Archive - Jul 2012 - Blog entry

Savers and retirees aren’t the only ones getting screwed by interest rates that have been artificially suppressed by central banks around the world.  These days, banks themselves are finding it increasingly difficult to earn even a nominal return on instruments they consider safe. Just last week, Denmark’s Nationalbanken set its deposit rate below zero for the first time, effectively charging commercial banks and others a fee for parking their surpluses in krones. There are numerous reasons why the krone would be a magnet for idle money. For one, Denmark’s economy is among the strongest in Europe. Also, because Danes rejected euro-zone membership in 2000, they enjoy a degree of political and economic autonomy that their neighbors do not have. This will presumably make Denmark less susceptible to the shock waves that follow the inevitable implosion of Greece, Spain, Italy et al. Small wonder, then, that the global stewards of OPM would consider the krone a safe haven even though it now guarantees them at least a small loss on their money. From Denmark’s standpoint, the decision to follow the European Central Bank’s latest rate cut was unavoidable. The alternative would have been to sit idly by as the krone appreciated, hobbling the country’s exports and destabilizing its balance sheet.

The Great Recession and the poor job market has stressed the middle class to its limit.   However, the seeds have long been sown from the poor fiscal and monetary policy implementation.

And then there are the fakes.

You can already see the collateral damage stemming from anemia in LIeBORgate banks... Capital Account's Lauren Lyster stimulates the conversation.

More of the same is not working, and it just may require lower equity prices for investors to get what they really wish for.

In simple terms, we’re getting many signals that the US economy may in fact be slipping into a second recession in the context of a greater DE-pression.

What's in the "Print" today? Not these issues.

Big Banks Are Rotten to the Core

Just when you thought the debt issue had reached its peak, the United Nations has come knocking on the door with their hand out.

All 3 Libor Arguments Fail

Recent economic data, and especially today's unemployment numbers reveal the powerlessness of the Fed in the face of underlying economic problems that they fail to understand. The Fed has tried every trick in the book for the past 4 years to revive the economy only to see it continue to weaken. Unfortunately they only know how to do one thing—print. The ultimate effect of this will be more economic stagnation, not real economic growth. Here is why.

“We are prepared for all scenarios, including abandoning the euro.”

Hundreds of billions of dollars of additional potential legal liability, much of which likely borne by US banks, yet very few are paying attention. Here's how I see it...

Merkel and Weidermann’s points here are crucial. There is no way that either can OK giving German funds (ultimately Germany is the real backstop for the EFSF and ESM) without conditions. Why should Germany risk its AAA status to prop up countries that have proven to be unwilling to implement any meaningful reforms and whom actually lie openly to Germany’s face time and again?

Nothing short of the improper taking of private property against the will of the owner?