitute a breakdown and know in advance what action to take should breakdown occur, we are now in the bullish camp and have been buying a range of selected stocks in expectation of an upside breakout which should lead to a powerful broad based advance.
We require 3 conditions to be be met to be sure that we have an upside sector breakout, which are expected to be synchronously fulfilled. First gold has to break out upside from its current potentially bearish Rising Wedge - new highs are NOT GOOD ENOUGH and to claim they are is amateurish. Second, while silver has undeniably broken out upside from a Triangle, IT HAS NOT BROKEN OUT YET TO CLEAR NEW HIGHS. Thirdly, as more ordinary investors are well aware, Precious Metals stocks indices HAVE NOT YET BROKEN OUT to new highs, although there is strong evidence is that they will do before long.
Let's be clear - we are not trying to "rain on anyone's parade" by making the above observations, we are simply "keeping one foot on the ground". Our outlook for the sector is now strongly bullish for the reasons which we will now set out. Fundamentally the outlook for gold and silver is rosy. There is an unstoppable global trend of competitive currency devaluation underway which is driven by balance of trade considerations and given that governments have this powerful core motivation to devalue their currencies, what better way to do it than simply to print more of the stuff, which means that you can avoid liquidity problems within your economy and placate grumbling workers unsettled by rising inflation by giving them pay rises, using massaged statistics to make sure that their pay rises don't keep up with inflation. The US is the "maestro" of both money creation, which is now absolutely necessary to service runaway debt and government spending, and fiddling statistics, like the CPI and the unemployment figures, the former to cheat people on fixed incomes out of fair cost of living increases and the latter to make things look better than they really are.
http://news.goldseek.com/CliveMaund/1284944400.php
Jim Sinclair’s Commentary
Three solid fellows present their view on the future of the price of Gold.
Alf Field: $4,250 – $10,000 Click here to read the article…
Harry Schultz: $6,000 Click here to read the article…
Martin Armstrong: $5,000 Click here to read the article…
Tuesday, September 21, 2010
Monday, September 20, 2010
US FED POISED TO DESTROY US ECONOMY
An historic week in Precious Metals is now behind us. Gold closed the week at a new ALL-TIME high. Silver closed the week at a 30 year high. Fantastic! Higher prices ahead are built into these markets now. How difficult the road to achieve them remains to be seen. The Rat Bastids of the CRIMEX will not go down without a fight, and a tsunami of paper Precious Metals will rise to meet overwhelming demand for Gold and Silver bullion.
The more worthless paper these crooks sell in their futile effort to stop the rise in Silver and Gold, the higher their price will ultimately go. Last time I checked, it was against the law to sell something you do not own. But with the entire world financial system, a system based on monopoly money, the rule of law is suspended to protect the lies at it's foundation. Once the cover on this global scam is finally peeled back to reveal the true lies of the global financial system, the Precious Metals will to soar to heights now only dreamed about.
The Rat Bastids have opened the week on the offensive ahead of tomorrow's Fed meeting. Speculation that the Fed will announce more Quantitative Easing measures at their meeting this month seem misplaced. Though it would appear as inevitable that the Fed is going to have to step up their new role as buyer of last resort sooner rather than later.
The Federal Reserve’s Next Moves …
by Larry Edelson
Make no mistake about it: In the weeks and months ahead, you are going to see Fed Chief Ben Bernanke pull out nuclear-sized bombs to try and destroy the debt crisis that is affecting the world.
But wait you say, hasn’t the Fed already shot all of its bullets?
My answer: No, it hasn’t. The Federal Reserve has far more fire power than almost anyone believes. Mind you: It will not alter the fate and destiny of the economy. But it will alter the way the economy goes down in flames.
Fed Weapon #1: The Fed can print as much money as it wants. There is no limit to how much it can print. Everyone knows that, but few believe the Fed will print unlimited amounts of money.
Don’t kid yourself. There is no legal or political body the Fed has to answer to. So it can and will print fiat money ad infinitum.
Fed Weapon #2: The Fed could also take some of that money and begin buying stocks and real estate for its own account. There is nothing to prevent the Fed from doing that either.
It could buy a trillion dollars or more of stocks and real estate. It can park those assets on its balance sheet, for as long as it wants. Investors who sell their stocks and real estate to the Fed effectively receive money that previously did not exist.
Moreover, the Fed could even set the prices at which it will buy stocks and real estate, at levels well above current market values. It could, in essence, buy anything it wants, at any price it wants, park the assets on its balance sheet, and wait for as long as it needs to before putting the assets back up for sale.
Mind you, the economy would still continue to sink in the interim. But the Fed is hoping that by buying time, the economy would eventually rebound enough for things “to get back to normal” — so to speak — and then, as I noted, it would unload its assets and drain money back out of the system.
Fed Weapon #3: The Fed could lower the bank reserve requirement — which is currently 10% for all bank liabilities over $55.2 million — all the way down to zero.
In effect, it could tell banks that for every $10 of customer deposits it holds, not one penny has to be parked at the Fed anymore as collateral.
While that does not guarantee that banks will start to aggressively lend again, it does add further liquidity to the system.
But that’s not all …
Fed Weapon #4: The Fed could penalize banks for not lending to the economy! Yes, that’s right. For instance, right now the Fed pays banks 0.25% on the excess funds they park with the Federal Reserve, funds that are above and beyond what is required to be held at the Fed as reserves.
But as we all know, banks have not been in a lending frame of mind. For a variety of reasons. One of those reasons however, is this current policy of paying banks a risk-free 0.25% on their excess funds that they’re keeping with the Fed.
So instead, the Fed could simply do a 180 — and tell banks that it is no longer going to pay them any interest on their excess reserve funds.
The Fed can even go a step further, and effectively tax or penalize banks for not making loans out to the general economy.
Fed Weapon #5: The Fed can engineer a “default on the sly” on all government obligations, effectively inflating away America’s debts, by DEVALUING THE U.S. DOLLAR, forcibly and clandestinely.
Of course, the consequences of the four preceding strategies will likely devalue the dollar.
But lest the value of the dollar does not fall enough, the Fed can print up ever more dollars, sell them in the open market … buy other currencies … and put much more pressure on China to revalue its currency higher (and the dollar lower).
In short, the Fed can do whatever it wants, whenever it wants. It does have plenty of ammo left.
http://www.uncommonwisdomdaily.com/the-federal-reserve%e2%80%99s-next-moves-%e2%80%a6-10064?FIELD9=2
Last week we witnessed a massive intervention in the currency markets by the Bank of Japan in an effort to take some froth out of the Japanese Yen. In truth, this intervention was more about propping up the US Dollar than it was capping the Yen. Humorously, the Dollar has as of today, less than one week later, given back all of it's gains that resulted from the Bank of Japan Yen intervention. There was a strong bid in the Dollar as US markets opened this morning, but this would appear to be Fed rigging ahead of their revered meeting this week.
The Dollar is standing on one leg. Central banks from around the world are now lining up to prop the Dollar up, and weaken their local currencies in the process, in a race to the bottom of the currency barrel. The theory being that a weaker local currency will encourage more exports. It is becoming clearer by the day that the US Dollar is a pariah holding back true global growth, and it must eventually be eliminated [along with the US Federal Reserve] if the World is to ever dig itself out from under this global financial crisis whose root cause is the debt burden represented by the US Dollar.
Colombia central bank buys dollars, peso falls
By Jack Kimball and Nelson Bocanegra
BOGOTA, Sept 15 (Reuters) - Colombia's central bank on Wednesday started purchasing what it said would be at least $20 million daily for the next four months to help ease the rise of its currency, becoming the latest Latin American economy to intervene in its market.
The move left the door open for more measures to curb the peso's COP=RR appreciation and followed intervention by Brazil to ease the real's climb and Peru's buying dollars to curb the sol.
"The Board of Directors of the Central Bank decided to resume the accumulation of international reserves. To do this, it will purchase daily at least $20 million through competitive auctions for at least four months counting from (Wednesday)," the bank said in a statement on its website.
The peso, one of the region's strongest performing currencies this year, fell 1.43 percent to a low of 1,817 pesos per dollar from Tuesday's close after the bank's announcement. The local unit closed down 0.89 percent at 1,807.1 on Wednesday.
The Colombian peso has soared 12.5 percent against the dollar this year, the sol PEN=PE has risen more than 3 percent and the real has rallied 4.5 percent since June. Brazil's currency weakened 1 percent on Wednesday after the government threatened to step up intervention.
Latin America's emerging market economies are struggling with appreciation. Regional powerhouse Brazil is aggressively buying dollars, Peru is tightening deposit requirements and Chile has warned it may also have to intervene.
Peru's central bank purchased $21 million on Wednesday, while on the other side of the world, Japan sold yen to battle an appreciating currency, which risks reducing demand for exports and damaging growth.
The peso's appreciation hurts Colombian exporters, who receive earnings in dollars but pay costs in pesos.
http://www.reuters.com/article/idUSN1514548320100915
“Currency warfare is the most destructive form of economic warfare."
-Harry Dexter White, US Representative to Bretton Woods, 1944
Currency wars set to break out as volatility grows
By David Uren
GET set for an outbreak of currency wars with the potential to shake global confidence as markets move towards the volatile October period.
The long-standing debate between China and the US is again at a flashpoint, while Japan is aggrieved that China's central bank is pushing up the value of the yen.
The investors' flight from the euro may also gather speed under renewed concerns over the sovereign risk.
The Australian dollar, which is being pushed higher as investors assess the strength of Australia's economy and the prospect of further rate rises, is set to be buffeted by changing market assessments of risk.
A confluence of international meetings over the next six weeks will elevate market concerns into the political domain.
The International Monetary Fund is meeting in Washington early next month, followed by the G20 finance ministers and central bank governors later in the month, and the G20 leaders' summit in Korea in early November.
http://www.theaustralian.com.au/business/opinion/currency-wars-set-to-break-out/story-e6frg9qo-1225919825846
The case for owning physical Precious Metals could not be any clearer now. As global central banks cut off their noses to spite their faces, Gold and Silver will only climb higher as locals seek to protect their wealth from a global currency debasement. Next stop, global Hyperinflation as all confidence in fiat currencies is lost.
How Hyperinflation Will Happen[MUST READ]
by Gonzalo Lira
Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency.
