Saturday, November 6, 2010
From the UK Telegraph:
Right from the start of the financial crisis, it was apparent that one of its biggest long-term casualties would be the mighty dollar, and with it, very possibly, American economic hegemony. The process would take time – possibly a decade or more – but the starting gun had been fired.
At next week's meeting in Seoul of the G20's leaders, there will be no last rites – this hopelessly unwieldy exercise in global government wouldn't recognise a corpse if stood before it in a coffin – but it seems clear that this tragedy is already approaching its denouement.....read on
It is the clearest warning shot to date that global investors will not tolerate Ben Bernanke's openly-declared policy of generating inflation for much longer.
Soaring bourses may have stolen the headlines, but equities are rising for an unhealthy reason: because they are a safer asset class than bonds at the start of an inflationary credit cycle.
Meanwhile, the price of US crude oil jumped $2.5 a barrel to $87. It is up 20pc since markets first concluded in early September that 'QE2' was a done deal.
This amounts to a tax on US consumers, transferring US income to Mid-East petro-powers. Copper has behaved in much the same way. So have sugar, soya, and cotton.
The dollar plunged yet again. That may have been the Fed's unstated purpose. If so, Washington has angered the world's rising powers and prompted a reaction with far-reaching strategic consequences.
Li Deshui from Beijing's Economic Commission said a string of Asian states share China's "deep bitterness" over dollar debasement, and are examining ways of teaming up to insulate themselves from the tsunami of US liquidity. Thailand said its central bank is already in talks with neighbours to devise a joint protection policy.
Brazil's central bank chief Henrique Mereilles said the US move had created "excessive dollar liquidity which we are absorbing," forcing his country to restrict inflows. Mexico's finance minister warned of "more bubbles."
These countries cannot easily shield themselves from the inflationary effect of QE2 by raising interest rates since this leads to further "carry trade" inflows in search of yield. They are being forced to eye capital controls, with ominous implications for the interwoven global system.
In London and Frankfurt the verdict was just as harsh. "In our view, this is one of the greatest policy mistakes in the Fed's history," said Toby Nangle from Baring Asset Management.
.....Of course, it is precisely this open door that has so juiced risk trades, from Australian dollar futures, to silver contracts, and junk bonds. Goldman Sachs thinks QE2 will ultimately reach $2 trillion, with no exit until 2015. Such moral hazard is irresistible. It is the Bernanke 'super-put'.....read in full
NEW YORK, NY--(Marketwire - November 4, 2010) - On November 2, 2010, Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com), a leading plaintiffs' firm, filed a class action complaint in the United States District Court for the Southern District of New York, on behalf of an individual investor, against JP Morgan Chase and HSBC in connection with their alleged conspiracy and manipulation of the market for silver futures and options contracts traded on COMEX. To view a copy of the complaint, please click here.
The complaint alleges that around June 2008, when JP Morgan acquired Bear Stearns, including Bear Stearns' short positions in silver futures, JP Morgan and HSBC commenced a conspiracy to manipulate, and did manipulate, the market for silver futures and options contracts on COMEX. Specifically, the complaint alleges that around this time, JP Morgan and HSBC, pursuant to their conspiracy, acquired massive short positions on silver futures contracts in an effort to artificially depress the price of the silver futures market. The defendants realized substantial illegal profits in connection with their scheme, while investors who had no knowledge of the scheme, lost substantial amounts of money because of the defendants' conduct......read on
For those of you who have been following this blog since July, hopefully you have followed my advice and that of those commentators featured that have suggested protecting and growing your wealth in The People's Money - Silver. Since July silver has run up from approx. AUD630 to this moment the extremely lucky number of AUD888. A 40% increase in 3 months !! - now that is what I call wealth protection.
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SAN FRANCISCO (MarketWatch) — Gold futures rallied to a fresh record high Friday, settling less than $3 away from $1,400 an ounce a day after their biggest one-day gain in nearly 20 months.
Gold for December delivery added $14.60, or 1.1%, to $1,397.70 an ounce on the Comex division of New York Mercantile Exchange. Silver and copper also hit historic high marks.
The metal went from losses to a solid rally in under three hours of floor trading, and kept going even as other commodities and the stock market moderated their gains.
Gold rose 2.9% on the week, on the heels of a 2.5% gain in the prior week......read on