Full Version: The Dollar
Common Ground Common Sense > Issues that Affect Our Lives > Job Market, Fiscal, and Economic Policies
The Dollar Is at Risk - Axel Merk , Merk Investments
The Sinking Dollar by Immanuel Wallerstein
All the main actors are hoping there can be a soft landing, an orderly transition away from the U.S. dollar. But if the U.S. stimulus turns out to be the last of the bubbles, the dollar could very suddenly deflate in a most chaotic fashion.
more...
All the main actors are hoping there can be a soft landing, an orderly transition away from the U.S. dollar. But if the U.S. stimulus turns out to be the last of the bubbles, the dollar could very suddenly deflate in a most chaotic fashion.
more...
Dean Baker's economic commentary
The dollar has already dropped.
Dollar Fails Crucial Test By Addison Wiggin | Baltimore, Maryland | 05/11/09 The U.S. dollar failed an important technical test recently. Roll the videotape: "This move has really lit a fire under the dollar bears," says Chuck Butler. "Many institutional investors use the dollar index as their means of trading the dollar. And to see it fall through its 200-day moving average was enough proof for them that…Read more…
The Dollar Dike Gives Way? By Bill Bonner | Paris, France | 05/25/09 "China stuck in dollar trap," says the headline on the front page of the Financial Times. The FT says China is buying more U.S. bonds than ever. It must…according to the news report…because it has too many. Unless it supports the dollar, it risks a big collapse in the value of its foreign exchange holdings (mostly…Read more…
They've got it all figured out.
The printing presses were burning out bearings,
what with all the money printing...but they found
a way to slow them down...and here it is:
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The printing presses were burning out bearings,
what with all the money printing...but they found
a way to slow them down...and here it is:
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Dollar's Weakness, Confirmed by Duru
Dangers of a Dollar Collapse by Donald Ingram
Mr. Geithner Goes to China by The Baseline Scenario
China Warns U.S. About Debt Monetization (WSJ) by The Daily Bail
Bernanke Has Lost Control by Karl Denninger
PIMCO's Bill Gross Sees a Bleak Future by Tom Lindmark
Dollar Declines as Nations Mull Reserve Currency Alternative
By Oliver Biggadike and Chris Fournier
June 2 (Bloomberg) -- The dollar weakened beyond $1.43 against the euro for the first time in 2009 on bets record U.S. borrowing will undermine the greenback, prompting nations to consider alternatives to the world's main reserve currency.
The 16-nation euro gained for a fourth day versus the dollar as the Russian government said emerging-market leaders may discuss the idea of a supranational currency. The pound rose to the highest level since October and the Canadian dollar traded near an eight-month high on speculation signs of a recovery in U.S. housing will spur higher-yield demand.
"There's been a lot of talk out of Russia about a new global currency, and that's contributing toward this latest bout of dollar weakness," said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. "These latest comments are just adding to the general dollar weakness we've seen recently."
The dollar slid 0.9 percent to $1.4284 per euro at 12:44 p.m. in New York, from $1.4159 yesterday. It touched $1.4314, the weakest level since Dec. 29. The dollar fell 0.9 percent to 95.74 yen, from 96.59. The euro was little changed at 136.76 yen, compared with 136.78.
Sterling rose as much as 0.8 percent to $1.6577, the highest level since Oct. 30, while the Canadian dollar advanced 1.1 percent to C$1.0819, near the strongest level since Oct. 3.
Pending sales of existing homes in the U.S. climbed 6.7 percent in April, the National Association of Realtors said today. The median forecast of 32 economists surveyed by Bloomberg News was a 0.5 percent gain.
Dollar Index
The Dollar Index, which ICE uses to track the currency's performance against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, fell as much as 0.9 percent to 78.44, the lowest level since Dec. 18.
Russian President Dmitry Medvedev may discuss his proposal to create a new world currency when he meets counterparts from Brazil, India and China this month, Natalya Timakova, a spokeswoman for the president, told reporters by phone today. Medvedev first proposed seeking alternatives to the U.S. dollar as a reserve currency in March.
The Dollar Index reached 89.62 on March 4, the highest level since 2006, as the global recession spurred investors to take refuge in Treasuries including bills.
Demand for the record amount of debt the U.S. is selling will be sufficient, Treasury Secretary Timothy Geithner said in an interview today with state media outlets in China.
China has a "very sophisticated understanding" of why the U.S. is running up deficits, Geithner said in Beijing, pledging to rein in borrowing later.
There's no replacement currency for the dollar in the short term, Guo Shuqing, former head of China's foreign-exchange administrator, said in an interview with the Financial Times for an article published yesterday.
'Opportunity to Sell'
"The market is looking for the opportunity to sell the U.S. dollar," said Jack Spitz, a managing director for foreign exchange at National Bank of Canada in Toronto. "It took decades for the euro to be established. I can only imagine how long it would take for the BRIC countries to put together a currency."
The dollar also declined on speculation "smaller" central banks started today's selling of the greenback, said Sebastien Galy, a currency strategist at BNP Paribas SA in New York.
"If people believe that there is official pressure behind it, then obviously it puts pressure on euro-dollar on the upside," Galy said. "Small central banks have an incentive in doing something because if they're the first movers, they will not suffer by far as much as the big ones." Galy predicted the 16-nation currency may reach $1.4360 today, a peak last reached in December.
Europe's Unemployment
The euro fell earlier versus the yen as Europe's jobless rate jumped in April to the highest level in almost 10 years. Unemployment in the 16-member euro region increased to 9.2 percent from 8.9 percent in March, the European Union statistics office in Luxembourg said today.
ECB President Jean-Claude Trichet said last month it would buy 60 billion euros of covered bonds. The Federal Reserve, Bank of England and Bank of Japan are already purchasing government and corporate bonds in a policy known as quantitative easing, which is intended to keep borrowing costs low. The ECB will keep its benchmark rate unchanged at 1 percent on June 4, according to a Bloomberg survey.
The euro's rally against the dollar may be entering its "last stage," and investors would likely benefit from selling the 16-nation currency against the greenback, according to UBS AG, the world's second-biggest foreign-exchange trader.
Europe's currency is poised to weaken toward $1.30, analysts led by Mansoor Mohi-uddin, Zurich-based chief currency strategist at UBS, wrote in a note to clients yesterday. The analysts reiterated forecasts for the euro to trade at $1.40 in one month's time and then weaken.
"We remain positive on the U.S. dollar and think that the greenback is likely in its final stage of weakness," the analysts wrote. "Equity and bond flows have the potential to surprise and could lend support to the dollar."
To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Chris Fournier in Montreal at cfournier3@bloomberg.net
Last Updated: June 2, 2009 12:51 EDT
By Oliver Biggadike and Chris Fournier
June 2 (Bloomberg) -- The dollar weakened beyond $1.43 against the euro for the first time in 2009 on bets record U.S. borrowing will undermine the greenback, prompting nations to consider alternatives to the world's main reserve currency.
The 16-nation euro gained for a fourth day versus the dollar as the Russian government said emerging-market leaders may discuss the idea of a supranational currency. The pound rose to the highest level since October and the Canadian dollar traded near an eight-month high on speculation signs of a recovery in U.S. housing will spur higher-yield demand.
"There's been a lot of talk out of Russia about a new global currency, and that's contributing toward this latest bout of dollar weakness," said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. "These latest comments are just adding to the general dollar weakness we've seen recently."
The dollar slid 0.9 percent to $1.4284 per euro at 12:44 p.m. in New York, from $1.4159 yesterday. It touched $1.4314, the weakest level since Dec. 29. The dollar fell 0.9 percent to 95.74 yen, from 96.59. The euro was little changed at 136.76 yen, compared with 136.78.
Sterling rose as much as 0.8 percent to $1.6577, the highest level since Oct. 30, while the Canadian dollar advanced 1.1 percent to C$1.0819, near the strongest level since Oct. 3.
Pending sales of existing homes in the U.S. climbed 6.7 percent in April, the National Association of Realtors said today. The median forecast of 32 economists surveyed by Bloomberg News was a 0.5 percent gain.
Dollar Index
The Dollar Index, which ICE uses to track the currency's performance against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, fell as much as 0.9 percent to 78.44, the lowest level since Dec. 18.
Russian President Dmitry Medvedev may discuss his proposal to create a new world currency when he meets counterparts from Brazil, India and China this month, Natalya Timakova, a spokeswoman for the president, told reporters by phone today. Medvedev first proposed seeking alternatives to the U.S. dollar as a reserve currency in March.
The Dollar Index reached 89.62 on March 4, the highest level since 2006, as the global recession spurred investors to take refuge in Treasuries including bills.
Demand for the record amount of debt the U.S. is selling will be sufficient, Treasury Secretary Timothy Geithner said in an interview today with state media outlets in China.
China has a "very sophisticated understanding" of why the U.S. is running up deficits, Geithner said in Beijing, pledging to rein in borrowing later.
There's no replacement currency for the dollar in the short term, Guo Shuqing, former head of China's foreign-exchange administrator, said in an interview with the Financial Times for an article published yesterday.
'Opportunity to Sell'
"The market is looking for the opportunity to sell the U.S. dollar," said Jack Spitz, a managing director for foreign exchange at National Bank of Canada in Toronto. "It took decades for the euro to be established. I can only imagine how long it would take for the BRIC countries to put together a currency."
The dollar also declined on speculation "smaller" central banks started today's selling of the greenback, said Sebastien Galy, a currency strategist at BNP Paribas SA in New York.
"If people believe that there is official pressure behind it, then obviously it puts pressure on euro-dollar on the upside," Galy said. "Small central banks have an incentive in doing something because if they're the first movers, they will not suffer by far as much as the big ones." Galy predicted the 16-nation currency may reach $1.4360 today, a peak last reached in December.
Europe's Unemployment
The euro fell earlier versus the yen as Europe's jobless rate jumped in April to the highest level in almost 10 years. Unemployment in the 16-member euro region increased to 9.2 percent from 8.9 percent in March, the European Union statistics office in Luxembourg said today.
ECB President Jean-Claude Trichet said last month it would buy 60 billion euros of covered bonds. The Federal Reserve, Bank of England and Bank of Japan are already purchasing government and corporate bonds in a policy known as quantitative easing, which is intended to keep borrowing costs low. The ECB will keep its benchmark rate unchanged at 1 percent on June 4, according to a Bloomberg survey.
The euro's rally against the dollar may be entering its "last stage," and investors would likely benefit from selling the 16-nation currency against the greenback, according to UBS AG, the world's second-biggest foreign-exchange trader.
Europe's currency is poised to weaken toward $1.30, analysts led by Mansoor Mohi-uddin, Zurich-based chief currency strategist at UBS, wrote in a note to clients yesterday. The analysts reiterated forecasts for the euro to trade at $1.40 in one month's time and then weaken.
"We remain positive on the U.S. dollar and think that the greenback is likely in its final stage of weakness," the analysts wrote. "Equity and bond flows have the potential to surprise and could lend support to the dollar."
To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Chris Fournier in Montreal at cfournier3@bloomberg.net
Last Updated: June 2, 2009 12:51 EDT
I thought the piece below from MoneyNews was well worth including.
The late, great Milton Friedman
in his classic book prophetically
revealed how Obama's reckless
monetary policies will cause hyperinflation and destroy our nation
Everything Barack Obama, the Federal Reserve, and Congress are doing was predicted in startling detail almost two decades ago by a famous Nobel Prize-winning economist.
His name was Milton Friedman.
Though he passed away in 2006, in his prophetic book, Friedman showed how, facing massive deficits, the U.S. government would dramatically increase the money supply; why foreign countries would stop buying our debt; how the Fed would start buying our Treasury bills; and why this would call cause massive inflation.
He even predicted that our officials would claim inflation was no problem at all.
Amazingly all of this is coming to pass!
Make no mistake about it — the Obama administration is embracing massive inflationary deficit spending.
In just 100 days, Barrack Obama has more than doubled the U.S. money supply . . . committed the government to at least $7 trillion in new spending . . . and warned the American people to expect trillion-dollar deficits for the foreseeable future.