Right now, the U.S. government is indebted to about 100% of GDP, with a yearly fiscal deficit of about 10% of GDP, and no end in sight. For its part, the Federal Reserve is purchasing Treasuries, in order to finance the fiscal shortfall, both directly (the recently unveiled QE-lite) and indirectly (through the Too Big To Fail banks). The Fed is satisfying two objectives: One, supporting the government in its efforts to maintain aggregate demand levels, and two, supporting asset prices, and thereby prevent further deflationary erosion. The Fed is calculating that either path—increase in aggregate demand levels or increase in aggregate asset values—leads to the same thing: A recovery in the economy.
This recovery is not going to happen—that’s the news we’ve been getting as of late. Amid all this hopeful talk about “avoiding a double-dip”, it turns out that we didn’t avoid a double-dip—we never really managed to claw our way out of the first dip. No matter all the stimulus, no matter all the alphabet-soup liquidity windows over the past 2 years, the inescapable fact is that the economy has been—and is headed—down.
But both the Federal government and the Federal Reserve are hell-bent on using the same old tired tools to “fix the economy”—stimulus on the one hand, liquidity injections on the other. (See my discussion of The Deficit here.)
It’s those very fixes that are pulling us closer to the edge. Why? Because the economy is in no better shape than it was in September 2008—and both the Federal Reserve and the Federal government have shot their wad. They got nothin’ left, after trillions in stimulus and trillions more in balance sheet expansion—
—but they have accomplished one thing: They have undermined Treasuries. These policies have turned Treasuries into the spit-and-baling wire of the U.S. financial system—they are literally the only things holding the whole economy together.
In other words, Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.
So this is how hyperinflation will happen:
http://www.zerohedge.com/article/guest-post-how-hyperinflation-will-happen
Japan, and much of the "emerging" global economies want a stronger Dollar to improve their exports and in turn their local economies. Unfortunately, the US, though they don't come right out and say it, want a weaker Dollar to improve exports of US products and improve the US economy.
"You can't have your cake and eat it too."
The fate of the US Dollar clearly hinges on the Chinese and their management of the Yuan. The Chinese are coming under increasing pressure from the US to allow their currency to appreciate. It must certainly infuriate the Chinese that Japan is allowed to "intervene" in the currency markets to weaken the Yen, but the Chinese are to be considered "currency manipulators" because they chose to purposefully keep their currency weak. China will, in time, allow the Yuan to rise versus the Dollar. It is in their best interests in the long term, and considering the rising inflation on the mainland, it will become imperative that the Yuan rise. In fact, the Chinese Yuan is rising presently.
Following recent announcement that inflation in China is escalating [+4.2% June to July] the Yuan has seen steady appreciation the last three weeks and again this morning touched a new 17 year high versus the US Dollar.
American politicians, hardly knowledgeable of the ebb and flow of global currency, have convinced themselves that a rise in the Chinese Yuan will translate into a momentous rise in manufacturing jobs here in the US. This is a pipe dream... Even if it were to come to pass, it would take years for this "transformation" in manufacturing jobs to occur. A rise in the Yuan will in fact put immense pressure on the US Dollar.
The US Dollar that is presently the World's "global currency". A falling US Dollar will create a momentous rise in inflation quicker than it will create any jobs. In fact, it is entirely possible that a falling Dollar will only exacerbate an already decimated US jobs market. US Politicians should be careful of what the wish for. A nightmare scenario might develop because of their impudence and impatience. Their "dreams" of "creating" 500,000 new jobs overnight dashed upon the rocks of a rising tide of inflation, or worse, a tsunami of US Government induced Hyperinflation.
US-China clash over yuan escalates, risking superpower stand-off
By Ambrose Evans-Pritchard
US Treasury Secretary Tim Geithner has issued his harshest attack to date on China’s currency policy, the latest move in an escalating superpower clash across the gamut of commercial and strategic relations.
We are very concerned about the negative impact of (China’s) policies on our economic interests,” he told a Congressional hearing on Beijing’s use of exchange intervention for trade advantage.
“The pace of appreciation has been to slow. The undervalued renminbi helps China’s export sector. It encourages out-sourcing of production and jobs from the United States. By continuing a rigid exchange rate, China is impeding the adjustments needed to secure sustainable global growth,” he said.
The tough talk comes amid concerns that the global currency order is unravelling, with countries breaking ranks in a `beggar-thy-neigbour’ use of 1930s-style devaluation to help exporters and shore up their economies.
Japan became the latest country to intervene this week, carrying out massive dollar and euro purchases to weaken the yen. Sander Levin, chair of the US House Ways and Means Committee, called the move “deeply disturbing”, chiefly because it muddies the political water and lets China off the hook.
Mr Geithner’s ire follows a move by US trade chief Ron Kirk to file two cases against China at the World Trade Organization, alleging bias against US steel producers and credit card companies. Mr Kirk said he was “fighting for the American jobs threatened by China’s actions.”
Trade expert Gary Hufbauer from Washington’s Peterson Institute said the tensions risk triggering a dangerous clash.” The US and China are now adversaries, not enemies, but if the Obama administration pushes this trade agenda the way it is now doing, we will end up antagonists,” he said.
Professor Hufbauer said the White House has lost faith in “quiet diplomacy”, irked that the yuan has hardly moved since Beijing ended the dollar peg in June. This is spiced by populist fever before the mid-term elections in November.
“The US trade deficit with China is widening, yet the Chinese are still accumulating reserves at remarkable rate, beyond their needs. They know that growth in China’s coastal provinces is their passport to political stability, but this is incompatible with US political stability,” he said.
“We have grievances piling up in tyres, aluminium, paper, and steel, and it has all come to a head. Of course, China is getting an unfair share of the blame from this anti-globalisation mood on Capitol Hill. The truth is that when the US curbed imports of Chinese tyres, sales went to Brazil and Mexico instead, not to US producers,” he said.
Jiang Yu from China’s foreign ministry echoed the point. “Appreciation of the renminbi will not resolve the deficit between the US and China and will not resolve US domestic unemployment. Pressure will not only fail to solve the problems; it could have the opposite effect,” she said..
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8007629/US-China-clash-over-yuan-escalates-risking-superpower-stand-off.html
Congress wants tough stance with China over trade
Martin Crutsinger, AP Economics Writer
WASHINGTON (AP) -- Congress is pressuring the Obama administration to take a tougher stand with China over trade practices that they say have cost Americans millions of jobs.
Democrats and Republicans on committees in the Senate and House told Treasury Secretary Timothy Geithner on Thursday that China is manipulating its currency. They said that and other practices have led to a huge trade gap between the two countries and job losses in the United States.
Geithner said the administration was ready to work with Congress on an effective strategy. But he cautioned that the government should not take any action that would wind up hurting U.S. companies and businesses by triggering retaliation by China, an important trading partner.
Members of the Senate Banking Committee said they were frustrated because the administration failed to cite China as a currency manipulator in its latest report. Instead, the White House took the same position as previous administrations in simply urging China to move faster to allow its currency to rise in value against the dollar.
American manufacturers contend that the Chinese currency is undervalued by as much as 40 percent. That has given Chinese companies a tremendous competitive advantage -- making U.S. products more expensive in China and Chinese goods cheaper in the United States.
Under a 1988 law, the Treasury Department is required to submit a currency report to Congress every six months and cite any country that it finds is manipulating its currency to gain trade advantages.
A number of senators complained that the Obama administration, like previous administrations, failed to identify China as a currency manipulator.
"At a time when the U.S. economy is trying to pick itself up off the ground, China's currency manipulation is like a boot to the throat of our recovery," Sen. Charles Schumer, D-N.Y., said. "This administration refuses to try and take that boot off our neck."
http://finance.yahoo.com/news/Congress-wants-tough-stance-apf-950590414.html?x=0&sec=topStories&pos=7&asset=&ccode=
The ONLY boot on the throat of the US Economy is the US Dollar itself. And the foot inside that boot belongs to the crooked for profit bank the US Federal Reserve. If the US Congress are indeed serious about lifting the boot off the "throat of or recovery" they must get truly serious about breaking the shackles of the Constitutionally ILLEGAL US Federal Reserve. The US Congress' continued reluctance to pull back the curtain on this 100 year old fraud is a bigger threat to US soverignty and it's economic base than the Chinese ever could or would be. It is high time the US Congress admit the failure of their Creature From Jekyll Island and restore real constitutional money to the core of our financial system.
The more worthless paper these crooks sell in their futile effort to stop the rise in Silver and Gold, the higher their price will ultimately go. Last time I checked, it was against the law to sell something you do not own. But with the entire world financial system, a system based on monopoly money, the rule of law is suspended to protect the lies at it's foundation. Once the cover on this global scam is finally peeled back to reveal the true lies of the global financial system, the Precious Metals will to soar to heights now only dreamed about.
The Rat Bastids have opened the week on the offensive ahead of tomorrow's Fed meeting. Speculation that the Fed will announce more Quantitative Easing measures at their meeting this month seem misplaced. Though it would appear as inevitable that the Fed is going to have to step up their new role as buyer of last resort sooner rather than later.
The Federal Reserve’s Next Moves …
by Larry Edelson
Make no mistake about it: In the weeks and months ahead, you are going to see Fed Chief Ben Bernanke pull out nuclear-sized bombs to try and destroy the debt crisis that is affecting the world.
But wait you say, hasn’t the Fed already shot all of its bullets?
My answer: No, it hasn’t. The Federal Reserve has far more fire power than almost anyone believes. Mind you: It will not alter the fate and destiny of the economy. But it will alter the way the economy goes down in flames.
Fed Weapon #1: The Fed can print as much money as it wants. There is no limit to how much it can print. Everyone knows that, but few believe the Fed will print unlimited amounts of money.
Don’t kid yourself. There is no legal or political body the Fed has to answer to. So it can and will print fiat money ad infinitum.
Fed Weapon #2: The Fed could also take some of that money and begin buying stocks and real estate for its own account. There is nothing to prevent the Fed from doing that either.
It could buy a trillion dollars or more of stocks and real estate. It can park those assets on its balance sheet, for as long as it wants. Investors who sell their stocks and real estate to the Fed effectively receive money that previously did not exist.
Moreover, the Fed could even set the prices at which it will buy stocks and real estate, at levels well above current market values. It could, in essence, buy anything it wants, at any price it wants, park the assets on its balance sheet, and wait for as long as it needs to before putting the assets back up for sale.
Mind you, the economy would still continue to sink in the interim. But the Fed is hoping that by buying time, the economy would eventually rebound enough for things “to get back to normal” — so to speak — and then, as I noted, it would unload its assets and drain money back out of the system.
Fed Weapon #3: The Fed could lower the bank reserve requirement — which is currently 10% for all bank liabilities over $55.2 million — all the way down to zero.
