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Foreclosures: 'Worst three months of all time'
Despite signs of broader economic recovery, number of foreclosure filings hit a record high in the
third quarter - a sign the plague is still spreading.
concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in
the third quarter, according to a report issued Thursday.
"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online
marketer of foreclosed homes.
that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the
RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second
quarter and a 23% jump over the third quarter of 2008.
A leading City economist today warned that the UK faces a currency
crisis after the Bank of England allowed the pound to become “seriously
Stephen King, chief economist at HSBC, said: “There's always a risk of a sterling
crisis. It clearly is already a currency that's been seriously undermined.”
The pound was trading
against the US dollar at above $2 and at 1.50 before
the financial crisis struck.
But ballooning levels of government debt and a bearish stance on Threadneedle
Street — where Bank Governor Mervyn King said a weak pound was “helpful”
in rebalancing the economy — has pushed sterling sharply lower...
Don’t give up on quantitative easing: We can have our cake and eat it too
ccording to a widely-held consensus view, the world is slowly emerging from the Great Recession
of 2008. Growth in China is projected to top 8 per cent in 2009. Australia raised the interest rate on the Australian dollar last week and the US and UK economies are showing signs that unemployment growth
has slowed even though the unemployment rates in both countries are very high. Sometime soon, perhaps in the spring of 2010, perhaps earlier, the Fed, the European Central Bank, and the Bank of England are likely to respond to the perceived global recovery by reducing the sizes of their balance sheets and
raising interest rates on overnight loans.
John Taylor, of the eponymous Taylor Rule of central
banking, foresees a welcome return to business as usual. In his view, once the Fed starts to tighten, it would raise interest rates in response
to inflation and lower them when actual output falls below potential output. That would be a mistake. We can do better.
The liability side of the Fed balance sheet is a narrow measure of the money supply. Backing this up on the asset side, the Fed holds
gold, foreign currencies and loans to the US government. After the demise of the gold-exchange standard in 1973, the assets
of the Fed consisted mostly of three-month Treasury bills. This was true for 35 years until the Great Recession of 2008 led
to an unprecedented change in monetary policy.
Central banks throughout the world began to purchase an exotic variety of new assets. In the US, the Fed bought
long-term government bonds and relatively risky (by historical standards) private securities. Historically, monetary policy meant variations in the size of central bank balance sheets. In the US this was
accomplished by the purchase and sale of T-bills. During the Great Recession, the Fed and other central banks learnt to vary
not just the size of its balance sheet, but also its composition.
Soon, central banks throughout the world will follow Australia’s lead and begin to raise
overnight interest rates. When this happens, world central banks should embrace quantitative easing as a second pillar of monetary policy, not abandon it and revert to business as usual.
rumours of the dollar’s death are much exaggerated
It is the season of dollar panic. These panic-mongers are varied: gold
bugs, fiscal hawks and many others agree that the dollar, the dominant currency since the first world war, is on its death
bed. Hyperinflationary collapse is in store. Does this make sense? No. All the same, the dollar-based global monetary system
is defective. It would be good to start building alternative arrangements.
We should start with what is not happening. In the recent panic, the
children ran to their mother even though her mistakes did so much to cause the crisis. The dollar’s value rose. As confidence
has returned, this has reversed. The dollar jumped 20 per cent between July 2008 and March of this year. Since then it has
lost much of its gains. Thus, the dollar’s fall is a symptom of success, not of failure.
Although the economy is still struggling
to recover from the financial crisis, some major banks eked out profits from trading.
big banks are showing they can still make money, even as Main Street struggles -- though not from lending, refinancing homes
or other bread-and-butter business.
Instead, they're doing what Wall Street does best
-- betting big on stocks, bonds, commodities and other assets.
Citigroup, the shakiest of the major banks during the financial crisis, reported Thursday it
eked out a quarterly profit from trading, despite suffering more losses on consumer loans. Trading also drove big profits
at Goldman Sachs and JPMorgan Chase.
some banks are making money now is a sign of remarkable recovery from the crisis a year ago. But the lopsided business model
raises questions about what happens if trading profits fall off and banks are left to rely on more traditional operations.
After all, the economy is still struggling to recover, unemployment
is approaching 10 percent and Americans are saving money and trying to pay down debt, not taking on more.
``The good news is that banks are in better shape. The bad news is
that they're not making loans to consumers and businesses,'' said market analyst Edward Yardeni. ``That could come back to
bite them because these trading gains will only last so long.''
Soros says U.S. economy will be drag on world growth
Billionaire investor and philanthropist
said on Thursday that the world's current "currency arrangements" are fraught
with danger and that the world needs global regulation.
Soros, who runs hedge fund firm Soros Fund Management and has made his
reputation with bold currency bets, said the U.S. dollar ought to be falling in
value against the Chinese currency to allow the United States to contain its
current account deficit.
However, Soros said because the renminbi is tied to the greenback, the
Chinese currency is constantly undervalued leaving the dollar to sink against
the world's other major currencies.