While the media has been falling over itself to praise Obama's "bold initiatives," the question no one has been asking is, "Where is all of this money coming from?"
Decades ago, Milton Friedman answered these questions clearly and precisely in his insightful — and very topical book, Money Mischief: Episodes in Monetary History.
In Money Mischief, Friedman even warned that the coming inflation could "destroy" our country.
Here's what he wrote: "Inflation is a disease, a dangerous and sometimes fatal disease that, if not checked in time, can destroy a society." (Money Mischief, Page 191)
You see the end result of that process in countries like Zimbabwe today, where prices double every day, and it now takes a $10 billion Zimbabwe note to buy a single loaf of bread - assuming you can find one.
Could America suffer the same fate? Friedman wrote ominously, "The Fate of a Country Is Inseparable From the Fate of Its Currency."
Even Warren Buffett recently admitted on CNBC that the only way for the U.S. to solve it's woes was to inflate the currency.
There is little doubt that Obama's massive deficit spending will doom the dollar and our economy.
You need to find out what is really happening to our economy and your wealth and get a copy of Milton Friedman's pathbreaking book, Money Mischief.
Its insights are so relevant and shocking — it reads like it was just published for our times!
................................................................................
Milton Friedman isn't the only one worrying about the US deficits and the dollar, as seen below --
June 2 (Bloomberg) -- China’s former central bank adviser Yu Yongding will meet Treasury Secretary Timothy Geithner today and tell him the U.S. shouldn’t be complacent about China continuing to buy Treasuries.
“I wish to tell the U.S. government: ‘Don’t be complacent and think there isn’t any alternative for China to buy your bills and bonds’,’’ Yu said in an interview yesterday. “The euro is an alternative. And there are lots of raw materials we can still buy.’’ Yu is scheduled to meet Geithner at the Grand Hyatt Hotel in Beijing today.
China is the biggest foreign holder of U.S. Treasuries with $768 billion at the end of the first quarter. Premier Wen Jiabao in March called for the U.S. “to guarantee the safety of China’s assets” and central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.
China is concerned that the U.S.’s spending and planned record fiscal deficit will eventually lead to inflation and a loss of confidence in the dollar, undermining the value of China’s Treasury holdings, Yu said.
The deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion shortfall, according to the Congressional Budget Office.
The Obama administration aims to reduce the fiscal deficit to “roughly” 3 percent of gross domestic product from a projected 12.9 percent this year, Geithner said in Beijing yesterday.
Strong Dollar
The treasury secretary, on a two-day visit to the Chinese capital, said that China’s investments in U.S. financial assets are very safe, and that the Obama administration is committed to a strong dollar.
The U.S. should take China’s interests into consideration “so that your own interest can be protected,’’ Yu said. “You should not try to inflate away your debt burden.” China could still diversify some of its Treasury holdings into euros or commodities, Yu added.
“Yes, some people say the euro is very weak,’’ Yu said. “Okay, weak is good, we’ll buy very cheap.’’
The best outcome for China would still be to negotiate with the U.S. and reach agreement on its Treasury holdings, Yu said. “The borrower should keep their promises,” he added.
The late, great Milton Friedman
in his classic book prophetically
revealed how Obama's reckless
monetary policies will cause hyperinflation and destroy our nation
Everything Barack Obama, the Federal Reserve, and Congress are doing was predicted in startling detail almost two decades ago by a famous Nobel Prize-winning economist.
His name was Milton Friedman.
Though he passed away in 2006, in his prophetic book, Friedman showed how, facing massive deficits, the U.S. government would dramatically increase the money supply; why foreign countries would stop buying our debt; how the Fed would start buying our Treasury bills; and why this would call cause massive inflation.
He even predicted that our officials would claim inflation was no problem at all.
Amazingly all of this is coming to pass!
Make no mistake about it — the Obama administration is embracing massive inflationary deficit spending.
In just 100 days, Barrack Obama has more than doubled the U.S. money supply . . . committed the government to at least $7 trillion in new spending . . . and warned the American people to expect trillion-dollar deficits for the foreseeable future.
While the media has been falling over itself to praise Obama's "bold initiatives," the question no one has been asking is, "Where is all of this money coming from?"
Decades ago, Milton Friedman answered these questions clearly and precisely in his insightful — and very topical book, Money Mischief: Episodes in Monetary History.
In Money Mischief, Friedman even warned that the coming inflation could "destroy" our country.
Here's what he wrote: "Inflation is a disease, a dangerous and sometimes fatal disease that, if not checked in time, can destroy a society." (Money Mischief, Page 191)
You see the end result of that process in countries like Zimbabwe today, where prices double every day, and it now takes a $10 billion Zimbabwe note to buy a single loaf of bread - assuming you can find one.
Could America suffer the same fate? Friedman wrote ominously, "The Fate of a Country Is Inseparable From the Fate of Its Currency."
Even Warren Buffett recently admitted on CNBC that the only way for the U.S. to solve it's woes was to inflate the currency.
There is little doubt that Obama's massive deficit spending will doom the dollar and our economy.
You need to find out what is really happening to our economy and your wealth and get a copy of Milton Friedman's pathbreaking book, Money Mischief.
Its insights are so relevant and shocking — it reads like it was just published for our times!
................................................................................
Milton Friedman isn't the only one worrying about the US deficits and the dollar, as seen below --
June 2 (Bloomberg) -- China’s former central bank adviser Yu Yongding will meet Treasury Secretary Timothy Geithner today and tell him the U.S. shouldn’t be complacent about China continuing to buy Treasuries.
“I wish to tell the U.S. government: ‘Don’t be complacent and think there isn’t any alternative for China to buy your bills and bonds’,’’ Yu said in an interview yesterday. “The euro is an alternative. And there are lots of raw materials we can still buy.’’ Yu is scheduled to meet Geithner at the Grand Hyatt Hotel in Beijing today.
China is the biggest foreign holder of U.S. Treasuries with $768 billion at the end of the first quarter. Premier Wen Jiabao in March called for the U.S. “to guarantee the safety of China’s assets” and central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.
China is concerned that the U.S.’s spending and planned record fiscal deficit will eventually lead to inflation and a loss of confidence in the dollar, undermining the value of China’s Treasury holdings, Yu said.
The deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion shortfall, according to the Congressional Budget Office.
The Obama administration aims to reduce the fiscal deficit to “roughly” 3 percent of gross domestic product from a projected 12.9 percent this year, Geithner said in Beijing yesterday.
Strong Dollar
The treasury secretary, on a two-day visit to the Chinese capital, said that China’s investments in U.S. financial assets are very safe, and that the Obama administration is committed to a strong dollar.
The U.S. should take China’s interests into consideration “so that your own interest can be protected,’’ Yu said. “You should not try to inflate away your debt burden.” China could still diversify some of its Treasury holdings into euros or commodities, Yu added.
“Yes, some people say the euro is very weak,’’ Yu said. “Okay, weak is good, we’ll buy very cheap.’’
The best outcome for China would still be to negotiate with the U.S. and reach agreement on its Treasury holdings, Yu said. “The borrower should keep their promises,” he added.
How long can the Dollar Last as the World’s Reserve Currency?- by Bob Chapman - 2009-06-13
De-Dollarization: Dismantling America’s Financial-Military EmpireThe Yekaterinburg Turning Point- by Prof. Michael Hudson - 2009-06-13
This was Snuff's Post #1
May 22 2009, 02:08 PM
"WSJ: Dollar Set For Nosedive"
We're waiting.
Bet against the dollar at your own peril. 80% of global business is denominated in dollars, up from 60 % ten years ago.
You need them for oil, for commerce, for reserves (to keep the George Soros's of the world from bombing your currency).
I'm keeping mine.
The few I have left.
May 22 2009, 02:08 PM
"WSJ: Dollar Set For Nosedive"
We're waiting.
Bet against the dollar at your own peril. 80% of global business is denominated in dollars, up from 60 % ten years ago.
You need them for oil, for commerce, for reserves (to keep the George Soros's of the world from bombing your currency).
I'm keeping mine.
The few I have left.
G8 Can’t Stop Future Inflation
JUNE 14, 2009…3:22 AM
There are many mysteries to life. One of them is NOT how we got in this economic mess. Anyone looking at the history of finance can see that credit bubbles always lead to crashes that we call ‘depressions’. And that using credit to finance wars is the #1 way of creating a credit bubble. All nations don’t need to go to war, to create a global credit bubble. Generally speaking, when major global empires go to war, they create global credit bubbles if they refuse to tax their imperial core to pay for wars. And generally speaking, no empire ever dares to tax the populace at home, for international wars. So they create immense amounts of credit based on future taxes.
The problem with all this is, if a major empire doesn’t tax its populace while going to war, if these wars never end or take forever to end like the Vietnam War or the Cold War, these quickly build up immense mountains of IOUs. So, this weekend, the G8 nations are meeting yet again, in desperation, trying to figure out how to have the pre-2008 status quo while changing nothing essential. Let’s look at some of the news stories before we visit the Bank of International Settlements:
Bank Rescue Costs EU States $5.3 Trillion, More Than German GDP - Bloomberg.com
European governments have approved $5.3 trillion of aid, more than the annual gross domestic product of Germany, to support banks during the credit crunch, according to a European Union document.
Germany, the world’s #2 or #3 world trade profit center, next to Japan and China, is floundering. This trio of nations depends very much on the US sucking down manufactured goods. This keeps them afloat. This has dried up nearly to $0 profits over the cost of importing raw materials. Throwing $5.3 trillion down the rabbit hole to keep the European banking and trade system going is an immense sacrifice and one that may not pay off, as far as Germany is concerned.
The U.K. pledged 781.2 billion euros ($1.1 trillion) to restore confidence in its lenders, the most of any of the 27 EU members, according to a May 26 document prepared by officials from the European Commission, the European Central Bank and member states and obtained by Bloomberg News. Denmark, where 13 of the country’s 140 banks were bailed out by the central bank or bought by rivals last year, committed 593.9 billion euros.
The measures, designed to save banks and revive economic growth, surpass Germany’s $3.3 trillion economy, the region’s biggest. They also helped to widen the Euro area’s budget deficit to the most in three years in 2008. The commission, the EU’s executive arm, is seeking to create the first EU-wide agencies with rule-making powers to monitor risk in the economy after the crisis led to $460 billion of losses and writedowns across the continent, according to data compiled by Bloomberg.
More…
JUNE 14, 2009…3:22 AM
There are many mysteries to life. One of them is NOT how we got in this economic mess. Anyone looking at the history of finance can see that credit bubbles always lead to crashes that we call ‘depressions’. And that using credit to finance wars is the #1 way of creating a credit bubble. All nations don’t need to go to war, to create a global credit bubble. Generally speaking, when major global empires go to war, they create global credit bubbles if they refuse to tax their imperial core to pay for wars. And generally speaking, no empire ever dares to tax the populace at home, for international wars. So they create immense amounts of credit based on future taxes.
The problem with all this is, if a major empire doesn’t tax its populace while going to war, if these wars never end or take forever to end like the Vietnam War or the Cold War, these quickly build up immense mountains of IOUs. So, this weekend, the G8 nations are meeting yet again, in desperation, trying to figure out how to have the pre-2008 status quo while changing nothing essential. Let’s look at some of the news stories before we visit the Bank of International Settlements:
Bank Rescue Costs EU States $5.3 Trillion, More Than German GDP - Bloomberg.com
European governments have approved $5.3 trillion of aid, more than the annual gross domestic product of Germany, to support banks during the credit crunch, according to a European Union document.
Germany, the world’s #2 or #3 world trade profit center, next to Japan and China, is floundering. This trio of nations depends very much on the US sucking down manufactured goods. This keeps them afloat. This has dried up nearly to $0 profits over the cost of importing raw materials. Throwing $5.3 trillion down the rabbit hole to keep the European banking and trade system going is an immense sacrifice and one that may not pay off, as far as Germany is concerned.
The U.K. pledged 781.2 billion euros ($1.1 trillion) to restore confidence in its lenders, the most of any of the 27 EU members, according to a May 26 document prepared by officials from the European Commission, the European Central Bank and member states and obtained by Bloomberg News. Denmark, where 13 of the country’s 140 banks were bailed out by the central bank or bought by rivals last year, committed 593.9 billion euros.