In effect, it could tell banks that for every $10 of customer deposits it holds, not one penny has to be parked at the Fed anymore as collateral.
While that does not guarantee that banks will start to aggressively lend again, it does add further liquidity to the system.
But that’s not all …
Fed Weapon #4: The Fed could penalize banks for not lending to the economy! Yes, that’s right. For instance, right now the Fed pays banks 0.25% on the excess funds they park with the Federal Reserve, funds that are above and beyond what is required to be held at the Fed as reserves.
But as we all know, banks have not been in a lending frame of mind. For a variety of reasons. One of those reasons however, is this current policy of paying banks a risk-free 0.25% on their excess funds that they’re keeping with the Fed.
So instead, the Fed could simply do a 180 — and tell banks that it is no longer going to pay them any interest on their excess reserve funds.
The Fed can even go a step further, and effectively tax or penalize banks for not making loans out to the general economy.
Fed Weapon #5: The Fed can engineer a “default on the sly” on all government obligations, effectively inflating away America’s debts, by DEVALUING THE U.S. DOLLAR, forcibly and clandestinely.
Of course, the consequences of the four preceding strategies will likely devalue the dollar.
But lest the value of the dollar does not fall enough, the Fed can print up ever more dollars, sell them in the open market … buy other currencies … and put much more pressure on China to revalue its currency higher (and the dollar lower).
In short, the Fed can do whatever it wants, whenever it wants. It does have plenty of ammo left.
http://www.uncommonwisdomdaily.com/the-federal-reserve%e2%80%99s-next-moves-%e2%80%a6-10064?FIELD9=2
Last week we witnessed a massive intervention in the currency markets by the Bank of Japan in an effort to take some froth out of the Japanese Yen. In truth, this intervention was more about propping up the US Dollar than it was capping the Yen. Humorously, the Dollar has as of today, less than one week later, given back all of it's gains that resulted from the Bank of Japan Yen intervention. There was a strong bid in the Dollar as US markets opened this morning, but this would appear to be Fed rigging ahead of their revered meeting this week.
The Dollar is standing on one leg. Central banks from around the world are now lining up to prop the Dollar up, and weaken their local currencies in the process, in a race to the bottom of the currency barrel. The theory being that a weaker local currency will encourage more exports. It is becoming clearer by the day that the US Dollar is a pariah holding back true global growth, and it must eventually be eliminated [along with the US Federal Reserve] if the World is to ever dig itself out from under this global financial crisis whose root cause is the debt burden represented by the US Dollar.
Colombia central bank buys dollars, peso falls
By Jack Kimball and Nelson Bocanegra
BOGOTA, Sept 15 (Reuters) - Colombia's central bank on Wednesday started purchasing what it said would be at least $20 million daily for the next four months to help ease the rise of its currency, becoming the latest Latin American economy to intervene in its market.
The move left the door open for more measures to curb the peso's COP=RR appreciation and followed intervention by Brazil to ease the real's climb and Peru's buying dollars to curb the sol.
"The Board of Directors of the Central Bank decided to resume the accumulation of international reserves. To do this, it will purchase daily at least $20 million through competitive auctions for at least four months counting from (Wednesday)," the bank said in a statement on its website.
The peso, one of the region's strongest performing currencies this year, fell 1.43 percent to a low of 1,817 pesos per dollar from Tuesday's close after the bank's announcement. The local unit closed down 0.89 percent at 1,807.1 on Wednesday.
The Colombian peso has soared 12.5 percent against the dollar this year, the sol PEN=PE has risen more than 3 percent and the real has rallied 4.5 percent since June. Brazil's currency weakened 1 percent on Wednesday after the government threatened to step up intervention.
Latin America's emerging market economies are struggling with appreciation. Regional powerhouse Brazil is aggressively buying dollars, Peru is tightening deposit requirements and Chile has warned it may also have to intervene.
Peru's central bank purchased $21 million on Wednesday, while on the other side of the world, Japan sold yen to battle an appreciating currency, which risks reducing demand for exports and damaging growth.
The peso's appreciation hurts Colombian exporters, who receive earnings in dollars but pay costs in pesos.
http://www.reuters.com/article/idUSN1514548320100915
“Currency warfare is the most destructive form of economic warfare."
-Harry Dexter White, US Representative to Bretton Woods, 1944
Currency wars set to break out as volatility grows
By David Uren
GET set for an outbreak of currency wars with the potential to shake global confidence as markets move towards the volatile October period.
The long-standing debate between China and the US is again at a flashpoint, while Japan is aggrieved that China's central bank is pushing up the value of the yen.
The investors' flight from the euro may also gather speed under renewed concerns over the sovereign risk.
The Australian dollar, which is being pushed higher as investors assess the strength of Australia's economy and the prospect of further rate rises, is set to be buffeted by changing market assessments of risk.
A confluence of international meetings over the next six weeks will elevate market concerns into the political domain.
The International Monetary Fund is meeting in Washington early next month, followed by the G20 finance ministers and central bank governors later in the month, and the G20 leaders' summit in Korea in early November.
http://www.theaustralian.com.au/business/opinion/currency-wars-set-to-break-out/story-e6frg9qo-1225919825846
The case for owning physical Precious Metals could not be any clearer now. As global central banks cut off their noses to spite their faces, Gold and Silver will only climb higher as locals seek to protect their wealth from a global currency debasement. Next stop, global Hyperinflation as all confidence in fiat currencies is lost.
How Hyperinflation Will Happen[MUST READ]
by Gonzalo Lira
Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency.
Right now, the U.S. government is indebted to about 100% of GDP, with a yearly fiscal deficit of about 10% of GDP, and no end in sight. For its part, the Federal Reserve is purchasing Treasuries, in order to finance the fiscal shortfall, both directly (the recently unveiled QE-lite) and indirectly (through the Too Big To Fail banks). The Fed is satisfying two objectives: One, supporting the government in its efforts to maintain aggregate demand levels, and two, supporting asset prices, and thereby prevent further deflationary erosion. The Fed is calculating that either path—increase in aggregate demand levels or increase in aggregate asset values—leads to the same thing: A recovery in the economy.
This recovery is not going to happen—that’s the news we’ve been getting as of late. Amid all this hopeful talk about “avoiding a double-dip”, it turns out that we didn’t avoid a double-dip—we never really managed to claw our way out of the first dip. No matter all the stimulus, no matter all the alphabet-soup liquidity windows over the past 2 years, the inescapable fact is that the economy has been—and is headed—down.
But both the Federal government and the Federal Reserve are hell-bent on using the same old tired tools to “fix the economy”—stimulus on the one hand, liquidity injections on the other. (See my discussion of The Deficit here.)
It’s those very fixes that are pulling us closer to the edge. Why? Because the economy is in no better shape than it was in September 2008—and both the Federal Reserve and the Federal government have shot their wad. They got nothin’ left, after trillions in stimulus and trillions more in balance sheet expansion—
—but they have accomplished one thing: They have undermined Treasuries. These policies have turned Treasuries into the spit-and-baling wire of the U.S. financial system—they are literally the only things holding the whole economy together.
In other words, Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.
So this is how hyperinflation will happen:
http://www.zerohedge.com/article/guest-post-how-hyperinflation-will-happen
Japan, and much of the "emerging" global economies want a stronger Dollar to improve their exports and in turn their local economies. Unfortunately, the US, though they don't come right out and say it, want a weaker Dollar to improve exports of US products and improve the US economy.
"You can't have your cake and eat it too."
The fate of the US Dollar clearly hinges on the Chinese and their management of the Yuan. The Chinese are coming under increasing pressure from the US to allow their currency to appreciate. It must certainly infuriate the Chinese that Japan is allowed to "intervene" in the currency markets to weaken the Yen, but the Chinese are to be considered "currency manipulators" because they chose to purposefully keep their currency weak. China will, in time, allow the Yuan to rise versus the Dollar. It is in their best interests in the long term, and considering the rising inflation on the mainland, it will become imperative that the Yuan rise. In fact, the Chinese Yuan is rising presently.
Following recent announcement that inflation in China is escalating [+4.2% June to July] the Yuan has seen steady appreciation the last three weeks and again this morning touched a new 17 year high versus the US Dollar.
American politicians, hardly knowledgeable of the ebb and flow of global currency, have convinced themselves that a rise in the Chinese Yuan will translate into a momentous rise in manufacturing jobs here in the US. This is a pipe dream... Even if it were to come to pass, it would take years for this "transformation" in manufacturing jobs to occur. A rise in the Yuan will in fact put immense pressure on the US Dollar.
The US Dollar that is presently the World's "global currency". A falling US Dollar will create a momentous rise in inflation quicker than it will create any jobs. In fact, it is entirely possible that a falling Dollar will only exacerbate an already decimated US jobs market. US Politicians should be careful of what the wish for. A nightmare scenario might develop because of their impudence and impatience. Their "dreams" of "creating" 500,000 new jobs overnight dashed upon the rocks of a rising tide of inflation, or worse, a tsunami of US Government induced Hyperinflation.
US-China clash over yuan escalates, risking superpower stand-off
By Ambrose Evans-Pritchard
US Treasury Secretary Tim Geithner has issued his harshest attack to date on China’s currency policy, the latest move in an escalating superpower clash across the gamut of commercial and strategic relations.
We are very concerned about the negative impact of (China’s) policies on our economic interests,” he told a Congressional hearing on Beijing’s use of exchange intervention for trade advantage.
“The pace of appreciation has been to slow. The undervalued renminbi helps China’s export sector. It encourages out-sourcing of production and jobs from the United States. By continuing a rigid exchange rate, China is impeding the adjustments needed to secure sustainable global growth,” he said.
The tough talk comes amid concerns that the global currency order is unravelling, with countries breaking ranks in a `beggar-thy-neigbour’ use of 1930s-style devaluation to help exporters and shore up their economies.
Japan became the latest country to intervene this week, carrying out massive dollar and euro purchases to weaken the yen. Sander Levin, chair of the US House Ways and Means Committee, called the move “deeply disturbing”, chiefly because it muddies the political water and lets China off the hook.
Mr Geithner’s ire follows a move by US trade chief Ron Kirk to file two cases against China at the World Trade Organization, alleging bias against US steel producers and credit card companies. Mr Kirk said he was “fighting for the American jobs threatened by China’s actions.”
Trade expert Gary Hufbauer from Washington’s Peterson Institute said the tensions risk triggering a dangerous clash.” The US and China are now adversaries, not enemies, but if the Obama administration pushes this trade agenda the way it is now doing, we will end up antagonists,” he said.
