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Noteworthy News – November 24, 2014


Part-time jobs put millions in poverty or close to it - CNN Money

The Economist Has No Clothes – Scientific American

How Bad Are Venezuela’s Economic Problems? – Forbes


The liquidity monster that awaits – Financial Times

The Wisdom of Peter Schiff – New York Times


Economists Say We Should Tax The Rich At 90 Percent - Huffington Post

The Downside of the Boom – New York Times


For Goldman, Government Gift From 2008 Crisis Keeps Giving – Dealbook

RBS admits to data error in European stress test – CNBC


Posted in Economics, Markets, Media, Politics.

Noteworthy News – November 17, 2014


2 in 5 Young Americans Don’t Want a Job – Time

Full employment: The recovery’s missing ingredient - Washington Post

Japan Falls Into Recession - Wall Street Journal

Get Out While You Can: Why Young Americans Should Consider Moving Abroad – AlterNet

World Economy Worst in Two Years, Europe Darkening, Deflation Lurking: Global Investor Poll – Bloomberg


Billionaires are hoarding more cash - Hartford Business

Warning Signs From Commodity Prices – New York Times

Another Widening Gap: The Haves vs. the Have-Mores - The New York Times


Abenomics 2.0 – Just What Are They Trying To Achieve? - Fistful of Euros


UBS Eyes Cancelling Bonuses for FOREX Traders - BreitBart

Chinese banks’ bad loans ratio rises - Reuters


Posted in Economics, Markets, Media, Politics.

How 3 Traders Manipulated the Currency Market at Citigroup, JPMorgan and UBS

In the endless revelations about corruption within the banking industry, Bloomberg gives us a taste of the market movements caused by trades at banks for the benefit of the traders:

The traders, and others at banks including HSBC Holdings Plc (HSBA) and Royal Bank of Scotland Group Plc, would congregate in chat rooms an hour or so before benchmark rates are set to discuss their aggregate trading positions and how to execute them to their mutual benefit

And you just have to love the image of them congratulating and high-fiving eachother for ripping everyones’ face off:

Despite the impact their behavior had on the value of trillions of dollars of investments around the world, the traders regularly congratulated each other for successfully manipulating the market.

If the currency manipulation doesn’t get you going, then you can move on to Matt Taibbi’s article on JP Morgan’s fraud in the mortgage market:

When Fleischmann and her team reviewed random samples of the loans, they found that around 40 percent of them were based on overstated incomes – an astronomically high defect rate for any pool of mortgages; Chase’s normal tolerance for error was five percent. One mortgage in particular that sticks out in Fleischmann’s mind involved a manicurist who claimed to have an annual income of $117,000. Fleischmann figured that even working seven days a week, this woman would have needed to work 488 days a year to make that much. “And that’s with no overhead,” Fleischmann says. “It wasn’t possible.”

But when she and others raised objections to the toxic loans, something odd started happening. The number-crunchers who had been complaining about the loans suddenly began changing their reports. The process she describes is strikingly similar to the way police obtain false confessions: The interrogator verbally abuses the target until he starts producing the desired answers. “What happened,” Fleischmann says, “is the head diligence manager started yelling at his team, berating them, making them do reports over and over, keeping them late at night.” Then the loans started clearing.

And much more on how JP worked with the government to bury the case:

Instead, the government decided to help Chase bury the evidence. It began when Holder’s office scheduled a press conference for the morning of September 24th, 2013, to announce sweeping civil-fraud charges against the bank, all laid out in a detailed complaint drafted by the U.S. attorney’s Sacramento office. But that morning the presser was suddenly canceled, and no complaint was filed. According to later news reports, Dimon had personally called Associate Attorney General Tony West, the third-ranking official in the Justice Department, and asked to reopen negotiations to settle the case out of court.

Posted in Conspiracy, Markets.

Tagged with , , .

Noteworthy News – November 10, 2014


China’s high employment cause for short-term comfort, long-term concern - Reuters

China’s economic risks ‘not scary’ – President Xi Jinping – BBC

The Great Recession, Six Years Later: Uneven Recovery, Flawed Indicators, and a Struggling Working Class - Hampton Institute

Softer Escort Prices Provide Context on U.S. Jobs: Opening Line – Bloomberg

U.S. labor market tightens, but wages still anemic – Reuters


This billionaire thinks the Fed is missing the hyperinflation in the Hamptons - Washington Post

Fed to Markets: Brace for Volatility – Wall Street Journal


A passport to privilege - Financial Times

ECB door remains open to QE despite doubts over impact – Reuters


Most Wall Street firms still see Fed rate hike by June 2015: Reuters poll – Reuters

ECB has stopped daily monitoring of banks’ liquidity - Reuters

Bonus Season Brings More Pain for Traders - Wall Street Journal


Posted in Economics, Markets, Media, Politics.

