March 26, 2009

Russia adds to calls for currency reform

This is a scary subject that needs to go away. It will lead to protectionism or the disentegration of the dollar as a reserve currency.

Russia adds to calls for currency reform

Russia wants to convene an international conference at government envoy level to discuss the creation of a new global currency, RIA news agency quoted First Deputy Foreign Minister Andrei Denisov as saying

March 24, 2009

China Urges New Money Reserve to Replace Dollar

This is a very scary idea should other countries begin to agree.

China Urges New Money Reserve to Replace Dollar

China's central bank says a currency system controlled by the International Monetary Fund would be more stable and economically viable.

March 16, 2009

Price Controls (Scary!!)

This is a scary thing that Professor Mankiw points out. It never ceases to amaze me the things that get done in the name of political expediency.

via Greg Mankiw's Blog by Greg Mankiw on 3/16/09
Price controls, that is:
Across the country, from Vermont to Alaska, state and municipal governments are doing what they can to ease the burden for Americans who are increasingly out of work and unable to pay their bills. One controversial solution being considered is a move back to price controls. The New York Legislature and the San Francisco City Council are considering expanding rent controls. Some politicians in Vermont are trying to limit the price of milk. And in Alaska, a bill to cap oil prices is pending in the state legislature.
The bad news: There will be more shortages and gross inefficiencies in the allocation of resources.

The good news: Chapter 6 of my favorite textbook will not become obsolete.

March 13, 2009

China ‘Worried’ About Safety of U.S. Treasuries

This is a scary statement. If china decided to dump treasuries and us dollars we could have a gargantuan mess. It would make our current economic problems look pretty small.

China 'Worried' About Safety of U.S. Treasuries

China, the biggest holder of U.S. government debt, expressed concern about the safety of those assets.

March 12, 2009

The problem with todays reality

What this tells me is that Americans are having a tough time coming to terms with reality and their is still a lot of downside risk. How is this blurb out of the Wall Street Journal positive. It literally says that people are spending money while job loss is increasing. Last I checked that was a very quick way to end up bankrupt.

Until we see data that matches (sales are declining and job loss is occuring, or sales are increasing and job loss is slowing) we haven't seen a bottom, in the market and a rebounding to the economy. Buckle up and hold on.

WSJ NEWS ALERT: Retail Sales Slip in February, but Beat Economists' Expectations
News Alert
from The Wall Street Journal

U.S. retail sales edged down in February for the seventh time in past eight months, but the decline was less than economists expected. Retail sales fell 0.1% in February but climbed 0.7% excluding autos, the Commerce Department said. Increases in an array of businesses from furniture to clothing and electronics suggest consumer resilience to a recession throwing droves of people out of work.

Sales in January were revised up sharply, surging 1.8% instead of rising by 1.0% as originally reported.

Separately, the Labor Department said first-time unemployment claims increased to 654,000 from the previous week's figure of 639,000, above analysts' expectations. The number of people receiving benefits for more than a week increased by 193,000 to 5.3 million, the most on records dating back to 1967.

March 11, 2009

Freddie Reports $23.9 Billion Loss

This is ridiculous. Freddie and Fannie and most of the auto industry and banking industry are simply bleeding out, we simply can't prop them up. We put the tourniquet on, it didn't work. Stop wasting resources on the dead.

via Wall Street Journal on 3/11/09
Freddie Mac reported a deep loss for the fourth quarter and said it will need a $30.8 billion injection of capital from the U.S. Treasury.

Airline industry ‘in crisis’

The less airplanes being delivered the less raw materials needed. This could put a strain on Australia, US and other raw material locations. In addition it will put a hit on Boeing et al. Watch the manufacturing sector for more weakness in months and weeks to come, not to mention airlines themselves.
Air France-KLM and Lufthansa, the two leading European airlines, announced further capacity reductions for the summer season on Wednesday in the face of the deepening world recession.

Airlines around the globe are being hit by the mounting crisis in the aviation sector. More are seeking to defer delivery of new aircraft, undermining the outlook for production at jetmakers Airbus and Boeing, and smaller producers such as Brazil’s Embraer and Canada’s Bombardier.

By Kevin Done and Gerrit Wiesmann in Frankfurt, Justine Lau in Hong Kong and John Murray-Brown in Dublin

Published: March 11 2009 19:08 | Last updated: March 11 2009 19:08

The Lede: Sacramento and Its Riverside Tent City

Can't believe this is even possible in America

via NYT > Home Page by By KATHARINE Q. SEELYE on 3/11/09
Sacramento, with one of the highest foreclosure rates, has one of the biggest tent cities in the country.

China exports drop

If China's exports are truly dropping as much as has been reported
look for a fall in the Aussie dollar. Australia exports a lot of raw
materials to China and will likely see a decrease in exports as well
and thus less of a need to hold Aussie denominated deposits.

Thanks Billy Bayne
Cell 702-280-5761

March 10, 2009

Articles of interest

Libor Creep Says Credit Markets Risk Freeze on Policy Distrust

In this article we see that there is no tricking markets. Politicians can say whatever they would like, but if the rubber doesn't meet the road and things don't start to pan out the market reacts accordingly. Politicians need to get a reality check and realize that by trying to save everyone they are in fact endangering everyone. "Bad actors" unfortunately need to be punished for bad choices and bad investments, the more that is held at bay the more "good" people and investments are harmed.

Pimco Predicts Inflation, Joining Buffett, Marc Faber (Update2)

This is one of those large things that is really currently being distorted. Currently the US is basically printing as much money as it can to prop up industries and banks, they are spending money like it is going out of style; under normal circumstances I would be shorting the dollar like crazy. The more dollars on the market the less valuable the dollar. However, under current circumstances we have one of the most stable governments on the planet and uncertainty in the world leads to investment in the US and US held assets. But like everything else, this won't last forever, and at a point certain in the future our currency is going to have to take a major hit and inflation will catch up to us. The question is when. Want to be on a dollar short when it happens.

March 09, 2009

Missing the Point

Another bad week or two of economic data. I would really like to get back into the currency game but can't bring myself to with all of the government intervention.

My favorite line as of late is the government wanting to get banks lending again. Does that mean being responsible and making good loans (that is never said), they simply say lending. Does it ever occur to anyone that is what got us into the trouble in the first place. Banks were lending and by so doing they made many bad loans, and we are suffering the consequence of an overinflated market.

As I've said before, at this point we need to go ahead and "reset" the economy, take our lumps and put in a good foundation on which we can build.

Former Google CEO Issues Dire Warning About China

Concerning article. The double edge of globalization. Guns and butter can be so complicated.  Former Google CEO Issues Dire Warning About Ch...