Professor Hufbauer said the White House has lost faith in “quiet diplomacy”, irked that the yuan has hardly moved since Beijing ended the dollar peg in June. This is spiced by populist fever before the mid-term elections in November.
“The US trade deficit with China is widening, yet the Chinese are still accumulating reserves at remarkable rate, beyond their needs. They know that growth in China’s coastal provinces is their passport to political stability, but this is incompatible with US political stability,” he said.
“We have grievances piling up in tyres, aluminium, paper, and steel, and it has all come to a head. Of course, China is getting an unfair share of the blame from this anti-globalisation mood on Capitol Hill. The truth is that when the US curbed imports of Chinese tyres, sales went to Brazil and Mexico instead, not to US producers,” he said.
Jiang Yu from China’s foreign ministry echoed the point. “Appreciation of the renminbi will not resolve the deficit between the US and China and will not resolve US domestic unemployment. Pressure will not only fail to solve the problems; it could have the opposite effect,” she said..
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8007629/US-China-clash-over-yuan-escalates-risking-superpower-stand-off.html
Congress wants tough stance with China over trade
Martin Crutsinger, AP Economics Writer
WASHINGTON (AP) -- Congress is pressuring the Obama administration to take a tougher stand with China over trade practices that they say have cost Americans millions of jobs.
Democrats and Republicans on committees in the Senate and House told Treasury Secretary Timothy Geithner on Thursday that China is manipulating its currency. They said that and other practices have led to a huge trade gap between the two countries and job losses in the United States.
Geithner said the administration was ready to work with Congress on an effective strategy. But he cautioned that the government should not take any action that would wind up hurting U.S. companies and businesses by triggering retaliation by China, an important trading partner.
Members of the Senate Banking Committee said they were frustrated because the administration failed to cite China as a currency manipulator in its latest report. Instead, the White House took the same position as previous administrations in simply urging China to move faster to allow its currency to rise in value against the dollar.
American manufacturers contend that the Chinese currency is undervalued by as much as 40 percent. That has given Chinese companies a tremendous competitive advantage -- making U.S. products more expensive in China and Chinese goods cheaper in the United States.
Under a 1988 law, the Treasury Department is required to submit a currency report to Congress every six months and cite any country that it finds is manipulating its currency to gain trade advantages.
A number of senators complained that the Obama administration, like previous administrations, failed to identify China as a currency manipulator.
"At a time when the U.S. economy is trying to pick itself up off the ground, China's currency manipulation is like a boot to the throat of our recovery," Sen. Charles Schumer, D-N.Y., said. "This administration refuses to try and take that boot off our neck."
http://finance.yahoo.com/news/Congress-wants-tough-stance-apf-950590414.html?x=0&sec=topStories&pos=7&asset=&ccode=
The ONLY boot on the throat of the US Economy is the US Dollar itself. And the foot inside that boot belongs to the crooked for profit bank the US Federal Reserve. If the US Congress are indeed serious about lifting the boot off the "throat of or recovery" they must get truly serious about breaking the shackles of the Constitutionally ILLEGAL US Federal Reserve. The US Congress' continued reluctance to pull back the curtain on this 100 year old fraud is a bigger threat to US soverignty and it's economic base than the Chinese ever could or would be. It is high time the US Congress admit the failure of their Creature From Jekyll Island and restore real constitutional money to the core of our financial system.
Wednesday, September 15, 2010
Currency Wars Move Front And Center
“What we see here is one of the greatest, least loved, and least recognized primary bull markets in history…. This great gold bull market is something that one sees maybe once or twice in a lifetime.”
- Richard Russell, September 2010
An apparent short squeeze in the Precious Metals have left our CRIMEX Rat Bastids gasping for air as the US Dollar tumbled below it's 200 day moving average yesterday. Soft support was found at 81 on the USDX, giving the Rat Bastids small comfort.
Were it not for a timely intervention in the Yen by Bank of Japan officials last night, the Dollar would very likely be staring at the all important 80 level on the USDX this afternoon given today's grossly Dollar negative economic data.
Understand, for the Bank Of Japan to intervene on the Yen's behalf, they must sell their own currency, and then buy US Dollars. Fat chance that is going to solve anything long term. If anything it should create demand for Gold in Japan as their currency weakens. It is unlikely that the Bank of Japan pursues this intervention for any length of time. Today's action was most likely more about slowing the rise in the Yen, than it is about taking it down. It would appear to be more than a coincidence that the Bank of Japan intervenes in the Yen just as the Dollar is about to fall off a cliff.
Today's timeline of currency intervention in the Yen coupled with the Dollar negative economic numbers out today clearly lead one to believe that the Dollar is destined to move lower soon, and the Precious Metals much higher. However, a pause in the rise of Precious Metals and the fall of the Dollar is warranted here if for any other reason than to just let the dust settle on this Bank of Japan salvo thrown at the Currency Markets. The Currency Wars are now front and center in the Global Economic Crisis. This is the beginning of the end for funny money.
Japan intervenes to weaken yen
By Lindsay Whipp and Alan Beattie
(FT) -- Tokyo intervened in the currency markets for the first time in more than six years to weaken the yen, after the currency broke through Y83 against the U.S. dollar and threatened exporter profits and business sentiment.
The unilateral intervention on Wednesday morning sent the yen down as much as Y1 within an hour and gave the Nikkei 225 and its exporter constituents a boost. However, the action came at a sensitive time that could cloud the debate over China's control over the renminbi.
Yoshihiko Noda, the finance minister, told reporters that the yen's sharp gains from Tuesday -- following Prime Minister Naoto Kan's victory in his Democratic party's leadership battle -- were "a problem that could not be overlooked," given that the Japanese economy has suffered some difficulties, including its ongoing struggles with deflation.
"In order to restrain excessive moves in the currency market, we earlier carried out currency intervention," Mr Noda said. He added that he was prepared to take further action, including further intervention, if necessary and that overseas authorities had been contacted.
Yen intervention remains a political matter over and above an economic one, and the decision for the government to intervene gives Mr. Kan the opportunity to show leadership, according to traders and analysts. A trader said that the lull after Tuesday's DPJ vote gave the authorities a chance to catch the market by surprise.
The action is being interpreted as what is known as a smoothing operation, which is carried out to flatten sudden moves in the currency, rather than to send the currency to a specific point, according to traders. Yoshito Sengoku, chief cabinet secretary, suggested to reporters that the finance ministry saw levels of Y82 as a line of defense for the economy.
http://edition.cnn.com/2010/BUSINESS/09/15/japan.yen.ft/?hpt=T2
Whether this yen intervention is a stink bomb or a smoke screen won't be know for several days, but it seems clear the Yen's unabated rise over the last two weeks has spooked Japan's manufacturing/export base.
Regardless, the Bank of Japan's Yen intervention "saved" the US Dollar today from a flood of bad economic data:
U.S. Import Prices Rose More Than Forecast in August
By Shobhana Chandra
Sept. 15 (Bloomberg) -- Prices of goods imported into the U.S. rose more than forecast in August as crude oil and food costs jumped, masking contained inflation elsewhere.
The 0.6 percent increase in the import-price index followed a revised 0.1 percent rise in July, Labor Department figures showed today in Washington. The August gain was twice the median estimate in a Bloomberg News survey. Prices excluding petroleum rose 0.2 percent, the first increase since May.
Mounting unemployment is restraining consumer spending, discouraging companies from raising prices in the world’s largest economy even as some commodity costs get a boost from demand in developing markets including China. Subdued inflation is one reason economists project the Federal Reserve will keep the benchmark interest rate close to zero until 2011.
“This weakens the case for deflation, and at the same time inflation isn’t a concern,” said Hugh Johnson, chairman of Albany, New York-based Hugh Johnson Advisors, who accurately forecast the gain in import prices. “The Fed doesn’t need to be in a hurry to move.”
Another report showed manufacturing in the New York region expanded at a slower pace than forecast in September, signaling that factory managers remain concerned about a slowdown in U.S. economic growth.
http://www.businessweek.com/news/2010-09-15/u-s-import-prices-rose-more-than-forecast-in-august.html
NY Manufacturing Expansion Slows
By Kathleen Madigan
New York manufacturing activity is expanding this month but at a slower pace than in August, according to the Federal Reserve Bank of New York’s Empire State Manufacturing Survey released Wednesday. Hiring, however, continued to rebound.
The Empire State’s business-conditions index fell to 4.14 in September from 7.10 in August. Economists had expected a reading of 7.0 for September.
While the top-line index weakened, some subindexes improved. The orders index turned positive, rising to 4.33 from -2.71, and shipments improved to a -0.27 reading from -11.50 in August. The index for employment was positive but little changed, standing at 14.93 in September from 14.29. The inventories index, however, fell to 1.49 from 2.86.
The index of prices paid increased to 22.39 from 20.00 last month, while the index of prices received rose to 1.49 from -2.86. Despite the improvement, businesses have little pricing power in an economy that stalled this summer.
Expectations about economic activity in the New York region continued to deteriorate, the report said. The expectations index fell to 31.34 from 35.71 in August. The report said it was the lowest reading since March 2009. The employment index for the next six months slipped to 16.42 from 20.00.
http://blogs.wsj.com/economics/2010/09/15/ny-manufacturing-expansion-slows/
US industrial production slows in August
By Alan Rappeport in New York
US factory output slowed in August, as carmakers pulled back production after a midsummer surge, draining momentum from the manufacturing sector.
Federal Reserve figures showed on Monday that US industrial production rose 0.2 per cent in August after climbing by a revised 0.6 per cent in July. That was in line with economists’ expectations and left production up 6.2 per cent from a year ago.
Following the initial inventory-led boost for the manufacturing sector, which appears to be drawing to a close, a key element going forward will be whether final demand picks up sufficiently to keep the upward impetus in place,” said Joshua Shapiro, chief US economist at MFR.
Manufacturing production was hit by a 5.2 per cent drop in output of cars and car products. Production of consumer goods was off by 0.4 per cent, as factories made fewer appliances and less furniture and carpeting.
In August, output at mines picked up but weaker production of electricity and natural gas slowed utilities.
These production trends reflect the patterns of final demand growth in the overall economy,” said John Ryding and Conrad DeQuadros, at RDQ Economics. “Going forward, we expect continued growth in manufacturing activity although at a slower pace than we have seen over the past year.”
Meanwhile, capacity utilisation, which measures the percentage of plants in use, rose to 74.7 per cent. Although that is 4.7 percentage points higher than August 2009, it remains almost 6 percentage points below the historical average, suggesting substantial resource slack in the economy.
http://www.ft.com/cms/s/0/f43dae22-c0c9-11df-94f9-00144feab49a.html
Rising import prices IS inflationary --- Dollar negative.