The measures, designed to save banks and revive economic growth, surpass Germany’s $3.3 trillion economy, the region’s biggest. They also helped to widen the Euro area’s budget deficit to the most in three years in 2008. The commission, the EU’s executive arm, is seeking to create the first EU-wide agencies with rule-making powers to monitor risk in the economy after the crisis led to $460 billion of losses and writedowns across the continent, according to data compiled by Bloomberg.
More…
2012 is coming up faster than you think. Are you ready for the 2nd coming of the leveraged debt disaster?
Recovery? You have to be kidding. It must be inflated away. There is no other political possibility. The high yield bond market equals the junk bond market
This is primarily an American problem. Think of the dollar impact.
That worrying wall of debt
By Vipal Monga
Published June 5, 2009 at 11:59 AM
The leveraged loan market got accustomed to big numbers over the past decade. There’s $3.6 trillion, the amount of leveraged loans made since 2000, according to Thomson Reuters’ Loan Pricing Corp. There’s 735-fold, the amount of growth between 2003 and 2007 in the volume of collateralized loan obligations — the funds that helped fuel the loan market’s surge after the tech and telecom bust of 2001. And there’s $375 billion, the amount of bank debt used to fund leveraged buyouts completed between 2005 and 2007.
But right now, the leveraged loan market is fixated on one number: $430 billion, the amount in leveraged loans due to mature between 2012 and 2014. Despite the big numbers of the past, this might be simply too big. Indeed, the $430 billion figure is already worrying lenders, borrowers and loan-market investors alike as they struggle with the possibility that a large portion of those loans will neither be repaid nor refinanced, raising the specter of a wave of defaults among the debt-fueled LBO borrowers of 2005 through 2007.
“People are in a panic about it right now,” says one lawyer who specializes in corporate finance. “There’s not enough capacity to refinance this.”
Is the panic justified?
Standing where we are today, it certainly seems as though the looming maturities will break upon an already fragile market, causing further damage and potentially extending the crisis. But just how serious a threat the maturities pose is an open question. Markets are dynamic, ever-evolving systems, and it’s virtually certain the conditions that exist today will have changed substantially, even fundamentally, tomorrow. As Alexander Gendzier, capital markets lawyer at Jones Day, says, “2012 is a couple of lifetimes from where we are today.”
More…
Recovery? You have to be kidding. It must be inflated away. There is no other political possibility. The high yield bond market equals the junk bond market
This is primarily an American problem. Think of the dollar impact.
That worrying wall of debt
By Vipal Monga
Published June 5, 2009 at 11:59 AM
The leveraged loan market got accustomed to big numbers over the past decade. There’s $3.6 trillion, the amount of leveraged loans made since 2000, according to Thomson Reuters’ Loan Pricing Corp. There’s 735-fold, the amount of growth between 2003 and 2007 in the volume of collateralized loan obligations — the funds that helped fuel the loan market’s surge after the tech and telecom bust of 2001. And there’s $375 billion, the amount of bank debt used to fund leveraged buyouts completed between 2005 and 2007.
But right now, the leveraged loan market is fixated on one number: $430 billion, the amount in leveraged loans due to mature between 2012 and 2014. Despite the big numbers of the past, this might be simply too big. Indeed, the $430 billion figure is already worrying lenders, borrowers and loan-market investors alike as they struggle with the possibility that a large portion of those loans will neither be repaid nor refinanced, raising the specter of a wave of defaults among the debt-fueled LBO borrowers of 2005 through 2007.
“People are in a panic about it right now,” says one lawyer who specializes in corporate finance. “There’s not enough capacity to refinance this.”
Is the panic justified?
Standing where we are today, it certainly seems as though the looming maturities will break upon an already fragile market, causing further damage and potentially extending the crisis. But just how serious a threat the maturities pose is an open question. Markets are dynamic, ever-evolving systems, and it’s virtually certain the conditions that exist today will have changed substantially, even fundamentally, tomorrow. As Alexander Gendzier, capital markets lawyer at Jones Day, says, “2012 is a couple of lifetimes from where we are today.”
More…
IMF official says US dollar reserve status to stay
Forbes - NY,USA
The IMF said the dollar, which has been hit by the re-emergence of risk appetite amid signs the economic slump is losing momentum, is "only modestly above ...
Ecommerce Journal IMF says the worst of the recession has not been weathered yet
Ecommerce Journal - Boston,MA,USA
On Monday the head of the IMF stated that the world economy have not gone through the worst of the recession , claiming a record number of European jobs . ...
Forbes - NY,USA
The IMF said the dollar, which has been hit by the re-emergence of risk appetite amid signs the economic slump is losing momentum, is "only modestly above ...
Ecommerce Journal IMF says the worst of the recession has not been weathered yet
Ecommerce Journal - Boston,MA,USA
On Monday the head of the IMF stated that the world economy have not gone through the worst of the recession , claiming a record number of European jobs . ...
QUOTE(Snuffysmith @ Jun 15 2009, 12:48 PM) 
Three Not-So-Optimistic Economists (VIDEO)
BusinessDon't Believe The Hype: Roubini, Krugman, Samuelson Shoot Down "Green Shoots"
BusinessDon't Believe The Hype: Roubini, Krugman, Samuelson Shoot Down "Green Shoots"
There are no green shoots - only weeds.
But there are green backs - US Dollars.
Coin of the realm.
Respect them, use them, trade them for oil, or the US Military will kill you and break your stuff.
BRIC group plans
its own revolution
Russia's choice of Yekaterinburg, scene of the execution of Tsar Nicholas II and his family, for the summit of Brazil, Russia, India and China may be telling. This week's gathering could prove to be a milestone in developing a new global economic order as the countries seek to move away from US-dollar dependence. - W Joseph Stroupe
This is the second article of a three-part report.
Part 1: Awakening ahead on bond delusion
its own revolution
Russia's choice of Yekaterinburg, scene of the execution of Tsar Nicholas II and his family, for the summit of Brazil, Russia, India and China may be telling. This week's gathering could prove to be a milestone in developing a new global economic order as the countries seek to move away from US-dollar dependence. - W Joseph Stroupe
This is the second article of a three-part report.
Part 1: Awakening ahead on bond delusion
By John Parry
[/font] NEW YORK (Reuters) - Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.
Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.
Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.
Prechter, speaking at the Reuters Investment Outlook Summit in New York, said he sees investors' confidence in an economic rebound fading, a trend that will drag the S&P 500 stock index .SPX well below the March 6 intraday low of 666.79 by the end of this year or early next.
"There will be a leg down in stock prices, and it will affect all other areas," including corporate bonds and commodities, said Prechter, who is executive officer at research company Elliott Wave International, based in Gainesville, Georgia.
Prechter, who is known for his bearish views, has repeatedly forecast a steep decline in stocks this year, even as the stock market has rebounded from 12-year lows set in March as optimism about an economic recovery has risen.
Despite the government and Federal Reserve's massive rescues for financial companies and securities markets, Prechter expects credit markets to clam up again as they did in the first phase of the global financial crisis and for the U.S. economy to sink into a depression.
Although U.S. banks' recently passed government "stress tests" that assessed the adequacy of their capital levels to absorb losses and have been able to raise some capital in debt and equity markets, "the banking sector is in severe trouble," as more loans turn bad, he said.
The economy "is obviously heading toward a depression," despite the government's efforts to dodge one, said Prechter.
Federal Reserve Chairman Ben Bernanke has not averted a re-run of the 1930s Great Depression, even though investors are becoming firmly convinced that the Fed has avoided disaster and that the economy has hit bottom.
"It's the next leg down (in stocks) that will make it clear that these things are not true," Prechter said.
[font="Arial, Helvetica, sans-serif"](Editing by Leslie Adler)
U.S. likely to lose AAA rating: Prechter
Mon Jun 15, 2009 5:17pm EDT
[/font] NEW YORK (Reuters) - Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.
Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.
Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.
Prechter, speaking at the Reuters Investment Outlook Summit in New York, said he sees investors' confidence in an economic rebound fading, a trend that will drag the S&P 500 stock index .SPX well below the March 6 intraday low of 666.79 by the end of this year or early next.
"There will be a leg down in stock prices, and it will affect all other areas," including corporate bonds and commodities, said Prechter, who is executive officer at research company Elliott Wave International, based in Gainesville, Georgia.
Prechter, who is known for his bearish views, has repeatedly forecast a steep decline in stocks this year, even as the stock market has rebounded from 12-year lows set in March as optimism about an economic recovery has risen.
Despite the government and Federal Reserve's massive rescues for financial companies and securities markets, Prechter expects credit markets to clam up again as they did in the first phase of the global financial crisis and for the U.S. economy to sink into a depression.
Although U.S. banks' recently passed government "stress tests" that assessed the adequacy of their capital levels to absorb losses and have been able to raise some capital in debt and equity markets, "the banking sector is in severe trouble," as more loans turn bad, he said.
The economy "is obviously heading toward a depression," despite the government's efforts to dodge one, said Prechter.
Federal Reserve Chairman Ben Bernanke has not averted a re-run of the 1930s Great Depression, even though investors are becoming firmly convinced that the Fed has avoided disaster and that the economy has hit bottom.
"It's the next leg down (in stocks) that will make it clear that these things are not true," Prechter said.
[font="Arial, Helvetica, sans-serif"](Editing by Leslie Adler)
U.S. likely to lose AAA rating: Prechter
Mon Jun 15, 2009 5:17pm EDT
Tried to quote ya snuff...but it wouldn't take...
I even think the White House brain trust is starting to doubt some...
http://www.washingtonpost.com/wp-dyn/conte...1302035_pf.html
Obama's Spending Plans May Pose Political Risks
Concern Mounts in White House as 2010 Elections Loom
By Scott Wilson
Washington Post Staff Writer
Sunday, June 14, 2009
After enjoying months of towering poll numbers, legislative victories and well-received foreign
policy initiatives, the White House has become increasingly concerned that President Obama's
spending plans, which would require $9 trillion in government borrowing over the next decade,
could become a political liability that defines the 2010 midterm elections.
The concern was reflected in the aggressive response from administration officials to criticism
that money from Obama's stimulus plan is arriving too slowly to help the languishing economy,
as well as in the president's public endorsement of "pay as you go" legislation, which would require
Congress to make room for new non-discretionary spending with equivalent cuts to other parts
of the budget. Yesterday, Obama also outlined billions of dollars in savings that would be used
to pay for his health-care reform proposal.
But there is evidence of growing public concern over his fiscal policies. As he traveled Thursday in
Green Bay, Wis., Obama was greeted by demonstrators holding signs that said, "No socialism" and "Taxed Enough Yet?"
...
(for those who saw my support of "The Clinton Brand" as anti-Obama, they missed the message)
Clinton, a former governor, took office during a far milder recession and was unable to pass a much
smaller stimulus package than Obama's. Clinton ended his tenure with budget surpluses after reducing
federal spending as a share of the gross domestic product -- fiscal discipline that did not survive the Bush administration.
"President Clinton believed in the public sector, but he thought that his responsibility to the long-term
fiscal condition of the country ruled out a significant expansion of the government in the economy as a
whole," said William A. Galston, a former Clinton policy adviser who is a senior fellow at the Brookings
Institution. "What is unmistakably clear is that the trajectory of the Obama administration -- whether it's
four years or eight years in office -- will be the reverse."
The administration is responding to public concerns over the nation's fiscal health and the political threat
it may pose. Rahm Emanuel, Obama's chief of staff, said that a quick economic recovery would have the
single biggest effect on the grim budget forecasts and that the administration's top priority will be "getting
America's fiscal house in order" once Congress finishes work on health-care and energy reform legislation.
"There's two parts to fiscal reform: cutting and cost controls," Emanuel said. "At the end of the day, you're
going to have to look at tax reform as part of the long-term fiscal health of the country. But if you change
Medicare, Medicaid and other big drivers of costs, you're going to get enormous savings."
The cost of extending health insurance to the 47 million uncovered Americans is estimated to be as high
as $1.2 trillion over the next decade, and administration officials say they are not sure how much the
overhaul will save the federal budget over the long term.
