A new study, which was published on Monday by the National Bureau of Economic Research, suggests that the Federal Reserve's policy of using ultra-low interest rates in order to encourage lending, might be doing the opposite...
http://finance.fortune.cnn.com/2013/03/05/federal-reserve-bernanke-lending/?iid=HP_LN
Tuesday, March 5, 2013
Sunday, March 3, 2013
China "fully prepared" for currency war: banker
AFP - A top Chinese banker said Beijing is "fully prepared" for a currency war as he urged the world to abide by a consensus reached by the G20 to avert confrontation, state media reported on Saturday.
Yi Gang, deputy governor of China's central bank, issued the call after G20 finance ministers last month moved to calm fears of a looming war on the currency markets at a meeting in Moscow.
Those fears have largely been fuelled by the recent steep decline in the Japanese yen, which critics have accused Tokyo of manipulating to give its manufacturers a competitive edge in key export markets over Asian rivals.
Yi said a currency war could be avoided if major countries observed the G20 consensus that monetary policy should primarily serve as a tool for domestic economy, the Xinhua report said.
But China "is fully prepared", he added.
"In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries."
South Korea's incoming president Park Geun-Hye has also signalled her willingness to step in to stabilise the won and protect exporters battling a stronger Korean currency and a weaker yen.
Tax bills for rich families approach 30-year high
WASHINGTON (AP) -- The poor rich.
With Washington gridlocked again over whether to raise their taxes, it turns out wealthy families already are paying some of their biggest federal tax bills in decades even as the rest of the population continues to pay at historically low rates.
President Barack Obama and Democratic leaders in Congress say the wealthy must pay their fair share if the federal government is ever going to fix its finances and reduce the budget deficit to a manageable level.
A new analysis, however, shows that average tax bills for high-income families rarely have been higher since the Congressional Budget Office began tracking the data in 1979. Middle- and low-income families aren't paying as much as they used to.
For 2013, families with incomes in the top 20 percent of the nation will pay an average of 27.2 percent of their income in federal taxes, according to projections by the Tax Policy Center, a research organization based in Washington. The top 1 percent of households, those with incomes averaging $1.4 million, will pay an average of 35.5 percent.
Thursday, February 28, 2013
Jamie Dimon: That's why I'm richer than you
FORTUNE -- At JPMorgan Chase's annual investor day on Tuesday, CEO Jamie Dimon answered one analyst's question by saying, "That's why I'm richer than you."
Zing. The line got a bunch of laughs. And it quickly became a headline for articles recounting the Q and lack of A between Dimon and the Credit Agricole analyst Mike Mayo, who has the reputation of being one of the few analysts to be tough on Wall Street CEOs.
But what did Dimon mean by it? Mayo's question was about bank capital. European regulators are requiring banks there to hold more capital than U.S. rivals. Mayo wanted to know if that would give those banks, in this case UBS, an advantage over JPMorgan (JPM) in attracting clients who want a safe place for their money.
- See more at: http://finance.fortune.cnn.com/2013/02/27/jamie-dimon-richer-than-you/?iid=HP_River#sthash.H4Wa3m5W.na7qhxdm.dpufhttp://news.firedoglake.com/2013/02/28/jamie-dimon-thats-why-im-richer-than-you/ At a J.P. Morgan investor event this week Mike Mayo, an analyst at CLSA, who has been a critic of large banks and, at times, Dimon, asked if J.P. Morgan wasn’t at a competitive disadvantage compared to more highly capitalized peers.
Mayo: I think what I hear UBS saying in the presentation is that if I’m an affluent customer I’ll feel a lot better going to UBS if they have 13.5 (percent) capital ratio than another big bank with a 10 percent ratio. Do you agree with that?
Dimon: You would go to UBS and not JPMorgan?
Mayo: I didn’t say that. That’s their argument.
Dimon: That’s why I’m richer than you.
GBP worst performing currency this year
On the heels of Abe's final decision to appoint a somewhat middle-of-the-road 'dove' as BoJ Governor, we thought it appropriate to look at the year's FX performance to see who is 'winning' the currency wars so far this year. The answer may surprise you (or not if you had read this or this).