Slowing manufacturing --- Dollar negative.
Slowing industrial production and slack capacity utilization --- Dollar negative.
Bank of Japan buys Dollar to weaken Yen, and protects Dollar from blatantly negative economic data points.
Tomorrow we will get the latest on the US Current Account deficit, Initial Jobless Claims, Producer Prices, and the Treasury International Capital [TIC] Report. The effects on the Dollar could be devastating. Maybe the Bank of japan can bail it out again?
Japan May Sell Yen for Second Day in a Row
By Benzinga.com
Japan may intervene in currency markets for the second day in a row, seeking to protect the yen against volatility and a 15-year high against the dollar.
According to a Bloomberg
report:
Japan yesterday unilaterally sold the yen against the dollar for the first time since 2004. Chief Cabinet Secretary Yoshito Sengoku said the finance ministry "seems to think" 82 yen per dollar to be the line of defense, after it reached 82.88 yesterday. Government officials speaking on condition of anonymity have previously said volatility was a bigger concern than the level. Officials said Japan may continue selling the yen in the US and into today's Tokyo trading if needed.
The intervention has sent the yen tumbling more than 3% against the dollar, to 85.63. The CurrencyShares Japanese Yen Trust (FXY) is down 3%, to $115.60.
"The BOJ will provide abundant liquidity to the financial market by utilizing the funds injected by intervention," Bank of Japan board member Tadao Noda said at a press conference in Shimonoseki yesterday.
Prime Minister Naoto Kan is under increasing pressure to stem the yen's recent strength, as slowing exports could potentially wreck any economic growth.
The yen reached a level against the dollar "we couldn't ignore," Kan told reporters in Tokyo yesterday, adding that he will continue to watch the currency closely.
"In the medium-term it can't change the overall direction" of the yen, Tohru Sasaki, head of Japan rates and foreign-exchange research in Tokyo at JPMorgan Chase, told Bloomberg.
http://www.minyanville.com/businessmarkets/articles/yen-japanese-yen-yen-exchange-rate/9/15/2010/id/30105?camp=syndication&medium=portals&from=yahoo
This Yen intervention smells more like a US Dollar rescue than a play to protect Japanese exporters, does it not?
Japan can intervene [re: manipulate] in it's currency, but China can not?
China Currency Policy Prompts U.S. Lawmaker Ire, Disagreement on Remedies
By Mark Drajem
U.S. lawmakers faulted China’s currency policy as predatory as they disagreed on the need for legislation that would punish China for keeping its currency undervalued.
Representative Tim Ryan, an Ohio Democrat and co-sponsor of legislation letting companies seek duties on Chinese imports, said China is violating trade laws and the bill would give the U.S. tools to combat undervalued currencies.
“It’s now time for our country to have the guts to stand up and take a strong stand against China’s currency manipulation,” Ryan said today in testimony to the House Ways and Means Committee. Representative Dave Camp, top Republican on the panel, said he opposes the legislation.
Differences among legislators reflect divisions among businesses and farm groups over trade with China. U.S. manufacturers and labor unions support pressing China on its currency to create jobs, while farmers and lobbyists for companies such as Caterpillar Inc. and Citigroup Inc. argue the actions may hurt business in one the fastest-growing U.S. export markets.
Legislation sponsored by Ryan and Tim Murphy, a Pennsylvania Republican, would let companies petition for higher duties on imports from China to compensate for the effect of a weak currency.
“Frustrations are high, but legislation will not help us get to the goal,” John Frisbie, president of the U.S.-China Business Council that represents companies with operations in China, said in his prepared testimony.
http://finance.yahoo.com/news/China-Currency-Policy-Prompts-bloomberg-594245449.html;_ylt=Ak.E9cZuP0a0jSIjPhcWLlS7YWsA;_ylu=X3oDMTE1Mm5mdmloBHBvcwM4BHNlYwN0b3BTdG9yaWVzBHNsawNjaGluYWN1cnJlbmM-?x=0&sec=topStories&pos=5&asset=&ccode=
Just a side note: The Chinese Yuan hit a 17 year high this morning. Congressional impatience will only hasten the US Dollar's eminent demise.
Gold broke magnificently to the upside yesterday, and Silver moved ever closer to bull market highs. Follow though today was tepid because of the Yen intervention and phony Dollar strength. If Gold can stay above 1262 into the close Friday, odds should be almost 100% that the next leg up in Gold, to $1500, has begun. Silver is entering an overbought condition on it's daily chart. Brave shorts could be the cause for Silver to remain overbought for "much longer than expected" as the bears get their nuts squeezed like lemons at a lemonade stand. Silver needs only to close above its March 5th 2008 mark of $20.64 before achieving a new 30 year closing high.
The recent move in Silver is a major short squeeze as many doubted Silver's resiliency at the $20 price level, particularly in light of the CRIMEX's expanding open interest in this Precious Metal, and chose to sell short in anticipation of the usual CRIMEX take down. Much paper Silver has been sold to "meet demand" and halt the rise in the price of Silver. The "take down" might still come, but don't be surprised if it is from a much higher price.
Silver supply is extremely tight. As of Monday, over 1200 Silver contracts were awaiting delivery notices from the CRIMEX Rat Bastids who sold paper Silver to investors in the futures market that are now asking for delivery. This large number equates to over 6 million ounces of Silver waiting for delivery. A large number of contracts waiting for delivery this far into a delivery month is VERY bullish for Silver...and could portend a major take down going into options expiration at the end of the month as the CRIMX Rat Bastids desperately seek to shake some Silver from the tightfisted investors unwilling to part with their wealth.
A break, and close, in Gold above $1268 tomorrow could prepare us for a move of $20 above the recent high at $1275. A race to $1300 Gold could be just hours away. Monitor tomorrow mornings economic data closely. Any excuse to hit the Precious Metals by the CRIMEX Rat Bastids will be taken advantage of, but it would appear that Silver and Gold are preparing to move higher from here despite the market rigging. Yet we refrain from overconfidence...
Traders, mind your protective stops. If you are already short these explosive markets...God Bless You. Investors, sit tight, and be right. Buy weakness aggressively, or add to your positions, at support.
- Richard Russell, September 2010
An apparent short squeeze in the Precious Metals have left our CRIMEX Rat Bastids gasping for air as the US Dollar tumbled below it's 200 day moving average yesterday. Soft support was found at 81 on the USDX, giving the Rat Bastids small comfort.
Were it not for a timely intervention in the Yen by Bank of Japan officials last night, the Dollar would very likely be staring at the all important 80 level on the USDX this afternoon given today's grossly Dollar negative economic data.
Understand, for the Bank Of Japan to intervene on the Yen's behalf, they must sell their own currency, and then buy US Dollars. Fat chance that is going to solve anything long term. If anything it should create demand for Gold in Japan as their currency weakens. It is unlikely that the Bank of Japan pursues this intervention for any length of time. Today's action was most likely more about slowing the rise in the Yen, than it is about taking it down. It would appear to be more than a coincidence that the Bank of Japan intervenes in the Yen just as the Dollar is about to fall off a cliff.
Today's timeline of currency intervention in the Yen coupled with the Dollar negative economic numbers out today clearly lead one to believe that the Dollar is destined to move lower soon, and the Precious Metals much higher. However, a pause in the rise of Precious Metals and the fall of the Dollar is warranted here if for any other reason than to just let the dust settle on this Bank of Japan salvo thrown at the Currency Markets. The Currency Wars are now front and center in the Global Economic Crisis. This is the beginning of the end for funny money.
Japan intervenes to weaken yen
By Lindsay Whipp and Alan Beattie
(FT) -- Tokyo intervened in the currency markets for the first time in more than six years to weaken the yen, after the currency broke through Y83 against the U.S. dollar and threatened exporter profits and business sentiment.
The unilateral intervention on Wednesday morning sent the yen down as much as Y1 within an hour and gave the Nikkei 225 and its exporter constituents a boost. However, the action came at a sensitive time that could cloud the debate over China's control over the renminbi.
Yoshihiko Noda, the finance minister, told reporters that the yen's sharp gains from Tuesday -- following Prime Minister Naoto Kan's victory in his Democratic party's leadership battle -- were "a problem that could not be overlooked," given that the Japanese economy has suffered some difficulties, including its ongoing struggles with deflation.
"In order to restrain excessive moves in the currency market, we earlier carried out currency intervention," Mr Noda said. He added that he was prepared to take further action, including further intervention, if necessary and that overseas authorities had been contacted.
Yen intervention remains a political matter over and above an economic one, and the decision for the government to intervene gives Mr. Kan the opportunity to show leadership, according to traders and analysts. A trader said that the lull after Tuesday's DPJ vote gave the authorities a chance to catch the market by surprise.
The action is being interpreted as what is known as a smoothing operation, which is carried out to flatten sudden moves in the currency, rather than to send the currency to a specific point, according to traders. Yoshito Sengoku, chief cabinet secretary, suggested to reporters that the finance ministry saw levels of Y82 as a line of defense for the economy.
http://edition.cnn.com/2010/BUSINESS/09/15/japan.yen.ft/?hpt=T2
Whether this yen intervention is a stink bomb or a smoke screen won't be know for several days, but it seems clear the Yen's unabated rise over the last two weeks has spooked Japan's manufacturing/export base.
Regardless, the Bank of Japan's Yen intervention "saved" the US Dollar today from a flood of bad economic data:
U.S. Import Prices Rose More Than Forecast in August
By Shobhana Chandra
Sept. 15 (Bloomberg) -- Prices of goods imported into the U.S. rose more than forecast in August as crude oil and food costs jumped, masking contained inflation elsewhere.
The 0.6 percent increase in the import-price index followed a revised 0.1 percent rise in July, Labor Department figures showed today in Washington. The August gain was twice the median estimate in a Bloomberg News survey. Prices excluding petroleum rose 0.2 percent, the first increase since May.
Mounting unemployment is restraining consumer spending, discouraging companies from raising prices in the world’s largest economy even as some commodity costs get a boost from demand in developing markets including China. Subdued inflation is one reason economists project the Federal Reserve will keep the benchmark interest rate close to zero until 2011.
“This weakens the case for deflation, and at the same time inflation isn’t a concern,” said Hugh Johnson, chairman of Albany, New York-based Hugh Johnson Advisors, who accurately forecast the gain in import prices. “The Fed doesn’t need to be in a hurry to move.”
