Monday, April 11, 2016

Central Banks Have No Way Out
Charles Hugh Smith*: "Foreign exchange (FX) is a zero-sum game: if one currency weakens, another must strengthen. Since the value of a currency is relative to other currencies, all currencies can't weaken together: at least one currency must strengthen as others weaken .. The stock market is a monkey on a leash held by central banks--just give the leash a little tug, and the monkey jumps. Bonds are a gorilla--harder to control, but still manageable--but foreign exchange is King Kong, trading $5 trillion a day and impossible to control beyond short-term manipulations. Currencies set the underlying trend, not just for bonds and stocks, but for entire economies .. Here's my take: Japan has no options left. China, on the other hand, can devalue the yuan as the USD strengthens. Indeed, a very good case can be made that China should devalue the yuan, as a practical adjustment to new global realities. The Fed has a stark choice, and the 2-minute warning just sounded. It can break the informal Shanghai Accord to weaken the USD to save Japan from the slow-moving catastrophe of a soaring yen, or it can let the USD weaken further to placate China and the commodity-dependent economies. What it can't do is please everybody. This is the inevitable consequence of manipulating markets: you end up being unable to please anyone, because your constant manipulation has created unsustainable carry trades and speculative gambles. The FX market is about to blow up in the Fed's face, and there's nothing they can do about it. What central banks fear most are markets that are not tightly controlled by central banks. The world's central banks are about to sit down to a banquet of consequences arising from seven long years of relentless manipulation."
LINK HERE to the essay


Anonymous said...

Banking Expert Who Exposed Savings & Loan Corruption Joins Sanders Campaign

An expert in banking corruption and finance has joined the Bernie Sanders campaign. William K. Black, an associate professor at the University of Missouri-KC, is Bernie Sanders’ new economic advisor. Black was one of the central figures in exposing and prosecuting corruption in the savings and loan crisis from the late 1980s and mid-1990s. His addition to the Sanders campaign brings important knowledge in laws pertaining to finance and banking.

Anonymous said...

28 Pages

Former Sen. Bob Graham and others urge the Obama administration to declassify redacted pages of a report that holds 9/11 secrets

For 13 years, the 28 pages have been locked away in a secret vault. Only a small group of people have ever seen them. Tonight, you will hear from some of the people who have read them and believe, along with the families of 9/11 victims that they should be declassified.

Bob Graham: I think it is implausible to believe that 19 people, most of whom didn't speak English, most of whom had never been in the United States before, many of whom didn't have a high school education-- could've carried out such a complicated task without some support from within the United States.

Anonymous said...

Sorry Paul, but the Bailout WAS about the Banks
posted by Adam Levitin

Paul Krugman claims that "Many analysts concluded years ago" that the big banks were not at the heart of the financial crisis and that breaking them up would not protect us from future crises. Incredibly, his claim is linked to an article by ... Paul Krugman. Maybe a Nobel Prize comes with a license to cite oneself as Gospel authority, but I don't believe that Krugman's Nobel Prize was for his expertise on bank regulation.

So what's wrong with Krugman's claim? Let's go piece by piece.