Kurt Nimmo Infowars Simon Maughn, co-head of European equities at MF Global, has toldCNBCthat a third round of so-called quantitative easing is in the works. The private Federal Reserve will again become the marginal buyer of bonds. The latest effort by the Fed to finance the government’s staggering deficit will end in June. If the private Federal Reserve owned by offshore banksters stops this lending scheme, interest rates will rise significantly which in turn will exert tremendous pressure on the American public. If interest rates surge anytime soon, millions of indebted Americans may default on their debt, thereby bankrupting the American financial institutions, asPuru Saxena, founder of Puru Saxena Wealth Management, notes.
Su Qiang and Li Xiaokun AsiaOne Business St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday. Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies. "About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.
The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.
Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China's Tianwan nuclear power plant, the most advanced nuclear power complex in China.
Shigeki Nozawa Bloomberg The dollar may fall below 75 yen next year as it becomes the world’s “weakest currency” due to the Federal Reserve’s monetary-easing program, according to JPMorgan & Chase Co. The U.S. central bank, along with those in Japan and Europe, will keep interest rates at record lows in 2011 as they seek to boost economic growth, said Tohru Sasaki, head of Japanese rates and foreign-exchange research at the second-largest U.S. bank by assets. U.S. policy makers may take additional easing steps following the $600 billion bond-purchase program announced this month depending on inflation and the labor market, he said. “The U.S. has the world’s largest current-account deficit but keeps interest rates at virtually zero,” Sasaki said at a forum in Tokyo yesterday. “The dollar can’t avoid the status as the weakest currency.” Read Full Article RELATED ARTICLE: Eurozone Debt Crisis 2.0: Dollar Sucks Less than Euro, Again
Eric Blair Activist Post The grand symphony of currency manipulation seems more finely orchestrated than ever before. However, it's not necessarily the fundamentals that are moving currencies so much as global perception. In the battle between the Fed's quantitative weakening of the dollar versus the eurozone debt crisis, the dollar is winning this round of who sucks less. On October 1st, I posed the question, will the dollar rebound before being dissolved into a global currency? At that time, no one was predicting the dollar to gain strength with the Federal Reserve planning more quantitative easing. The windbag media promoted QE2 as a stock market stabilizer and a boost to U.S. exports, yet mostexpertsopenly called it a backdoor bailout, or monetizing debt, or plain old money printing. Nearly everyone agreed it would ultimately erode the value of the dollar even further and cause measurable inflation.
Indeed, it was a well-justified gloom-and-doom 6 months for the dollar by Fed critics. After all the media build-up, the Fed's announcement of the $600B easing plancame strategically on the day after mid-term elections, when most of the media was focused on feeding the false left-right frenzy by digesting the election results. In other words, QE2 got some mention, but the timing was clearly a tactic to keep a lid on the talking-head backlash. Then, Obama rushed out of the country for the G20 economic summit taking the remaining media distraction with him. Between stories of Michelle's shopping trips, it was revealed that China and other foreign economic players were not very happy about the Fed's move. Yet, the dollar started to rally.
Recent commentary by Chuck Butler in the Daily Reckoning questions the commodity sell-off and dollar rally:
But does it all make sense, given what I mentioned above that the FOMC is looking for inflation to inject into our economy? No… But since when, going back to the financial meltdown, does anything the markets do make sense?
Nothing makes sense if we still believe fundamentals actually matter. Sure the dollar is nearly dead, fundamentally, but it seems that perception now trumps concrete analysis. As I reported in October:
The fundamentals suggest that it (the dollar) should be finished, but just as the world is about to declare it dead, miraculously a global storyline seems to emerge just when needed and foreign investors rush back in for "safety." A clear example was the steady drumbeat of a sovereign-foreign-debt war that resulted in reports of whether the Euro would even survive, while the dollar enjoyed a triumphant ride up victory mountain.
Now, here we go again. As soon as the Fed announcement was made, the media shifted its focus once again to the eurozone debt "crisis." Story after story, day after day, about the developing crisis in Ireland -- and now Portugal. News agencies often salivate to repost these headlines, because crisis sells. And it sells because doom and gloomers, otherwise known as fundamental analysts, are waiting for reality to catch up to the numbers -- not just in the eurozone, but globally. The debt-infected PIIGS is a legitimate story, but it is clearly being heavily pushed to make the dollar look less pitiful.
