by Charles Hugh-Smith
Despite the many differences between China and the U.S., their basic problems are remarkably similiar: an economy that increasingly serves a tiny Elite, and a political/financial system that is incapable of meaningful reform.
Setting aside the latest bird flu outbreak and sagging indicators of growth, China 2.0 is in trouble (with 1.0 being the Communist era of 1949 -1977 and 2.0 being the modernization/globalization era of 1978 – 2013), for [...]
by Charles Hugh-Smith of OfTwoMinds blog,
If things fail from the periphery to the core, perhaps dominoes fall that way, too.
Wondering which dominoes are next to fall in Europe? Correspondent David P. provides a list based on a simple but powerful precept: follow the smart money. In this case, the smart money entered the at-risk banking sector of a particular nation to skim the fat premium offered by its higher interest rates–rates that [...]
British savers and pensioners are among the biggest losers from the Bank of England’s long-running programme of quantitative easing. This is because the main way QE affects the economy is by holding long-term interest rates below market levels. Annuities are based on long-term rates and, for a 65-year-old man, the income from an average annuity fell by almost 12 per cent in 2012.
The Bank has claimed that such loss [...]
from Gold Silver Worlds:
In his weekly update, Michael Pento analyzed some important macro economic data globally. He came to the well known conclusion that economic conditions worldwide are deteriorating. The primary driver is the debt crisis. Listen to his podcast(mp3).
Governments in the Western economies hold to their conviction that they are able to create demand in an artificial way, by continuing monetary stimulus and financial repression. They simply borrow money that is [...]
Just one more QE-episode… growth will come in two quarters, we promise… housing has bottomed… stocks ‘signal’ all is well. We have heard these ‘meme’s a thousand times and yet still what is borrowed is given to shareholders and animal spirits (judging by the dismal confidence among small business leaders) remain mired in the quagmire of uncertainty and risk aversion. Nowhere is this more evident than the roll-over (and now falling) demand [...]
While yesterday it was the sovereigns who suffered the wrath of the IMF’s wholesale growth outlook downgrade (unbeknownst to Christine Lagarde), today it is the turn of the financial sector (which is increasingly being blurred with the former in a world in which central banks are used to both backstop bank liabilities and fund endless public deficits, unafraid of the consequences in a closed loop fiat world in which defection [...]
Sept. 11 (Bloomberg) — David Rosenberg, Chief Economist at Gluskin Sheff & Associates, talks with Bloomberg’s Tom Keene about the prospects for quantitative easing from the Federal Reserve and the price of financial repression. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”
Wolf Richter www.testosteronepit.com
It must be infuriating for Mario Draghi, the hapless President of the European Central Bank, to see how masterfully the Fed and the Bank of Japan control their respective credit markets, how they manipulate them for the benefit of financial institutions, and how they’re allowing their governments to run up huge deficits—huge by European debt-crisis standards—and fund them at near zero cost, or below cost when adjusted for inflation. [...]
The latest monthly note from PIMCO’s Bill Gross is pretty great.
This time, instead of talking about overindebted governments, and about how all sovereign bond investors are victims of financial repression, he takes dead aim at the stock market, and argues that future returns can’t possibly be as good as they used to be.
Well he notes that historical rates of return on stocks of about 6.6% per year were always outpacing [...]
Since January 2007, long-only equity funds have seen redemptions of $545 billion. In the same period bond funds have seen inflows of $630 billion. In the last few months, cumulative flows into equity funds have retraced all the way back to 1996. While every day is a QuEasy day for stocks, it seems the ‘financial repression’ is working as instead of getting everyone else to do the opposite of what [...]
Global Financial Repression Is Here: India to ban GOLD sales! Argentina banned Gold sales and foreign currency! Europe withdrawal limits…Obama is spying your gold purchases!
Gold SHOCKER: The first gold ban of the 21st century could happen here
Something strange has been happening in India in the last year:
While the rest of the “developed” world has been doing all in its power to crush its currency in order to promote exports within a [...]