In Obama's radio address yesterday, he outlined $313 billion in savings and spending cuts over the next
10 years to help pay for the initiative, including adjusting Medicare payments to reflect efficiencies in the
health-care system, reducing hospital subsidies for treating uninsured patients as coverage expands to
more people, and lowering drug reimbursements for those eligible for both Medicare and Medicaid. In total,
Obama said, the administration has identified $948 billion of the projected costs, although those estimates
will probably be challenged by congressional auditors.
Peter Orszag, director of the Office of Management and Budget, told reporters last week: "We've never
changed our health-care system towards a best-practices one. So quantifying exactly what their impact
is is very difficult. But what I want to be very clear about is -- at worst, this will be deficit-neutral."
Some Democratic champions of health-care reform, including Galston, say slowing the growth of
medical costs could cut entitlement spending, reduce the need for borrowing and lead to significant long-term savings.
"The problem is that very few health-care experts believe that the measures proposed so far have
any reasonable chance of achieving those savings," Galston said.
Obama and his advisers hope that by the 2010 elections, the stimulus spending, the bank rescues
and other measures will have pushed the economy into recovery.
But some economists warn that any short-term economic improvement will probably resemble the
"jobless recovery" of the early 1990s, given the loss of jobs in the manufacturing, construction,
retail and other sectors. Democrats were trounced in midterm elections two years after Clinton
took office, partly because the economic recovery then underway had not significantly reduced unemployment.
Chris Edwards, director of tax policy studies at the conservative Cato Institute, said the large federal
deficits of the 1980s and early 1990s rallied public support for legislation that constrained government
spending -- a sentiment Obama appealed to last week in urging Congress to enact the "pay as you go"
rules into law. Ross Perot, for example, built a potent third-party campaign in 1992 on the issue of deficit reduction.
"There's a potential there that the seemingly out-of-control fiscal situation in Washington could galvanize
the public," Edwards said. "The question is whether the Republicans will be smart enough to take advantage of this."
-----------------
All I can do is pray for the Blue Dogs to buck up.
I even think the White House brain trust is starting to doubt some...
http://www.washingtonpost.com/wp-dyn/conte...1302035_pf.html
Obama's Spending Plans May Pose Political Risks
Concern Mounts in White House as 2010 Elections Loom
By Scott Wilson
Washington Post Staff Writer
Sunday, June 14, 2009
After enjoying months of towering poll numbers, legislative victories and well-received foreign
policy initiatives, the White House has become increasingly concerned that President Obama's
spending plans, which would require $9 trillion in government borrowing over the next decade,
could become a political liability that defines the 2010 midterm elections.
The concern was reflected in the aggressive response from administration officials to criticism
that money from Obama's stimulus plan is arriving too slowly to help the languishing economy,
as well as in the president's public endorsement of "pay as you go" legislation, which would require
Congress to make room for new non-discretionary spending with equivalent cuts to other parts
of the budget. Yesterday, Obama also outlined billions of dollars in savings that would be used
to pay for his health-care reform proposal.
But there is evidence of growing public concern over his fiscal policies. As he traveled Thursday in
Green Bay, Wis., Obama was greeted by demonstrators holding signs that said, "No socialism" and "Taxed Enough Yet?"
...
(for those who saw my support of "The Clinton Brand" as anti-Obama, they missed the message)
Clinton, a former governor, took office during a far milder recession and was unable to pass a much
smaller stimulus package than Obama's. Clinton ended his tenure with budget surpluses after reducing
federal spending as a share of the gross domestic product -- fiscal discipline that did not survive the Bush administration.
"President Clinton believed in the public sector, but he thought that his responsibility to the long-term
fiscal condition of the country ruled out a significant expansion of the government in the economy as a
whole," said William A. Galston, a former Clinton policy adviser who is a senior fellow at the Brookings
Institution. "What is unmistakably clear is that the trajectory of the Obama administration -- whether it's
four years or eight years in office -- will be the reverse."
The administration is responding to public concerns over the nation's fiscal health and the political threat
it may pose. Rahm Emanuel, Obama's chief of staff, said that a quick economic recovery would have the
single biggest effect on the grim budget forecasts and that the administration's top priority will be "getting
America's fiscal house in order" once Congress finishes work on health-care and energy reform legislation.
"There's two parts to fiscal reform: cutting and cost controls," Emanuel said. "At the end of the day, you're
going to have to look at tax reform as part of the long-term fiscal health of the country. But if you change
Medicare, Medicaid and other big drivers of costs, you're going to get enormous savings."
The cost of extending health insurance to the 47 million uncovered Americans is estimated to be as high
as $1.2 trillion over the next decade, and administration officials say they are not sure how much the
overhaul will save the federal budget over the long term.
In Obama's radio address yesterday, he outlined $313 billion in savings and spending cuts over the next
10 years to help pay for the initiative, including adjusting Medicare payments to reflect efficiencies in the
health-care system, reducing hospital subsidies for treating uninsured patients as coverage expands to
more people, and lowering drug reimbursements for those eligible for both Medicare and Medicaid. In total,
Obama said, the administration has identified $948 billion of the projected costs, although those estimates
will probably be challenged by congressional auditors.
Peter Orszag, director of the Office of Management and Budget, told reporters last week: "We've never
changed our health-care system towards a best-practices one. So quantifying exactly what their impact
is is very difficult. But what I want to be very clear about is -- at worst, this will be deficit-neutral."
Some Democratic champions of health-care reform, including Galston, say slowing the growth of
medical costs could cut entitlement spending, reduce the need for borrowing and lead to significant long-term savings.
"The problem is that very few health-care experts believe that the measures proposed so far have
any reasonable chance of achieving those savings," Galston said.
Obama and his advisers hope that by the 2010 elections, the stimulus spending, the bank rescues
and other measures will have pushed the economy into recovery.
But some economists warn that any short-term economic improvement will probably resemble the
"jobless recovery" of the early 1990s, given the loss of jobs in the manufacturing, construction,
retail and other sectors. Democrats were trounced in midterm elections two years after Clinton
took office, partly because the economic recovery then underway had not significantly reduced unemployment.
Chris Edwards, director of tax policy studies at the conservative Cato Institute, said the large federal
deficits of the 1980s and early 1990s rallied public support for legislation that constrained government
spending -- a sentiment Obama appealed to last week in urging Congress to enact the "pay as you go"
rules into law. Ross Perot, for example, built a potent third-party campaign in 1992 on the issue of deficit reduction.
"There's a potential there that the seemingly out-of-control fiscal situation in Washington could galvanize
the public," Edwards said. "The question is whether the Republicans will be smart enough to take advantage of this."
-----------------
All I can do is pray for the Blue Dogs to buck up.
QUOTE(Indianhead @ Jun 16 2009, 09:00 AM)
Tried to quote ya snuff...but it wouldn't take...
I even think the White House brain trust is starting to doubt some...
http://www.washingtonpost.com/wp-dyn/conte...1302035_pf.html
Obama's Spending Plans May Pose Political Risks
Concern Mounts in White House as 2010 Elections Loom
By Scott Wilson
Washington Post Staff Writer
Sunday, June 14, 2009
After enjoying months of towering poll numbers, legislative victories and well-received foreign
policy initiatives, the White House has become increasingly concerned that President Obama's
spending plans, which would require $9 trillion in government borrowing over the next decade,
could become a political liability that defines the 2010 midterm elections.
The concern was reflected in the aggressive response from administration officials to criticism
that money from Obama's stimulus plan is arriving too slowly to help the languishing economy,
as well as in the president's public endorsement of "pay as you go" legislation, which would require
Congress to make room for new non-discretionary spending with equivalent cuts to other parts
of the budget. Yesterday, Obama also outlined billions of dollars in savings that would be used
to pay for his health-care reform proposal.
But there is evidence of growing public concern over his fiscal policies. As he traveled Thursday in
Green Bay, Wis., Obama was greeted by demonstrators holding signs that said, "No socialism" and "Taxed Enough Yet?"
...
(for those who saw my support of "The Clinton Brand" as anti-Obama, they missed the message)
Clinton, a former governor, took office during a far milder recession and was unable to pass a much
smaller stimulus package than Obama's. Clinton ended his tenure with budget surpluses after reducing
federal spending as a share of the gross domestic product -- fiscal discipline that did not survive the Bush administration.
"President Clinton believed in the public sector, but he thought that his responsibility to the long-term
fiscal condition of the country ruled out a significant expansion of the government in the economy as a
whole," said William A. Galston, a former Clinton policy adviser who is a senior fellow at the Brookings
Institution. "What is unmistakably clear is that the trajectory of the Obama administration -- whether it's
four years or eight years in office -- will be the reverse."
The administration is responding to public concerns over the nation's fiscal health and the political threat
it may pose. Rahm Emanuel, Obama's chief of staff, said that a quick economic recovery would have the
single biggest effect on the grim budget forecasts and that the administration's top priority will be "getting
America's fiscal house in order" once Congress finishes work on health-care and energy reform legislation.
"There's two parts to fiscal reform: cutting and cost controls," Emanuel said. "At the end of the day, you're
going to have to look at tax reform as part of the long-term fiscal health of the country. But if you change
Medicare, Medicaid and other big drivers of costs, you're going to get enormous savings."
The cost of extending health insurance to the 47 million uncovered Americans is estimated to be as high
as $1.2 trillion over the next decade, and administration officials say they are not sure how much the
overhaul will save the federal budget over the long term.
In Obama's radio address yesterday, he outlined $313 billion in savings and spending cuts over the next
10 years to help pay for the initiative, including adjusting Medicare payments to reflect efficiencies in the
health-care system, reducing hospital subsidies for treating uninsured patients as coverage expands to
more people, and lowering drug reimbursements for those eligible for both Medicare and Medicaid. In total,
Obama said, the administration has identified $948 billion of the projected costs, although those estimates
will probably be challenged by congressional auditors.
Peter Orszag, director of the Office of Management and Budget, told reporters last week: "We've never
changed our health-care system towards a best-practices one. So quantifying exactly what their impact
is is very difficult. But what I want to be very clear about is -- at worst, this will be deficit-neutral."
Some Democratic champions of health-care reform, including Galston, say slowing the growth of
medical costs could cut entitlement spending, reduce the need for borrowing and lead to significant long-term savings.
"The problem is that very few health-care experts believe that the measures proposed so far have
any reasonable chance of achieving those savings," Galston said.
Obama and his advisers hope that by the 2010 elections, the stimulus spending, the bank rescues
and other measures will have pushed the economy into recovery.
But some economists warn that any short-term economic improvement will probably resemble the
"jobless recovery" of the early 1990s, given the loss of jobs in the manufacturing, construction,
retail and other sectors. Democrats were trounced in midterm elections two years after Clinton
took office, partly because the economic recovery then underway had not significantly reduced unemployment.
Chris Edwards, director of tax policy studies at the conservative Cato Institute, said the large federal
deficits of the 1980s and early 1990s rallied public support for legislation that constrained government
spending -- a sentiment Obama appealed to last week in urging Congress to enact the "pay as you go"
rules into law. Ross Perot, for example, built a potent third-party campaign in 1992 on the issue of deficit reduction.
"There's a potential there that the seemingly out-of-control fiscal situation in Washington could galvanize
the public," Edwards said. "The question is whether the Republicans will be smart enough to take advantage of this."
-----------------
All I can do is pray for the Blue Dogs to buck up.
I even think the White House brain trust is starting to doubt some...
http://www.washingtonpost.com/wp-dyn/conte...1302035_pf.html
Obama's Spending Plans May Pose Political Risks
Concern Mounts in White House as 2010 Elections Loom
By Scott Wilson
Washington Post Staff Writer
Sunday, June 14, 2009
After enjoying months of towering poll numbers, legislative victories and well-received foreign
policy initiatives, the White House has become increasingly concerned that President Obama's
spending plans, which would require $9 trillion in government borrowing over the next decade,
could become a political liability that defines the 2010 midterm elections.