The dollar has lost about 7 percent this year against a basket of the world's
Meanwhile, an undervalued yuan makes Chinese consumer goods cheaper in
foreign markets. Beijing has powered the country's growth by targeting U.S. and
other consumer markets with its exports, putting many producers in those markets
out of business because they cannot compete.
Ferguson ocupa dos
cátedras en Harvard -en laFacultad de Historia y en la Escuela de Nego-cios-, ha escrito más de una decena de libros de referencia
y publica una columna semanal enFinancial Times. El libro señala los fallos, pero entona una defensa de las denostadas finanzas. "Lejos de ser obra
de meras sanguijuelas deseosas de chupar la sangre a las familias endeudadas o de jugar con los ahorros de las viudas y los
huérfanos, la innovación financiera ha representado un factor indispensable en el desarrollo del hombre", escribe. "La evolución
del crédito y la deuda ha sido tan importante como cualquier innovación tecnológica en el auge de la civilización".El
dinero es ansiado y odiado a partes iguales. Y dicen que no da la felicidad. Reflexiones filosóficas aparte, hay que reconocer
que es un motor fundamental en la historia. Esto es lo que el historiador escocés Niall Ferguson se ha propuesto exponer y
analizar en su nuevo libro El triunfo del dinero. Cómo las finanzas mueven el mundo (Debate), un estudio que arrancó antes de que estallara Wall Street,
pero en el que aparece deletreado el germen del desastre.
Trichet considera "prematuro" hablar del fin de la crisis
El presidente del Banco Central Europeo (BCE), Jean Claude
Trichet, considera que un año después del agravamiento de la crisis financiera tras la quiebra de Lehman Brothers se observan
"más y más signos de estabilización económica en la zona euro", aunque advirtió de que es "prematuro" afirmar que se ha superado
la crisis financiera.
un discurso pronunciado en Francfort, el máximo responsable de política monetaria de la eurozona reiteró que "se ha detenido
la caída libre de la actividad económica" y mostró su confianza en que en el futuro se registre una recuperación "gradual",
aunque existe un elevado grado de incertidumbre.
At the Federal Reserve Board Conference on Key
Developments in Monetary Policy, Washington, D.C.
October 8, 2009
The Federal Reserve's Balance Sheet:
To fight a recession, the standard prescription for a central
bank is to
lower its target short-term interest rate, thereby easing financial conditions
and supporting economic growth. In the current downturn, however, the Federal
Reserve has faced two historically unusual constraints on policy. First, the
financial crisis, by increasing credit risk spreads and inhibiting normal flows
of financing and credit extension, has likely reduced the degree of monetary
accommodation associated with any given level of the federal funds rate target,
perhaps significantly. Second, since December, the targeted funds rate has been
effectively at its zero lower bound (more precisely, in a range between 0 and 25
basis points), eliminating the possibility of further stimulating the economy
through cuts in the target rate. To provide additional support to the economy
despite these limits on traditional monetary policy, the Federal Open Market
Committee (FOMC) and the Board of Governors have taken a number of actions and
initiated a series of new programs that have increased the size and changed the
composition of the Federal Reserve's balance sheet.
...the unregulated and untracked shadow banking world
of financial engineering,
profiteering, and looting.
Estimates run as high as $1.4 Quadrillion (!)
for the notional value of the world’s derivatives. Prior to 1990 there was
basically no market whatsoever. The only agency to track a portion of the U.S.’s
derivatives is the OCC (Office of the Comptroller of Currencies). They only
track a PORTION of the derivatives and only those held by commercial banks.
Office of the Comptroller of Currencies' Quarterly Report on Bank Trading and
Derivatives Activities, 2nd Quarter 2009
• The notional value of derivatives held by U.S.
commercial banks increased $1.5 trillion in the second quarter, or 0.7%, to
$203.5 trillion. • U.S. commercial banks reported revenues of $5.2 billion
trading cash and derivative instruments in the second quarter of 2009, compared
to a record $9.8 billion in the first quarter. • Net current credit exposure
decreased 20% to $555 billion. • Derivative contracts remain concentrated in
interest rate products, which comprise 85% of total derivative notional values.
The notional value of credit derivative contracts decreased by 8% during the
quarter to $13.4 trillion.
The total notional value of derivates that
they track appears to have continued
going up, but in fact have been going down recently. The reason they report
total derivatives still going up is that several key big companies, formerly
Investment Banks, filed to become Commercial Banks so that they can receive
government handouts like the rest of the Commercial Banks. The largest of these
is Goldman Sachs.
