Thursday, 21 October 2010

The Weak Dollar Policy.

Baltic Dry Index. 2729 -15
LIR Gold Target by 2019: $3,000.

"It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to [be] competitive. It is not a viable, feasible strategy."

US Treasury Secretary Geithner.

Watch what they do rather than pay attention to what they say. Yes, it’s danger time again the G-20 finance ministers “will try to resolve differences over exchange-rate policies this weekend as U.S. officials continue to press China to let the yuan appreciate faster. The U.S. is pushing for the G-20 to agree on a statement of cooperation on exchange-rate issues, either during the Oct. 22- 23 gathering in Gyeongju, South Korea”, according to Bloomberg. While US Secretary Geithner is likely to have them rolling in the aisles with his strong dollar routine, the coming meeting is likely to be one of the more acrimonious meetings since the US banksters almost blew up the global financial system. Everyone attending, except the Chinese, want the China to raise the value of the yuan. Everyone attending, except America, want America to actually implement a strong dollar policy. Everyone attending bar none, all want to weaken their own currency against the rest, in that way they hope to get export advantage for their manufacturers. Stay long gold and silver, adding more if any central banks are foolish enough to dump more. The existing fiat dollar reserve standard is broken, with the US version of casino capitalism dead but still on central bankster life support. All in the room know it, but for the moment none are willing to pull the plug. But the plug will get pulled eventually, sooner rather than later the more invented fiat money the Fed pumps in to the US banking system.

"Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."

Alan Greenspan

Dollar plummets on report Fed plans to pump $500bn more into economy

US stock markets recovered on Wednesday as the dollar fell across the board amid further signs the Federal Reserve will increase economic stimulus over the next six months.
Published: 10:44PM BST 20 Oct 2010

The Fed’s Beige Book survey on regional business on Wednesday said the US economy expanded at a “modest pace” with little sign of acceleration last month, fueling speculation that central bankers could take further measures to support growth.

Jack Ablin, chief investment officer at Chicago-based Harris Private Bank told Bloomberg: “The Beige Book reiterates the call for quantitative easing. The economy is growing, just not accelerating. It remains to be seen what ultimately the Fed buying of bonds will do.”

A report by consulting firm Medley Global Advisors suggested the Fed could start introducing the stimulus as soon as next month, spending $100bn a month on bond purchases. It is understood the Fed has an open-ended commitment to do more over the next 18 months.

The dollar plummeted to its lowest level against the euro since July, and a 15-year low against the yen. The euro was up 1.06pc at $1.395 and the dollar ended at 81.05 yen.

U.S. Seeks G-20 Cooperation on Currencies, Pushes China on Yuan

Oct. 21 (Bloomberg) -- Group of 20 policy makers will try to resolve differences over exchange-rate policies this weekend as U.S. officials continue to press China to let the yuan appreciate faster.

The U.S. is pushing for the G-20 to agree on a statement of cooperation on exchange-rate issues, either during the Oct. 22- 23 gathering in Gyeongju, South Korea, or at a summit of leaders in Seoul in November, a U.S. official said today. The U.S. has said it wants currencies to respond to market forces and economic fundamentals, rather than government intervention.

---- Geithner’s comments show the U.S. is trying to forge a united front among the Group of Seven nations in urging China and other emerging market nations to let their currencies rise, said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

“How the dollar does against the euro and sterling might be different than how the dollar does against Asia,” Chandler said. He predicted there would be increasing pressure on China at the G-20 meetings, without an international agreement on intervention such as the Plaza Accord of 1985.

----- G-20 officials convene amid concern countries are pursuing weaker exchange rates as a route to stronger economic growth, either by limiting currency gains with government purchases like China or by discussing possible monetary easing, as the U.S. and U.K. have done.

Stuck in the middle are nations such as South Korea and Brazil, which have introduced controls to slow currency gains and capital inflows. China’s surprise shift to higher interest rates this week underscores the task developing nations face as they struggle to keep speculative cash from destabilizing their economies.

Record Flows

Emerging-market equity mutual funds attracted more than $60 billion this year and bond funds lured $41 billion, both on pace for record annual inflows, according to data compiled by EPFR Global, a Cambridge, Massachusetts-based research firm. The investment drove 19 of 25 emerging-market currencies tracked by Bloomberg higher versus the dollar.

While Brazil has been more willing to relax its exchange- rate controls, it is now finding that approach difficult to sustain because of actions by other large emerging-market nations, a U.S. Treasury official told reporters yesterday, without naming China specifically. Brazil and India are framing the issues the G-20 will need to tackle, the official said.

Next, China’s red rag to the assembling G-19 bulls.

China’s 9.6% Growth May Add Weight to Calls for Currency Gains

Oct. 21 (Bloomberg) -- China’s economy grew 9.6 percent in the third quarter and inflation accelerated to the fastest pace in almost two years, adding weight to calls for the engine of the global recovery to let its currency appreciate more rapidly.

Growth exceeded the 9.5 percent median estimate of economists in a Bloomberg News survey. Consumer prices jumped 3.6 percent in September from a year earlier, the statistics bureau said in Beijing today. That matched the median forecast.

China’s expansion, running at more than three times the pace of growth in the U.S., may add fuel to arguments that the second-largest economy can withstand a stronger yuan as Group of 20 officials gather to discuss currencies in South Korea tomorrow. China raised interest rates on Oct. 19 for the first time since the global crisis, affirming policy makers’ confidence in the recovery and concern at price pressures.