The concern was reflected in the aggressive response from administration officials to criticism
that money from Obama's stimulus plan is arriving too slowly to help the languishing economy,
as well as in the president's public endorsement of "pay as you go" legislation, which would require
Congress to make room for new non-discretionary spending with equivalent cuts to other parts
of the budget. Yesterday, Obama also outlined billions of dollars in savings that would be used
to pay for his health-care reform proposal.
But there is evidence of growing public concern over his fiscal policies. As he traveled Thursday in
Green Bay, Wis., Obama was greeted by demonstrators holding signs that said, "No socialism" and "Taxed Enough Yet?"
...
(for those who saw my support of "The Clinton Brand" as anti-Obama, they missed the message)
Clinton, a former governor, took office during a far milder recession and was unable to pass a much
smaller stimulus package than Obama's. Clinton ended his tenure with budget surpluses after reducing
federal spending as a share of the gross domestic product -- fiscal discipline that did not survive the Bush administration.
"President Clinton believed in the public sector, but he thought that his responsibility to the long-term
fiscal condition of the country ruled out a significant expansion of the government in the economy as a
whole," said William A. Galston, a former Clinton policy adviser who is a senior fellow at the Brookings
Institution. "What is unmistakably clear is that the trajectory of the Obama administration -- whether it's
four years or eight years in office -- will be the reverse."
The administration is responding to public concerns over the nation's fiscal health and the political threat
it may pose. Rahm Emanuel, Obama's chief of staff, said that a quick economic recovery would have the
single biggest effect on the grim budget forecasts and that the administration's top priority will be "getting
America's fiscal house in order" once Congress finishes work on health-care and energy reform legislation.
"There's two parts to fiscal reform: cutting and cost controls," Emanuel said. "At the end of the day, you're
going to have to look at tax reform as part of the long-term fiscal health of the country. But if you change
Medicare, Medicaid and other big drivers of costs, you're going to get enormous savings."
The cost of extending health insurance to the 47 million uncovered Americans is estimated to be as high
as $1.2 trillion over the next decade, and administration officials say they are not sure how much the
overhaul will save the federal budget over the long term.
In Obama's radio address yesterday, he outlined $313 billion in savings and spending cuts over the next
10 years to help pay for the initiative, including adjusting Medicare payments to reflect efficiencies in the
health-care system, reducing hospital subsidies for treating uninsured patients as coverage expands to
more people, and lowering drug reimbursements for those eligible for both Medicare and Medicaid. In total,
Obama said, the administration has identified $948 billion of the projected costs, although those estimates
will probably be challenged by congressional auditors.
Peter Orszag, director of the Office of Management and Budget, told reporters last week: "We've never
changed our health-care system towards a best-practices one. So quantifying exactly what their impact
is is very difficult. But what I want to be very clear about is -- at worst, this will be deficit-neutral."
Some Democratic champions of health-care reform, including Galston, say slowing the growth of
medical costs could cut entitlement spending, reduce the need for borrowing and lead to significant long-term savings.
"The problem is that very few health-care experts believe that the measures proposed so far have
any reasonable chance of achieving those savings," Galston said.
Obama and his advisers hope that by the 2010 elections, the stimulus spending, the bank rescues
and other measures will have pushed the economy into recovery.
But some economists warn that any short-term economic improvement will probably resemble the
"jobless recovery" of the early 1990s, given the loss of jobs in the manufacturing, construction,
retail and other sectors. Democrats were trounced in midterm elections two years after Clinton
took office, partly because the economic recovery then underway had not significantly reduced unemployment.
Chris Edwards, director of tax policy studies at the conservative Cato Institute, said the large federal
deficits of the 1980s and early 1990s rallied public support for legislation that constrained government
spending -- a sentiment Obama appealed to last week in urging Congress to enact the "pay as you go"
rules into law. Ross Perot, for example, built a potent third-party campaign in 1992 on the issue of deficit reduction.
"There's a potential there that the seemingly out-of-control fiscal situation in Washington could galvanize
the public," Edwards said. "The question is whether the Republicans will be smart enough to take advantage of this."
-----------------
All I can do is pray for the Blue Dogs to buck up.
The Blue dogs buck up everything they touch. They either do the wrong thing for the right reason or the right
thing for the wrong reason...
QUOTE(rla @ Jun 16 2009, 09:10 AM)
The Blue dogs buck up everything they touch. They either do the wrong thing for the right reason or the right
thing for the wrong reason...
thing for the wrong reason...
And I thought Liberals were free of prejudice, blind to the color of one's coat.
We'll better see who fits your description by Jan. 20, 2010, and Nov. 4, 2010.
QUOTE(Indianhead @ Jun 16 2009, 11:37 AM)
QUOTE(rla @ Jun 16 2009, 09:10 AM)
The Blue dogs buck up everything they touch. They either do the wrong thing for the right reason or the right
thing for the wrong reason...
thing for the wrong reason...
And I thought Liberals were free of prejudice, blind to the color of one's coat.
We'll better see who fits your description by Jan. 20, 2010, and Nov. 4, 2010.
Liberals are liberated from traditional sources of authority and committed to the common good...
The world is mad. Do you think it might be a good idea if the Russian President and Finance Minister got on the same page?
The dollar will not survive the fall. The winter is going to be mean, cold and terminal to the US dollar.
Medvedev calls for new reserve currencies
Tue Jun 16, 2:23 am ET
YEKATERINBURG, Russia – Russian President Dmitry Medvedev says the world needs new reserve currencies.
Medvedev told a regional summit Tuesday that the creation of new reserve currencies in addition to the dollar is needed to stabilize global finances.
Medvedev has made the proposal before. It reflects both the Kremlin's push for greater international clout and a concern shared by other countries that soaring U.S. budget deficits could spur inflation and weaken the dollar.
Airing it at a summit meeting underlined the challenge to U.S. clout.
Medvedev spoke at a summit of the Shanghai Cooperation Organization, which includes China and four Central Asian nations.
More…
The dollar will not survive the fall. The winter is going to be mean, cold and terminal to the US dollar.
Medvedev calls for new reserve currencies
Tue Jun 16, 2:23 am ET
YEKATERINBURG, Russia – Russian President Dmitry Medvedev says the world needs new reserve currencies.
Medvedev told a regional summit Tuesday that the creation of new reserve currencies in addition to the dollar is needed to stabilize global finances.
Medvedev has made the proposal before. It reflects both the Kremlin's push for greater international clout and a concern shared by other countries that soaring U.S. budget deficits could spur inflation and weaken the dollar.
Airing it at a summit meeting underlined the challenge to U.S. clout.
Medvedev spoke at a summit of the Shanghai Cooperation Organization, which includes China and four Central Asian nations.
More…
"A new world economic order" is another way of saying goodbye to the dollar as the linchpin of business settlements.
Brazil’s Lula calls for new world economic order
Mon Jun 15, 2009 9:17am EDT
By Jonathan Lynn
GENEVA (Reuters) - Brazilian President Luiz Inacio Lula da Silva urged unions and workers on Monday to take advantage of the global financial crisis to help forge a new world economic order.
"I address myself now to the labor leaders," Lula told a global jobs summit at the International Labour Organization (ILO), a United Nations agency grouping governments, employers and worker representatives to promote good working conditions.
"This is an exceptional opportunity for all of you to think and develop proposals together with the employers and business leaders so that we can change definitely the relations between state and civil society and so that we can build our countries with much more fairness and much more solidarity," he said.
Lula said destabilizing surges last year in oil and commodity prices had been due to speculation.
"We cannot live with a financial system that speculates paper on top of paper without generating one single job, without manufacturing one screw, one shoe, one shirt, one tie," the former union leader told the conference to frequent applause.
More…
Brazil’s Lula calls for new world economic order
Mon Jun 15, 2009 9:17am EDT
By Jonathan Lynn
GENEVA (Reuters) - Brazilian President Luiz Inacio Lula da Silva urged unions and workers on Monday to take advantage of the global financial crisis to help forge a new world economic order.
"I address myself now to the labor leaders," Lula told a global jobs summit at the International Labour Organization (ILO), a United Nations agency grouping governments, employers and worker representatives to promote good working conditions.
"This is an exceptional opportunity for all of you to think and develop proposals together with the employers and business leaders so that we can change definitely the relations between state and civil society and so that we can build our countries with much more fairness and much more solidarity," he said.
Lula said destabilizing surges last year in oil and commodity prices had been due to speculation.
"We cannot live with a financial system that speculates paper on top of paper without generating one single job, without manufacturing one screw, one shoe, one shirt, one tie," the former union leader told the conference to frequent applause.
More…
Get this! Net foreign sales of US Treasuries were reported as if this is nothing much. A few more months and you can kiss the US dollar goodbye regardless of the algorithms.
The closely watched figure, excluding transactions that don’t occur on an open market, recorded net purchases of $11.2 billion in long-term U.S. securities after purchases of $55.4 billion in March, according to the monthly Treasury International Capital report, known as TIC.
It will take more than unified lies to hold the bond market after the third consecutive month of TIC increasing outflow. It will take QE at an unimaginable level.
This is a horrible report.
April Net Foreign Sales Of Long-Term US Secs $8.8B
* JUNE 15, 2009, 9:00 A.M. ET
WASHINGTON (Dow Jones)–Net foreign sales of long-maturity U.S. securities totaled $8.8 billion in April, following purchases of $36.5 billion the month before, according to a U.S. Treasury Department report released Monday.
Meanwhile, the report shows that China, Japan and Russia - three large purchasers of U.S. Treasurys - all trimmed their holdings of U.S. debt.
The monthly Treasury report highlights cross-border acquisitions of securities with maturities of more than one year including nonmarket transactions such as stock swaps and principal repayment on asset-backed securities.
The closely watched figure, excluding transactions that don’t occur on an open market, recorded net purchases of $11.2 billion in long-term U.S. securities, after purchases of $55.4 billion in March, according to the monthly Treasury International Capital report, known as TIC.
The report’s most comprehensive category, "monthly net TIC flows," includes nonmarket flows, short-term securities and changes in banks’ dollar holdings. This measure of net foreign capital outflow was $53.2 billion in April, versus an inflow of $25.0 billion the previous month.
More…
The closely watched figure, excluding transactions that don’t occur on an open market, recorded net purchases of $11.2 billion in long-term U.S. securities after purchases of $55.4 billion in March, according to the monthly Treasury International Capital report, known as TIC.
It will take more than unified lies to hold the bond market after the third consecutive month of TIC increasing outflow. It will take QE at an unimaginable level.
This is a horrible report.
April Net Foreign Sales Of Long-Term US Secs $8.8B
* JUNE 15, 2009, 9:00 A.M. ET
WASHINGTON (Dow Jones)–Net foreign sales of long-maturity U.S. securities totaled $8.8 billion in April, following purchases of $36.5 billion the month before, according to a U.S. Treasury Department report released Monday.
Meanwhile, the report shows that China, Japan and Russia - three large purchasers of U.S. Treasurys - all trimmed their holdings of U.S. debt.
The monthly Treasury report highlights cross-border acquisitions of securities with maturities of more than one year including nonmarket transactions such as stock swaps and principal repayment on asset-backed securities.
The closely watched figure, excluding transactions that don’t occur on an open market, recorded net purchases of $11.2 billion in long-term U.S. securities, after purchases of $55.4 billion in March, according to the monthly Treasury International Capital report, known as TIC.
The report’s most comprehensive category, "monthly net TIC flows," includes nonmarket flows, short-term securities and changes in banks’ dollar holdings. This measure of net foreign capital outflow was $53.2 billion in April, versus an inflow of $25.0 billion the previous month.
More…
Today is made up of lawyer talk from Russia’s Finance Minister Kudin. He is calling the dollar "irreplaceable" as a reserve currency at a time when China, India and Russia have all simultaneously reported significantly REDUCING their purchases of US dollar instruments. I am sure he is talking his position while today further reducing any new purchases.
Of course there is no way to substitute the US dollar in the reserves of all world central banks as they are simply stuck with too many.
There are too few SDRs at the present time.
There are no SDR bonds yet that are to issued so the IMF can join in Quantitative Easing in a more enthusiastic way. Governments would prefer a basket of depreciating paper rather than one single currency, even the euro, to diversify their reserves, risk, and to slow down their losses.