Today's major headlines from leading UK papers show how "critical" the eurozone debt crisis has become. The first story appeared in the London Guardian titled Ireland crisis could cause EU collapse, warns president, where EU President Van Rompuy warned in a speech in Brussels, that "We're in a survival crisis . . . we all have to work together in order to survive with the eurozone, because if we don't survive with the eurozone we will not survive with the European Union." The article went on to define the pressure cooker facing the PIIGS:
Van Rompuy's speech added to the pressure on the Irish government, which was continuing to resist international pressure to accept a bailout this morning.
Shares fell across Europe as pressure mounted on Ireland to accept an EU or International Monetary Fund bailout to stem contagion to other high-deficit eurozone countries. Portugal, which has seen its borrowing costs rocket along with Ireland's, warned last night that it too might need a rescue package.
But despite fears that the crisis could bring down the euro, Ireland's minister for European Affairs Dick Roche denied this morning that Ireland needed emergency financing.
The next article that encapsulates the heightened fear surrounding the debt crisis was written by the brilliant financial reporter Ambrose Evans-Pritchard of the Telegraph titled The horrible truth starts to dawn on Europe's leaders where he states: "The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict." Granted, he was basing his analysis on the same Van Rompuy speech, which seems eerily reminiscent ofHank Paulson's dire warning of complete collapse and martial law in the U.S. if the Congress did not pass the TARP bailout.
The situation for the PIIGS hasn't changed in the last six months. It isn't incredibly more severe than it was then. And despite mildly encouraging retail numbers this quarter, the U.S. is not much better off than it was when the dollar was sinking like a stone. So, it is vividly transparent that the global banksters use the media to move the FOREX at times of their choosing and in contrast to fundamentals. In turn, we all buy in and post and repost the crisis headlines feeding the manipulation machine.
The video below shows the absurd shell game that is the eurozone debt mess. It's comically and obviously robbing Peter to pay Paul to prop up the Ponzi scheme: The media machine seems unbeatable, but luckily it's somewhat predictable. I reiterate what I said when I predicted the dollar to rebound in October:
The severely debased dollar is unlikely to rebound to previous highs given the international awareness of America's financial problems. Understanding that the goal of the global elite is to move toward a global currency, ultimately they must kill the dollar and other major currencies.
Although the end may be very near for the dollar we will likely see the establishment play them off each other for as long as possible. These cycles have seemed to run for about six months, but I don't think we'll see the dollar rise again for that amount of time. Nor do I think it will reach its twelve-month highs against the euro again, but I would wager that we'll see very strong gains to the dollar by year end. The European Union heads are to meet again in December to determine amendments to the Lisbon Treaty, which some leading diplomats are calling "mission impossible." The lead-up to this meeting, coupled with the eurozone debt issues, will drive this quarter's news cycle and the FOREX.
Another development to watch in regards to the strength of the dollar is food, oil, and gold commodities. Since they trade in dollars, it would make sense that they would sink if the dollar starts beating up on the euro. And we already have witnessed some slight movements downward. However, I predict that they will remain relatively stable and fall far less than the euro will against the dollar. And by the first quarter of next year, commodities will be off to the races again where we will likely see $100 oil and $2000 gold by mid-year. That may be the real start of the end of the dollar, and the euro.
As a final note: They can't allow the euro to fail before the dollar because the European Union is the banking model they desire for the world currency; separate nation states with local currency but where consolidated economic governance is dictated by a grand central bank. Incidentally, theeurozone debt crisis 2.0 is a dog and pony show.
Kelly Olsen Associated Press SEOUL, South Korea — Former Federal Reserve Chairman Paul Volcker says the U.S. central bank's plan to buy hundreds of billions of dollars in government bonds probably won't do much to boost the economic recovery. The Fed announced Wednesday that it would purchase $600 billion in Treasurys, aiming to lower long-term interest rates in an effort to spur spending and ultimately lower the U.S. unemployment rate, currently at 9.6 percent. The move comes on the heels of previous purchases of $1.7 trillion in mortgage and Treasury bonds. Volcker told a business audience in Seoul that the Fed's bond plan is obviously an attempt to spur the U.S. economy but "is not the kind of action that's likely to change the general picture that I've described as slow and labored recovery over a period of time."
The Fed's move has caused worries in South Korea and other emerging markets in Asia. Those governments fear that lower interest rates in the U.S. will further push investors to seek higher returns overseas and that this tide of money will drive up their currencies and destabilize their markets.