Gold, Yen, Central Banks and the Endgame

Japan is frantically trying to stop its deflationary trap and its immense debt burden.  The population is aging and prospects look dire.  On Halloween (great timing) the Bank of Japan threw the kitchen sink at the problem by announcing that they would increase their QE from ¥60-70 trillion, to ¥80 trillion ($700 B) and would increase its purchases of ETF and REIT’s.  In addition,  Japan’s $US1.2 trillion Government Pension Investment Fund will dramatically rebalance its portfolio away from bonds.  These actions have depreciated the Yen versus the dollar by about 5% since the announcement and have created about an 8% jump in the Nikkei.    If you extend the time period to the summer, the Yen is down about 13% while the Nikkei is up about 10%.

Japanese Yen Decline

If you are a Japanese citizen, you have lost a significant amount of purchasing power unless you own a bunch of stocks (which they don’t).  Going back to 2012, the loss is over 30%:

2012 Japanese Yen

Let us be clear about Central Bank objectives:

  1. Ease out of or stop recessions from happening
  2. Keep employment strong by successfully implementing 1)
  3. Keep deflation at bay
  4. If you are in substantial debt, ease your way out of it through inflation

Number 4 is the item that we will focus on.

Japan’s debt to GDP is well over 200% (¥1 quadrillion!) and rising quickly.  They have had a hard time getting their inflation to move upward and they have also added some taxes to try to bring their deficit down which has probably counteracted their inflation and growth targets.  Inflation is the only plausible solution and depreciation of the Yen is key to Japan’s predicament.  The recent aggressiveness of the Bank of Japan smells more of desperation than solution.

The one thing that I can cite as factual is that the Bank of Japan often purchases equities and other assets (not just government bonds) and is not bashful about it.  My summary of their actions is that *anything is game*.  Since the Bank of Japan is purchasing all of their own debt and a good chunk of those in existance are owned by Japanese families or Japanese entities, they have not seen the bond vigilantes who usually make governments become honest about their problems.

Without rising interest rates, Japan just needs to keep investors psychologically calm so that there is not a hyper-inflationary or crashing currency situation.  One of the ways to keep investors calm is to stop gold and silver from skyrocketing in price due to a lack of faith in the currency and a scramble to preserve wealth through hard assets.  It just so happens that the ex-Assistant Treasurer to the Reagan administration and co-drafter of the Economic Recovery Tax Act of 1981, Paul Craig Roberts hit the idea of central banks’ interaction with the gold market right on the head:

As we have demonstrated in previous articles, the bullion banks (primarily JP Morgan, HSBC, ScotiaMocatta, Barclays, UBS, and Deutsche Bank), most likely acting as agents for the Federal Reserve, have been systematically forcing down the price of gold since September 2011. Suppression of the gold price protects the US dollar against the extraordinary explosion in the growth of dollars and dollar-denominated debt.

It is possible to suppress the price of gold despite rising demand, because the price is not determined in the physical market in which gold is actually purchased and carried away. Instead, the price of gold is determined in a speculative futures market in which bets are placed on the direction of the gold price. Practically all of the bets made in the futures market are settled in cash, not in gold. Cash settlement of the contracts serves to remove price determination from the physical market.

Cash settlement makes it possible for enormous amounts of uncovered or “naked” futures contracts — paper gold — to be printed and dumped all at once for sale in the futures market at times when trading is thin. By increasing the supply of paper gold, the enormous sales drive down the futures price, and it is the futures price that determines the price at which physical quantities of bullion can be purchased.

 You can read the full article here.

What I liked even more was the fact that over the last five years, when Asian physical delivery markets are open the returns are positive whereas they are negative when the London/US markets are open:


Lastly – Japan was successful in depreciating its currency starting in 2012.  At the start of that slaughtering, Gold started to rally in Yen rather dramatically.  By early 2013 that trend started to reverse and since mid 2013, Gold in Yen has been relatively flat even though the Yen is continuously crucified.  Is it possible that the Bank of Japan wants to keep Gold unexciting as a preservation of wealth and move their citizens into stocks and “more productive” assets?

Gold is Flat to Yen as Yen Dies

Just a coincidence or does the Bank of Japan not want their citizens to think they can preserve wealth with Gold?

Most interesting question is how can record demand for physical silver occur at the same time that the price is falling like a rock? – U.S. Mint temporarily sold out of Silver Eagles amid huge demand

Posted in Conspiracy, Derivatives, Economics, Markets, Politics.

Tagged with , , , , , , , , .

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