Today the IMF complimented the Federal Reserve for its enthusiastic monetary actions. That means applause for printing money with a confidence that if required the US Federal Reserve would continue along that path.
There is even some who are declaring Chairman Bernanke the greatest Fed Chairman anywhere.
The market hears what it wants to hear but does not take into consideration the further deterioration of fundamentals, now in the Treasury International Capital Flows (TIC).
When technical analysis first came on the scene it was a method of knowing fundamentals that were not evident in the marketplace. Then along came the millions who adopted TA as a religion. This religion further appointed high priests who became the Holy Seers of algorithms which were further financed by titanic amounts of money.
Now you need to know the fundamentals perfectly because TA is a Siren song attracting you by emotional pressure up on the rocks of a dollar that will not survive the fall and winter of 2009.
TA now makes the short term explosions up and down, but take a step back and look at the big picture. TA does not make the long term trends of all these practitioners or failed to own gold at $300.
Today is comical based on the senseless movement of algorithms and the now pushing of a non-concept that the US dollar is somehow going into a bull market and gold has had it.
The US dollar is going to .7200, .6200, and .5200. Gold is going to $1224 then to $1650 and onto Alf’s numbers.
This is a perfect setup for a June low in this reaction. Armstrong feels if this happens $5000 is set in cement.
Ignore the top callers. Understand trading these markets is reserved for the professional only. The pubic cannot trade for insurance. Understand the pull inside you to trade is that of the gambleholic’s emotional parade to destruction. Listen to Kenny Rogers "The Gambler."
Stay the course.
Russia’s Kudrin Signals No Alternative to Dollar
By John Fraher and Joseph Richter
June 15 (Bloomberg) — Russian Finance Minister Alexei Kudrin said the dollar is in “good shape,” further affirming that there’s no substitute for the world’s reserve currency.
Kudrin rushed to reassure investors of Russia’s confidence in the dollar just days after his boss, President Dmitry Medvedev, questioned its global status, joining China’s central bank Governor Zhou Xiaochuan in suggesting the world may need another benchmark for settling international debts.
“It’s too early to speak of an alternative,” Kudrin said in an interview two days ago in Lecce, Italy, after meeting officials from the Group of Eight nations.
Kudrin’s comments underscore the dependence of Brazil, China, Russia, and India on the currency of the U.S., the world’s largest economy and a $2.5 trillion export market. Even as some of their leaders questioned the dollar’s status, the four nations increased foreign reserves by more than $60 billion in May to limit their currencies’ gains and support their exports. They now have combined reserves of $2.8 trillion and are among the largest holders of Treasuries.
“At this point there’s no alternative to the U.S. dollar in terms of deep liquid markets and trading 24-7 globally,” Michael Woolfolk, senior currency strategist at the Bank of New York Mellon in New York, said yesterday in a telephone interview. “Nothing even comes close to the dollar in terms of reserve status.”
More…
International Demand for U.S. Assets Slowed in April (Update3)
By Vincent Del Giudice
June 15 (Bloomberg) — International purchases of American financial assets grew more slowly in April as China, Japan and Russia pared demand for Treasuries, underscoring the danger of U.S. reliance on foreigners to finance its fiscal deficit.
Total net purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with buying of $55.4 billion in March, the Treasury said today in Washington. International holdings of Treasuries increased a net $41.9 billion, compared with the $55.3 billion gain in March. Including bills, the holdings fell a net $2.6 billion.
Benchmark 10-year Treasuries, which rose after Russian Finance Minister Alexei Kudrin said it’s “too early to speak of an alternative” to the dollar, remained higher after today’s report. That indicates investors have yet to see evidence that international money managers are losing confidence in the currency that has proved a haven during the credit crisis.
“Talk that foreign central banks will diversify out of their dollar and Treasury holdings is so far just talk,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. “The worst financial crisis since the Great Depression is still ongoing and foreign investors and central banks still have a safe haven demand for U.S. Treasuries.”
More…
Of course there is no way to substitute the US dollar in the reserves of all world central banks as they are simply stuck with too many.
There are too few SDRs at the present time.
There are no SDR bonds yet that are to issued so the IMF can join in Quantitative Easing in a more enthusiastic way. Governments would prefer a basket of depreciating paper rather than one single currency, even the euro, to diversify their reserves, risk, and to slow down their losses.
Today the IMF complimented the Federal Reserve for its enthusiastic monetary actions. That means applause for printing money with a confidence that if required the US Federal Reserve would continue along that path.
There is even some who are declaring Chairman Bernanke the greatest Fed Chairman anywhere.
The market hears what it wants to hear but does not take into consideration the further deterioration of fundamentals, now in the Treasury International Capital Flows (TIC).
When technical analysis first came on the scene it was a method of knowing fundamentals that were not evident in the marketplace. Then along came the millions who adopted TA as a religion. This religion further appointed high priests who became the Holy Seers of algorithms which were further financed by titanic amounts of money.
Now you need to know the fundamentals perfectly because TA is a Siren song attracting you by emotional pressure up on the rocks of a dollar that will not survive the fall and winter of 2009.
TA now makes the short term explosions up and down, but take a step back and look at the big picture. TA does not make the long term trends of all these practitioners or failed to own gold at $300.
Today is comical based on the senseless movement of algorithms and the now pushing of a non-concept that the US dollar is somehow going into a bull market and gold has had it.
The US dollar is going to .7200, .6200, and .5200. Gold is going to $1224 then to $1650 and onto Alf’s numbers.
This is a perfect setup for a June low in this reaction. Armstrong feels if this happens $5000 is set in cement.
Ignore the top callers. Understand trading these markets is reserved for the professional only. The pubic cannot trade for insurance. Understand the pull inside you to trade is that of the gambleholic’s emotional parade to destruction. Listen to Kenny Rogers "The Gambler."
Stay the course.
Russia’s Kudrin Signals No Alternative to Dollar
By John Fraher and Joseph Richter
June 15 (Bloomberg) — Russian Finance Minister Alexei Kudrin said the dollar is in “good shape,” further affirming that there’s no substitute for the world’s reserve currency.
Kudrin rushed to reassure investors of Russia’s confidence in the dollar just days after his boss, President Dmitry Medvedev, questioned its global status, joining China’s central bank Governor Zhou Xiaochuan in suggesting the world may need another benchmark for settling international debts.
“It’s too early to speak of an alternative,” Kudrin said in an interview two days ago in Lecce, Italy, after meeting officials from the Group of Eight nations.
Kudrin’s comments underscore the dependence of Brazil, China, Russia, and India on the currency of the U.S., the world’s largest economy and a $2.5 trillion export market. Even as some of their leaders questioned the dollar’s status, the four nations increased foreign reserves by more than $60 billion in May to limit their currencies’ gains and support their exports. They now have combined reserves of $2.8 trillion and are among the largest holders of Treasuries.
“At this point there’s no alternative to the U.S. dollar in terms of deep liquid markets and trading 24-7 globally,” Michael Woolfolk, senior currency strategist at the Bank of New York Mellon in New York, said yesterday in a telephone interview. “Nothing even comes close to the dollar in terms of reserve status.”
More…
International Demand for U.S. Assets Slowed in April (Update3)
By Vincent Del Giudice
June 15 (Bloomberg) — International purchases of American financial assets grew more slowly in April as China, Japan and Russia pared demand for Treasuries, underscoring the danger of U.S. reliance on foreigners to finance its fiscal deficit.
Total net purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with buying of $55.4 billion in March, the Treasury said today in Washington. International holdings of Treasuries increased a net $41.9 billion, compared with the $55.3 billion gain in March. Including bills, the holdings fell a net $2.6 billion.
Benchmark 10-year Treasuries, which rose after Russian Finance Minister Alexei Kudrin said it’s “too early to speak of an alternative” to the dollar, remained higher after today’s report. That indicates investors have yet to see evidence that international money managers are losing confidence in the currency that has proved a haven during the credit crisis.
“Talk that foreign central banks will diversify out of their dollar and Treasury holdings is so far just talk,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. “The worst financial crisis since the Great Depression is still ongoing and foreign investors and central banks still have a safe haven demand for U.S. Treasuries.”
More…
Snuffy:
Funny you mentioned "The Gambler" I was just
on a smoke break thinking of the lyrics...
"know when to hold them, know when to fold them"...
Tough day for equities, currencies, bonds, T-bills...everything...
exceeeeept...oil and gas...and my tomatos, which are coming in by the
bucket...I guess my next song will be "You Are My Sunshine"...
written by a former governor...or maybe our our state song
...another simple thing for a simple guy...loving the land near The Gulf.
Funny you mentioned "The Gambler" I was just
on a smoke break thinking of the lyrics...
"know when to hold them, know when to fold them"...
Tough day for equities, currencies, bonds, T-bills...everything...
exceeeeept...oil and gas...and my tomatos, which are coming in by the
bucket...I guess my next song will be "You Are My Sunshine"...
written by a former governor...or maybe our our state song
...another simple thing for a simple guy...loving the land near The Gulf.
QUOTE(Indianhead @ Jun 16 2009, 07:30 PM)
Snuffy:
Funny you mentioned "The Gambler" I was just
on a smoke break thinking of the lyrics...
"know when to hold them, know when to fold them"...
Tough day for equities, currencies, bonds, T-bills...everything...
exceeeeept...oil and gas...and my tomatos, which are coming in by the
bucket...I guess my next song will be "You Are My Sunshine"...
written by a former governor...or maybe our our state song
...another simple thing for a simple guy...loving the land near The Gulf.
Funny you mentioned "The Gambler" I was just
on a smoke break thinking of the lyrics...
"know when to hold them, know when to fold them"...
Tough day for equities, currencies, bonds, T-bills...everything...
exceeeeept...oil and gas...and my tomatos, which are coming in by the
bucket...I guess my next song will be "You Are My Sunshine"...
written by a former governor...or maybe our our state song
...another simple thing for a simple guy...loving the land near The Gulf.
Are you getting the rain that we are?
WORLD FOREX: Dollar Declines; BRIC Nations Want Diversity Wall Street Journal - 1 hour ago By Dan Molinski OF DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The dollar declined Tuesday as major emerging market nations urged more diversity in the global currency system, another sign that big investors are growing restless with the greenback's ... Dollar Falls as Housing Gain Encourages Higher-Yield Demand Bloomberg Dollar slides after Russia comments, BRIC summit guardian.co.uk
Shanghai Cooperation Organization -- News Updates Russian President Dmitry Medvedev will host leaders from China and Central Asia Monday at the summit of a regional grouping dominated by Moscow and Beijing. (AP Photo/Mikhail Metzel)
Emerging Economic Powers Meet in Russia -- New York Times
MOSCOW — Leaders of some of the world's most powerful economies gathered Tuesday to discuss how they can exert more control over the global financial system as it takes its first wobbly steps toward recovery.
Yet not an American or Western European was in the bunch.
The first summit meeting of the so-called BRIC group — Brazil, Russia, India and China — was intended to underscore the rising economic clout of these four major developing countries and their demand for a greater voice in the world. And Russia, the group's host and ideological provocateur, was especially interested in using the summit to fire a shot across Washington's bow.
Read more ....http://www.nytimes.com/2009/06/17/world/europe/17bric.html?_r=1&ref=global
More News On The Shanghai Cooperation Organization
First summit meeting of BRIC leaders begins in Yekaterinburg -- China View
http://news.xinhuanet.com/english/2009-06/...nt_11552453.htm
Russia, China seek greater international clout -- Yahoo News/AP
http://news.yahoo.com/s/ap/20090616/ap_on_...ia_summit_talks
Russia Hosts 'Counterbalance' to U.S., 'Shanghai Cooperation Organization' -- FOX News http://www.foxnews.com/story/0,2933,526423,00.html
Medvedev calls for new reserve currencies -- AP
http://www.google.com/hostednews/ap/articl...L84TGAD98RJKRO0
Russia challenges dollar, China offers loans -- AP
http://www.google.com/hostednews/ap/articl...L84TGAD98RM6A00
China, Russia Woo Central Asian Countries With Bailout Cash -- Bloomberg
http://www.bloomberg.com/apps/news?pid=206...id=aBzpsQgJ68dA
Big four emerging economies meet for first summit -- Canada.com
http://www.canada.com/business/fp/four+eme...0801/story.html
Backgrounder: Brief history of Shanghai Cooperation Organization -- China View
http://news.xinhuanet.com/english/2009-06/...nt_11550837.htm
Emerging Economic Powers Meet in Russia -- New York Times
MOSCOW — Leaders of some of the world's most powerful economies gathered Tuesday to discuss how they can exert more control over the global financial system as it takes its first wobbly steps toward recovery.
