Monthly Archives: August 2014

A bold investment that might just pay off [2012]

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“This nation has vast reserves of energy; it’s at the centre of an international dispute; one of its former leaders has recently been tried in court for actions taken during his reign; and the stock market is down 90% from its peak.  It’s Iceland. And it may be one of the best – if riskiest – investment opportunities out there right now.  It is possible for non-citizens to open an account with one of the major banks. You can then use the funds to invest in a government or stock-market fund.  If you want to go down this route, then the best option is Arion Bank. This bank was formed from the ruins of Kaupthing, which went bust. It is free from the debt problems of its predecessor.”

http://moneyweek.com/iceland-a-bold-investment-58310/

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Iceland EU accession talks break down over mackerel quotas

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“Negotiations over mackerel fishing quotas have fallen apart, extending a dispute dubbed ‘the mackerel war’ that has been a thorny issue in Iceland’s EU membership bid.  The European Union, Iceland, the Faroe Islands and Norway left a meeting in Edinburgh without reaching an agreement for 2014.  Fishing is the main obstacle stopping Iceland from joining the EU. Reykjavik pulled out of accession talks indefinitely in September despite public support for a promised referendum on joining the bloc.  Iceland and the Faroe Islands, a Danish territory with autonomy in fishing matters, have been engaged in a ‘mackerel war’ with the EU since they unilaterally increased their quotas in 2010.”

http://phys.org/news/2014-03-eu-iceland-nordic-mackerel-quota.html

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Iceland Brings In Experts to Help Lift Capital Controls

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“Iceland imposed restrictions on the movement of capital into and out of the country in 2008 after its three largest banks—Landsbanki, Kaupthing and Glitnir—collapsed. Their combined assets were about nine times the tiny island nation’s gross domestic product, currently roughly $15 billion.  The government is concerned that if the deal with creditors is struck in the wrong way then creditors taking their recovered kronur out of Iceland could destabilize the economy, not least by undermining the value of the currency. That could trigger negative effects such as a fresh round of spiraling inflation like the economy saw during the financial crisis.”

http://online.wsj.com/articles/iceland-brings-in-experts-to-help-lift-capital-controls-1404979518

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Icelandic capital controls to remain until 2015: central bank

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“Capital controls are expected to remain in place in Iceland until 2015, according to the country’s central bank.  The restrictions have had a profound effect on the asset allocation of Icelandic pension funds, leaving them only limited room to manoeuvre, as they are unable to make new investments in assets denominated in foreign currencies.  As a result, the asset allocation of Icelandic pension funds today largely consists of government guaranteed paper and bank deposits.  The central bank had introduced measures to temporarily restrict currency outflows following the country’s banking crisis in 2008.”

http://www.ipe.com/icelandic-capital-controls-to-remain-until-2015-central-bank/40226.fullarticle

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Iceland Seen Threatened by Capital Flight From Its Own Citizens

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“U.S. hedge funds aren’t the only ones trying to exit Iceland.  Its own citizens may follow if the government doesn’t show it can lift capital controls in place since 2008 without triggering a currency sell-off, according to Iceland’s biggest insurance firm.  Iceland has yet to test the staying power of its economic recovery. Capital controls, imposed at the end of 2008 after the island’s three biggest banks defaulted on $85 billion, have so far stopped offshore investors selling $7.2 billion in assets, equivalent to half the nation’s gross domestic product.  Hedge funds bought claims on the banks’ assets at prices well below face value. Five years later they’re still waiting to cash in.”

http://www.bloomberg.com/news/2014-02-28/iceland-seen-threatened-by-capital-flight-from-its-own-citizens.html

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What happens when a central bank goes bust?

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“Four men control roughly 75% of the entire world money supply:  Zhou Xiaochuan, People’s Bank of China; Mario Draghi, European Central Bank; Haruhiko Kuroda, Bank of Japan; Ben Bernanke, US Federal Reserve.  Four guys. And they control the livelihoods of billions of people around the world.  So, how are they doing?  Each of these major central banks in ‘rich’ Western countries is essentially at, or below, the level of capital that Lehman Brothers had when they went under.”

http://www.sovereignman.com/finance/heres-what-happens-when-a-central-bank-goes-bust-12440/

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Singapore’s central bank lost $10.2 billion fighting Bernanke [2013]

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“Four men control over 70% of the world’s money supply, giving them control over the price of… everything.  And this system is so absurd that, healthy nations like Singapore are forced to lose billions in order to keep playing the game.  That’s exactly what it is– a game. Like most nations, Singapore has been playing this game for decades while the US changes the rules whenever it sees fit.  And it’s becoming obvious that the cost of playing is now far exceeding the benefit it receives. The hard numbers are very clear on this point.  This spells one inexorable conclusion, game over: a dramatic decline in the US dollar’s role as the global reserve currency in the next few years.”

http://www.sovereignman.com/trends/singapores-central-bank-lost-87-of-gdp-growth-fighting-bernanke-12665/

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The Fed in Danger

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“The danger stems from a growing sense in Congress that the Fed has, with its program of quantitative easing and ultra-low interest rates, lengthened the Great Recession.  The Federal Reserve has just expanded its balance sheet by trillions of dollars. It is now holding trillions of Treasury notes and bonds that it ostensibly acquired on the open market but that represent, nonetheless, loans to the federal government from its own bank. These bonds were issued by the same Treasury Department with which Mrs. Yellen has been meeting with more or less weekly.  If Congress has a right to know what agreements have been made, what about the rest of us?”

http://www.nysun.com/editorials/the-fed-in-danger/88785/

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Fed Chairman Shrinks as Balance Sheet Grows

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“With Janet Yellen’s confirmation as new Fed Chairman in the news, below is an awesome picture of the physical heights of the last four Fed Chairmen – Paul Volcker, Alan Greenspan, Ben Bernanke and Yellen.  The graphic was originally provided by the New York Times’s Economix blog, but today it is getting passed around on Twitter via @VolSlinger.  In the Times blog post about the topic on Nov. 11, they highlighted the downward trend in the fed fund rate.  Looking at it in an inverse way, however, shows as the Fed Chairman’s height falls the balance sheet balloons. The eight inches between Mr. Benanke and Ms. Yellen could mean a lot more growth!”

http://www.streetinsider.com/Fed/Fed+Chairman+Shrinks+as+Balance+Sheet+Grows/8894371.html

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Foodflation – Since QE3, Breakfast Is Up Over 24%

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“Having pointed out the ‘surges’ in the cost of your 4th of July burger at the behest of Greenspan and Bernanke, we thought a reflection on the soaring costs of ‘the most important meal of the day’ were in order. As the following chart illustrates in words and pictures even a PhD Fed economist or CNBC pretend-economist could understand – food-flation is here from breakfast through dinner (no matter how many iPads we try and eat).”

http://www.zerohedge.com/news/2014-07-06/foodflation-qe3-breakfast-over-24

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