Though OCC says the notional value increased by $1.5 trillion… in Q4 of ’08
by $24.5 Trillion mainly due to the previously mentioned IB’s becoming CB’s, but
take that effect away and you would have net negative derivative growth as you
are seeing in the remainder of the bullets with revenues cut nearly in half, net
current credit exposure decreased 20%, and credit derivatives decreased
Do you see those decreases in the monetary aggregates reported by the
Fed? No? That’s because their monetary aggregates do not capture the entirety of
the shadow banking system, they only capture a portion of it indirectly when
credit dollars are deposited in institutions. Leverage is dramatically increased
as derivative contracts (most with no real backing – as in no real ability to
pay) as companies pretend that their positions are backed or hedged – in most
cases a catastrophic loss could not be paid, that is exactly what happened with
the collapse of AIG and why the Government stepped in to bail out the central
And the central banks, the Primary Dealers (WFC is not a P.D.),
DOMINATE the world of derivatives. Remember, these are the banks WHO ARE THE
FED. They are the ones who influence the Treasury and politicians to get their
rules made into law (using phony money they created from thin air)...
..Here’s a paragraph
taken from the OCC’s latest report:
Credit derivatives grew rapidly over the past several years as
dealers increasingly used them to structure securities to help meet investor
demand for higher yields. From year-end 2003 to 2008, credit derivative
contracts grew at a 100% compounded annual growth rate. However, notional credit
derivatives volume has fallen $2.5 trillion, or 15.5%, since peaking at $15.9
trillion in the fourth quarter of 2008.
One hundred percent
compounding rate of interest? Ha, ha, that’s a double every single year. Think
that’s sustainable? It’s not. Again, note that derivative VOLUME peaked in ’08
and is now down 15.5% in less than a year.
The clues are there, and they
are telling me that net derivatives have peaked and are, in fact, falling
backwards executing a classic parabolic collapse...
..The truth, however, is that there are very few legitimate
purposes for these
derivatives other than to find new ways to charge fees and to increase “credit,”
that, of course, being someone else’s debt.
And speaking of fees, they
have found a new game to send fees and commissions into the stratosphere, it’s
called “Cap & Trade.” Goldman, in particular, has placed themselves at the
head of a new market, one that will be larger than even the currency markets and
they will skim transaction fees every step of the way (shhhh, Cap & Trade is
really just another derivative market, shhhh!). Of course this is sold as being
good for the environment! LOL, what bunk! It’ll be good for Goldman and more
expensive for everybody else. This same lie is told about derivatives in
general, some even claim that derivatives makes things less expensive! What
baloney, they DRASTICALLY increase overall costs and ADD RISK to the system,
they certainly do not lessen it.
Now that the systemic risk has become
wider known, Congress...is pretending to do something
about them for the benefit of the show...the big banks are not going to let any real changes get passed. They don’t
limits or regulations, and they don’t want exchanges because they have the
world’s largest market for debt cornered and they want to keep it that way.
Stiglitz Says Banks Should Be Banned From
Large banks should be banned from trading derivatives including credit default
swaps, said Joseph Stiglitz, the Nobel prize-winning economist.
The CDS positions held by the five largest
banks posed “significant risk” to
the financial system, Stiglitz said at a press conference in Brussels. Big banks
should have extra restrictions placed on them, including a ban on derivative
trading, because of the risk that they would need government money if they fail,
he said in a speech today.
“We will have another armed robbery
unless we prevent the banks, the banks
that are too big to fail,” Stiglitz said. “We should say that if you’re too big
to fail then you are too big to be. They need more restrictions, such as no
Derivative trading and excessive risk-taking
are blamed for helping to spark
the worst financial crisis since World War II. American International Group Inc., once the
world’s largest insurer, needed about $180 billion of government money after its
derivative trades faltered and pushed the company toward bankruptcy.
Financial markets should be subject
to taxes that will discourage
“dysfunctional” trading and help pay for the effects that the global crisis had
on poorer nations, Stiglitz said last week.
Faced with a deep recession, Cuba tries socialism
Facing a severe and protracted economic downturn, Cuba's
government is scaling back socialism in an attempt to save it.
Cuba's workplace cafeterias are closing, President
Raúl Castro keeps saying
the well-off shouldn't get the same subsidies as the poor, and now there are
rumblings that one of the stalwart vestiges of the revolution -- the ration
booklet -- has outlived its usefulness.
As the Cuban government struggles through a deep recession, its leaders have
begun picking away at socialism in order to save it. But experts say the latest
buzz by the Cuban government is simply another desperate fix to stem the slide
of a failed economy that buckled long ago.
Even one of Havana's leading economists recently said Cuba's economy needed
to be turned upside down -- ``feet up.'' So taxi drivers got private licenses,
farmers now have their own plots of land and government workers have to pack
their own lunches.
``I think what they are trying to do is prepare the people for a hard
landing,'' said Cuba expert Jonathan Benjamin-Alvarado of the University of
Nebraska. ``The government is really saying in so many words: We've got limited
resources and can only do so much. I think they are stuck.''
Since he took office early last year, Raúl Castro has been saying that the
country's severely battered economy needs fixing. In a widely quoted August
speech, Castro said Cuba was spending more than it made.
``Nobody, no individual nor country, can indefinitely spend more than she or
he earns. Two plus two always adds up to four, never five,'' he said. ``Within
the conditions of our imperfect socialism, due to our own shortcomings, two plus
two often adds up to three.''