GBP (blue) is the 'worst'-performing currency versus the USD this year - having overtaken the JPY in the last two days...higher on the chart below is USD strength
Interestingly, given US equity performance YTD, the USD is 2.25% stronger on the year against a broad basket of currencies.
The USD is 'seasonally' strong in Q1 on average over the past 30 years but this rise is quite remarkable relative to that average and we can only imagine what impact this will have on corporate earnings for Q1 as the S&P 500's 46% overseas revenues gets notched down on the income statement.
Charts: Bloomberg
Wednesday, February 27, 2013
Asking the right questions about Italy
Basically Berlusconi represents a return to Nationalism and a repudiation of the measures imposed upon Italy by Berlin/Brussels (The European Union). Grillo represents something stronger which is a total rejection of Berlin/Brussels (The European Union) and a demand that Italy return to self-governance. Grillo’s party won more votes than any other party and taken together, Berlusconi’s coalition and the 5 Star Party won the vast majority of votes at just under sixty percent. Yes, there are other national issues such as corruption and nepotism and so forth that relate strictly to the political situation in Italy but again, these are the small questions and far less significant to the central question of what will happen to the European Union as a result of the vote of the Italian people.
I first direct your consideration to this; if it can happen in Italy then why not in Greece, Spain, Portugal or France? People in other countries will take heart from Grillo’s attempt and then success and the mob may begin to stir. However Italy is going to work out and whatever alliances may be made or whether there will be a second vote; the writing is emblazoned now clearly on the wall which declares opposition to living under the dictums handed down from other countries and enforced by the money that may or not be parceled out to the Italian nation. This is clearly defined by the total rejection of Monti and the Brussels/Berlin austerity measures that he put in place. The vote for Monti at just under ten percent is a ringing condemnation of the European Union by the people of Italy. In fact I would say that the Italian elections are exactly what the European Union has feared most, the very most, which is the rejection of the Brussels/Berlin governance by those who ultimately matter which are the people of a nation. I think it can now be said with a good degree of accuracy that the Italian people took a long hard look at the European Union and voted, “NO!”
What most people have not grasped yet, but the dawning will come, is that a Referendum has just taken place in Italy. All of the political upheaval in Italy was caused by anger and frustration with the European Union and their policies. This is what drove the election and not to appreciate this is a serious mistake. The EU is now cornered. This is the third largest nation in the Union and the voters, the people, have just turned out a majority that clearly and resolutely said “Basta!” (Enough!). I would say that how all of any of this works itself out is anyone’s guess now but I would also say that what has happened, like a wife catching her husband with another woman, will forever change the relationship. If the bureaucrats and technocrats in Brussels wanted to know what Dante’s Inferno looked like they have only to pay attention this morning. They can stare at it now.
http://www.zerohedge.com/print/470458
I first direct your consideration to this; if it can happen in Italy then why not in Greece, Spain, Portugal or France? People in other countries will take heart from Grillo’s attempt and then success and the mob may begin to stir. However Italy is going to work out and whatever alliances may be made or whether there will be a second vote; the writing is emblazoned now clearly on the wall which declares opposition to living under the dictums handed down from other countries and enforced by the money that may or not be parceled out to the Italian nation. This is clearly defined by the total rejection of Monti and the Brussels/Berlin austerity measures that he put in place. The vote for Monti at just under ten percent is a ringing condemnation of the European Union by the people of Italy. In fact I would say that the Italian elections are exactly what the European Union has feared most, the very most, which is the rejection of the Brussels/Berlin governance by those who ultimately matter which are the people of a nation. I think it can now be said with a good degree of accuracy that the Italian people took a long hard look at the European Union and voted, “NO!”
