Sunday, May 31, 2009

Germany leads shift in global view

The next German government is almost certain to crack down on spending and drastically raise taxes after the lower house of parliament yesterday adopted measures that come close to banning budget deficits beyond 2016. ...

The present Korean crisis is a by-product of the complex of instincts, prejudices and vested interests best identified by a single name: George W. Bush. ...

Ironically, there is one European example worth following, and it comes from France. But so far Obama will not acknowledge it. That's nuclear power. The French embraced nuclear power several decades ago. It now produces nearly 80 percent of the country's electricity. France even exports to neighbors. As a result, France is insulated from the energy shocks manufactured by Kremlin autocrats threatening to cut off gas shipments in the dead of winter. France is as close to energy independent as any nation in Western Europe.


Ironically, there is one European example worth following, and it comes from France. But so far Obama will not acknowledge it. That's nuclear power. The French embraced nuclear power several decades ago. It now produces nearly 80 percent of the country's electricity. France even exports to neighbors. As a result, France is insulated from the energy shocks manufactured by Kremlin autocrats threatening to cut off gas shipments in the dead of winter. France is as close to energy independent as any nation in Western Europe.

Even if the courts were to reject the plans for G.M. and Chrysler, the administration's actions in trying to force the deals may damage the credit markets for years to come. The treatment of the bondholders is a warning to investors that the federal government won't hesitate to push them aside in a crisis.

States do not provide people with anything. States merely function as means. Governments consist of people who enact and collect the funds needed to fund the execution of laws. The money comes, at least in fiscally responsible nations, from the nations' peoples. When social programs are created to care for those in need, it is not the state that provides the programs, it is the society. ...

Most people will not change. Too radical. Not going with the flow. Not betting against the herd.


The best examples in the 20th century were Jews in Germany in 1933. They stayed. This included Jewish bankers, all of whom could have left. They thought they could deal with Hitler. They did not read Mein Kampf. They did not take it seriously. ...

Saturday, May 30, 2009

US Total debt pushes 64 Trillion
Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows.

The 12% rise in red ink in 2008 stems from an explosion of federal borrowing during the recession, plus an aging population driving up the costs of Medicare and Social Security.

That's the biggest leap in the long-term burden on taxpayers since a Medicare prescription drug benefit was added in 2003.

The latest increase raises federal obligations to a record $546,668 per household in 2008, according to the USA TODAY analysis. That's quadruple what the average U.S. household owes for all mortgages, car loans, credit cards and other debt combined.

"We have a huge implicit mortgage on every household in America — except, unlike a real mortgage, it's not backed up by a house," says David Walker, former U.S. comptroller general, the government's top auditor.

FIND MORE STORIES IN: United States House of Representatives | Baby Boomer | Tax

USA TODAY used federal data to compute all government liabilities, from Treasury bonds to Medicare to military pensions.

Bottom line: The government took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion.
For the first time since another Democrat occupied the White House, investors from Beijing to Zurich are challenging a president's attempts to revive the economy with record deficit spending. Fifteen years after forcing Bill Clinton to abandon his own stimulus plans, the so-called bond vigilantes are punishing Barack Obama for quadrupling the budget shortfall to $1.85 trillion. By driving up yields on U.S. debt, they are also threatening to derail Federal Reserve Chairman Ben S. Bernanke's efforts to cut borrowing costs for businesses and consumers.

The 1.4-percentage-point rise in 10-year Treasury yields this year pushed interest rates on 30-year fixed mortgages to above 5 percent for the first time since before Bernanke announced on March 18 that the central bank would start printing money to buy financial assets. Treasuries have lost 5.1 percent in their worst annual start since Merrill Lynch & Co. began its Treasury Master Index in 1977.

"The bond-market vigilantes are up in arms over the outlook for the federal deficit," said Edward Yardeni, who coined the term in 1984 to describe investors who protest monetary or fiscal policies they consider inflationary by selling bonds. He now heads Yardeni Research Inc. in Great Neck, New York. "Ten trillion dollars over the next 10 years is just an indication that Washington is really out of control and that there is no fiscal discipline whatsoever."

Pentagon will clear global banking transactions Mr. Obama, officials said, will announce the creation of a White House office — reporting to both the National Security Council and the National Economic Council — that will coordinate a multibillion-dollar effort to restrict access to government computers and protect systems that run the stock exchanges, clear global banking transactions and manage the air traffic control system.

Friday, May 29, 2009

Gary Gensler for CFTC
As Congress returns from its spring recess this week, the Commodity Futures Trading Commission (CFTC) -- which is poised to gain new authority over the risky financial instruments known as derivatives -- remains without a permanent chair.

The controversy plaguing the White House's choice to lead the CFTC, Gary Gensler, began last month when Sen. Bernie Sanders of Vermont blocked a floor vote on the nomination and suggested Gensler was not the "independent leader" needed to "create a new culture in the financial marketplace." Gensler's biggest sin, for Sanders, was helping to pass the Commodity Futures Modernization Act (CFMA) of 2000, a bill that kept the derivatives market out of regulators' reach.