The system that allows
islanders to buy food at deeply subsidized prices each month has long been one
of the central building blocks of the country's socialist system, providing
everyone from surgeons to street-sweepers the same allotment of basic foods like
rice, beans and a bit of chicken.
Now, state-run media are
suggesting the "libreta" that Cubans have depended on since 1962 to put meager
helpings of food on their tables has outlived its usefulness and is hamstringing
the government as it tries to reform the ever-struggling economy.
"The ration booklet was a
necessity at one time, but it has become an impediment to the collective
decisions the nation must take," Lazaro Barredo Medina, editor of the Communist
Party's Granma newspaper, wrote Friday in a full-page signed opinion.
He said the government ought
not do away with rations by decree, but suggested readers should start preparing
for life without a system that people on this island both covet as a birthright
and complain is woefully insufficient to meet even the most modest needs.
Barredo's words carry no
immediate policy weight, but such a lengthy and frankly worded editorial penned
by the editor of Granma could very well presage major governmental changes down
the road — though it is impossible to know exactly when.
Dollar to Hit 50 Yen, Cease as Reserve,
The dollar may drop to 50 yen next year and eventually lose its role as the
global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said,
citing trading patterns and a likely double dip in the U.S. economy.
“The U.S. economy will deteriorate into 2011 as the effects of excess
consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third-
biggest bank. “The dollar’s fall won’t stop until there’s a change to the global
La única economía cerrada hoy día, es la economía mundial. Son las palabras
de mi maestro Arthur Laffer. Pero al amanecer del siglo XXI estamos siendo
testigos de las rudas zancadillas sembradas en la ruta hacía la globalización de
la economía, y una feroz lucha por su control ante unos Estados Unidos
sangrantes y debilitados.
En los siguientes años de este nuevo milenio, cortesía de su nuevo presidente
socialista, Barack Obama, el deterioro de los Estados Unidos y su pérdida de
control de la economía mundial será más evidente y, por razones naturales,
México deberá tener un papel muy diferente al jugado durante el último siglo, si
es que los mexicanos entendemos lo que está sucediendo en el nuevo paradigma
mundial. Los Estados Unidos seguirán luchando por dictar la pauta de los
acontecimientos económicos del mundo, básicamente a través de su política
monetaria de su banco central, la Reserva Federal (el FED), cuando menos
Sin embargo, en estos momentos un nuevo cartel de países encabezados por
Rusia y China, seriamente contemplan la posibilidad de abandonar el dólar como
la moneda mundial para utilizar una nueva, y no es precisamente el euro.
El Fondo de la Reserva Federal es la más poderosa institución en Washington y
la menos cuestionada de todas. Puede decidir elecciones, rescatar gobiernos de
la bancarrota, impulsar el mercado de valores o inmobiliario a la estratosfera,
o, simplemente destruir dichas actividades. Sin embargo, opera sin vigilancia o
supervisión alguna. Este organismo del país más rico y poderoso sobre la faz de
la tierra, es también conocido como la criatura de Jekyll Island, lugar que lo
vio nacer producto de una reunión en el año de 1913 entre los representantes de
los grandes capitales de la época: JP Morgan, Los Rockefeller, Los Warburg, Los
Rothschild: ¿el objetivo? eliminar la odiosa competencia para tomar control
total de los mercados financieros.
La composición de la reunión de Jekyll Island fue un ejemplo clásico de la
formación de un cartel. Un cartel es un grupo de hombres de negocios o países
independientes que se unen para coordinar la producción, calidad, el precio, y
la comercialización de los productos de sus miembros. El propósito de los
carteles es reducir la competencia y así incrementar sus ganancias. Estos
objetivos los logran estableciendo monopolios compartidos en sus actividades que
obliga al público a pagar precios mucho más altos por sus productos y servicios,
de los que normalmente tendrían que pagar en un sistema de libre mercado.
Unos cuantos años después de la formación del cartel de Jekyll Island,
mediante ciertas maniobras de los bancos más importantes de los Estados Unidos,
se provoca la gran depresión que curiosamente elimina más del 50% de la
competencia de esos grandes bancos.
A partir de la formación del banco central de los Estados Unidos, el FED ha
manipulado le economía del país de la forma más misteriosa y secreta que alguien
pudiera imaginar. La oficina de contabilidad del gobierno federal publicó un
reporte recientemente que entre otras cosas revela el hecho de que el FED
mantiene un fondo secreto de contingencia por un total de $30.7 billones de
dólares. Este dinero proviene de guardaditos que el Fondo ha “desnatado” de las
ganancias que le dejan las operaciones de mercado abierto. Supuestamente esos
dineros deberían de estar en la Tesorería.
