Daily Archives: February 3, 2013

Fed Officials Recognized Upcoming 2007 Crisis But Weren’t Worried

"Federal Reserve officials in August 2007 saw the beginnings of the crisis in subprime mortgages and concluded that the U.S. economy would be able to withstand it, even as some Fed members warned that it could trigger a downturn, transcripts from their 2007 meetings show. The transcripts show the committee's slow grasp of the enormity of contagion that was to spread throughout global markets as a result of billions of dollars in low-quality housing assets that had been securitized into bonds and sold to banks and investors worldwide. The FOMC focused on the economy's performance and showed reluctance to alter policy until August." Continue reading →

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“Currency Wars” heating up again! What it means for you

"Coordinated, easy monetary policy among the world’s central banks has been a key driver of asset values. That much is undeniable. I have highlighted multiple markets — from junk bonds to farmland to emerging market bonds — where bubblicious activity is rearing its ugly head again as a result, just as it did in previous periods of overly aggressive policy easing. We know this doesn’t end well. The only question is timing." Continue reading →

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Russia Says World Is Nearing Currency War as Europe Joins

"The alert from the country that chairs the Group of 20 came as Luxembourg Prime Minister Jean-Claude Juncker complained of a 'dangerously high' euro. The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies run out of room. The risk is as each country tries to boost exports, it hurts the competitiveness of other economies and provokes retaliation. The skirmish may lead to a clash of G-20 finance ministers and central banks when they meet next month in Moscow, three months after reiterating their 2009 pledge to 'refrain from competitive devaluation of currencies.'" Continue reading →

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Pacific Group to Convert 1/3 of Hedge-Fund Assets to Gold

"The Pacific Group Ltd., founded by a former PaineWebber Inc. trader, is converting one-third of its hedge-fund assets into physical gold, betting that prices will go up as governments print more money to pay off debt. The Hong Kong-based asset manager plans to take delivery of $35 million worth of gold bars that can be traded on the London Bullion Market Association and other international markets, William Kaye, its founder and chief investment officer, said in a telephone interview on Jan. 18. It has secured vault space at Hong Kong International Airport to store the gold, he said." Continue reading →

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Kyle Bass Tells ‘Nominal’ Stock Market Cheerleaders: Remember Zimbabwe

"Bass starts by reflecting on the ongoing (and escalating) money-printing (or balance sheet expansion as we noted here) as the driver of stock movements currently and would not be surprised to see them move higher still (given the ongoing printing expected). However, he caveats that nominally bullish statement with a critical point, 'Zimbabwe's stock market was the best performer this decade - but your entire portfolio now buys you 3 eggs' as purchasing power is crushed. Investors, he says, are 'too focused on nominal prices' as the rate of growth of the monetary base is destroying true wealth." Continue reading →

Continue ReadingKyle Bass Tells ‘Nominal’ Stock Market Cheerleaders: Remember Zimbabwe

Swiss Gold Repatriation Almost Reality

"Today, almost one year later we have 90000 supporters for this initiative. Once the 100000 supporters is reached, we are certain that the Swiss National Bank will repatriate their gold holdings. I'm sure those 10000 votes will be reached by March 2013. The SNB hasn't said where its gold is and also hasn't said if it will repatriate their gold all at once, but if they were to repatriate it all at once, it would be almost double the amount that Germany is now repatriating over 7 years: namely 674 tonnes of gold. Other countries who want their gold back are: Ecuador (26 tonnes), The Netherlands (613 tonnes)." Continue reading →

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Man busted at airport with $70 million check is ex-Iran central bank head

"The German newspaper Bild am Sonntag reports that a man caught last month trying to enter Germany with a check worth about $70 million was Iran's former central bank chief. The weekly reports that customs officials at Duesseldorf airport found the check in Tahmasb Mazaheri's luggage Jan. 21 upon his arrival from Turkey. German customs had issued a statement Friday saying a check for 300 million Venezuelan Bolivars issued by the Bank of Venezuela was found on an unnamed 59-year-old man. Mazaheri was the governor of the Central Bank of Iran until 2008." Continue reading →

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The Disappearing Gold

"The Bundesbank is just as fearful of a run as the Fed and will be only too willing to accept the Fed’s terms. What must be borne in mind is the root cause of the request. It was not the Bundesbank itself that originally wanted the transfer to take place; it was the German people who, quite rightly, have become distrustful of the fact that their gold has been in New York for so long and want to see it repatriated. It is not the banks who wish to correct the situation. Not one bank wishes to expose the inappropriate practices of any other bank. Their loyalty is to each other and not to their depositors." Continue reading →

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India hikes import tax on gold by 50%

"India raised the import tax on gold to 6% from 4%, a senior finance ministry official said, as the world's top gold buyer aimed to curb purchases and rein in its ballooning current account deficit. India's passion for gold, seen by many as a hedge against persistently high inflation, has contributed to a rise in its current account deficit, which reached an all-time high of 5.4 percent of GDP in the July-September quarter. The shortfall has increased India's need for foreign capital inflows and evoked memories of the 1991 balance of payments crisis, when the central bank sent 47 tonnes of gold to Europe as collateral for a loan to avert a sovereign default." Continue reading →

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LBMA, IGE urged to end Iran-Turkey Gold trade

"Turkey is facing more pressure from global communities to end it's gold-for-gas dealings with Iran. The latest to join the fray is United Against Nuclear Iran (UANI), which launched its Turkey gold campaign, and called on both the London Bullion Market Association (LBMA) and Istanbul Gold Exchange (IGE) to enact new measures to combat illicit barter agreements, where Iranian crude oil is being exchanged for Turkish gold. Specifically, UANI is calling for the LBMA to require all of its members, particularly the IGE, to certify that the recipient of their gold products is not Iran. The LBMA should revoke the membership of any member that is unable to do so." Continue reading →

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