Two blogs which are required reading
Over here, one blog which really must be read by any who wish to know about the misuse of money is Wat Tyler’s Burning our Money. On November 5th, he wrote:
On a day when the Bank of England announced it was printing another £25bn to tide the government over the next couple of months, eminent monetary expert Sir Stuart Rose explained our central problem from a technical perspective:
“We are skint.”
Yes, indeed. Sir Stuart has put his finger on the Big Issue. He continued:“This Government and the future Government have got to make some hard decisions about refilling the coffers”.
On the other side of the pond, it really must be Karl Denniger’s Market Ticker. I’ve been wading through his post on Tier Capital requirements and what he calls “kindergarten maths” is a challenge to me. He concludes, about the Federal trillions in reserves:
Jansen was one of the bloggers recently “invited” to Treasury. Nonetheless, it is rather galling to watch a clearly-intelligent individual entirely ignore what amounts to kindergarten math when it comes to what is the obvious and indeed only rational explanation for the Primary Dealers’ demand.
Simply put, the system is (still) insolvent as it was last fall and that insolvency has been papered over with The Fed’s “money hose.”
The system has NOT ”stabilized” – quite to the contrary. As with the FDIC that has refused to close banks until they are 30, 40, or even 50% underwater on their assets The Fed has effectively papered over the insolvency of the primary dealers to the point that they are now demanding the ability to ignore the primary safety and soundness metric for a bank - Tier Capital – as “compensation” for participating in The Fed’s attempt to drain the excess reserves it pumped in. This says that they’re not only still broke they’re more broke than they were last fall!
How does one argue with these gentlemen? I’ve yet to see either comprehensively taken apart.
Filed under: Politics & economics
One cannot argue with these gentlemen.
Wallpaper only holds a cracked wall together momentarily. It may hide the cracks, but…..
I said many months ago, it can only be a race to the bottom, a competitive devaluation of the currency… (Speaking of UK at the time, but also applies to US) to renege on the debts…(external and internal -external trade creditors, and pensions, dole, etc)..paid with a devalued currency.
In the Wiemar, gold and equities went to the moon, measured in a worthless currency, – not internationally. The currency collapse was a confidence issue, — confidence was lost because of overprinting–deluge of paper. Precisely what we have now…..and gold and equities are going to the moon at the moment!
Of the £175B QE,… £173B went on gilts, ie Browns deficit. BofE had to buy because rational investors wouldn’t because the interest rate is too low, – - it doesn’t reflect the increasing risk of £ devaluation. The idea was to help industry by buying corporate debt, but Browns stupidity crowded corporate out of the market. The one-eyed, bad writer, bad speller, scottish git should be hung. The additional £25B is his continuing spending! Probably more to come, – keep watching!
QE thus tends to become a downward spiral…BofE buys more and more because no one else will….interest rates demanded get higher.
Eventually you end up borrowing to repay interest. That way is insanity. The pure interest on the borrowings destroys the economy/currency, specially when you try to curtail QE and market rates are asked.
This scenario is increasingly being factored into the markets. Brown is on a deliberate scorched-earth policy of the UK economy.
Even at this late stage, there is a way out…maybe!
But the way would be totally beyond the comprehension and ethos of existing politicians. Merv King would maybe go for it, but he would be slapped down.
We are spending 100s of Billions buying banks, trying to re-set the economy at 2008 levels, which MUST fail.
S E Asian economies, mainly China, are buying commodities, agricultural land offshore, mines, mineral rights,, oil exploration rights. Chinese ministers have been in Africa in the past few weeks, with a flurry of deals, ….., over the weekend they were in Egypt, with deals in the Arabic world.
Chinese currency is pegged to the $. As the Euro rises (proportionate to the $) China hollows out the european manufacturing base. That is their plan.
Quite a few SE Asian nations, whose currencies are now rising vs China, are now supporting the $. A $ carry trade has grown up, major players are Wall St (yup) and Hedgies. I am guessing that the carry trade will out muscle the SE Asian nations, as those nations will quickly deplete their reserves. Carry traders will short the $.
In other words, financial turmoil, the perfect scenario for gold.
Central banks are now net purchasers, Wall St capping is increasingly losing, Central banks can print money to buy gold. Even little Sri Lanka!
We talk crap about windmills and climate change, realise we must go nuclear at the 11th hour. Has that stupid bast*rd Milipede any idea of the waiting list for casings in Japan? When you are last in the queue, and energy agencies moles admit that oil reserves have been overstated for decades, foreign companies quoting for nuclear plants are definitely going to screw you over. And that assumes they remain interested while you argue for the next six years about planning.
Total insanity, orchestrated specifically by a one-eyed git!
Fasten your seat belts, still waters are running very deep.