Cuando alguien afirma que el FED está tirando el dinero de los
contribuyentes, su Presidente en turno protesta vigorosamente asegurando que el
FED no tiene presupuesto para apropiación de fondos de parte del gobierno
federal. La verdad es que el FED necesita los recursos de los contribuyentes
tanto como un falsificador de dinero necesita asaltar una gasolinera. El banco
central puede imprimir todo el dinero que necesite. Como banco de emergencia
para el sistema financiero nacional, el FED controla la circulación de dólares,
la definición del su valor, controla los intereses, controla la economía.
El concepto de banca central es relativamente nuevo y solamente los
socialistas monetarios afirman que tiene un buen récord. En su interminable
campaña para expandir el dinero y el crédito, una verdadera contracción del
mismo nunca ocurre. El FED pude bajar los intereses que le carga a los bancos
miembros por los prestamos que les otorga, puede manipular los requerimientos de
reservas, más impactante, puede comprar valores de la Tesorería en el mercado
abierto. Es decir, sacar dinero de una bolsa para echárselo en la otra.
Las compras en el mercado abierto es lo que ha probado ser más rentable. El
FED compra valores de la Tesorería directamente o a través de sus Casas de Bolsa
favoritas y mantiene esos valores como activos. Operando a través de sus
sucursales y bancos miembros, piramida préstamos con esos valores. La calidad
del crédito del gobierno de los Estados Unidos, cuyo balance sugeriría
declararlo en bancarrota, es sólo sostenido por el poder del Fondo de la Reserva
El FED puede ser un importante o insignificante jugador en el mercado, o
puede simplemente jugar el papel para persuadir gobiernos extranjeros de comprar
y acumular deuda del gobierno de los EU para financiar el déficit. En cualquier
caso, este poder le da vida a la relación simbiótica entre el sistema bancario y
el gobierno que hace una burla de la alegada independencia de FED.
La verdadera ridiculez—y aquí es donde el poder de falsificar aparece—es la
forma en que el FED consigue el dinero para comprar esos valores de la deuda.
Los fabrica echando a funcionar su maquinita, se los saca de la manga, tarea que
se simplificó cuando el papel dinero reemplazó al restrictivo sistema del patrón
Si alguien en el sector privado trata de hacer lo mismo, atraería toda la ira
del supremo gobierno para ir a aterrizar en las tétricas prisiones federales. El
gobierno de los Estados Unidos ha considerado invadir países que se rumorea
están falsificando dólares. Hace esfuerzos extraordinarios para aniquilar y
castigar severamente a los falsificadores de billetes. Yo le llamo a ese
esfuerzo eliminación de la competencia.
El argumento original para la creación del FED fue que eliminaría las crisis
que causa a los bancos ir a la quiebra y que los depositantes pierdan su dinero.
Después de la creación del FED en 1913, las recesiones han sido más frecuentes,
el gobierno se ha hecho exageradamente grande, el dólar ha perdido casi el 100%
de su valor. Los depositantes han sido afectados como nunca.
Las huellas digitales de FED están por todos lados en esos eventos. Cada
nuevo dólar creado por las operaciones de FED diluye el valor de los dólares
existentes en la economía. Un dólar aun más barato redistribuye dinero de
ahorradores a deudores, y de la clase media que paga impuestos a los bancos y
contratistas del gobierno que pueden gastar ese dinero fresco antes del aumento
Ricardo Valenzuela is a libertarian Mexican
economist who graduated from Tech Monterrey and has an MBA from the UNAM.
In Recession, China Solidifies Its Lead in Global Trade
With the global recession
making consumers and businesses more price-conscious, China
is grabbing market share from its export competitors, solidifying a dominance in
world trade that many economists say could last long after any economic
China’s exports this year have already vaulted
it past Germany to become the
world’s biggest exporter. Now, those market share gains are threatening to
increase trade frictions with the United States and Europe. The European
Commission proposed on Tuesday to extend antidumping duties on Chinese, as
well as Vietnamese, shoe imports.
China is winning a larger piece of a shrinking pie. Although world trade
declined this year because of the recession, consumers are demanding
lower-priced goods and Beijing, determined to keep its export machine humming,
is finding a way to deliver.
The country’s factories are aggressively reducing prices — allowing China to
gain ground in old markets and make inroads in new ones.
The most striking gains have come in the United States, where China has
displaced Canada this year as the largest supplier of imports.
Ben Bernanke's dollar crisis went into a wider mode yesterday as the greenback was shockingly upstaged by the euro and yen,
both of which can lay claim to the world title as the currency favored by central banks as their reserve currency.
Over the last three months, banks put 63 percent of their new cash into euros and yen -- not
the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital.
The dollar's share of new cash in the central banks was down to 37 percent -- compared with two-thirds a decade ago.
Fed boss Ben Bernanke may be forced
to raise rates in order to restore faith in the dollar — and help bring the euro and the yen back to earth.he
could be the Fed chairman who brought down the whole thing."
Investors and central banks are snubbing dollars because the greenback is kept too weak by zero interest rates
and a flood of greenbacks in the global economy.
They grumble that
they've loaned the US record amounts to cover its mounting debt, but are getting paid back by a currency that's worth 10 percent
less in the past three months alone. In a decade, it's down nearly one-third.