Yet not an American or Western European was in the bunch.
The first summit meeting of the so-called BRIC group — Brazil, Russia, India and China — was intended to underscore the rising economic clout of these four major developing countries and their demand for a greater voice in the world. And Russia, the group's host and ideological provocateur, was especially interested in using the summit to fire a shot across Washington's bow.
Read more ....http://www.nytimes.com/2009/06/17/world/europe/17bric.html?_r=1&ref=global
More News On The Shanghai Cooperation Organization
First summit meeting of BRIC leaders begins in Yekaterinburg -- China View
http://news.xinhuanet.com/english/2009-06/...nt_11552453.htm
Russia, China seek greater international clout -- Yahoo News/AP
http://news.yahoo.com/s/ap/20090616/ap_on_...ia_summit_talks
Russia Hosts 'Counterbalance' to U.S., 'Shanghai Cooperation Organization' -- FOX News http://www.foxnews.com/story/0,2933,526423,00.html
Medvedev calls for new reserve currencies -- AP
http://www.google.com/hostednews/ap/articl...L84TGAD98RJKRO0
Russia challenges dollar, China offers loans -- AP
http://www.google.com/hostednews/ap/articl...L84TGAD98RM6A00
China, Russia Woo Central Asian Countries With Bailout Cash -- Bloomberg
http://www.bloomberg.com/apps/news?pid=206...id=aBzpsQgJ68dA
Big four emerging economies meet for first summit -- Canada.com
http://www.canada.com/business/fp/four+eme...0801/story.html
Backgrounder: Brief history of Shanghai Cooperation Organization -- China View
http://news.xinhuanet.com/english/2009-06/...nt_11550837.htm
QUOTE(Indianhead @ Jun 16 2009, 01:30 PM)
Snuffy:
Funny you mentioned "The Gambler" I was just
on a smoke break thinking of the lyrics...
"know when to hold them, know when to fold them"...
Tough day for equities, currencies, bonds, T-bills...everything...
exceeeeept...oil and gas...and my tomatos, which are coming in by the
bucket...I guess my next song will be "You Are My Sunshine"...
written by a former governor...or maybe our our state song
...another simple thing for a simple guy...loving the land near The Gulf.
Funny you mentioned "The Gambler" I was just
on a smoke break thinking of the lyrics...
"know when to hold them, know when to fold them"...
Tough day for equities, currencies, bonds, T-bills...everything...
exceeeeept...oil and gas...and my tomatos, which are coming in by the
bucket...I guess my next song will be "You Are My Sunshine"...
written by a former governor...or maybe our our state song
...another simple thing for a simple guy...loving the land near The Gulf.
Near the Gulf (but not too near) is the best place to be for the next 50 years at least.
Jim Sinclair’s Commentary
Yesterday’s dollar strength came from a statement at the end of the G8 meeting concerning Russia’s unending confidence in the US dollar. That triggered the algorithms to ram the US currency up more than 100 points.
There was a day when that would have been considered a currency crisis against upper bands and central bank intervention would be called in. Today 100 points in a currency move is just another day signifying absolutely nothing. Now the algorithms are trading with each other.
The dollar is history as the Universal Reserve Currency. You do not need a Nobel Prize to see that. The long term dollar trend is down, and will NOT be reversed here by spin.
I join trader Dan in cautioning you that you are not financed to play against the hedgies as traders. Invest with the trend and do not use margin.
Gold is getting ready to secure $1224 on its way to $1650 and then on to Alf’s numbers.
BRICs May Buy Each Other’s Bonds in Shift From Dollar
By Lyubov Pronina and Alex Nicholson
June 16 (Bloomberg) — Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar, Russian President Dmitry Medvedev’s top economic adviser said.
The leaders of the so-called BRIC countries will discuss measures to promote regional currencies when they meet later today,Arkady Dvorkovich told reporters in the Ural Mountains city of Yekaterinburg before the first BRIC summit.
“There will be talk about increasing the share of mutual trade in national currencies, possibly placing part of reserves in the financial instruments of partner countries,” Dvorkovich said.
Medvedev is hosting back-to-back summits of developing economies in Yekaterinburg as he seeks to lessen the world economy’s dependence on the U.S. dollar. Medvedev will hold talks later today with Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh and Brazilian President Luiz Inacio Lulada Silva.
Medvedev and Hu earlier today attended a summit of the Shanghai Cooperation Organization, which also includes the four former Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.
The Russian leader reiterated his intention to push for the creation of a “supranational currency” to challenge the U.S. dollar and encouraged China and the other Shanghai group members to use each other’s currencies for trade.
More…
Yesterday’s dollar strength came from a statement at the end of the G8 meeting concerning Russia’s unending confidence in the US dollar. That triggered the algorithms to ram the US currency up more than 100 points.
There was a day when that would have been considered a currency crisis against upper bands and central bank intervention would be called in. Today 100 points in a currency move is just another day signifying absolutely nothing. Now the algorithms are trading with each other.
The dollar is history as the Universal Reserve Currency. You do not need a Nobel Prize to see that. The long term dollar trend is down, and will NOT be reversed here by spin.
I join trader Dan in cautioning you that you are not financed to play against the hedgies as traders. Invest with the trend and do not use margin.
Gold is getting ready to secure $1224 on its way to $1650 and then on to Alf’s numbers.
BRICs May Buy Each Other’s Bonds in Shift From Dollar
By Lyubov Pronina and Alex Nicholson
June 16 (Bloomberg) — Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar, Russian President Dmitry Medvedev’s top economic adviser said.
The leaders of the so-called BRIC countries will discuss measures to promote regional currencies when they meet later today,Arkady Dvorkovich told reporters in the Ural Mountains city of Yekaterinburg before the first BRIC summit.
“There will be talk about increasing the share of mutual trade in national currencies, possibly placing part of reserves in the financial instruments of partner countries,” Dvorkovich said.
Medvedev is hosting back-to-back summits of developing economies in Yekaterinburg as he seeks to lessen the world economy’s dependence on the U.S. dollar. Medvedev will hold talks later today with Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh and Brazilian President Luiz Inacio Lulada Silva.
Medvedev and Hu earlier today attended a summit of the Shanghai Cooperation Organization, which also includes the four former Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.
The Russian leader reiterated his intention to push for the creation of a “supranational currency” to challenge the U.S. dollar and encouraged China and the other Shanghai group members to use each other’s currencies for trade.
More…
The Alternatives to Uncle Buck Being Considered
China Stakes
BRIC, SCO Discuss "Super-Sovereignty" Currency, USD Alternatives
By Scott Zhou
June 16,2009
Shanghai
China continued to consider a "super-sovereignty" currency among the countries of Shanghai Cooperation Organization (SCO), an intergovernmental mutual-security organization that met today in the Russian city of Yekaterinburg, in the Urals at the division of Asia and Europe. Members include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, with India as one of its four observers.
Right after the SCO meeting, the BRIC country (Brazil, Russia, India and China) leaders met formally for the first time. It is not merely coincident that three of them have expressed a desire to adjust their foreign exchange reserve portfolios by reducing the share or volume of US dollar assets.
China has just halted the increase its holding of US Treasury debt. By the end of April, China held $763.5 billion of it, a fall of $4.4 billion, month on month, the first time China has reduced its Treasury holdings. Since May, 2008, China has increased its holding by $260 billion.
Inside China, USD is a hate-more-than-love story. Analysts have long argued that China should be very cautious on buying US government bonds since dollar is bound to weaken. Others hold that US treasury debts are still the best and first choice for China's near $2 trillion foreign exchange reserve.
In March, Madam Hu Xiaolian, the chief of China's State Administration of Foreign Exchange and a deputy governor of the People's Bank of China, China's central bank, said that investing in US national debt is an essential part of China's reserve management. But while continuing to buy US national debt, China is concerned about the risk of the fluctuation in value of its assets.
China has announced that it would buy up to $50 billion in bonds issued by the International Monetary Fund (IMF). Meanwhile, Russia and Brazil have said they are planning to buy up to $10 billion in IMF bonds, which would mean selling Treasury bonds. India has expressed the same interest. In April, China, Russia, and Brazil all reduced their holdings of US treasury debt.
China now believes that a long-term dollar decline is inevitable, and the risk to the value of its $2 trillion foreign exchange reserve has become realistic, if not imminent.
China has been a huge beneficiary of the order of the world economy and a monetary system with the US dollar as the reserve currency. China's economy has been anchored by a stable dollar exchange pegged by China's currency, RMB.
But the financial crisis has given China a wake up call that the present monetary system is not sustainable, and neither is China's foreign exchange regime and mode of economic growth, which has been largely based on relentless exporting.
What, then, is the role RMB can play in the future? Russia has been urging China for years to settle their bi-lateral trade in their respective currencies. Brazil intends to trade with China by RMB and the real. Recently Russia suggested making RMB convertible to become an international reserve currency.
China can not challenge US directly. The BRIC summit is a convenient platform for China and the other BRIC powers, set to become the 4 of the 6 largest economic entities by 2050, to put a bit of pressure on the US. Held before the first China-US Strategic and Economic Dialogue in late July in Washington DC, the BRIC summit may give China some leverage in dealing with the US.
Russia is ready to use its exchange reserve to buy securities issued by BRIC countries. In return, Russia hopes the others will be willing to buy financial instruments issued by Russia. The leaders discussed increasing of the share of settlement currencies for trade among them. They also discussed adjusting their reserve assets portfolio in a coordinated way.
At the SCO meeting held just before the BRIC summit and attended by China, Russia and India, China proposed to research the feasibility of using a super-sovereignty currency among SCO member countries.
Kazakhstan president Nursultan Nazarbayev proposed that trade among SCO countries be settled by currencies of member countries. He also suggested that a super-sovereignty currency used inside the SCO eventually become a SCO reserve currency. Russian President Dmitry Medvedev also supported the idea.
China Stakes
BRIC, SCO Discuss "Super-Sovereignty" Currency, USD Alternatives
By Scott Zhou
June 16,2009
Shanghai
China continued to consider a "super-sovereignty" currency among the countries of Shanghai Cooperation Organization (SCO), an intergovernmental mutual-security organization that met today in the Russian city of Yekaterinburg, in the Urals at the division of Asia and Europe. Members include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, with India as one of its four observers.
Right after the SCO meeting, the BRIC country (Brazil, Russia, India and China) leaders met formally for the first time. It is not merely coincident that three of them have expressed a desire to adjust their foreign exchange reserve portfolios by reducing the share or volume of US dollar assets.
China has just halted the increase its holding of US Treasury debt. By the end of April, China held $763.5 billion of it, a fall of $4.4 billion, month on month, the first time China has reduced its Treasury holdings. Since May, 2008, China has increased its holding by $260 billion.
Inside China, USD is a hate-more-than-love story. Analysts have long argued that China should be very cautious on buying US government bonds since dollar is bound to weaken. Others hold that US treasury debts are still the best and first choice for China's near $2 trillion foreign exchange reserve.
In March, Madam Hu Xiaolian, the chief of China's State Administration of Foreign Exchange and a deputy governor of the People's Bank of China, China's central bank, said that investing in US national debt is an essential part of China's reserve management. But while continuing to buy US national debt, China is concerned about the risk of the fluctuation in value of its assets.
China has announced that it would buy up to $50 billion in bonds issued by the International Monetary Fund (IMF). Meanwhile, Russia and Brazil have said they are planning to buy up to $10 billion in IMF bonds, which would mean selling Treasury bonds. India has expressed the same interest. In April, China, Russia, and Brazil all reduced their holdings of US treasury debt.
