Monthly Archives: October 2014

The morning after: When a government destroys its currency

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“This is a familiar story that repeats across history. Despite obvious warning signs, people almost universally allow themselves to ignore reality.  It’s human nature to want to believe that everything is going to be OK. And when our political leaders whisper soothing words of hope and optimism, we take the bait.  Looking back, it was plain as day that Mexico was going to devalue the peso. Everything about the economy and currency was totally unsustainable. Deep down people knew it.  Similarly, it was plain as day that Hitler was going to decimate Poland. And people knew it.  Yet millions allowed their confidence to be misplaced in leaders who assured them that everything was OK.  Are we so different?”

http://www.sovereignman.com/trends/the-morning-after-what-happens-when-a-government-destroys-its-currency-14925/

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The Fed: Strangling the Saving Ethic and Values

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“Around the time Nixon was pulling the plug on what remained of the gold standard, the personal savings rate in America was north of 12.5%. These days, it’s 5.4%, and that’s up from 2.2% in the boom year of 2005. The 2008 crash tightened people’s belts. However, prudence is not bursting out all over. The WSJ says the personal savings rate has increased ‘in large part because it counts reductions in personal debt, such as mortgages and credit-card balances, as savings’, but that most debt reduction has been driven by defaults, rather than paying back.  It’s clear that since the last tethers tying the dollar to gold were cut, money production has soared, and a casualty has been the savings ethic.”

http://www.caseyresearch.com/articles/the-fed-strangling-the-saving-ethic-and-values

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Ex-Fed chief Bernanke denied loan to refinance his home

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“Former Federal Reserve Chairman Ben Bernanke revealed last week that he was turned down when he tried to refinance his home loan.  ‘I think it’s entirely possible’ that lenders ‘may have gone a little bit too far on mortgage credit conditions,’ he said.  Bernanke also told the conference of the National Investment Center for Seniors Housing and Care that the first-time homebuyer market is ‘not what it should be.’  Bernanke was paid $199,750 annually as head of the central bank and reportedly earned $250,000 in March for his first public speaking engagement since stepping down in January.  He also reportedly received $1 million in a deal to write his memoirs.”

http://www.foxnews.com/politics/2014/10/06/ex-fed-chief-bernanke-denied-loan-to-refinance-his-home/

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IMF: infrastructure spending spree last chance to revive growth

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“Britain and other advanced economies should take advantage of ultra-low borrowing costs to lift spending on key infrastructure projects and boost the global recovery, according to the International Monetary Fund.  The IMF said a debt-funded investment spree could ‘pay for itself’ if projects were chosen wisely, as government spending would stimulate demand, create jobs, and support longer-term growth. However it warned against governments embarking on a blind spending spree, which would push up debt piles without stimulating growth. Spending on infrastructure would only have a positive impact if policymakers conducted ‘rigorous’ cost-benefit analyses.”

http://www.telegraph.co.uk/finance/economics/11128937/IMF-infrastructure-spending-spree-last-chance-to-revive-growth.html

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US Now Admits It Is Funding “Occupy Central” In Hong Kong

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“Just as the US admitted shortly after the so-called ‘Arab Spring’ began spreading chaos across the Middle East that it had fully funded, trained, and equipped both mob leaders and heavily armed terrorists years in advance, it is now admitted that the US State Department through a myriad of organizations and NGOs is behind the so-called ‘Occupy Central‘ protests in Hong Kong.  The very concept of the United States ‘promoting democracy’ is scandalous when considering it is embroiled in an invasive global surveillance scandal, guilty of prosecuting one unpopular war after another, and brutalizing and abusing its own citizens at home with militarized police.”

http://landdestroyer.blogspot.ca/2014/10/us-now-admits-it-is-funding-occupy.html

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China Tries Again to Jolt Tired Economy

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“China’s central bank is planning to inject 200 billion yuan into the banking system, according to financial executives briefed on the matter, as recent credit-easing measures have failed to push the world’s second-largest economy back to stronger growth rates amid deepening worries about a global slowdown.  The latest effort by the People’s Bank of China, which will offer funds to about 20 large national and regional banks, follows last month’s move to pump 500 billion yuan into the country’s five major state-owned banks. It comes as concerns mount in Beijing that the nation will miss its growth target—set at 7.5% this year—for the first time since the 1998 Asian financial crisis.”

http://online.wsj.com/articles/chinas-central-bank-to-inject-more-funds-into-chinese-banks-1413549172

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Draghi-Weidmann fight intensifies as ECB debates action

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“ECB president Draghi repeated he’s ready to expand the ECB’s balance sheet by as much as €1 trillion to beat back the threat of deflation.  Bundesbank head Weidmann responded by saying that a target value isn’t set in stone. History suggests Draghi will ultimately prevail over his German colleague. The Bundesbank head is concerned that a balance-sheet target may lead to the ECB paying too much for assets under its programs to purchase asset-backed securities and covered bonds, he said on Oct. 9. Germany’s Focus magazine reported that Draghi finds cooperating with Weidmann has become ‘almost impossible’ and that he no longer divulges his plans to him beforehand.”

http://www.irishtimes.com/business/economy/draghi-weidmann-fight-intensifies-as-ecb-debates-action-1.1961552

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There They Go Again: Fed Officials Give Rate Timetables

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“Federal Reserve officials insist that the outlook for interest rates depends on how economic data evolves and isn’t driven by the calendar. They are nevertheless offering various views on the probable timing of the first increase since 2006.  The Fed’s pledge that interest rates will stay low for a ‘considerable time’ could mean anything from two months to one year, Vice Chairman Stanley Fischer said today.  New York Fed President William C. Dudley said this week that forecasts for an increase in mid-2015 are ‘reasonable.’ Today, San Francisco Fed President John Williams said that timeframe is a ‘reasonable guess to my mind.'”

http://www.bloomberg.com/news/2014-10-09/fischer-says-considerable-time-is-2-months-to-a-year.html

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Bill Bonner: Get Ready for QE4

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Bill-Bonner2

“Stocks have barely begun to correct (the S&P 500 is down about 7% from its September high) and the St. Louis Fed president is already preparing for QE4.  But where is the proof – from logic or experience – that QE pays off?  It is a shame that quack philosophers, politicians and central bankers are not subject to penalty. After all, bridge builders and hedge fund managers suffer shame and ruin when their projects fall to pieces.  Fed officials are promising more cash and credit, neither of which they actually possess.  You’ll recall that stocks fell when QE1 and QE2 ended. Why shouldn’t they fall now that QE3 is ending too?”

http://bonnerandpartners.com/get-ready-qe4/

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Firestone Did What Governments Have Not: Stopped Ebola In Its Tracks

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“Firestone detected its first Ebola case on March 30, when an employee’s wife arrived from northern Liberia. She’d been caring for a disease-stricken woman and was herself diagnosed with the disease. Since then Firestone has done a remarkable job of keeping the virus at bay. It built its own treatment center and set up a comprehensive response that’s managed to quickly stop transmission. Dr. Brendan Flannery, the head of the U.S. Centers for Disease Control and Prevention’s team in Liberia, has hailed Firestone’s efforts as resourceful, innovative and effective.  Currently the only Ebola cases on the sprawling, 185-square-mile plantation are in patients who come from neighboring towns.”

http://www.npr.org/blogs/goatsandsoda/2014/10/06/354054915/firestone-did-what-governments-have-not-stopped-ebola-in-its-tracks

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