The collapse in world trade has stopped, but there is no sign of a recovery.
World trade has been one of the worst casualties of the global economic slowdown and the source of some particularly startling figures. Towards the end of last year trade all but collapsed. According to the World Bank, the value of exports from a sample of 65 countries accounting for 97% of world trade rose by 20.2% in September, compared with a year earlier. But by November exports were worth 17.3% less than a year earlier, before slumping by a whopping 32.6% in the year to January. In March the managers of South Korea’s Busan port, long one of the world’s busiest, said that it had run out of space to store nearly 32,000 empty containers. The Baltic Dry Index, which measures demand for the
Central bank governors should serve one non-renewable term
Central bank governors should be appointed for one fixed, non-renewable term. The ECB got that one right. Members of the Board, including the President, serve for one, non-renewable eight-year term. The Bank of England’s arrangements are deficient in this regard. The governor is appointed for a five-year term but can be re-appointed as many times as the Chancellor of the Exchequer sees fit.
The Fed’s arrangements for appointments to the Board are also flawed. From the Fed’s website, Board appointments following the following set of rules: “The Board is composed of seven members, who are appointed by the President of the United States and confirmed by the U.S. Se
Investment banks, of all things, are making serious money again, thanks in part to government aid. Ironically, they are benefiting from the crisis they helped to create. As profits go up, so do salaries -- only this time, it's the taxpayers who are shouldering the risks.
Anshu Jain, 46, listened stoically and silently to the remarks of shareholders at the annual meeting of Deutsche Bank at the end of May. Many were troubled by the fact that the bank had reported its biggest ever loss in 2008, €3.9 billion ($5.6 billion), for which Jain, as its top investment banker, was responsible.
I was originally going to write about something else, but after a loyal Financial Armageddon visitor alerted me to the following Financial Times commentary, "Insight: Learn to Love the Recovery," by Tim Bond, head of asset allocation at Barclays Capital, I changed my mind. Frankly, I couldn't believe this piece of propagandistic excretia was written by a senior financial industry executive who makes decisions about where to invest. Because some FT readers might be fooled into thinking Mr. Bond had something useful to say, I felt duty-bound to respond to his "insights" with a few brief comments of my own.
he IMF holds 103.4 million ounces (3,217 metric tons) of gold at designated depositories. The IMF’s total gold holdings are valued on its balance sheet at SDR 5.9 billion (about $8.7 billion) on the basis of historical cost. As of March 31, 2009, the IMF's holdings amounted to $94.8 billion (at then current market prices). A portion of these holdings were acquired since the Second Amendment of the IMF’s Articles of Agreement in April 1978, amounting to 12.97 million ounces (403.3 metric tons), with a market value of $11.9 billion as of March 31, 2009. As noted below, this part of the Fund’s gold holdings is not subject to restitution to members.
The IMF acquired the majority of its gold holdings prior to the Second Amendment through four main types of transacti
The political classes obsess over the Norwich North by-election and Labour's slow-motion hara-kiri under Gordon Brown. But the news that really matters - the economic news - keeps flowing thick and fast. And it's far from reassuring.
UK output shrank 0.8pc between April and June - far worse than the average 0.3pc slump predicted by City economists. All parts of the economy - apart from the public sector - are now in recession.
This was the fifth successive quarter of GDP contraction, with output down 5.6pc since the spring of 2008 - more than double the depth of the early 1990s recession and the steepest peace-time fall since the early 1930s.
It's hard to imagine that the monetary policy talk can get any nuttier, but we've likely only just begun. After all, despite the Federal Reserve growing its balance sheet by 140 percent and dropping rates essentially to zero, the bankruptcies just keep on coming. Ex-Fed governor Wayne Angell told Larry Kudlow's CNBC audience, "monetary policy always works!" Although Angell does stipulate that it takes time before the tromping on the monetary gas pedal will spin the economic tires and spray the prosperity gravel.
But good grief, the Fed started cutting rates in September 2007, dropping the federal-funds rate from 5.25 percent to 4.75 percent, and it was cut, cut, cut until daddy set the target rate at 0 to .25 percent in December of last year. In the meantime, one trill
Rich Dad is a publishing phenomenon that most investment analysts prefer to ignore. But his common sense advice on how to manage personal finance has become a best-seller. Therefore, when he comments on a new trend then it is worth paying attention.
Now he is saying gold could hit $15,000 in a huge price spike. Well, he spotted the US housing market bubble before it happened, and helped millions to cash in before that market crashed.
What perhaps the professional analysts dislike about Rich Dad, apart from his enormous success, is that he just manages to jump on the right bandwagon at the right time for what seem obvious reasons. So has he got it right on gold?
Today's hearing by the U.S. Commodity Futures Trading Commission to discuss speculation in futures markets is a sham, a kangaroo court.
Notice that the concern of the CFTC is only why oil went up last year. The commission has no concern as to why oil fell so abruptly from $147 down to $35 even though Don Coxe was widely quoted at the time as saying the government had instigated a massive takedown. The commission's focus is on commodities of "finite supply" and preventing speculation.
Until about 10 years ago the world was always living with a glut of commodities, and particularly the most important one, oil. Technology had allowed the production capacity of oil to always grow much faster than demand. This is why OPEC was always trying to impose production quota
Here at Casey Research, we’ve been watching the actions of foreign holders of U.S. dollars as closely as a Las Vegas pit boss watches a card player on a $1 million winning streak.
Many of those in the deflation camp largely, or entirely, ignore the potential role these foreign holders may play in the drama now unfolding. But in fact, foreigners have, over the last decade, been by far the single most important source of buying for U.S. Treasuries.
Given the Treasury’s need to flog on the order of $3 trillion worth of its unbacked paper this year just to keep the government’s doors open – and that is a four- or fivefold increase over 2008 – the foreign buyers not only have to show up for the Treasury auctions, they have to show up in droves.
The collapse in Britain's economy now rivals the worst days of the Great Depression, it has emerged.
Economic output shrank by 5.6pc in the 12 months to the middle of the year, according to official figures which shattered hopes that the recovery has already begun.
The Office for National Statistics said that Britain's gross domestic product (GDP) contracted by 0.8pc in the second quarter, following the unprecedented 2.4pc fall in the first three months of the year. Economists had expected GDP – the broadest measure of the country's economic performance – to shrink by 0.3pc.
China is likely to press President Obama's administration on how it will rein in America's spiralling deficit as two days of talks between the countries start in Washin
“If the key issue in the past was the renminbi’s exchange rate, now it’s the US dollar,” said Wang Qing, an economist at Morgan Stanley. “What China cares about the most is the stability of the dollar and the stability of US policy.”
The US currency matters to China because it has invested billions and billions of dollars of its reserves in US government debt, which is denominated in dollars. The latest figures from May show that China owns $801.5bn of Treasuries, making it the second largest creditor to the US after Japan.
Old-time country music fans will recognize the title as one of the late Tammy Wynette’s greatest hits. Men and women are alike in uncountable ways, yet are also remarkably different. In every species, the female is from Venus, the male from Mars. Sometimes, even relationships that have endured for the longest time end in divorce.
Today, I write of the pending divorce I see in a relationship that the world has grown comfortable in observing for hundreds of years. As such, when it becomes obvious that the two will part ways, most will be shocked and in disbelief. Yet there will be no reconciliation and the split should prove permanent. The divorce I speak of is in the price relationship between gold and silver.
Gold will still be gold, of course, and will remain as i
In some offices in the US Treasury, there are framed posters that exhort the country’s population to buy American government bonds as part of their patriotic duty.
The images date back to the 1940s when the US government was worried about how to plug the yawning funding gap created by the second world war.
Ben Bernanke was elegant, concise, and yet he missed the point. Last week, in his testimony to congress, the chairman of the Federal Reserve presented his “exit strategy” – a toolkit of policies to prevent an increase in inflation once the economy starts to recover. The policies are the best modern central banking has to offer.
But simply possessing such tools does not make an exit strategy. For that, Mr Bernanke would, at the very least, need to define the circumstances that would trigger the use of such tools. I doubt very much that either Mr Bernanke, or his counterparts in Europe, are in a position to provide a credible definition at this point.
People trust gold more than governments and the political establishment. That is gold's inherent strength that makes it a good investment throughout difficult economic times.
Fundamentals are not good, the season is not one where gold is known to perform well, the top gold ETF seems to be losing a bit of its allure - and its volume - buying from the jewellery sector remains very depressed, general stock markets appear to be strengthening, some feel the financial crisis is behind us reducing the safe haven perception of gold, yet the gold market continues to show strength. True it is off its peaks, but every time it seems to be slipping back toward $900, so far this summer doldrum season it has picked up again to settle around the $950 level. Why?
Big round numbers are irresistibly alluring. There is some kind of psychological gravity about them that captures people’s attention. Remember when the Dow 30 first breached 10k (March 1999) or oil first exceeded $100 (February 2008)? These were major financial-media events that spilled widely into the mainstream consciousness.
I suspect the next great big round number to be achieved will be $1000 gold. While gold did indeed close slightly above $1000 for two days in March 2008, it has never been able to sustain this key psychological milestone. Even at the climax of its late 1970s bubble in January 1980, gold only hit $850 in nominal terms (about $2300 in today’s dollars). Gold’s quest for $1000 has proven exceedingly elusive.
With gold trading around US $952 (£580) per ounce this week, that means many vendors are accepting less than £120 per ounce.
It’s an ill wind that blows no good and now an American gold dealer aims to make a healthy profit from hard times by helping people turn unwanted jewellery into cash. The question is; are its profit margins too wide?
Cash4Gold spares people what many might regard as the daunting prospect of haggling with jewellers or pawnbrokers. But is the convenience of selling trinkets by post really worth signing away four fifths of their intrinsic value?
When I called Cash4Gold to offer them the right of reply to rival dealers’ claims that they pay only 20pc of value, their spokesman was refreshingly direct:
Gold buying is hot right now, but the offers consumers are getting to sell their bling is not, with amounts running as varied as the stores looking to buy.
Selling gold jewelry for its meltdown value shouldn't be a complex procedure. The price of gold is set on the world markets, fluctuating daily, so in theory it shouldn't be tough to determine what your piece of jewelry is worth.
What you'll actually get for it, however, is complex, and too few consumers seem to understand what goes into a merchant's formula for deciding how much to pay for your gold.
July
31
July
World Trade - After the fall
Jul 31 2009 The Economist
The collapse in world trade has stopped, but there is no sign of a recovery.
World trade has been one of the worst casualties of the global economic slowdown and the source of some particularly startling figures. Towards the end of last year trade all but collapsed. According to the World Bank, the value of exports from a sample of 65 countries accounting for 97% of world trade rose by 20.2% in September, compared with a year earlier. But by November exports were worth 17.3% less than a year earlier, before slumping by a whopping 32.6% in the year to January. In March the managers of South Korea’s Busan port, long one of the world’s busiest, said that it had run out of space to store nearly 32,000 empty containers. The Baltic Dry Index, which measures demand for the
Continue Reading
31
July
Should Fed chairmen go around kissing babies?
Jul 31 2009 The Financial Times
Central bank governors should serve one non-renewable term
Central bank governors should be appointed for one fixed, non-renewable term. The ECB got that one right. Members of the Board, including the President, serve for one, non-renewable eight-year term. The Bank of England’s arrangements are deficient in this regard. The governor is appointed for a five-year term but can be re-appointed as many times as the Chancellor of the Exchequer sees fit.
The Fed’s arrangements for appointments to the Board are also flawed. From the Fed’s website, Board appointments following the following set of rules: “The Board is composed of seven members, who are appointed by the President of the United States and confirmed by the U.S. Se
Continue Reading
31
July
Banks Reopen Global Casino
Jul 31 2009 Der Spiegel
Investment banks, of all things, are making serious money again, thanks in part to government aid. Ironically, they are benefiting from the crisis they helped to create. As profits go up, so do salaries -- only this time, it's the taxpayers who are shouldering the risks.
Anshu Jain, 46, listened stoically and silently to the remarks of shareholders at the annual meeting of Deutsche Bank at the end of May. Many were troubled by the fact that the bank had reported its biggest ever loss in 2008, €3.9 billion ($5.6 billion), for which Jain, as its top investment banker, was responsible.
Continue Reading
31
July
Don't Be Fooled
Jul 31 2009 Financial Armageddon
I was originally going to write about something else, but after a loyal Financial Armageddon visitor alerted me to the following Financial Times commentary, "Insight: Learn to Love the Recovery," by Tim Bond, head of asset allocation at Barclays Capital, I changed my mind. Frankly, I couldn't believe this piece of propagandistic excretia was written by a senior financial industry executive who makes decisions about where to invest. Because some FT readers might be fooled into thinking Mr. Bond had something useful to say, I felt duty-bound to respond to his "insights" with a few brief comments of my own.
Continue Reading
31
July
Gold in the IMF
Jul 31 2009 International Monetary Fund
he IMF holds 103.4 million ounces (3,217 metric tons) of gold at designated depositories. The IMF’s total gold holdings are valued on its balance sheet at SDR 5.9 billion (about $8.7 billion) on the basis of historical cost. As of March 31, 2009, the IMF's holdings amounted to $94.8 billion (at then current market prices). A portion of these holdings were acquired since the Second Amendment of the IMF’s Articles of Agreement in April 1978, amounting to 12.97 million ounces (403.3 metric tons), with a market value of $11.9 billion as of March 31, 2009. As noted below, this part of the Fund’s gold holdings is not subject to restitution to members.
The IMF acquired the majority of its gold holdings prior to the Second Amendment through four main types of transacti
Continue Reading
30
July
Huge gilts row barely registers as the UK sleepwalks into stagnation
Jul 30 2009 The Telegraph
The political classes obsess over the Norwich North by-election and Labour's slow-motion hara-kiri under Gordon Brown. But the news that really matters - the economic news - keeps flowing thick and fast. And it's far from reassuring.
UK output shrank 0.8pc between April and June - far worse than the average 0.3pc slump predicted by City economists. All parts of the economy - apart from the public sector - are now in recession.
This was the fifth successive quarter of GDP contraction, with output down 5.6pc since the spring of 2008 - more than double the depth of the early 1990s recession and the steepest peace-time fall since the early 1930s.
Continue Reading
30
July
You Can't Print Production and Prosperity
Jul 30 2009 Ludwig von Mises Institute
It's hard to imagine that the monetary policy talk can get any nuttier, but we've likely only just begun. After all, despite the Federal Reserve growing its balance sheet by 140 percent and dropping rates essentially to zero, the bankruptcies just keep on coming. Ex-Fed governor Wayne Angell told Larry Kudlow's CNBC audience, "monetary policy always works!" Although Angell does stipulate that it takes time before the tromping on the monetary gas pedal will spin the economic tires and spray the prosperity gravel.
But good grief, the Fed started cutting rates in September 2007, dropping the federal-funds rate from 5.25 percent to 4.75 percent, and it was cut, cut, cut until daddy set the target rate at 0 to .25 percent in December of last year. In the meantime, one trill
Continue Reading
30
July
Dr. Nouriel Roubini Interview
Jul 30 2009 Youtube
Renowned economist Dr. Nouriel Roubini speaking about the current financial crisis at Yeshiva University's Alexander Brody Lecture Series.
Continue Reading
29
July
Is Rich Dad Right About $15000 Gold?
Jul 29 2009 GoldSeek
Rich Dad is a publishing phenomenon that most investment analysts prefer to ignore. But his common sense advice on how to manage personal finance has become a best-seller. Therefore, when he comments on a new trend then it is worth paying attention.
Now he is saying gold could hit $15,000 in a huge price spike. Well, he spotted the US housing market bubble before it happened, and helped millions to cash in before that market crashed.
What perhaps the professional analysts dislike about Rich Dad, apart from his enormous success, is that he just manages to jump on the right bandwagon at the right time for what seem obvious reasons. So has he got it right on gold?
Continue Reading
29
July
CFTC Conceals the Real Problem, the Infinite Dollar
Jul 29 2009 GoldSeek
Today's hearing by the U.S. Commodity Futures Trading Commission to discuss speculation in futures markets is a sham, a kangaroo court.
Notice that the concern of the CFTC is only why oil went up last year. The commission has no concern as to why oil fell so abruptly from $147 down to $35 even though Don Coxe was widely quoted at the time as saying the government had instigated a massive takedown. The commission's focus is on commodities of "finite supply" and preventing speculation.
Until about 10 years ago the world was always living with a glut of commodities, and particularly the most important one, oil. Technology had allowed the production capacity of oil to always grow much faster than demand. This is why OPEC was always trying to impose production quota
Continue Reading
29
July
Foreign Investment in the U.S. – Going Down, Down, Down
Jul 29 2009 GoldSeek
Here at Casey Research, we’ve been watching the actions of foreign holders of U.S. dollars as closely as a Las Vegas pit boss watches a card player on a $1 million winning streak.
Many of those in the deflation camp largely, or entirely, ignore the potential role these foreign holders may play in the drama now unfolding. But in fact, foreigners have, over the last decade, been by far the single most important source of buying for U.S. Treasuries.
Given the Treasury’s need to flog on the order of $3 trillion worth of its unbacked paper this year just to keep the government’s doors open – and that is a four- or fivefold increase over 2008 – the foreign buyers not only have to show up for the Treasury auctions, they have to show up in droves.
Continue Reading
29
July
British economic collapse rivals Great Depression
Jul 29 2009 The Telegraph
The collapse in Britain's economy now rivals the worst days of the Great Depression, it has emerged.
Economic output shrank by 5.6pc in the 12 months to the middle of the year, according to official figures which shattered hopes that the recovery has already begun.
The Office for National Statistics said that Britain's gross domestic product (GDP) contracted by 0.8pc in the second quarter, following the unprecedented 2.4pc fall in the first three months of the year. Economists had expected GDP – the broadest measure of the country's economic performance – to shrink by 0.3pc.
Continue Reading
28
July
China to press US on the dollar and the deficit as talks start in Washington
Jul 28 2009 The Telegraph
China is likely to press President Obama's administration on how it will rein in America's spiralling deficit as two days of talks between the countries start in Washin
“If the key issue in the past was the renminbi’s exchange rate, now it’s the US dollar,” said Wang Qing, an economist at Morgan Stanley. “What China cares about the most is the stability of the dollar and the stability of US policy.”
The US currency matters to China because it has invested billions and billions of dollars of its reserves in US government debt, which is denominated in dollars. The latest figures from May show that China owns $801.5bn of Treasuries, making it the second largest creditor to the US after Japan.
Continue Reading
28
July
Silver is about to split from gold
Jul 28 2009 SilverSeek
Old-time country music fans will recognize the title as one of the late Tammy Wynette’s greatest hits. Men and women are alike in uncountable ways, yet are also remarkably different. In every species, the female is from Venus, the male from Mars. Sometimes, even relationships that have endured for the longest time end in divorce.
Today, I write of the pending divorce I see in a relationship that the world has grown comfortable in observing for hundreds of years. As such, when it becomes obvious that the two will part ways, most will be shocked and in disbelief. Yet there will be no reconciliation and the split should prove permanent. The divorce I speak of is in the price relationship between gold and silver.
Gold will still be gold, of course, and will remain as i
Continue Reading
28
July
Global Insight: Localisation back in fashion
Jul 28 2009 The Financial Times
In some offices in the US Treasury, there are framed posters that exhort the country’s population to buy American government bonds as part of their patriotic duty.
The images date back to the 1940s when the US government was worried about how to plug the yawning funding gap created by the second world war.
Continue Reading
28
July
There is no easy way out for central banks
Jul 28 2009 The Financial Times
Ben Bernanke was elegant, concise, and yet he missed the point. Last week, in his testimony to congress, the chairman of the Federal Reserve presented his “exit strategy” – a toolkit of policies to prevent an increase in inflation once the economy starts to recover. The policies are the best modern central banking has to offer.
But simply possessing such tools does not make an exit strategy. For that, Mr Bernanke would, at the very least, need to define the circumstances that would trigger the use of such tools. I doubt very much that either Mr Bernanke, or his counterparts in Europe, are in a position to provide a credible definition at this point.
Continue Reading
27
July
Gold moves in a mysterious way - well perhaps not
Jul 27 2009 Mineweb
People trust gold more than governments and the political establishment. That is gold's inherent strength that makes it a good investment throughout difficult economic times.
Fundamentals are not good, the season is not one where gold is known to perform well, the top gold ETF seems to be losing a bit of its allure - and its volume - buying from the jewellery sector remains very depressed, general stock markets appear to be strengthening, some feel the financial crisis is behind us reducing the safe haven perception of gold, yet the gold market continues to show strength. True it is off its peaks, but every time it seems to be slipping back toward $900, so far this summer doldrum season it has picked up again to settle around the $950 level. Why?
Continue Reading
27
July
Gold $1000 Quest
Jul 27 2009 GoldSeek
Big round numbers are irresistibly alluring. There is some kind of psychological gravity about them that captures people’s attention. Remember when the Dow 30 first breached 10k (March 1999) or oil first exceeded $100 (February 2008)? These were major financial-media events that spilled widely into the mainstream consciousness.
I suspect the next great big round number to be achieved will be $1000 gold. While gold did indeed close slightly above $1000 for two days in March 2008, it has never been able to sustain this key psychological milestone. Even at the climax of its late 1970s bubble in January 1980, gold only hit $850 in nominal terms (about $2300 in today’s dollars). Gold’s quest for $1000 has proven exceedingly elusive.
Continue Reading
27
July
Gold: are dealers' profit margins too wide?
Jul 27 2009 The Telegraph
With gold trading around US $952 (£580) per ounce this week, that means many vendors are accepting less than £120 per ounce.
It’s an ill wind that blows no good and now an American gold dealer aims to make a healthy profit from hard times by helping people turn unwanted jewellery into cash. The question is; are its profit margins too wide?
Cash4Gold spares people what many might regard as the daunting prospect of haggling with jewellers or pawnbrokers. But is the convenience of selling trinkets by post really worth signing away four fifths of their intrinsic value?
When I called Cash4Gold to offer them the right of reply to rival dealers’ claims that they pay only 20pc of value, their spokesman was refreshingly direct:
Continue Reading
27
July
Gold selling rising with the price
Jul 27 2009 The Oregonian
Gold buying is hot right now, but the offers consumers are getting to sell their bling is not, with amounts running as varied as the stores looking to buy.
Selling gold jewelry for its meltdown value shouldn't be a complex procedure. The price of gold is set on the world markets, fluctuating daily, so in theory it shouldn't be tough to determine what your piece of jewelry is worth.
What you'll actually get for it, however, is complex, and too few consumers seem to understand what goes into a merchant's formula for deciding how much to pay for your gold.
Continue Reading