Another report showed manufacturing in the New York region expanded at a slower pace than forecast in September, signaling that factory managers remain concerned about a slowdown in U.S. economic growth.
http://www.businessweek.com/news/2010-09-15/u-s-import-prices-rose-more-than-forecast-in-august.html
NY Manufacturing Expansion Slows
By Kathleen Madigan
New York manufacturing activity is expanding this month but at a slower pace than in August, according to the Federal Reserve Bank of New York’s Empire State Manufacturing Survey released Wednesday. Hiring, however, continued to rebound.
The Empire State’s business-conditions index fell to 4.14 in September from 7.10 in August. Economists had expected a reading of 7.0 for September.
While the top-line index weakened, some subindexes improved. The orders index turned positive, rising to 4.33 from -2.71, and shipments improved to a -0.27 reading from -11.50 in August. The index for employment was positive but little changed, standing at 14.93 in September from 14.29. The inventories index, however, fell to 1.49 from 2.86.
The index of prices paid increased to 22.39 from 20.00 last month, while the index of prices received rose to 1.49 from -2.86. Despite the improvement, businesses have little pricing power in an economy that stalled this summer.
Expectations about economic activity in the New York region continued to deteriorate, the report said. The expectations index fell to 31.34 from 35.71 in August. The report said it was the lowest reading since March 2009. The employment index for the next six months slipped to 16.42 from 20.00.
http://blogs.wsj.com/economics/2010/09/15/ny-manufacturing-expansion-slows/
US industrial production slows in August
By Alan Rappeport in New York
US factory output slowed in August, as carmakers pulled back production after a midsummer surge, draining momentum from the manufacturing sector.
Federal Reserve figures showed on Monday that US industrial production rose 0.2 per cent in August after climbing by a revised 0.6 per cent in July. That was in line with economists’ expectations and left production up 6.2 per cent from a year ago.
Following the initial inventory-led boost for the manufacturing sector, which appears to be drawing to a close, a key element going forward will be whether final demand picks up sufficiently to keep the upward impetus in place,” said Joshua Shapiro, chief US economist at MFR.
Manufacturing production was hit by a 5.2 per cent drop in output of cars and car products. Production of consumer goods was off by 0.4 per cent, as factories made fewer appliances and less furniture and carpeting.
In August, output at mines picked up but weaker production of electricity and natural gas slowed utilities.
These production trends reflect the patterns of final demand growth in the overall economy,” said John Ryding and Conrad DeQuadros, at RDQ Economics. “Going forward, we expect continued growth in manufacturing activity although at a slower pace than we have seen over the past year.”
Meanwhile, capacity utilisation, which measures the percentage of plants in use, rose to 74.7 per cent. Although that is 4.7 percentage points higher than August 2009, it remains almost 6 percentage points below the historical average, suggesting substantial resource slack in the economy.
http://www.ft.com/cms/s/0/f43dae22-c0c9-11df-94f9-00144feab49a.html
Rising import prices IS inflationary --- Dollar negative.
Slowing manufacturing --- Dollar negative.
Slowing industrial production and slack capacity utilization --- Dollar negative.
Bank of Japan buys Dollar to weaken Yen, and protects Dollar from blatantly negative economic data points.
Tomorrow we will get the latest on the US Current Account deficit, Initial Jobless Claims, Producer Prices, and the Treasury International Capital [TIC] Report. The effects on the Dollar could be devastating. Maybe the Bank of japan can bail it out again?
Japan May Sell Yen for Second Day in a Row
By Benzinga.com
Japan may intervene in currency markets for the second day in a row, seeking to protect the yen against volatility and a 15-year high against the dollar.
According to a Bloomberg
report:
Japan yesterday unilaterally sold the yen against the dollar for the first time since 2004. Chief Cabinet Secretary Yoshito Sengoku said the finance ministry "seems to think" 82 yen per dollar to be the line of defense, after it reached 82.88 yesterday. Government officials speaking on condition of anonymity have previously said volatility was a bigger concern than the level. Officials said Japan may continue selling the yen in the US and into today's Tokyo trading if needed.
The intervention has sent the yen tumbling more than 3% against the dollar, to 85.63. The CurrencyShares Japanese Yen Trust (FXY) is down 3%, to $115.60.
"The BOJ will provide abundant liquidity to the financial market by utilizing the funds injected by intervention," Bank of Japan board member Tadao Noda said at a press conference in Shimonoseki yesterday.
Prime Minister Naoto Kan is under increasing pressure to stem the yen's recent strength, as slowing exports could potentially wreck any economic growth.
The yen reached a level against the dollar "we couldn't ignore," Kan told reporters in Tokyo yesterday, adding that he will continue to watch the currency closely.
"In the medium-term it can't change the overall direction" of the yen, Tohru Sasaki, head of Japan rates and foreign-exchange research in Tokyo at JPMorgan Chase, told Bloomberg.
http://www.minyanville.com/businessmarkets/articles/yen-japanese-yen-yen-exchange-rate/9/15/2010/id/30105?camp=syndication&medium=portals&from=yahoo
This Yen intervention smells more like a US Dollar rescue than a play to protect Japanese exporters, does it not?
Japan can intervene [re: manipulate] in it's currency, but China can not?
China Currency Policy Prompts U.S. Lawmaker Ire, Disagreement on Remedies
By Mark Drajem
U.S. lawmakers faulted China’s currency policy as predatory as they disagreed on the need for legislation that would punish China for keeping its currency undervalued.
Representative Tim Ryan, an Ohio Democrat and co-sponsor of legislation letting companies seek duties on Chinese imports, said China is violating trade laws and the bill would give the U.S. tools to combat undervalued currencies.
“It’s now time for our country to have the guts to stand up and take a strong stand against China’s currency manipulation,” Ryan said today in testimony to the House Ways and Means Committee. Representative Dave Camp, top Republican on the panel, said he opposes the legislation.
Differences among legislators reflect divisions among businesses and farm groups over trade with China. U.S. manufacturers and labor unions support pressing China on its currency to create jobs, while farmers and lobbyists for companies such as Caterpillar Inc. and Citigroup Inc. argue the actions may hurt business in one the fastest-growing U.S. export markets.
Legislation sponsored by Ryan and Tim Murphy, a Pennsylvania Republican, would let companies petition for higher duties on imports from China to compensate for the effect of a weak currency.
“Frustrations are high, but legislation will not help us get to the goal,” John Frisbie, president of the U.S.-China Business Council that represents companies with operations in China, said in his prepared testimony.
http://finance.yahoo.com/news/China-Currency-Policy-Prompts-bloomberg-594245449.html;_ylt=Ak.E9cZuP0a0jSIjPhcWLlS7YWsA;_ylu=X3oDMTE1Mm5mdmloBHBvcwM4BHNlYwN0b3BTdG9yaWVzBHNsawNjaGluYWN1cnJlbmM-?x=0&sec=topStories&pos=5&asset=&ccode=
Just a side note: The Chinese Yuan hit a 17 year high this morning. Congressional impatience will only hasten the US Dollar's eminent demise.
Gold broke magnificently to the upside yesterday, and Silver moved ever closer to bull market highs. Follow though today was tepid because of the Yen intervention and phony Dollar strength. If Gold can stay above 1262 into the close Friday, odds should be almost 100% that the next leg up in Gold, to $1500, has begun. Silver is entering an overbought condition on it's daily chart. Brave shorts could be the cause for Silver to remain overbought for "much longer than expected" as the bears get their nuts squeezed like lemons at a lemonade stand. Silver needs only to close above its March 5th 2008 mark of $20.64 before achieving a new 30 year closing high.
The recent move in Silver is a major short squeeze as many doubted Silver's resiliency at the $20 price level, particularly in light of the CRIMEX's expanding open interest in this Precious Metal, and chose to sell short in anticipation of the usual CRIMEX take down. Much paper Silver has been sold to "meet demand" and halt the rise in the price of Silver. The "take down" might still come, but don't be surprised if it is from a much higher price.
Silver supply is extremely tight. As of Monday, over 1200 Silver contracts were awaiting delivery notices from the CRIMEX Rat Bastids who sold paper Silver to investors in the futures market that are now asking for delivery. This large number equates to over 6 million ounces of Silver waiting for delivery. A large number of contracts waiting for delivery this far into a delivery month is VERY bullish for Silver...and could portend a major take down going into options expiration at the end of the month as the CRIMX Rat Bastids desperately seek to shake some Silver from the tightfisted investors unwilling to part with their wealth.
A break, and close, in Gold above $1268 tomorrow could prepare us for a move of $20 above the recent high at $1275. A race to $1300 Gold could be just hours away. Monitor tomorrow mornings economic data closely. Any excuse to hit the Precious Metals by the CRIMEX Rat Bastids will be taken advantage of, but it would appear that Silver and Gold are preparing to move higher from here despite the market rigging. Yet we refrain from overconfidence...
Traders, mind your protective stops. If you are already short these explosive markets...God Bless You. Investors, sit tight, and be right. Buy weakness aggressively, or add to your positions, at support.
Monday, September 13, 2010
I Smell A Rat Bastid
Forgive me I must be brief... back to reality today, and it has been a loooooong day.
Stocks Continue September Rally; Nasdaq Surges Nearly 2%- AP
Wall Street climbed Monday as investors gained confidence in the banking sector following the passage of new global regulations, and China's economy continued its robust growth.
This is a load of crap! The equity markets were up today because the Dollar got spanked pretty hard today. The Dollar closed down 1% today at 81.86. The Dollar is in trouble... The 200 day moving average for the Dollar is at 81.59. Drop below there, and things could get ugly in a hurry. Support at 80 is tenuous at best.
Stocks Continue September Rally; Nasdaq Surges Nearly 2%- AP
Wall Street climbed Monday as investors gained confidence in the banking sector following the passage of new global regulations, and China's economy continued its robust growth.
This is a load of crap! The equity markets were up today because the Dollar got spanked pretty hard today. The Dollar closed down 1% today at 81.86. The Dollar is in trouble... The 200 day moving average for the Dollar is at 81.59. Drop below there, and things could get ugly in a hurry. Support at 80 is tenuous at best.
The U.S. Dollar Is In Trouble
By Dave Kranzler, The Golden Truth
Gradually the dollar is being eliminated from the foreign-trade settlement flows,” said Dariusz Kowalczyk, a Hong-Kong based senior economist at Credit Agricole CIB. “People are beginning to trade Asian currencies without intermediation via the dollar.”
This quote comes from a Bloomberg article last week which reported that China and Russia will bypass the U.S. dollar and engage in trade with each other using yuan and rubles. This could start freely occurring sometime this month.