Gensler has offered a mea culpa to smooth his path to confirmation by vowing to steer the CFTC toward meaningful regulation of derivatives. Unfortunately, the political jockeying over his past has obscured the key question: What is the best way to regulate the sprawling derivatives market?

After retiring at age 39 from Goldman Sachs, the derivatives-mad firm that has profited nicely from the government's multiple financial bailouts, Gensler came to the Clinton Treasury Department. There he worked on CFMA, the bill that allowed the derivatives market to metastasize into a hotbed of financial risk with an estimated value -- before last fall's financial crash -- exceeding the world's real financial holdings.

Wednesday, May 27, 2009

Faber: US will hyper inflate like Zimbabwe

May 27 (Bloomberg) -- The U.S. economy will enter "hyperinflation" approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said. ...

The economic crisis, he said, would be the harbinger of a period of instability and a "series of political crises". He added: "Forget the axis of evil; welcome to the axis of upheaval."

Treasuries yield curve widens

The Treasury received $81.2 billion worth of bids for the $35 billion worth of 5-year notes it offered Wednesday. That made for a bid-to-cover ratio of 2.32, which was better than last month's 5-year auction, but was weaker than Tuesday's sale of 2-year notes.

"There's a lot of paper coming to the market due to the government's needs," Cardillo said. "There is the fear that the government's spending is going to mushroom into inflation." ...

The so-called yield curve steepened to 2.75 percentage points, surpassing the previous record of 2.74 percentage points set on Aug. 13, 2003. Yields on 10-year notes have risen more than 100 basis points since Fed officials said in March they would buy up to $300 billion of U.S. debt over six months to drive consumer rates down and lift the economy from recession.

In addition to raising borrowing costs for the government, rising yields on Treasury debt could hamper an economic recovery since they are used as benchmarks for certain consumer loans such as home mortgages. Higher rates on those kinds of loans could prolong a recovery in the battered housing market.

Tuesday, May 26, 2009

US Debt dumped – Maryland tax hike on millionaires backfires

Think of a typical image of a "survivalist" even the stereotypical view: tough, able to live off the land, resourceful and ready to deal with any disaster. Does this sound like the guy who whips out a Visa Card when the going gets tough? Would you expect to see a person working to build a homestead and a sustainable life using a credit card "just for airline miles"? Or perhaps, would you expect someone living by the mantra of adapt, improvise and overcome to finance a lifestyle with a home equity loan?

The Maryland state revenue office says it's "way too early" to tell how many millionaires moved out of the state when the tax rates rose. But no one disputes that some rich filers did leave. It's easier than the redistributionists think. Christopher Summers, president of the Maryland Public Policy Institute, notes: "Marylanders with high incomes typically own second homes in tax friendlier states like Florida, Delaware, South Carolina and Virginia. So it's easy for them to change their residency."...

The latest drama began this past Thursday …


The supply of U.S. Treasury bonds dumped on the market was so overwhelming, even the Federal Reserve, with all its massive efforts to buy up bonds, could not stop the avalanche. ...

Sunday, May 24, 2009

Asia's "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons. Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."

"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.

Fight for global reserve currency US backing for world currency stuns markets Gulf Currency Collapses Dollar still top currency in Russia reserves-cbank China's yuan 'set to usurp US dollar' as world's reserve currency

Friday, May 22, 2009

Dollar falls as Britain rating downgraded, fears US may be next

May 22 (Bloomberg) -- The dollar fell to a four-month low against the euro and dropped versus the yen on speculation the U.S. government's creditworthiness is weakening, sapping demand for the greenback. ...

Since 1978, when such ratings began, Britain has been awarded an immaculate AAA – the mark of a healthy, leading world economy. That golden run could come ...

May 21 (Bloomberg) -- The odds on the dollar, Treasury bonds and the U.S. government's AAA grade all heading for the dumpster are shortening.

While currency forecasting is a mug's game and bond yields can't quite decide whether to dive toward deflation or surge in anticipation of inflation, every time I think about that credit rating, I hear what Agent Smith in the "Matrix" movies called "the sound of inevitability."

Friday, May 8, 2009

Gain moves MT4 to London

Dear Client:

This notice is to confirm that you will be able to continue to utilize hedging as part of your trading strategy through our UK entity, UK Ltd, which is authorized and regulated by the Financial Services Authority (FSA).

The transfer of your account to UK is not mandatory. However, keep in mind that should you decide not to transfer your account, you will not be able to establish new hedged positions beginning Friday, May 15, 2009.

Over the next couple of days, you will be receiving instructions for how to transfer your account to UK.

The transfer of your account will be a seamless process. You will not need to close your open positions or orders and you will be able to use the same User ID and password to log onto the MetaTrader platform. Following the transfer of your account to UK Ltd, your funds will be held in segregated accounts as required by FSA regulation.

Should you have any questions or concerns, please feel free to contact one of our customer service representatives.

Thank you in advance for your continued business.

The Team at

Thursday, May 7, 2009

FXCM starts shifting accounts to London

FAQs for NFA rules

Video: Trading Under the New NFA No-Hedging Rules

What the new rules mean:

Transferring to FXCM UK: