Egon von Greyerz: What’s Next, Coming Global Collapse, Gold, Silver & More
“There are currently so many factors that will cause the dollar’s fall: First of all, FATCA, the Foreign Account Tax Compliance Act, and other U.S. regulations means that every single transaction in dollars will be controlled by the U.S. authorities, even if the transaction itself has nothing to do with the United States.”
“The Australian government has just seized $360 million of bank accounts that have been dormant for only 3 years. This is, of course, outrageous. I’m sure many countries will follow, and eventually the U.S. will have hyperinflation due to the falling dollar.”
FT: The Fed Is Considering Charging Investors Looking To Exit Bond Funds
The Financial Times reports the Federal Reserve is considering charging fees to investors seeking to exit bond funds.
“Officials are concerned that bond-fund investors, as with bank depositors, can withdraw their money on demand even though the assets held by their funds are long-term debt and can be hard to sell in a crisis,” the paper says.
Moody’s cuts outlook for Canadian bank debt to negative over ‘bail-in’ regime
Canada’s finance minister is questioning the world’s largest ratings company over its warning banks will become riskier investments if the country relieves taxpayers from the burden of potential bailouts.
Moody’s Investors Service reduced the outlooks on Royal Bank of Canada, Bank of Nova Scotiaand five other lenders to negative on June 11, citing similar bail-in rules in Europe and the U.S. that would impose losses on bondholders in a crisis.
“I don’t quite follow the logic, to tell you the truth,” Joe Oliver said in a June 11 interview at Bloomberg’s New York headquarters. “What the bail-in would do would be to enhance the viability of the banks. That’s the whole point. You move debt to equity, that’s what keeps them going.”
Canada’s banks, which escaped the financial crisis without failures, wouldn’t be able to count on sovereign support as regulators seek to prevent a rerun of 2008’s global rescues where taxpayer cash was used to prop up lenders and safeguard the wider economy, New York-based Moody’s said. The country’s finance department, which first disclosed plans for the regime in March 2013, hasn’t said when the rules will be introduced. It would legislate that bondholders convert certain debt to equity if a bank was close to insolvency.
“The intention of the government is clearly to encourage prudent risk-taking and the maintenance of a strong credit profile,” David Beattie, senior credit officer at Moody’s Investors Service in Toronto, said by e-mail June 13. “However, should adverse developments require a future bank recapitalization inCanada, which is a very remote probability, the government also wants to reduce the public cost of a bank resolution by having the ability to impose losses on senior creditors.”
As governments around the world implement “bail-in” provisions to avoid taxpayer-funded bank bailouts, Moody’s Investors Service took action in Canada on Wednesday by changing the outlook to negative from stable on some of the senior debt and uninsured deposits of Canada’s largest seven banks.
QE1 QE2 QE3 – FEDS TAKE RECORD $1.9 TRILLION IN REVENUE – WE ARE IDIOTS!!!
Bank of Japan’s Bond Paralysis Seen Spreading Across Markets
The Bank of Japan’s unprecedentedasset purchase program has released a creeping paralysis that is freezing government bond trading, constricting the yen to the tightest range on record and braking stock-market activity.
Historical price volatility on Japanese bonds slid to a 1 1/2-year low of 0.913 percent on June 13 and a lack of activity delayed trading at least four days last week. The yen has traded in a range of 4.68 per dollar since Jan. 1, the tightest since Japan ended currency controls four decades ago. Average trading on the Topix index is near its lowest level in more than a year.
Asset purchases have not only made BOJ Governor Haruhiko Kuroda the biggest player in Japan’s $9.6 trillion bond market, they have also given him the most leverage over currency and equity markets in the world’s third-largest economy. Kuroda last week refrained from either expanding or reducing monetary easing that drove the yen to its biggest annual loss in more than three decades, pushed yields to a record low and boosted the Topix index to its highest since 2008.
“All the markets have been quiet,” said Daisuke Uno, the Tokyo-based chief strategist at Sumitomo Mitsui Banking Corp. “We’ve already seen the BOJ dominance of JGBs since last year, but recently participants in currency and stock markets are also decreasing as those assets have traded in narrow ranges.”
One-month implied volatility in dollar-yen fell to 5.25 percent on June 9, the lowest in data going back to 1995. The 30-day moving average for trading volume on the Topix dropped to 1.87 billion shares on May 28, the least since December 2012.
IMF Discusses Third Way Over Bailouts
At present, the IMF’s options are limited to a pure bailout or upfront debt restructuring based on whether the fund considers the country’s debt to be sustainable.
Argentina’s Stock Market Is Crashing
Alibaba Reveals A Significant Drop In Sales Growth
Why We Are Closer to a Recession in 2014 Than You Think
Don’t buy into the notion that there’s economic growth in America!
We’ve already seen U.S. gross domestic product (GDP) “unexpectedly” decline in the first quarter of 2014, and now there are signs of another contraction in the current quarter. (The technical definition of a recession is two negative quarters of GDP—we’re halfway there!)
As you know, consumer spending is the biggest part of ourU.S. economy, accounting for about two-thirds of our GDP. And consumers are pulling back.
Consumer spending in the U.S. economy declined 0.26% in April from March. This was the first monthly decline since December of 2013. (Source: Federal Reserve Bank of St. Louis web site, last accessed June 4, 2014.)
China Further Decreases U.S. Treasury Holdings
June 16 (Bloomberg) — In today’s “Global Outlook,” Bloomberg’s Betty Liu reports on the top headlines from around the world on Bloomberg Television’s “In The Loop.”