Loading...

Goooooood Morning Fiatnam!

Thursday, January 29, 2015

Open letter to the German readers: That which you were never told about Greece

http://syriza.net.gr/index.php/en/pressroom/253-open-letter-to-the-german-readers-that-which-you-were-never-told-about-greece

Most of you, dear Handesblatt readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds biggotry, nationalism, even violence.
In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity.
In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the 'extend and pretend' tactic would lead my country to a tragic state. That instead of Greece's stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself.

Short and Sweet...


Gold


We are there....load up.

Wednesday, January 28, 2015

The Boom in Food Stamps (Chlidren's Edition)


RMB breaks into the top five as a world payments currency

http://www.swift.com/about_swift/shownews?param_dcr=news.data/en/swift_com/2015/PR_RMB_into_the_top_five.xml

According to SWIFT data, the Chinese yuan overtook the Canadian and Australian dollar as a global payments currency in November 2014, and now takes position behind the Japanese Yen, British pound, Euro and US dollar Brussels, 28 January 2015 – After nearly one year firmly positioned at #7, the Renminbi (“RMB”) has entered the top five of world payment currencies since November 2014, overtaking both the Canadian Dollar and the Australian Dollar by value. Just two years ago, in January 2013, the RMB was ranked at position #13 with a share of 0.63%. In December 2014, the RMB reached a record high share of 2.17% in global payments by value and now trails the Japanese Yen which has a share of 2.69%.

According to SWIFT data, the Chinese yuan overtook the Canadian and Australian dollar as a global payments currency in November 2014, and now takes position behind the Japanese Yen, British pound, Euro and US dollar

Brussels, 28 January 2015 – After nearly one year firmly positioned at #7, the Renminbi (“RMB”) has entered the top five of world payment currencies since November 2014, overtaking both the Canadian Dollar and the Australian Dollar by value. Just two years ago, in January 2013, the RMB was ranked at position #13 with a share of 0.63%. In December 2014, the RMB reached a record high share of 2.17% in global payments by value and now trails the Japanese Yen which has a share of 2.69%.

- See more at: http://www.swift.com/about_swift/shownews?param_dcr=news.data/en/swift_com/2015/PR_RMB_into_the_top_five.xml#sthash.dgnOjEpB.dpuf

Iran, Russia to create joint bank for national currency trade

http://www.tehrantimes.com/politics/121368-iran-russia-to-create-joint-bank-for-national-currency-trade

Both sides plan to create a joint bank, or joint account, so that payments may be made in rubles and rials and there is an agreement to create a working group [for this]," Sanaei said... Sanaei expressed hope that Iranian producers will get approval to export dairy and meat products to Russia by March of this year.''

Jeffrey Gundlach says the Federal Reserve is on the brink of making a big mistake.

http://www.bloomberg.com/news/articles/2015-01-28/gundlach-sees-fed-bungling-exit-then-backtracking-with-new-cut

Jeffrey Gundlach says the Federal Reserve is on the brink of making a big mistake.

U.S. central bankers have been talking about raising benchmark borrowing costs this year even though the outlook for global growth is worsening as oil prices tumble. If Fed Chair Janet Yellen goes ahead with this plan, she runs the risk of having to quickly reverse course and cut interest rates, according to Gundlach.

“There’s no fundamental reason to raise interest rates,” Gundlach, chief executive officer at DoubleLine Capital LP, said at a conference yesterday in Hollywood, Florida. “My idea is the Fed raises rates for philosophical reasons. That may be short-lived.”

..

Despite this backdrop, most analysts expect central bankers to go through with some sort of tightening this year. Money-market derivatives traders are pricing in a rate increase in the fourth quarter, too.

“This is the triumph of hope over experience,” Gundlach said.

The Periodic Table of Commodity Returns


'Patient' Fed shows no signs of wavering on rate hikes

The Federal Reserve on Wednesday gave no sign that it is wavering on hiking interest rates sometime in the second half of 2015. The U.S. central bank was upbeat about the real economy, citing "solid" growth and "strong" job gains. The policymakers repeated that they think inflation will move back to the 2% target after being pushed down by transitory factors. The statement repeated that the central bank can be "patient" in hiking rates. This takes rate hikes off the table for the next two policy meetings in March and late April. Officials made no mention of the weakness in the global economy and the recent decisions by global central banks. The Fed decision was unanimous.

http://www.federalreserve.gov/newsevents/press/monetary/20150128a.htm

Strong Dollar Squeezes U.S. Firms

http://www.wsj.com/articles/strong-dollar-hangs-over-more-companies-rattling-investors-1422386620

The stronger dollar is slicing sales and profits at big American companies, prompting them to put renewed emphasis on cost cutting and cramping the broader U.S. economy.
The currency effects are hitting a wide swath of corporate America—from consumer products giant Procter & Gamble Co. to technology stalwart Microsoft Corp. to pharmaceuticals company Pfizer Inc. Those companies and others have expanded aggressively overseas in search of growth and now are finding that those sales are shrinking in value or not keeping up with dollar-based costs.

Comparing the inflated cost of living today from 1938 to 2015

http://www.mybudget360.com/cost-of-living-1938-to-2015-inflation-history-cost-of-goods-inflation/

People have a hard time understanding how inflation erodes their purchasing power.  Little by little the cost of everything goes up and people simply assume this is normal in an economy.  The $2 movie ticket becomes a $8 movie ticket.  That can of tuna just got smaller but the price remains the same.  The cost of going to college went from manageable to needing large student debt merely to complete a four year degree.  Inflation is argued to be a purely monetary outcome.  You have too much money, in the form of cash or credit in today’s case, chasing fewer goods.  In our current economy, debt is the fuel accelerating inflation.  You can see this in items like housing, cars, and college where debt is the primary fuel driving prices higher.  The big problem today is that incomes are simply not rising fast enough to keep up with the rise in other expenses.  Over time, inflation has a big destructive power.  I thought it would be useful to look at the cost of typical items in 1938 and compare them to where things stand in 2015.