“Foreign critics would look at today’s data and argue for stronger yuan gains,” said Ben Simpfendorfer, a Hong Kong-based economist at Royal Bank of Scotland Plc. Chinese officials “may worry about tightening too aggressively on both interest rates and the currency.”

Goldman Sachs Group Inc. estimated quarter-on-quarter growth accelerated to 10 percent. The statistics bureau only gives a year-on-year figure.

I was going to write about gold in relation to the current move, but a real pro, Tim Iacono has done it for me and better. Click on the link for some interesting charts.

Now -That – Was a Gold Bubble

On October 20, 2010, in Commodities, by Tim

Amid the increasing talk of a “gold bubble” these days (and with many investors not likely caring too much that the “bubble” they now see isn’t all that impressive as compared to the “bubbles” they saw two years ago, four years ago, and six years ago as noted in this item earlier in the week), putting a real gold bubble from 1979-1980 up on the same chart with the more recent moves seemed like an interesting exercise. The result is shown below.

We close with follow up news on Typhoon Megi. While the Philippines was only brushed by Megi’s path, the damage to rice production is quite severe, according to early reports. Megi is now strengthening again and now on track to hit China east of Hong Kong.

10 killed in Philippines as Typhoon Megi heads to China

Thousands of people sheltered in evacuation centres as Typhoon Megi dumped heavy rains across the Philippines' main island on Tuesday, a day after 10 were killed.

Published: 11:33AM BST 19 Oct 2010

Super typhoon Megi was forecast to regain momentum and begin powering towards southern China on Wednesday.

China's state-run Xinhua news agency said that the southern Guangdong province appeared to be the most at risk from Megi, which could trigger waves of up to seven metres (21 feet).

Authorities in Guangdong had ordered all fishing boats to return to harbour before midnight Tuesday and reservoirs and hydro-stations to be on alert, Xinhua said.

---- Megi smashed mostly farming and fishing areas of northern Luzon with wind gusts of 260 kilometres (160 miles) an hour on Monday, making it the strongest typhoon in the world this year.

It killed 10 people as it tore roofs off houses, destroyed rice crops, toppled trees, ripped down power lines, triggered landslides and whipped up storm surges.

---- Nearly 247,000 acres of rice and corn crops had also been destroyed across Isabela, one of the Philippines' key farming regions, Mr Dy said.

"Increasingly, the wealth of the modern world has come to be represented by financial assets rather than real assets, and this to me is a very unhealthy situation, because financial assets are inherently unstable. Financial assets (currencies, bonds, mortgages, stocks, bank credit, etc.) can be quickly and violently reduced in value, or destroyed completely by either inflation or deflation."

Donald J. Hoppe

At the Comex silver depositories Wednesday, final figures were: Registered 52.19 Moz, Eligible 59.66 Moz, Total 111.85 Moz.


Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

In Fraudclosuregate, the largest US title insurer has little faith in the banksters getting things right. Below, Bloomberg covers the latest development.

"The gold standard, in one form or another, will prevail long after the present rash of national fiats is forgotten or remembered only in currency museums."

Hans F. Sennholz

Fidelity National Will Require Foreclosure Warranty

Oct. 20 (Bloomberg) -- Fidelity National Financial Inc., the largest U.S. title insurer by market share, will require lenders to sign a warranty assuring their paperwork is sound before backing sales of foreclosed homes.

An indemnity covering “incompetent or erroneous affidavit testimony or documentation” must be signed for all foreclosure sales closing on or after Nov. 1, the Jacksonville, Florida- based company said in a memorandum to employees today. The agreement was prepared in consultation with the American Land Title Association and mortgage finance companies Fannie Mae and Freddie Mac, Fidelity National said.

“It’s just the prudent thing to do,” Peter Sadowski, executive vice president and chief legal officer for Fidelity National, said in an interview. “It is important for the servicers and the lenders to represent to us and to the people we are going to be insuring that there are no problems.”

Bank of America Corp., the biggest U.S. lender, agreed to a similar contract with Fidelity National on Oct. 8, the same day it extended a freeze on foreclosures to all states amid concern by federal and state officials that lenders are seizing homes without properly reviewing documents. The bank plans to start resubmitting foreclosure affidavits next week. Attorneys general across the country have opened a joint investigation into foreclosures, saying they will seek an immediate halt to any improper practices at mortgage lenders and loan servicers.

------ The indemnity agreement requires lenders to protect title insurers at their own expense from “any and all liability, loss, costs, damage and expense of every kind” if errors arise in foreclosure procedures, according to the document.

Attorney’s Fees

The expenses may include attorney’s fees, a decrease in the property’s value and inability to sell the title, Fidelity said in the document. The lender must also notify the insurer in each case that a foreclosure complies with state laws and regulations, according to the agreement.

The indemnity agreement is available for use by all title insurers, Fidelity National said.

"All previous attempts to base money solely on intangibles such as credit or government edict or fiat have ended in inflationary panic and disaster."

Donald Hoppe

The monthly Coppock Indicators finished September:

DJIA: +227 Down. NASDAQ: +321 Down. SP500: +221 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. September is the fourth down month in a row.

No comments:

Post a Comment