Reaches Breaking Point as Banks Shift
Central banks flush with record reserves are increasingly snubbing dollars in
favor of euros and yen, further pressuring the greenback after its biggest two-
quarter rout in almost two decades. Policy makers boosted foreign currency
holdings by $413 billion last quarter, the most since at least 2003, to $7.3
trillion, according to data compiled by Bloomberg. Nations reporting currency
breakdowns put 63 percent of the new cash into euros and yen in April, May and
June, the latest Barclays Capital data show. That’s the highest percentage in
any quarter with more than an $80 billion increase.
Dollar Retreats Most Against Commodities
in Wealth Shift
President Barack Obama’s effort to lead the world economic recovery by spending the U.S. out of its recession is undermining the dollar,
triggering record commodities rallies as investors scour the globe for hard assets.
As threats of a financial meltdown fade, the currency is falling victim to an unprecedented budget deficit, near-zerointerest rates and slow growth. The dollar is down 10 percent against six trading partners’ legal tender in Treasury
Secretary Timothy Geithner’s first eight-and-a-half months, the sharpest drop for a new occupant of that office since the Reagan administration’s James Baker persuaded world leaders to boost the deutsche mark and yen by debasing the dollar in 1985. This year’s
drop followed its best two quarters in 16 years.
had been strong because the U.S. was a haven in the storm, and now that the storm is abating, who needs the dollar?”
said Edmund Phelps, who won the 2006 Nobel Prize in economics and teaches at Columbia University in New York. “People got exasperated
with the tiny returns on safe assets.”
Even putting aside
the spectacular but hard-to-measure risks of a financing crisis or the loss of its special status, the dollar faces really
serious headwinds from boring old fundamentals.
The dollar has been weak for months and
markets have been fretting over a host of big picture worries.
Perhaps the world’s oil exporters
will stop using the dollar as the medium for petroleum trade. Or maybe the so-far patient and docile buyers of Treasuries
will finally turn jittery. Either could be a disaster for the dollar, but you don’t need conspiracies or crises to be
bearish on a currency from a country which on some measures has run the largest-ever deficit between what it imports and what
it sells abroad.
One of the most interesting side effects of the first part of the financial
crisis was that the dollar actually rose despite being the locus of the credit bubble and despite the U.S. consistently importing
far more than it exports. That strength, which has now been reversed in part, was largely because the freezing up of markets
set off a scramble for dollars.
The acute phase of the crisis is over and a return to something approaching
normalcy is not treating the dollar kindly; from its peak this year the dollar has fallen more than 13 percent against a trade-weighted
basket of currencies. The current account deficit — the balance of exports to imports — has also been reduced
greatly, from a peak north of 6 percent of GDP to below 3 percent at the end of June, with further narrowing in the months
since. That is because a weaker dollar makes U.S. products more competitive, but also because the price of oil, of which the
U.S. is a net importer, has dropped, and consumption at home is flagging.
It is far too early,
however, to say that the dollar adjustment has done its work and the deficit will now close.
but also more concrete importance is the status of the dollar. The social democratic vision necessarily involves huge increases
in domestic expenditures, most immediately for expanded health care. The plans currently under consideration will cost in
the range of $1 trillion. And once the budget gimmicks are discounted (such as promises of $500 billion cuts in Medicare which
will never eventuate), that means hundreds of billions of dollars added to
the monstrous budgetary deficits that the Congressional Budget Office projects conservatively at $7 trillion over the next
The effect on the dollar is already being felt and
could ultimately lead to a catastrophic collapse and/or hyperinflation. Having control of the world's reserve currency is
an irreplaceable national asset. Yet with every new and growing estimate of the explosion of the national debt, there are
more voices calling for replacement of the dollar as the world currency--not just adversaries like Russia and China, Iran
and Venezuela, which one would expect, but just last month the head of the World Bank...
The White House's top economic adviser took aim at Republican
criticism of President Obama's economic recovery policies on Monday, delivering a sharply worded letter to lawmakers that
credited the administration with pulling the nation back from an "abyss" and faulted the record of recent GOP presidents on
In his five-page letter to House Minority Leader John A. Boehner (Ohio),
National Economic Council Director Lawrence H. Summers attempted to rebuff what has become a centerpiece of the Republican
attacks -- that despite the administration's $787 billion stimulus package, job losses are continuing. Summers argued that
the Recovery Act has substantially reduced the pace of unemployment and that financial markets have stabilized. And while
the economy is still contracting, it is doing so much more slowly, he said. He also noted that some of the worst job losses
occurred before the administration took office.
El subsecretario del Departamento del Tesoro
norteamericano en financiamiento terrorista, David Cohen, ha explicado que en lo que va de año, Al Qaeda, que lidera Bin Laden,
ya ha hecho varios llamamientos a sus seguidores para que les donen fondos."Hemos concluido que Al Qaeda está atravesando
una de sus peores crisis financieras, y consecuentemente, está mermando su influencia en el exterior", asegura Cohen.
"Habrá más crisis financieras, sería ingenuo creer
que todo está arreglado"
Stephen Green, presidente desde hace tres años de HSBC, el mayor banco
del mundo por capitalización, del que anteriormente fue director general, acaba de publicar un libro titulado Les bonnes
valeurs, en el que intenta responder a la pregunta de si se puede ser banquero y hombre de fe a la vez.
Según él, "por supuesto,
se pueden extraer numerosas lecciones de esta crisis, aunque una cosa está clara: no hay alternativa al capitalismo de mercado".
Oil shale is rock
containing deposits of oil and is pictured here burning.
America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken.
Improvident Britain may avoid paralysing blackouts by mid-decade after all.
The World Gas Conference in Buenos Aires last week was one of those
events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically,
altering the global balance of energy faster than almost anybody expected.
Tony Hayward, BP's chief executive, said proven natural gas reserves
around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and rising fast.
"There has been a revolution in the gas
fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.
Bernanke and the Fed have lent and
spent trillions, but as the recovery takes hold, they'll have to rein some of
that back in.
The Federal Reserve threw a lot of money at the
crisis to get the gears of the
economy turning again -- but it may soon be time to collect on the bill.
Federal Reserve Chairman Ben Bernanke gave an update on the
Fed's expensive economic rescue package Thursday evening, in a keynote address
at a conference in Washington.
Bernanke and the central bank have been engaged in
unprecedented actions over the past year. After the Fed used the last of its
rate-cutting bullets, dropping interest rates to zero in December 2008, it had
to get creative to keep the recession from tailspinning into a depression.
The Fed's solution was three-fold. It lent funds to
companies and investors, bought up Treasury bonds, and purchased Wall Street's
In all, the Fed more than doubled the size of its balance
sheet, to $2.3 trillion.
As the recovery begins to take hold, many of those programs
are phasing out, but the balance sheet still stands at $2.2 trillion.
Now the Fed will have to walk a tightrope: If it keeps its
balance sheet super-sized for too long, that could lead to out-of-control
inflation. But deflation and soaring unemployment are a concern if the Fed
begins its exit too soon.
The number of job seekers
competing for each opening has reached the highest
point since the recession began, according to government data released
The employment crisis is expected to worsen as companies stay reluctant to
hire. Many economists expect a jobless recovery, putting pressure on President
Barack Obama and congressional Democrats to stimulate job creation.
There are about 6.3 unemployed workers competing, on average, for each job
opening, a Labor Department report shows. That's the most since the department
began tracking job openings nine years ago, and up from only 1.7 workers when
the recession began in December 2007.
The financial crisis
has blown a hole in the rosy forecasts of pension funds
that cover teachers, police officers and other government employees, casting
into doubt as never before whether these public systems will be able to keep
their promises to future generations of retirees.
The upheaval on Wall Street has deluged public pension systems with losses
that government officials and consultants increasingly say are insurmountable
unless pension managers fundamentally rethink how they pay out benefits or make
money or both.
Within 15 years, public systems on average will have less half the money they
need to pay pension benefits, according to an analysis by Pricewaterhouse
Coopers. Other analysts say funding levels could hit that low within a decade.
The state of the dollar probably hasn’t been a first-tier political issue in the United States since, say,
the presidential election of 1896. Back then, it manifested as whether or not America would stay on the gold standard or switch
to a bimetallic one. (The William Jennings Bryan “cross of gold” speech and all that.)
The aftershocks of the global financial crisis may now be propelling the dollar back to the political forefront.
The greenback’s continuing slide makes it a handy metric that neatly encapsulates America’s current economic troubles
and possible long-term decline. House Republicans for instance, have been using the weaker dollar as a weapon in their attacks
on the Bernanke-led Federal Reserve.
For more evidence of the dollar’s return to
political salience, look no further than theFacebook page of Sarah Palin. The 2008 GOP vice presidential nominee — and possible 2012 presidential candidate
— has shown a knack for identifying hot-button political issues, such as the purported “death panels” she
claims to have found in Democratic healthcare reform plans. In a recent Facebook posting, Palin expressed deep concern over
the dollar’s “continued viability as an international reserve currency” in light of huge U.S. budget deficits.
She might be onto something here, politically and economically. A recent Rasmussen poll, for instance, found that
88 percent of Americans say the dollar should remain the dominant global currency. Now, the average voter may not fully understand
the subtleties of international finance nor appreciate exactly how a dominant dollar has benefited the U.S economy. But they
sure think a weaker dollar is a sign of a weaker America.
The worst U.S. recession since the Great Depression has ended, but weak household spending as
the labor market struggles to create jobs will slow the pace of the economy's recovery, according to a survey.
The survey of 44 professional forecasters
released by the National Association for Business Economics, also known as the NABE, found that 80 percent of the respondents
believed the economy was growing again after four straight quarters of declines.