What most people have not grasped yet, but the dawning will come, is that a Referendum has just taken place in Italy. All of the political upheaval in Italy was caused by anger and frustration with the European Union and their policies. This is what drove the election and not to appreciate this is a serious mistake. The EU is now cornered. This is the third largest nation in the Union and the voters, the people, have just turned out a majority that clearly and resolutely said “Basta!” (Enough!). I would say that how all of any of this works itself out is anyone’s guess now but I would also say that what has happened, like a wife catching her husband with another woman, will forever change the relationship. If the bureaucrats and technocrats in Brussels wanted to know what Dante’s Inferno looked like they have only to pay attention this morning. They can stare at it now.
http://www.zerohedge.com/print/470458
Tuesday, February 26, 2013
Fed Faces Explaining Billion-Dollar Losses in QE Exit Stress
Federal Reserve Chairman Ben S. Bernanke’s efforts to rescue the economy could result in more than a half trillion dollars of paper losses on the central bank’s books if interest rates rise abruptly from recent levels.
http://www.bloomberg.com/news/2013-02-26/fed-faces-explaining-billion-dollar-losses-in-stress-of-qe3-exit.html
http://www.bloomberg.com/news/2013-02-26/fed-faces-explaining-billion-dollar-losses-in-stress-of-qe3-exit.html
Monday, February 25, 2013
Greece Likely to Exit Euro This Year, FX Concept’s Taylor Says
Greece will probably leave the euro as soon as next month as the government runs out of cash and European institutions fail to lend more to the nation, according to John Taylor of hedge fund FX Concepts LLC.
“This summer I think is very likely,” Taylor, founder and chief executive officer of FX Concepts in New York, said today in an interview on Bloomberg Television’s “Inside Track” with Erik Schatzker and Sara Eisen. “The Europeans aren’t going to give them the money, the International Monetary Fund’s not going to give them an OK. They will be out of money in June.”
Friday, February 22, 2013
Bank of England closes in on China currency deal
Sir Mervyn King, Governor of the Bank of England, is on the brink of striking a deal with the People's Bank of China which would cement the UK's role as the leading G7 trade hub for the world's fastest growing currency.
Wednesday, February 20, 2013
Japan trade deficit hits record as yen weakens
Japan's monthly trade deficit hit a record in January after its recent aggressive monetary policy stance weakened its currency sharply.
Exports rose in January, the first jump in eight months, as its goods became more affordable to foreign buyers.
However, a weak currency also pushed up its import bill resulting in a monthly trade deficit of 1.6tn yen ($17.1bn; £11.1bn), a 10% jump from a year ago.
EES: Currency Wars Heat Up With G20 Meeting
The G20 recently met to discuss the so called "Currency Wars" orcompetitive devaluation of domestic currencies by central banks.
http://seekingalpha.com/article/1204401-currency-wars-heat-up-with-g20-meeting
http://seekingalpha.com/article/1204401-currency-wars-heat-up-with-g20-meeting
Tuesday, February 19, 2013
Iceland Foreshadows Death of Currencies Lost in Crisis - Bloomberg
Iceland is hinting its currency may be too small to survive in the volatile world left behind by the global financial crisis.
Less than five months after Finance Minister Katrin Juliusdottir said the krona probably will never be restored to a free floating regime, central bank Governor Mar Gudmundsson is signaling the same.
Monday, February 18, 2013
Saxo Bank CEO Says Euro Is Doomed as Currency Woes Resurface
Lars Seier Christensen, co-chief executive officer of Danish bank Saxo Bank A/S, said the euro’s recent rally is illusory and the shared currency is set to fail because the continent hasn’t supported it with a fiscal union.
“The whole thing is doomed,” Christensen said yesterday in an interview at the bank’s Dubai office. “Right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all.”
G-20 Takes Harder Line on Currencies
Group of 20 finance chiefs sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation of a global currency war without singling out Japan for criticism.
Two days of talks between G-20 finance ministers and central bankers ended in Moscow yesterday with a pledge not to “target our exchange rates for competitive purposes,” according to a statement. That’s stronger than their position three months ago and leaves Japanese officials under pressure to stop publicly giving guidance on their currency’s value.