In the words of one analyst: “Given the risk to the dollar and U.S. assets from their fiscal position they want to reduce their dependence on the dollar as an invoicing currency...” Here's the link to the article: Dollar R.I.P?
This bearish chart is reinforced by the poor fundamentals supporting the dollar. The latest of which is an arguably de facto failure of last Thursday's 30-yr Treasury bond auction. Although this factoid received very little media commentary, the Primary Dealers (Wall Street banks) were forced to buy 62% of the long bond auction last week. In and of itself, this means that the traditional buyers of long-dated Treasury bonds - the Japanese, foreign Central Banks and institutional asset/liability fund managers - were reluctant to make a long term bet on the dollar.
http://truthingold.blogspot.com/2010/09/us-dollar-is-in-trouble.html
With the Dollar tanking, it was NOT unusual to see the equity markets higher [these days]. What was VERY unusual today's was the reaction to the falling Dollar in the Treasury Markets and in the Gold Market. Treasuries were up today. It is not very often Treasuries rise when equities are rising, but Treasuries rose as the Dollar fell. Why would investors buy a country's debt if it's currency was tanking? And why was Gold down [only fractionally], with the Dollar down 1%? Today's markets have the stench of US Government intervention all over them.
Folks, drag out those bullshit detectors, and man them faithfully. I smell a Rat Bastid screw job in the works. Traders beware! The CRIMEX goons are so desperate to stop the rise of Silver and Gold here that they are now throwing themselves at the markets. They have run out of everything else. The cupboards are bare, the sinks are long gone, their wives and children long since forgotten. They will now give their own lives in an effort to stop the bullion freight train bearing down on them. I have yet to see a human stop a train, but stack 'em like chord wood on the tracks, and we could see one last gasp by these Rat Bastids before they are trampled under the feet of a bullish stampede.
On their Weekly charts, Gold and Silver are poised to move much higher. Their Daily charts warrant a pause, particularly Silver. No market goes straight up [or down]. Fundamentals have been the Precious Metals friend for over 10 years now. Yet fundamentals have no quarter in a rigged market. The harder the CRIMEX goons works to slow the rise of the Precious Metals, the more explosive there move higher is going to be when these Rat Bastids are finally overrun. This could be their time to get crushed, as they are printing paper Gold and Silver as fast as they can to supply the market, but it never hurts to keep one's guard up against a crooked banker.
Traders, beware.
Investors. Be right, and sit tight. Buy weakness aggressively at support.
Thursday, September 9, 2010
The Advancing Army Of Physical Metal Demand
With Gold scratching at $1260, Silver clawing at $20, and the HUI GOLD BUGS INDEX sniffing 500, whats a bullion bank criminal supposed to do? Cheat!
With ever increasing amounts of paper Gold and Silver being sold by the bullion banks, none of it backed by physical bullion, the CRIMEX goons have their backs pressed right up against the wall. They are trapped. There demise all but certain. Will they be allowed to default by their government backers, or will the government ride to their rescue with a rules change for settlement? No bother. A rules change will simply confirm the lack of supply to meet demand, and a mushroom cloud will replace the CRIMEX. Deceit inevitably ends in destruction.
Every conniving effort is being made as I type this to break Gold. Gold obviously wants to stretch its legs here, but the bullion banks keep hitting it below the knees. This is Gold's season to soar, and the CRIMEX Rat Bastids know this. They appear prepared to give up their existence as functioning banks in an effort to prevent the inevitable.
The open interest on the gold comex rose again in fine fashion up a huge 5437 contracts to 585,564. The gold comex OI is coming close to its all time high of around 609,000
The silver comex OI rose as well, closing today (basis yesterday) at 139522 up a huge 1726 contracts.
With both gold and silver both exhibiting outside day reversals, the increase in OI must show the banking cartel trying to cover but cannot due to the swift rise
in metal prices. No doubt the huge strength in physical purchases from London has a lot to do with the comex price strength.
Evidence of declining LBMA volume means that buyers are not rolling but taking delivery of their physical metal. With a higher degree of leverage to the tune of 100: 1 you can bet the farm that banking cartel are very nervous that they will not be able to service the advancing army of physical metal demand.
-Harvey Organ, Sept 8, The Daily Gold & Silver Report
In other words, this precious metals scam is on the verge of being crushed...and the US Dollar along with it.
BLS BS: Jobless Claims Data Released Today Was A Complete Farce
By Dave Kranzler
"Nothing is but what is not" (Macbeth, Act 1, Scene 3).
True Orwellian deception once again rules the day. The stock market is bouncing with vigor on the weekly jobless claims report, which showed about 27k less new jobless claim filings than was expected.
But let's examine the report itself to see what's going on. Because of the holiday week, NINE States ended up not reporting their jobless claims, including California. The jobless claims number reported was estimated for these 9 States. That completely invalidates, from a statistical sampling context, anything reported and celebrated (how the hell do you celebrate a few less claims for unemployment welfare than was expected anyway?). As Bloomberg reports:
For the latest reporting week, nine states didn’t file claims data to the Labor Department in Washington because of the federal holiday earlier this week, a Labor Department official told reporters. As a result, California and Virginia estimated their figures and the U.S. government estimated the other seven, the official said. (Here's the article link: Another Govt Joke)
I really don't think this situation requires my editorial rhetoric. It stands out by itself as yet another example of the ways in which our Government goes to great lengths in order to hide the truth and proliferate deception and lies. As a matter fact, the Truth about this jobless claims report was not even contained in the actual BLS news release, as you can see for yourself: BLS BS. As you can see from the Bloomberg news release, the Truth was revealed in the media interview of the BLS official. Very few people who follow the news will ever see this subtely.
The most irritating and absurd aspect of this is that Obama was elected on a platform in which he promised more transparency and truth in Goverment. Not only has Obama completely failed in this regard, he is actually more deceitful than his predecessor. It just gets worse as time goes on. The system is completely broken and the continuous and inexorable descent into complete Orwellian Totalitarianism is occurring irrespective of which political party is in power.
Please do have Hope for anything to Change when the voters hand Congress back to the Republicans in November. The best outcome of that will be to neutralize Obama. President Obama becomes Lame Duck Obama and good riddance to Nancy as the capo di tutti capi of the House.
http://truthingold.blogspot.com/2010/09/bls-bs-jobless-claims-data-released.html
Yuan Trading Against Russian Ruble Said to Start Within Weeks in Shanghai
China and Russia plan to start trading in each other’s currencies as the world’s second-biggest energy consumer and the largest energy supplier seek to diminish the dollar’s role in global trade.
China may start trading its currency against the ruble within weeks, three bankers with knowledge of the matter told Bloomberg, and sent out a document last week allowing lenders to apply for ruble trading licenses, one of them said. Russia’s Micex Stock Exchange is making preparations to trade the ruble against the yuan in an initiative that has the backing of the country’s central bank, Ruben Aganbegyan, the head of the bourse, told reporters at a conference in Moscow today.
“Given the risk to the dollar and U.S. assets from their fiscal position they want to reduce their dependence on the dollar as an invoicing currency,” Bhanu Baweja, global head of emerging markets fixed income, currency and credit research at UBS AG, said in a phone interview from London. “It makes sense for two large economies to exclude a third, overly dominant economy from their trading equation.”
In the wake of the global financial crisis, which forced the U.S. economy into recession, both China and Russia have called for the dollar’s role in the financial system to be diluted. Volatility in major currencies is putting the global recovery at risk Zhang Ping, the head of China’s National Development and Reform Commission, said last month. President Dmitry Medvedev last year suggested Russia, holder of the world’s third-largest foreign-currency reserves, reduce its holdings of dollar.
http://www.bloomberg.com/news/2010-09-08/china-russia-push-yuan-ruble-trading-to-diminish-dominance-of-u-s-dollar.html
Economists cut U.S. growth forecast again
WASHINGTON (Reuters) - Projected U.S. economic growth for the rest of this year and next was revised down for a third month in a row by a panel of about 50 economists.
The latest Blue Chip Economic Indicators report on Thursday said the weaker outlook for second-half 2010 growth stemmed from lower expectations for consumer spending, business investment and private construction.
"Growth in the current quarter now is expected to be little better than the disappointingly soft advance registered last quarter," the survey said. Gross domestic product grew at a meager 1.6 percent annual rate in the second quarter, less than half the first quarter's 3.7 percent rate.
But the economists' group said that, after the mid-year soft patch, it saw a gradual improving trend setting in with growth slightly surpassing trend rate in the second half of 2011.
Blue Chip defines GDP trend growth at about 2-3/4 percent a year.
"For all of 2010, real GDP now is forecast to increase 2.7 percent on a year-to-year basis, 0.2 of a percentage point less than a month ago and 0.6 of a point less than predicted in June," the survey said.
Its consensus forecast for real GDP growth in 2011 was cut by 0.3 of a percentage point from a month ago to 2.5 percent.
"Given the depth of the recession, a forecast of roughly trend growth this year and next amounts to a very disappointing pace of recovery, with little progress expected to be made in lowering the unemployment rate," the forecast said.
http://finance.yahoo.com/news/Economists-cut-US-growth-rb-1119878296.html?x=0&sec=topStories&pos=7&asset=&ccode=
Obama's Summer Of Recovery looks more and more like a summer of lost hope. Why else would he be touting a new "spending initiative" [stimulus package is now a dirty word in Washington]? Recall Obama "promise" to cut the deficit in half in 6 years. It would take annual growth of 5.5% to have even a remote chance of pulling that off. I guess he can toss that promise onto the growing pile of "promises not kept".
Right on cue as the London markets close, Gold and Silver are getting hit by the CRIMEX goons this morning. The fools that fall for these crooks games are more to blame for our disgust with the NY CRIMEX than the crooks themselves. However, I suspect, and have suspected for a long time, that the CRIMEX is more "the left hand trading with the right hand" than actual "outsiders" trading with the bullion banks. The left hand trades with the right to give "the appearance" of weakness in the Gold and Silver market...all in an effort to steal the "outsider's" bullion as they panic at the illusion of weakness presented before them.
The CME Delivery Report yesterday showed that zero gold and 148 silver contracts were posted for delivery on Friday. JPMorgan was the big issuer in its client account... and the big stopper in its proprietary trading account. Out of one pocket and into another!
-Ed Steer's Gold & Silver Daily
Buy weakness aggressively. Be right and sit tight. The end is growing closer for these CRIMEX Rat Bastids.