Volcker served as Fed chief from 1979 until 1987 under presidents Jimmy Carter and Ronald Reagan and is currently chairman of President Barack Obama's Economic Recovery Advisory Board. He also warned that the U.S. won't find its way out of the economic doldrums through over-stimulation.
"The thought that you can create a prosperous economy by inflating is an illusion, in my judgment," he told reporters after his speech. "And we should never forget that. I thought we'd learned that lesson and I hope we continue to learn that lesson."
The Fed faces a dilemma in balancing the aim of boosting the economy now while avoiding fears of a future jump in inflation due to the monetary stimulus, said Volcker, who as central bank chairman hiked interest rates aggressively to tame inflation.
"The influence of this kind of action on longer term interest rates, in particular, is ambiguous because the immediate impact of buying bonds ought to be to drive bond prices up and interest rates down," he said. "But if people get concerned about longer run inflationary impacts, the effects go in the other direction."
In theory, the Fed's action is expected to lower interest rates because bond prices and interest rates – also known as yields – move in opposite directions. The yield is the fixed amount of annual interest paid to the owner of the bond expressed as a percentage of the bond price, so the extra demand created by the Fed's purchases should push bond prices up and lower the yield.
But when investors fear inflation will be higher in the future they demand that bonds pay a higher interest rate to protect their investment from the value-eroding effects of inflation.
The Fed ponders its biggest decision yet. Will it sacrifice the dollar?
Image: Mark Wilson/Getty
Joel Hilliker The Trumpet The Federal Reserve is expected to announce today whether or not to unleash a second round of quantitative easing. It may be one of the most important decisions in its history. Will the Fed sacrifice the dollar, and risk losing reserve currency status in an attempt to stimulate the economy and “painlessly” pay its debts? The Telegraph’s Ambrose Evans-Pritchard is warning that the Fed’s quantitative easing plan“risks” a “currency war”that may accelerate “the demise of the dollar-based currency system, perhaps leading to an unstable tripod with the euro and yuan, or a hybrid gold standard.” The problem facing the world is that the global economy is trapped in stalling speed. Most of the regular tools used by central banks have been exhausted. Interest rates are already near zero, and many governments have mostly spent what they can—and yet the global economy is sputtering.
All that is left for national economies is to try to gain export market share at the expense of their neighbors. To do this, nations are attempting to devalue their currencies to make their exports less expensive and imports more expensive. The risk, as Evans-Pritchard points out, is trade war.
Relations between China and America are especially strained. America wants to devalue the dollar and thus reverse its trade imbalance with China. China is resisting and is maintaining its dollar peg, which ensures that the yuan’s exchange rate remains fixed to the dollar. And the war is spreading. The Telegraph reports (emphasis ours throughout):
China’s Commerce Ministry fired an irate broadside against Washington on Monday. “The continued and drastic U.S. dollar depreciation recently has led countries including Japan, South Korea and Thailand to intervene in the currency market, intensifying a ‘currency war.’ In the mid-term, the U.S. dollar will continue to weaken and gaming between major currencies will escalate,” it said. …
Taiwan intervened on Monday to cap the rise of its currency, while Korea’s central bank chief said his country is eyeing capital controls as part of its “toolkit” to stem the flood of Fed-created money leaking out of the U.S. and sloshing into Asia. …
“It is becoming harder to mop up the liquidity flowing into these countries,” said Neil Mellor of the Bank of New York Mellon. “We fully expect more central banks to impose capital controls over the next couple of months. That is the world we live in,” he said. Globalisation is unravelling before our eyes.
AFP World oil prices hit fresh six-month peaks on Thursday as the dollar slumped on the back of the US Federal Reserve's new huge stimulus package aimed at boosting the American economy. Brent North Sea crude for delivery in December delivery rallied as high as 87.59 dollars, reaching a level last seen on May 4. It later stood at 87.46, up 1.08 dollars from Wednesday's close. New York's main contract, light sweet crude for December, surged to a similar high point at 86.05 dollars, before pulling back to 85.88, up 1.19 dollars. The dollar tumbled on Thursday after the Fed announced that it would launch a new asset-buying plan, or quantitative easing (QE), worth 600 billion dollars, to bolster the nation's sluggish economic recovery. In reaction, the European single currency soared to 1.4264 dollars, reaching the highest level since January 20, as traders fretted that the Fed policy could water down the value of the US unit. "The Fed announced yesterday evening that it would be buying up more US treasuries. The much weaker US dollar as a result is now giving impetus to commodity prices," said Commerzbank analyst Carsten Fritsch. Read Full Article
