Friday, August 31, 2012

Government bond purchases ECB and FED

The ECB has a lot of firepower left compared to the FED. German elections come up next year. Draghi will get a green light.
The FED will probably stop buying more government bonds after it succeeded in stimulating the economy just in time to make Obama win.

Tuesday, August 28, 2012

Euroshorts beware

Good luck, euroshorts, you're doomed.



I've foretold it so often at this site that I'm getting tired by now and will just watch.

Thursday, August 23, 2012

Recession 2013

U.S. Budget Deficit to Reach $1.1 Trillion in 2012, CBO Says

The U.S. economy will probably tip into recession next year if lawmakers can’t break an impasse over the federal budget, according to a report.
The nonpartisan Congressional Budget Office said today that scheduled tax increases and spending cuts in 2013 would reverse the modest economic recovery. Economic output would shrink next year by 0.5 percent, joblessness would climb to about 9 percent with “economic conditions in 2013 that will probably be considered a recession,” the agency said in a biannual report on the budget and economic outlook.
Comment: The important thing is to win the election and then we'll see.

Friday, August 17, 2012

US economy on the way to recovery?

The index of U.S. leading economic indicators climbed more than forecast in July, and consumer confidence unexpectedly improved this month, signs of sustained expansion in the world’s largest economy.
Comment: Well done, Bernanke, just in time for election. After November, we'll tank again. Maybe even earlier because, of course, Ben's isn't perfect.

Wednesday, August 15, 2012

Soon their heads may roll

'Rich Kids of Instagram': Overserved and Oversharing

First came Paris Hilton. Then the documentary about heirs of the One Percent, "Born Rich," and MTV's series "My Super Sweet 16." Now comes the dot-com version of silver-spoon voyeurism: "The Rich Kids of Instagram."
The blog on Tumblr features photos set in gilded frames of rich kids and wanna-bes in various states of excess, undress and indulgence, and ever since its launch last month, "The Rich Kids of Instagram" has touched off a firestorm of debate over rich kids and social media.
Comment: There are good rich and bad rich like there are good poor and bad poor. What's disturbing about recent trends is that in as much as many more poor have gotten bad, much worse have gotten the rich, particularly their kids. This does not bode well. This is the prelude to a time when the heads will roll, and it won't be the heads of the poor that will roll, because the poor are in the majority.

Monday, August 13, 2012

Economic collapse ahead?

Are The Government And The Big Banks Quietly Preparing For An Imminent Financial Collapse?
Something really strange appears to be happening. All over the globe, governments and big banks are acting as if they are anticipating an imminent financial collapse. Unfortunately, we are not privy to the quiet conversations that are taking place in corporate boardrooms and in the halls of power in places such as Washington D.C. and London, so all we can do is try to make sense of all the clues that are all around us. Of course it is completely possible to misinterpret these clues, but sticking our heads in the sand is not going to do any good either. Last week, it was revealed that the U.S. government has been secretly directing five of the biggest banks in America "to develop plans for staving off collapse" for the last two years. By itself, that wouldn't be that big of a deal. But when you add that piece to the dozens of other clues of imminent financial collapse, a very troubling picture begins to emerge. Over the past 12 months, hundreds of banking executives have been resigning, corporate insiders have been selling off enormous amounts of stock, and I have been personally told that a significant number of Wall Street bankers have been shopping for "prepper properties" in rural communities this summer. Meanwhile, there have been reports that the U.S. government has been stockpiling food and ammunition, and Barack Obama has been signing a whole bunch of executive orders that would potentially be implemented in the event of a major meltdown of society. So what does all of this mean? It could mean something or it could mean nothing. What we do know is that a financial collapse is coming at some point. Over the past 40 years, the total amount of all debt in the United States has grown from about 2 trillion dollars to nearly 55 trillion dollars. That is a recipe for financial armageddon, and it is inevitable that this gigantic bubble of debt is going to burst at some point.
In normal times, the U.S. government does not tell major banks to "develop plans for staving off collapse".
But according to a recent Reuters article, that is apparently exactly what has been happening....
Comment: A crash won't happen when widely expected.
I expect the crash to come after the economy has moved out of the recession and Krugman declares it is because of him.

Hedge funds cut their European shorts

Hedge Funds Capitulate on European Shorts

Hedge funds that base investment decisions on economic trends are unwinding bets against European stocks (SXXP) at the fastest pace in three years, speculating policy makers will step up the fight against the debt crisis.
The degree by which macro funds are trailing the Euro Stoxx 50 Index (SX5E) is narrowing at the fastest rate since 2009, a sign managers are covering short sales by buying shares ...
Pessimism about the outlook for the euro region has eased as German Chancellor Angela Merkel and French President Francois Hollande joined Draghi last month to reiterate that policy makers will do whatever is needed to preserve the single European currency...
Comment: A losing game from the beginning, just as we said it here.

Saturday, August 11, 2012

Thursday, August 9, 2012

Euro worries

The Economist worries about the euro - again.
Comment: Nothing else on the horizon?

European competitiveness

Parts of Europe Have Quietly Become Competitive

Comment: There are more surprises ahead that will prove how wrong leading US economists are about Europe.

Saturday, August 4, 2012

Why did Gordon Brown sell Britain's gold?

Revealed: why Gordon Brown sold Britain's gold at a knock-down price

"... the sale of the majority of Britain’s gold reserves for prices between $256 and $296 an ounce, only to watch it soar so far as $1,615 per ounce today.
When Brown decided to dispose of almost 400 tonnes of gold between 1999 and 2002, he did two distinctly odd things....
This is what had happened on an enormous scale by early 1999. One globally significant US bank in particular is understood to have been heavily short on two tonnes of gold, enough to call into question its solvency if redemption occurred at the prevailing price.
Goldman Sachs, which is not understood to have been significantly short on gold itself, is rumoured to have approached the Treasury to explain the situation through its then head of commodities Gavyn Davies, later chairman of the BBC and married to Sue Nye who ran Brown’s private office.
Faced with the prospect of a global collapse in the banking system, the Chancellor took the decision to bail out the banks by dumping Britain’s gold, forcing the price down and allowing the banks to buy back gold at a profit, thus meeting their borrowing obligations...
Comment: Saving the banks is one thing - yet who saves the country from its politicians?