EL déficit comercial
de Estados Unidos se redujo de manera inesperada un 3,5 por ciento en agosto hasta los 30.700 millones de dólares, debido
a la caída de las importaciones de crudo, según informó el Departamento de Comercio.
Los analistas habían
anticipado que el déficit comercial crecería desde los 32.000 millones en
julio hasta los millones
de dólares en agosto, por el aumento de los precios de los combustibles.
Las cifras finales revelan
que, aunque se produjo un encarecimiento del petróleo, el volumen de combustible importado se redujo con respecto al mes anterior
en 1.280 millones de dólares.
que el desempleo ahogue el gasto del consumidor en EEUU
rebote del gasto del consumidor de Estados Unidos, producto del programa gubernamental de estímulo económico, se disipará
cuando el índice de desempleo supere un 10 por ciento, según un sondeo a un grupo de economistas.
Las compras de las familias aumentarán a una tasa anual de un 1 por
ciento este trimestre después de haber subido a un 2.4 por ciento en los tres meses previos, de acuerdo con la mediana de
los pronósticos de 57 economistas sondeados por Bloomberg News del 1 al 8 de octubre. Los analistas bajaron asimismo las previsiones
de gastos del primer trimestre del 2010.
imposible ver mucha fuerza en el lado del consumidor dado lo mucho que ha caído el ingreso con los despidos y el escaso aumento
de los salarios por hora'', dijo David Greenlaw, economista principal de renta fija en Morgan Stanley & Co. en Nueva York.
‘‘Tenemos una recuperación gradual en la economía en conjunto, pero no es lo bastante vigorosa para reducir mucho
el índice de desempleo''.
vacantes de empleos en Estados Unidos cayeron en agosto al mínimo nivel en al menos nueve años, lo que indica que la economía
no ha mejorado lo suficiente para hacer que las compañías incorporen más personal.
La cantidad de cargos sin llenar cayó en 21,000 a 2.39 millones, el mínimo
desde que comenzaron los registros en el año 2000, dijo el viernes el Departamento de Trabajo en Washington. Las vacantes
habían caído unos 2.4 millones, o 50 por ciento, desde su apogeo en julio del 2007.
El informe mostró que tanto la contratación como los despidos se redujeron
en agosto, indicio de que la aceleración del último mes en las pérdidas de plantilla puede haberse debido a la falta de empleo
en vez de a un repunte de los despidos. Los datos del Departamento de Trabajo mostraron la semana pasada que las empresas
redujeron el personal en una cantidad neta de 263,000 trabajadores en septiembre y que la tasa de desempleo subió al máximo
nivel desde 1983.
``No vamos a decir
que está todo bien en el mercado laboral hasta que veamos un repunte en la contratación'', dijo Zach Pandl, economista de
Nomura Securities International Inc. en Nueva York. ``Los despidos han mermado, pero las empresas realmente no han acelerado
La actual crisis
evidenció la urgencia de reformas profundas en la arquitectura financiera internacional y a los sistemas regulatorios y de
supervisión, con el fin de garantizar una mayor estabilidad global, sostiene Alicia Bárcena, secretaria ejecutiva de la Comisión
Económica para América Latina y el Caribe (CEPAL).
La alta funcionaria de las Naciones Unidas dictó la Trigésima Octava Cátedra
de las Américas en la sede de la Organización de los Estados Americanos (OEA). Añade que la nueva arquitectura financiera
global debe cumplir con dos requisitos. Tener un liderazgo representativo, con legitimidad política, que incluya una instancia
de rendición de cuentas y contar con agencias especializadas globales y regionales.
The Obama administration "refused" to take meaningful steps to reform the banking system in the wake of last year's
financial crisis, and the opportunity to do so has now been missed, says a former chief economist for the International Monetary
Simon Johnson told PBS's Bill Moyers that he expects
an even larger financial crisis to hit the United States in the coming years because the system was not fixed through reform,
but rather through a massive injection of taxpayers' money into the failing banks.
"The short term opportunity was missed," Johnson said on Bill Moyers Journal Friday
night. "There was an opportunity the Obama administration had. President Obama campaigned on a message of change. ... The
time for change for the financial sector was absolutely upon us, this was abundantly apparent in January of this year."
Johnson continued: "Rahm Emanuel, the president's chief of staff, is known for saying 'Never
let a good crisis go to waste.' The crisis for the big banks is substantially over. And it was completely wasted. The administration
refused to break the power of the big banks when they had the opportunity earlier this year. And the regulatory reforms they
are now pursuing ... will turn out to be essentially meaningless."
Johnson said that the bank bailout would not fix the long-term instability of the financial sector, and "when [the
crisis] comes back, it will come back with a vengeance, and it will be I think even more devastating."
Whenever you find you
are on the side of the majority, it is time to pause and reflect
--- Mark Twain
We have never observed
a great civilization with a population as old as the United States will have in the twenty-first century; we have never observed
a great civilization that is as secular as we are apparently going to become; and we have had only half a century of experience
with advanced welfare states...Charles Murray
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