From Citi’s Willem Buiter…
After Spain’s still-to-be-finalised euro area bank bail-out, we expect it to be in a troika programme with sovereign conditionality, quite possibly soon.
After Spain’s bank bail-out, Cyprus or Italy will be the next euro area countries to apply for a troika bail-out, in our viewWe believe the need for a sovereign bail-out for Spain and Italy will be driven by a lack of affordable access to market funding and [...]
The dulcet tones of Jim Grant provided much food for thought on Tom Keene’s Bloomberg Radio show this morning. While the interest rate observer did not change his tack on the extreme experimentation of world’s central banks, he did have some new perspective on the incredible moral hazard (or unintended consequence) that is being created. One of his main criticisms is theincredible arrogance and conceit of a central banking system [...]
Mr Wen’s predicament is that turning to the hard option would not necessarily make life easier for the CPC. To the contrary, the process would become more bureaucratic and sacrifice some timeliness. But the change would encourage more representative, accountable, and transparent decision making, curb opportunities for corruption, and reduce the likelihood of waste—all issues that are now being debated more seriously in the wake of the Bo Xilai [...]
Stephen King, the top economist at UK bank HSBC, is out with a new note on the popular topic of “financial repression.”
The main ideas are basically distilled in these bullet points.
In other words, with the governments of big Western nations running up so much debt, they’re resorting to various tricks to keep funding themselves — tricks like QE and so on, which hurt savers, etc.
He also recorded a video to explain [...]
Reward savers and retirees?Don’t penalize them
GUEST EXPERT 04/18/2012
RealPlayer WinAmp Windows Media MP3
James J Puplava CFP with Jim Rickards
JIM: Joining us as my special guest on the program today is James Rickards. He’s senior managing director at Tangent Capital and also author of the bestselling book Currency Wars: The Making Of The Next Global Crisis.
And Jim, I want to begin our discussion today on something that you did recently; you submitted a testimony to the Senate Banking [...]
The Federal Reserve Bank of New York has invited some of its public critics to visit the bank to unburden themselves of their criticisms. On March 12, it was Jim Grant’s turn. The text of his remarks follows. (highlights ours)
Piece Of My Mind
My friends and neighbors, I thank you for this opportunity. You know, we are friends and neighbors. Grant’s makes its offices on Wall Street, overlooking Broadway, a 10-minute [...]
Submitted by cpowell on Sun, 2012-03-18 21:47. Section: Daily Dispatches
Maybe in another 10 or 20 years news organizations like the Financial Times will try to interview central bankers about the specific mechanisms of “financial represssion,” including intervention in the gold market.
* * *
Financial Repression Fast Becoming a Reality
By Tony Jackson
Financial Times, London
Sunday, March 18, 2012
The concept of financial repression has been on the edge of investors’ minds for a while. It ought [...]
by Rob Wile
MIT professor and finance expert Andrew Lo has voiced agreement with Carmen Reinhart that further quantitative easing could damage the recovery.
“Financial repression is a very serious issue and it will slow the recovery,” said Lo in an interview with theFinancial Times‘ Michael Mackenzie
In an op-ed at Bloomberg published Sunday, Reinhart said further accommodation would amount to “financial repression” as bond holders and savers get pinched for keeping assets on the sidelines.
Lo went a step [...]
The “Leadership” 5%
“Our high priest and priestesses of money are in danger of being revealed as powerless frauds”~Chris Martenson & Charles Eisenstein
Ben S. Bernanke
Education: Harvard Bachelor of Arts in economics, roomed with CEO of Goldman Sachs-”Doing God’s Work”-Blankfein, PdD economics MIT.
Employment: Visiting professor at NYU, Tenured Princeton Economics Professor, Board of Governors Federal Reserve System 2002-2005, Chairman of Bush’s Council of Economic Advisers, Chairman of the Fed 2006-present.
Failures: Helped blow the biggest bubble in economic history, the [...]