China now believes that a long-term dollar decline is inevitable, and the risk to the value of its $2 trillion foreign exchange reserve has become realistic, if not imminent.
China has been a huge beneficiary of the order of the world economy and a monetary system with the US dollar as the reserve currency. China's economy has been anchored by a stable dollar exchange pegged by China's currency, RMB.
But the financial crisis has given China a wake up call that the present monetary system is not sustainable, and neither is China's foreign exchange regime and mode of economic growth, which has been largely based on relentless exporting.
What, then, is the role RMB can play in the future? Russia has been urging China for years to settle their bi-lateral trade in their respective currencies. Brazil intends to trade with China by RMB and the real. Recently Russia suggested making RMB convertible to become an international reserve currency.
China can not challenge US directly. The BRIC summit is a convenient platform for China and the other BRIC powers, set to become the 4 of the 6 largest economic entities by 2050, to put a bit of pressure on the US. Held before the first China-US Strategic and Economic Dialogue in late July in Washington DC, the BRIC summit may give China some leverage in dealing with the US.
Russia is ready to use its exchange reserve to buy securities issued by BRIC countries. In return, Russia hopes the others will be willing to buy financial instruments issued by Russia. The leaders discussed increasing of the share of settlement currencies for trade among them. They also discussed adjusting their reserve assets portfolio in a coordinated way.
At the SCO meeting held just before the BRIC summit and attended by China, Russia and India, China proposed to research the feasibility of using a super-sovereignty currency among SCO member countries.
Kazakhstan president Nursultan Nazarbayev proposed that trade among SCO countries be settled by currencies of member countries. He also suggested that a super-sovereignty currency used inside the SCO eventually become a SCO reserve currency. Russian President Dmitry Medvedev also supported the idea.
And the Winner Is.... the SDR
This is a significant development.
It appears clear now that the preferred alternative to the US dollar reserve currency regime for international transactions is going to be the Special Drawing Rights (SDR) units from the International Monetary Fund. We have seen indications that this was going to be the alternative, as compared to the euro, but it was not so confident a probability as it seems today.
Now it seems to be. And those SDR units will be an adjusted basket of commodities and currencies that will be more reflective of the current global economic picture. This may be phased in over time if the US and its political supporters have their way.
This is important because it is feasible, a realistic alternative, much more practical than the complete replacement of the US dollar by something else like the euro for example. We may also see more bilateral agreements based on local currencies.
Achieving the concurrence of the Saudis and other US client states will be important, because the dollar reserve strength has been largely based on its political connection to oil and military power. Most commentators and analysts miss this, but it is essentially at the heart of the matter. History may look back on this as a period of neo-colonialism since it has been so pervasive and uneven in its geopolitical relationships, especially since the 1970's: a Pax Americana.
This is not to say that the IMF's SDRs will be THE solution. They may very well falter. But if one is looking for a politically and financially palatable alternative to break the Big Dollar cartel, this looks likely to us. If it falters, it will be replaced with something else, most likely after some 'tinkering' with the basket composition first.
Let's keep an eye on this. But it is our judgement that the US dollar will continue to decline in signficance, in a relatively orderly fashion for the forseeable future, looking out perhaps over the next ten years, barring a major exogenous event, most likely of a geopolitical or military nature.
Russia calls for revision of SDR currency basket
By Gleb Bryanski
Tue Jun 16, 2009 3:58pm IST
YEKATERINBURG, Russia (Reuters) - The International Monetary Fund (IMF) should expand the basket of Special Drawing Rights to include the Chinese yuan, commodity currencies and gold, a senior Kremlin official said on Tuesday.
The SDR is an international reserve asset allocated to member countries with its exchange rate determined by a basket of currencies, at the moment including dollar, euro, yen and sterling. A review of the basket is due in November 2010.
"The rouble, yuan deserve to be included in the SDR basket," Kremlin economy aide Arkady Dvorkovich told a news conference ahead of the first summit of Brazil, Russia, India and China, known as BRIC, in the Russian city of Yekaterinburg.
"It is important that the composition of the basket also reflects the role of commodities in the global economy," Dvorkovich said, naming Australian and Canadian dollars as possible candidates.
"We also think that gold has a potential as a possible participant. The price of gold has a negative correlation to the dollar. Therefore it is beneficial to tie these two instruments into one so that investors feel safer," he said.
Dvorkovich said he doubted Russia would complete its transition to an inflation-targeting regime which implies a freely floating exchange rate for the rouble next year when the IMF basket's review takes place, as announced by the central bank.
Dvorkovich said BRIC leaders will discuss new reserve currencies at the summit but called for caution in the currency debate, saying it was in no-one's interest to ruin the dollar.
Russia rattled financial markets last week when a central bank official said Moscow will cut the share of U.S. Treasuries in its forex reserves in favour of IMF bonds and bank deposits.
Finance Minister Alexei Kudrin played down this statement over the weekend saying the dollar's status as the world's main reserve currency would unlikely change in the near term. Dvorkovich said new reserve currencies were inevitable.
"The world economy will grow... In the future we are sure growth will resume. This growing pie should be divided in a fairer way. We are not talking about excluding the dollar but the share of other currencies should increase," he said.
He said BRIC leaders will discuss investing their reserves, which are among the seven largest in the world, in each other's currencies, settling bilateral trade in domestic currencies and striking currency swap agreements.
"It would make sense for us if our partners agreed to place some of their reserves in Russian roubles," Dvorkovich said.
He said BRIC countries had a common position regarding the reform of the International Monetary Fund while a decision by China, Brazil and Russia to purchase SDR-denominated bonds issued by the IMF would boost the role of SDRs.
"Any expansion of the IMF's resource base implies ... strengthening of SDRs' role in the international currency system," Dvorkovich said.
This is a significant development.
It appears clear now that the preferred alternative to the US dollar reserve currency regime for international transactions is going to be the Special Drawing Rights (SDR) units from the International Monetary Fund. We have seen indications that this was going to be the alternative, as compared to the euro, but it was not so confident a probability as it seems today.
Now it seems to be. And those SDR units will be an adjusted basket of commodities and currencies that will be more reflective of the current global economic picture. This may be phased in over time if the US and its political supporters have their way.
This is important because it is feasible, a realistic alternative, much more practical than the complete replacement of the US dollar by something else like the euro for example. We may also see more bilateral agreements based on local currencies.
Achieving the concurrence of the Saudis and other US client states will be important, because the dollar reserve strength has been largely based on its political connection to oil and military power. Most commentators and analysts miss this, but it is essentially at the heart of the matter. History may look back on this as a period of neo-colonialism since it has been so pervasive and uneven in its geopolitical relationships, especially since the 1970's: a Pax Americana.
This is not to say that the IMF's SDRs will be THE solution. They may very well falter. But if one is looking for a politically and financially palatable alternative to break the Big Dollar cartel, this looks likely to us. If it falters, it will be replaced with something else, most likely after some 'tinkering' with the basket composition first.
Let's keep an eye on this. But it is our judgement that the US dollar will continue to decline in signficance, in a relatively orderly fashion for the forseeable future, looking out perhaps over the next ten years, barring a major exogenous event, most likely of a geopolitical or military nature.
Russia calls for revision of SDR currency basket
By Gleb Bryanski
Tue Jun 16, 2009 3:58pm IST
YEKATERINBURG, Russia (Reuters) - The International Monetary Fund (IMF) should expand the basket of Special Drawing Rights to include the Chinese yuan, commodity currencies and gold, a senior Kremlin official said on Tuesday.
The SDR is an international reserve asset allocated to member countries with its exchange rate determined by a basket of currencies, at the moment including dollar, euro, yen and sterling. A review of the basket is due in November 2010.
"The rouble, yuan deserve to be included in the SDR basket," Kremlin economy aide Arkady Dvorkovich told a news conference ahead of the first summit of Brazil, Russia, India and China, known as BRIC, in the Russian city of Yekaterinburg.
"It is important that the composition of the basket also reflects the role of commodities in the global economy," Dvorkovich said, naming Australian and Canadian dollars as possible candidates.
"We also think that gold has a potential as a possible participant. The price of gold has a negative correlation to the dollar. Therefore it is beneficial to tie these two instruments into one so that investors feel safer," he said.
Dvorkovich said he doubted Russia would complete its transition to an inflation-targeting regime which implies a freely floating exchange rate for the rouble next year when the IMF basket's review takes place, as announced by the central bank.
Dvorkovich said BRIC leaders will discuss new reserve currencies at the summit but called for caution in the currency debate, saying it was in no-one's interest to ruin the dollar.
Russia rattled financial markets last week when a central bank official said Moscow will cut the share of U.S. Treasuries in its forex reserves in favour of IMF bonds and bank deposits.
Finance Minister Alexei Kudrin played down this statement over the weekend saying the dollar's status as the world's main reserve currency would unlikely change in the near term. Dvorkovich said new reserve currencies were inevitable.
"The world economy will grow... In the future we are sure growth will resume. This growing pie should be divided in a fairer way. We are not talking about excluding the dollar but the share of other currencies should increase," he said.
He said BRIC leaders will discuss investing their reserves, which are among the seven largest in the world, in each other's currencies, settling bilateral trade in domestic currencies and striking currency swap agreements.
"It would make sense for us if our partners agreed to place some of their reserves in Russian roubles," Dvorkovich said.
He said BRIC countries had a common position regarding the reform of the International Monetary Fund while a decision by China, Brazil and Russia to purchase SDR-denominated bonds issued by the IMF would boost the role of SDRs.
"Any expansion of the IMF's resource base implies ... strengthening of SDRs' role in the international currency system," Dvorkovich said.
QUOTE(Indianhead @ Jun 16 2009, 07:30 PM)
Snuffy:
Funny you mentioned "The Gambler" I was just
on a smoke break thinking of the lyrics...
"know when to hold them, know when to fold them"...
Tough day for equities, currencies, bonds, T-bills...everything...
exceeeeept...oil and gas...and my tomatos, which are coming in by the
bucket...I guess my next song will be "You Are My Sunshine"...
written by a former governor...or maybe our our state song
...another simple thing for a simple guy...loving the land near The Gulf.
Funny you mentioned "The Gambler" I was just
on a smoke break thinking of the lyrics...
"know when to hold them, know when to fold them"...
Tough day for equities, currencies, bonds, T-bills...everything...
exceeeeept...oil and gas...and my tomatos, which are coming in by the
bucket...I guess my next song will be "You Are My Sunshine"...
written by a former governor...or maybe our our state song
...another simple thing for a simple guy...loving the land near The Gulf.
Paranoia Strikes Deep...
...into your heart it will creep." Lyrics from the Buffalo Springfield song "For What It's Worth"
If you're wondering why the song is coming to mind, you must not have seen the mass public programming effort underway in Melbourne Australia where "Melburnians urged to have Go Bags ready in case of evacuation..."
Why, I haven't heard of grab & go bag since my sailboat days, where a grab & go kit is standard fare offshore. The idea is that if your boat sinks from under you, you'll have a VHF handheld radio (modified to work on all VHF frequencies, including the aircraft 121.5 MHz emergency frequency, a gallon of water, survival gear including a solar still and fishing gear, a deck of cards and so forth...)
But a grab and go kit in Melbourne?
---
It could be that the city fathers (and mothers) of Melbourne have been reading cheery reports like "World's megacities ripe for 'megadisaster'.
---
At some point, I rather expect a series of mega disasters. Why? The crooks who orchestrate things behind the scenes in the financial markets will need something BIG to cover their crimes and put the public off their scent.
What they don't want leaking out is the notion that printing up paper with nothing more than ink and a promise doesn't work very well as a long-term store of value. Which is why a steak dinner in the days before the Federal Reserve cost $1 dollar. today, it's 20-times that which means the purchasing power of money has been watered down twenty-times-over since 1913. Well, more actually, but it's all hidden in plain sight behind the big lie "Prices Go Up!"
Truth is that "Money is being watered down." Irwin Allen couldn't cook up a bigger disaster movie. titles like "The Poseidon Derivative", or "Towering Bankferno" rush to mind.
The Dollar: The Good, Bad and Ugly - Axel Merk, Merk Investments
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