Sunday, February 17, 2013
Why Bankers Rule the World - It’s the Interest
In the 2012 edition of Occupy Money released last week, Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed” but because of the inexorable mathematics of our private banking system.
http://www.marketoracle.co.uk/Article39053.html
http://www.marketoracle.co.uk/Article39053.html
Friday, February 15, 2013
EES: The Best Way To Trade The Currency Wars - Buy Gold Yen
So what's the best way to trade the currency wars, and to go long gold?
XAU/JPY
The simple answer is to be long gold/yen, or XAU/JPY. On a day like today when gold is down, instead of buying the normal XAU/USD which is what most investors would do, the best way to play both the JPY decline and potential rise in gold is to go long XAU and short JPY. It's possible to buy Gold against major currencies now and even some exotics.
http://seekingalpha.com/article/1188621-the-best-way-to-trade-the-currency-wars-buy-gold-yen
Thursday, February 14, 2013
EU Seeks Broad Transaction Tax
The European Union proposed a tax on financial transactions that could be collected worldwide as soon as the start of next year by the 11 nations that have so far signed up to participate.
The proposal, which marks a new stage in the EU’s efforts to raise revenue from the financial industry, came under immediate fire from banking groups. The EU plan would harm the German economy as a whole, eight lobby groups that represent industries ranging from the commercial country’s banks to skilled tradesmen said in a joint statement today.
The EU plan invokes “residence” and “issuance” ties to firms in participating countries, in a bid to prevent traders from escaping the levy by trading outside the tax’s zone, according to the proposal unveiled by EU Tax Commissioner Algirdas Semeta today in Brussels. To escape the proposed tax entirely, firms in other nations would have to entirely cease financial-services business with the 11 nations involved, according to the EU.
With the proposal, the EU is trying to curb what it sees as a “patchwork” of local levies. Like a prior, failed proposal for all 27 EU nations, today’s plan would set a rate of 0.1 percent for stock and bond trades and 0.01 percent on derivatives trades.
The EU estimates the arrangement could raise 30 billion euros ($40 billion) to 35 billion euros per year. To become law, the proposal has to be approved by the nations that agree to participate. They now comprise Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. All 27 EU nations can sit in on the talks and have the option to join.
Monday, February 11, 2013
Putin goes long Gold
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.
Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.
Berlusconi is Back, and So Is the Eurozone Debt Crisis
Since the beginning of the year, the markets have been behaving as if the Eurozone debt crisis has been magically solved.
Yields on Spanish and Italian debt are trading more than 1% lower than at their peak, while world stock markets have soared close to all-time highs.
Unfortunately, you can expect that all of this euphoria will fade when the Italian elections take place on February 23-24.
Why?...It's summed up in two words: Silvio Berlusconi.
That's because until recently a win by the former Prime Minister wasn't seen as very likely. Not long ago, The EU establishment believed they had the Italian elections completely wired.
The socialist "Democratic party" led by Pier Luigi Bersani was expected to win and be supported by a coalition of center parties led by the EU's favorite, Mario Monti, imposed as prime minister in November 2011.
Both of these candidates were safely pro-euro, and prepared to put Italy through a fair amount of "austerity" to keep it, provided the handouts kept flowing from Germany and the European Central Bank. The status quo wouldn't be threatened.
Meanwhile, the two anti-euro candidates were supposed to be comedians.
One is an actual comedian named Beppe Grillo, leading an eccentric "Five Star Movement," while the other is the aforementioned Silvio Berlusconi, who is currently under indictment for sex with under-age prostitutes and therefore (in the eyes of the EU bureaucracy) not seen as a serious threat.
At best it was thought Berlusconi and Grillo might get as much as 30% of the vote between them, but it wouldn't give them any significant power.
Well, let's just say things have changed.
Thursday, February 7, 2013
Bofa: Get Cash for storm
In what may be the first full digital storm panic, federal, state and business officials worried about the snow headed for the Mid-Atlantic and Northeast have taken to Twitter warn that a potential disaster is coming.
Bank of America led the frenzy. "Winter Storm #Nemo may bring 2 feet of #snow to New England late Fri & Sat. Prepare now - make sure you have plenty of cash on hand."
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