SAVERS beware. Governments have huge deficits to fill and are worried about the fragile finances of banks and consumers. Policies are being designed to help borrowers, not creditors. A similar approach was followed after the second world war, when a period of “financial repression” reduced the debt burden by delivering poor returns to savers.
This effect can be achieved in a number of ways. Investors can be forced into holding bonds, [...]
PIMCO founder and co-CIO Bill Gross spoke with Bloomberg Television’s Tom Keene today about the launch of the Total Return ETF, investment strategy and the ISDA’s decision on Greek debt.
Gross said that the ETF is “really a mom-and-pop type of thing from my standpoint.” He also said that the ISDA has yet to make a final call on Greek default-swaps and that “it’s not a slam dunk…we expect the next [...]
?Over the past 30 years, an offensively minded Federal Reserve and their global counterparts were printing money, lowering yields and bringing forward a false sense of monetary wealth.
Successful investing in a deleveraging, low interest rate environment will require defensive in addition to offensive skills.
The PIMCO defensive strategy playbook: Recognize zero bound limits and systemic debt risk in global financial markets. Accept financial repression but avoid its impact when [...]
Lee Cooperman, the billionaire chief executive officer of Omega Advisors Inc., spoke to Bloomberg TV’s Erik Schatzker this morning about his hedge fund’s investments. Cooperman said investing in U.S. Treasuries “makes no sense,” he considers stocks the best investment today and that he likes gold, the S&P and Apple.
On investing in Treasuries:
“I have great confidence the Fed is ultimately going to get their way. The Fed is trying to elevate [...]
[Editor's note: Professional money manager Tim Price is filling in for Simon today from London. His thoughts below on gold, bonds, and the false pretext of investing in equities is delightfully insightful.]
“No government has ever commanded the resources at the disposal of our ungodly Leviathan, which consumes about 25% of the product of the world’s richest country. It is driven by a voracious alliance of government’s own employees, and [...]
Uploaded by CapitalAccount on Feb 2, 2012
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Ben Bernanke is defending the Federal Reserve’s financial repression of savers today on the Capitol Hill. He also says there are no signs of higher inflation. Maybe that is because he is wearing his CPI, or PCE goggles…lucky for us, we have legendary investor Jim Rogers on Capital Account today to tell us why Ben Bernanke may not know what he is doing. Jim [...]
Pimco just saved you lots of garbage sellside “research” “analysis” on the topic.
Definition of ‘Financial Repression’
A term that describes measures by which governments channel funds to themselves as a form of debt reduction. This concept was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon. Financial repression can include such measures as directed lending to the government, caps on interest rates, regulation of capital movement between countries and [...]
Uploaded by CapitalAccount on Jan 9, 2012
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Merkozy reunites and turns up the heat on Greece to reform and cut the national debt, as markets fear the Greek bailout is unraveling. And signs of paranormal activity continue as investors pay Germany to lend the government money. The interest on 6-month German Bills — close to 5 billion dollars worth — were auctioned at a negative yield. We’ll talk about [...]
I scanned that column by Krugman:
I would agree with him that the US debt doesn’t have to be paid back; we just have to be able to service it to keep the happy party going. But I don’t agree that debt won’t be a problem in the future just because it isnt’ a big problem now.
It’s the exponential growth trend that will ruin us, as debt rise ever faster and [...]
by Simon Black of Sovereign Man
Get Ready To Start Paying These Taxes Too
In the pre-dawn darkness of a chilly LA morning, my day started off with a chuckle. A friend in the reforestation business sent me an email detailing the US Department of Agriculture’s new ‘Christmas Tree’ tax that was approved yesterday. I thought it was a joke. It wasn’t.
One can only laugh at the absurdity of the government getting involved in [...]
CAMBRIDGE – Why is everyone still referring to the recent financial crisis as the “Great Recession”? The term, after all, is predicated on a dangerous misdiagnosis of the problems that confront the United States and other countries, leading to bad forecasts and bad policy.
The phrase “Great Recession” creates the impression that the economy is following the contours of a typical recession, only more severe – [...]