Investment/Trends

Fed fears risks posed by exit tools; plan almost done

"The sheer magnitude of the amounts of money used to combat the crisis - $2.6 trillion sitting at the Fed as bank reserves and $4.2 trillion held by the Fed in various securities - may complicate the U.S. central bank's ability to control its target interest rate once the decision is made that it should be raised. The Fed has neared consensus that its workhorse tool will be the interest it pays banks on excess reserves on deposit at the Fed. Another tool would have a similar impact but apply more broadly, using overnight repurchase agreements that would let money market funds and other institutions as well as banks essentially make short-term deposits at the Fed." Continue reading →

Continue ReadingFed fears risks posed by exit tools; plan almost done

Japan economics minister warns of premature QE exit

"Japanese Economics Minister Akira Amari warned that it would be premature for the Bank of Japan to consider an exit strategy from its massive stimulus programme, voicing hope instead for further monetary easing if achievement of its inflation goal falls behind schedule. The central bank has kept policy unchanged since deploying an intense burst of monetary stimulus in April last year, when it pledged to double base money via aggressive asset purchases to accelerate inflation to 2 percent in roughly two years. With Japan only halfway to meeting that target, the BOJ is set to keep its stimulus plan intact well into next year." Continue reading →

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Neofeudalism’s Tax Donkeys and the Battle for Control of Resources

"Those with access to the low-interest unlimited credit spigot of the Federal Reserve are free to snap up tens of thousands of houses and tens of thousands of acres of productive land, along with other rentier assets such as parking lots and meters, fossil fuels in the ground, and of course the engines of credit creation, the banks. Should a legitimate (as opposed to black market/cash business) small business manage to open its doors, it faces a blizzard of junk fees, permits and taxes that make its survival a dubious prospect. No wonder self-employment and small business are in structural decline." Continue reading →

Continue ReadingNeofeudalism’s Tax Donkeys and the Battle for Control of Resources

Tax Collectors Grow More Aggressive; Payers Caught in the Middle

"Her Majesty's Revenue & Customs doesn't have enough power, or so the British Parliament is told. HMRC wants to be both judge and jury when it comes to recalcitrant taxpayers. It wants to the ability to 'raid bank accounts' and to do so without a court warrant. What comes across clearly in both the IRS stance and in the requests by the HRMC is a certain level of arrogance that is magnified by modern communication facilities. The pushback against intrusive tax collection is growing, even as agency demands for more power and revenue are expanding as well." Continue reading →

Continue ReadingTax Collectors Grow More Aggressive; Payers Caught in the Middle

More Jawboning from Australia’s Central Bank

"RBA Governor Glenn Stevens proceeded from characterizing the level of the exchange rate as 'uncomfortably high' to noting 'that foreign-exchange intervention can, judiciously used in the right circumstances, be effective and useful.' That latter observation was particularly noteworthy because, according to The Wall Street Journal, a currency intervention has essentially been verboten in the decades since Australia shifted to a floating exchange rate in 1983. He closed his remarks on this particular topic with an even more overt statement: 'Nonetheless, we think that investors are under-estimating the likelihood of a significant fall in the Australian dollar at some point.'" Continue reading →

Continue ReadingMore Jawboning from Australia’s Central Bank

Finance Goes From Foe to Friend in Hollande Government

"During his election campaign in 2011, President Francois Hollande famously called finance his 'greatest adversary.' In a speech today, French Finance Minister Michel Sapin called finance 'a friend,” quickly specifying that he was talking about 'good finance.' The new stance comes as the president’s popularity is at a record low and his economic policies have drawn the ire of members of his own Socialist Party and of allied groups. Recovery remains anemic and joblessness is at a record high. Global finance, however, has stuck with Hollande. Investors have piled into French bonds, giving Hollande’s government borrowing costs that are close to the lowest on record." Continue reading →

Continue ReadingFinance Goes From Foe to Friend in Hollande Government

Yellen Sees Little Threat to Financial Stability

"Federal Reserve Chair Janet Yellen said Wednesday that she doesn't see a need for the Fed to start raising interest rates to defuse the risk that extremely low rates could destabilize the financial system. Yellen said she does see 'pockets' of increased risk-taking. But she said those threats could be addressed through greater use of regulatory tools, such as higher capital standards for banks. Some critics of Fed policies have warned that the central bank could be setting the stage for another dangerous bubble by keeping rates so low for so long. In her speech, Yellen said she didn't see dangerous excesses in the financial system." Continue reading →

Continue ReadingYellen Sees Little Threat to Financial Stability

Japan consumer price growth at 32-year high

"Consumer prices in Japan rose at an annual rate of 3.4% in May, the fastest pace in 32 years, as the effect of the sales tax hike from 5% to 8% started to be felt. The price growth in May follows a 3.2% jump in April and is a big boost for Japan's attempt to trigger inflation. The country's central bank has set a target of a 2% inflation rate. The measures, which include boosting the country's money supply, have started to have an impact and consumer prices in the country have now risen for 12 months in a row. Policymakers have been hoping that consumers and business will be encouraged to start spending and not hold back on purchases, as they may have to pay more later on." Continue reading →

Continue ReadingJapan consumer price growth at 32-year high

BIS: Central banks warned of ‘false sense of security’

"'The Bank for International Settlements (BIS) has warned that ultra-low interest rates have lulled governments and markets "into a false sense of security'. The Basel-based organisation - usually dubbed the 'central banks' central bank' - urged policy makers to begin to normalise rates. 'The risk of normalising too late and too gradually should not be underestimated,' the BIS said. Markets have rallied since January. The FTSE all-world share index is up 5% so far this year, while the 'fear index', is at a 7-year low. 'Overall, it is hard to avoid the sense of a puzzling disconnect between the markets' buoyancy and underlying economic developments globally,' the BIS said in its annual report." Continue reading →

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Bill Bonner: Jailhouse humour

"We’re not going to let a little thing like forced labour spoil our Freedom Fest holiday. Anyway, it is only poor people who get caught up in the prisons’ slave market. So, we have nothing to worry about. We can hire a shyster lawyer when we need one. Besides, we like the Land of the Free. Which is to say, we appreciate hypocrisy. After all, it is the 'homage that vice pays to virtue'. Without it, virtue wouldn’t get any strokes at all. Free minds and free markets are virtues too. Nobody cares about them either. Not in America. We have the schools to shackle minds. And we have the feds to lock up, beat up, and tie up the markets." Continue reading →

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