Rare Trading Action, Explosion Imminent
By Eric King
Gold is attacking $1,260 in European trading and silver is moving towards $20. In a telephone interview with King World News from Spain, Turk, being a true veteran of these markets was able to follow up last week’s comments with more compelling observations:
September 8, 2010
James Turk: “Friday’s action was confirmation that the pattern has changed. Yesterday’s action verified that as well, as the dips were bought aggressively, and there is still this strong demand for physical metal at these levels.”
“The big money recognizes that the train is leaving the station. Every dip they are in there acquiring physical metal and this also substantiates that the pattern has in fact changed.”
“There is one last thing I would like to say about this pattern and this is why I keep coming back to it. This is exactly the type of trading action you would expect to see before the big breakout.”
“So, I am still expecting that upside explosion in silver as soon as we get above $20.5 to $21.”
“The action in gold is consistent with what is happening in silver, which also confirms it will break into new high ground as well.”
“In fact, gold is already there as we had an all-time record closing high yesterday in New York.”
When asked about the rarity of this type of trading pattern Turk responded, “It is very rare to see this type of trading action, and therefore you know it’s special because it means prices are about ready to take off to the upside.”
James is continuing to note the importance of the change in the trading habits of both gold and silver. Pullbacks are proving to be short and shallow in the metals and then the markets immediately turn higher. This certainly is aggressive action and as James said, “The train is leaving the station.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/9/8_James_Turk_-_Rare_Trading_Action,_Explosion_Imminent.html
With ever increasing amounts of paper Gold and Silver being sold by the bullion banks, none of it backed by physical bullion, the CRIMEX goons have their backs pressed right up against the wall. They are trapped. There demise all but certain. Will they be allowed to default by their government backers, or will the government ride to their rescue with a rules change for settlement? No bother. A rules change will simply confirm the lack of supply to meet demand, and a mushroom cloud will replace the CRIMEX. Deceit inevitably ends in destruction.
Every conniving effort is being made as I type this to break Gold. Gold obviously wants to stretch its legs here, but the bullion banks keep hitting it below the knees. This is Gold's season to soar, and the CRIMEX Rat Bastids know this. They appear prepared to give up their existence as functioning banks in an effort to prevent the inevitable.
The open interest on the gold comex rose again in fine fashion up a huge 5437 contracts to 585,564. The gold comex OI is coming close to its all time high of around 609,000
The silver comex OI rose as well, closing today (basis yesterday) at 139522 up a huge 1726 contracts.
With both gold and silver both exhibiting outside day reversals, the increase in OI must show the banking cartel trying to cover but cannot due to the swift rise
in metal prices. No doubt the huge strength in physical purchases from London has a lot to do with the comex price strength.
Evidence of declining LBMA volume means that buyers are not rolling but taking delivery of their physical metal. With a higher degree of leverage to the tune of 100: 1 you can bet the farm that banking cartel are very nervous that they will not be able to service the advancing army of physical metal demand.
-Harvey Organ, Sept 8, The Daily Gold & Silver Report
In other words, this precious metals scam is on the verge of being crushed...and the US Dollar along with it.
BLS BS: Jobless Claims Data Released Today Was A Complete Farce
By Dave Kranzler
"Nothing is but what is not" (Macbeth, Act 1, Scene 3).
True Orwellian deception once again rules the day. The stock market is bouncing with vigor on the weekly jobless claims report, which showed about 27k less new jobless claim filings than was expected.
But let's examine the report itself to see what's going on. Because of the holiday week, NINE States ended up not reporting their jobless claims, including California. The jobless claims number reported was estimated for these 9 States. That completely invalidates, from a statistical sampling context, anything reported and celebrated (how the hell do you celebrate a few less claims for unemployment welfare than was expected anyway?). As Bloomberg reports:
For the latest reporting week, nine states didn’t file claims data to the Labor Department in Washington because of the federal holiday earlier this week, a Labor Department official told reporters. As a result, California and Virginia estimated their figures and the U.S. government estimated the other seven, the official said. (Here's the article link: Another Govt Joke)
I really don't think this situation requires my editorial rhetoric. It stands out by itself as yet another example of the ways in which our Government goes to great lengths in order to hide the truth and proliferate deception and lies. As a matter fact, the Truth about this jobless claims report was not even contained in the actual BLS news release, as you can see for yourself: BLS BS. As you can see from the Bloomberg news release, the Truth was revealed in the media interview of the BLS official. Very few people who follow the news will ever see this subtely.
The most irritating and absurd aspect of this is that Obama was elected on a platform in which he promised more transparency and truth in Goverment. Not only has Obama completely failed in this regard, he is actually more deceitful than his predecessor. It just gets worse as time goes on. The system is completely broken and the continuous and inexorable descent into complete Orwellian Totalitarianism is occurring irrespective of which political party is in power.
Please do have Hope for anything to Change when the voters hand Congress back to the Republicans in November. The best outcome of that will be to neutralize Obama. President Obama becomes Lame Duck Obama and good riddance to Nancy as the capo di tutti capi of the House.
http://truthingold.blogspot.com/2010/09/bls-bs-jobless-claims-data-released.html
Yuan Trading Against Russian Ruble Said to Start Within Weeks in Shanghai
China and Russia plan to start trading in each other’s currencies as the world’s second-biggest energy consumer and the largest energy supplier seek to diminish the dollar’s role in global trade.
China may start trading its currency against the ruble within weeks, three bankers with knowledge of the matter told Bloomberg, and sent out a document last week allowing lenders to apply for ruble trading licenses, one of them said. Russia’s Micex Stock Exchange is making preparations to trade the ruble against the yuan in an initiative that has the backing of the country’s central bank, Ruben Aganbegyan, the head of the bourse, told reporters at a conference in Moscow today.
“Given the risk to the dollar and U.S. assets from their fiscal position they want to reduce their dependence on the dollar as an invoicing currency,” Bhanu Baweja, global head of emerging markets fixed income, currency and credit research at UBS AG, said in a phone interview from London. “It makes sense for two large economies to exclude a third, overly dominant economy from their trading equation.”
In the wake of the global financial crisis, which forced the U.S. economy into recession, both China and Russia have called for the dollar’s role in the financial system to be diluted. Volatility in major currencies is putting the global recovery at risk Zhang Ping, the head of China’s National Development and Reform Commission, said last month. President Dmitry Medvedev last year suggested Russia, holder of the world’s third-largest foreign-currency reserves, reduce its holdings of dollar.
http://www.bloomberg.com/news/2010-09-08/china-russia-push-yuan-ruble-trading-to-diminish-dominance-of-u-s-dollar.html
Economists cut U.S. growth forecast again
WASHINGTON (Reuters) - Projected U.S. economic growth for the rest of this year and next was revised down for a third month in a row by a panel of about 50 economists.
The latest Blue Chip Economic Indicators report on Thursday said the weaker outlook for second-half 2010 growth stemmed from lower expectations for consumer spending, business investment and private construction.
"Growth in the current quarter now is expected to be little better than the disappointingly soft advance registered last quarter," the survey said. Gross domestic product grew at a meager 1.6 percent annual rate in the second quarter, less than half the first quarter's 3.7 percent rate.
But the economists' group said that, after the mid-year soft patch, it saw a gradual improving trend setting in with growth slightly surpassing trend rate in the second half of 2011.
Blue Chip defines GDP trend growth at about 2-3/4 percent a year.
"For all of 2010, real GDP now is forecast to increase 2.7 percent on a year-to-year basis, 0.2 of a percentage point less than a month ago and 0.6 of a point less than predicted in June," the survey said.
Its consensus forecast for real GDP growth in 2011 was cut by 0.3 of a percentage point from a month ago to 2.5 percent.
"Given the depth of the recession, a forecast of roughly trend growth this year and next amounts to a very disappointing pace of recovery, with little progress expected to be made in lowering the unemployment rate," the forecast said.
http://finance.yahoo.com/news/Economists-cut-US-growth-rb-1119878296.html?x=0&sec=topStories&pos=7&asset=&ccode=
Obama's Summer Of Recovery looks more and more like a summer of lost hope. Why else would he be touting a new "spending initiative" [stimulus package is now a dirty word in Washington]? Recall Obama "promise" to cut the deficit in half in 6 years. It would take annual growth of 5.5% to have even a remote chance of pulling that off. I guess he can toss that promise onto the growing pile of "promises not kept".
Right on cue as the London markets close, Gold and Silver are getting hit by the CRIMEX goons this morning. The fools that fall for these crooks games are more to blame for our disgust with the NY CRIMEX than the crooks themselves. However, I suspect, and have suspected for a long time, that the CRIMEX is more "the left hand trading with the right hand" than actual "outsiders" trading with the bullion banks. The left hand trades with the right to give "the appearance" of weakness in the Gold and Silver market...all in an effort to steal the "outsider's" bullion as they panic at the illusion of weakness presented before them.
The CME Delivery Report yesterday showed that zero gold and 148 silver contracts were posted for delivery on Friday. JPMorgan was the big issuer in its client account... and the big stopper in its proprietary trading account. Out of one pocket and into another!
-Ed Steer's Gold & Silver Daily
Buy weakness aggressively. Be right and sit tight. The end is growing closer for these CRIMEX Rat Bastids.
Rare Trading Action, Explosion Imminent
By Eric King
Gold is attacking $1,260 in European trading and silver is moving towards $20. In a telephone interview with King World News from Spain, Turk, being a true veteran of these markets was able to follow up last week’s comments with more compelling observations:
September 8, 2010
James Turk: “Friday’s action was confirmation that the pattern has changed. Yesterday’s action verified that as well, as the dips were bought aggressively, and there is still this strong demand for physical metal at these levels.”
“The big money recognizes that the train is leaving the station. Every dip they are in there acquiring physical metal and this also substantiates that the pattern has in fact changed.”
“There is one last thing I would like to say about this pattern and this is why I keep coming back to it. This is exactly the type of trading action you would expect to see before the big breakout.”
“So, I am still expecting that upside explosion in silver as soon as we get above $20.5 to $21.”
“The action in gold is consistent with what is happening in silver, which also confirms it will break into new high ground as well.”
“In fact, gold is already there as we had an all-time record closing high yesterday in New York.”
When asked about the rarity of this type of trading pattern Turk responded, “It is very rare to see this type of trading action, and therefore you know it’s special because it means prices are about ready to take off to the upside.”
James is continuing to note the importance of the change in the trading habits of both gold and silver. Pullbacks are proving to be short and shallow in the metals and then the markets immediately turn higher. This certainly is aggressive action and as James said, “The train is leaving the station.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/9/8_James_Turk_-_Rare_Trading_Action,_Explosion_Imminent.html
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