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Citigroup - The Last Recourse Against Runaway Inflation? A Commensurately Greater Jump In The Dollar

Tyler Durden's picture




 

Citi's head of FX, Steven Englander, has some contrarian observations on the fate of the US dollar, which a more nuanced read may even indicate a slightly conspiratorial bent, namely that in order to cut the surging global inflation dead in its tracks (alas, too late for the regimes of Tunisia and Egypt), the dollar will have to surge even more. To wit: "If the world’s inflation problem is primarily derived from rising commodity and food prices, it is very likely that a stronger USD will help mitigate this inflation quickly and efficiently. There is a well established relationship between USD strength and weaker commodity prices." Of course, with the Printing Dutchman at the helm, what hope is there for a sustainable strong USD thesis: "The problem is that there does not appear to be a market driver for USD strength." Yet this could very well be the contrarian trade going forward as the G-20 looks aghast at events in Africa and realizes that the "last case" scenario just seems that much more credible. If this happens and there a concerted effort to reincarnate the dollar, look for the EURUSD to plunge, and all USDXXX pairs to surge in the following days, especially as the carry funding shorts realize that they will once again, just like in late 2008, be the sacrificial lambs at the altar of "Kicking the can down the road one last time"-dom. Quote Englander: "During a similar high commodity price episode in mid-2008, we saw some evidence of high reserves growth, which is unusual when the private sector is buying dollars. Moreover, then as now, market macro investor positions appeared to be long commodities. While it would be unusual for reserve managers to buy USD for inflation stabilization reasons, as a quick solution to a major problem it may be more effective than most."

Full must read note from Citi, which may explain why Goldman suddenly high tailed it out of its 1.40 tactical EURUSD target without hitting it and just two days after the revision.

 

 

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Sun, 01/30/2011 - 15:41 | 918232 tellsometruth
tellsometruth's picture

Tyler,

Good work here.  An important counter note is brought to light, and is worth considering...

Keep the free thinking aspect of this forum alive, and it will continue to be one step ahead of the curve.

Sun, 01/30/2011 - 16:05 | 918303 unununium
unununium's picture

No "mechanism" for a higher dollar, even with the money printing presses working overtime?  The trusty standbys are in play already

 - War, revolution, armed uprising

 - Euro disintegration

 - Soon more banking collapses, causing flight to Treasuries

 - Stock market collapse, causing flight to Treasuries

Sun, 01/30/2011 - 16:08 | 918313 chrisd
chrisd's picture

Exactly right. We saw it on Friday as the market fell and 10Y yields fell with them. As the market collapses, we will have a redux of 2008 with everyone running to the "safest" option, the US.

Sun, 01/30/2011 - 16:15 | 918342 EscapeKey
EscapeKey's picture

Those are only temporary plays, though.

Sun, 01/30/2011 - 16:26 | 918374 topcallingtroll
topcallingtroll's picture

I will take "temporary."   We just need more time for gdp to get moving so we can eventually be weaned from Bernanke's ugly man tit.

Mon, 01/31/2011 - 16:50 | 918620 GoinFawr
GoinFawr's picture

hahahhahahahahah...'safest', now that's an oxymoron.  But if this article is right, it could be viewed by those with large USD holdings as  their final round of last chances to 'divest while the divestment is still good' (aka "No Tomorrow").

Any idea where they might go? The whole  'dollar up, everything down' thingy doesn't always work that way for all things. Eg. Late July and early August of last year Gold bounced off a low, and USD did too, for awhile...

 

IE This isn't 2008, IMHO.

Sun, 01/30/2011 - 21:57 | 919031 MachoMan
MachoMan's picture

The difference between now and then is that precious metals have decoupled...  instead of a total panic into the dollar, that panic is shared with other items, namely gold and silver...  the death bell has already rung...  and each subsequent panic will lead to less and less trust in the dollar as a bastion of safety...

And that's the best case scenario...

Sun, 01/30/2011 - 16:09 | 918315 bonddude
bonddude's picture

NYTime paper santa rosa pressdemocrat now on this banking fraud story that leads 

all the way back to IndyMac failure.

Town paper in Sonoma trying to cover up banking fraud,ignores story for years.

http://www.pressdemocrat.com/article/20110128/OPINION/110129499

Sun, 01/30/2011 - 15:41 | 918233 Michael
Michael's picture

My new Youtube video;

I had to redo the sample sound tracks on my original version because of Time Warner copyright infringement of the thousands of labels they own, and it was banned in the USA that kept you from seeing it the first time I posted it.  I found a couple of my other favorite tracks on British labels that I used. I must say, they did me a favor because I had a second chance to tweak it and make it better.

Video Description;

Homey D. Clown comes out of hiding to support the Revolution. He don't like that Police State Shit, nor da man, thus Revolution. Yours is a peaceful revolution to keep your freedoms and liberty. But when push comes to shove, sacrifices will be made, and they know it. They also know, they can't get all of us.
I made this Youtube in honor of the world wide Revolution.
Please spread it around if you like it. Please rate it and leave a comment.

Homey D. Clown Don't Play That Police State Shit Thus Revolution

http://www.youtube.com/watch?v=VaebXLxuxmY

Sun, 01/30/2011 - 18:01 | 918647 bobert
bobert's picture

Hollywood here you come.

Sun, 01/30/2011 - 18:12 | 918666 Michael
Michael's picture

It took a while to make. Thanks.

Sun, 01/30/2011 - 15:44 | 918240 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I can see it now,

With fifteen minutes to go before the collapse of the financial system, Bernanke was in Davos drinking a Malibu and Rum.  Will he make it to his treehouse to raise rates in time?  Stay tuned.....

Sun, 01/30/2011 - 16:05 | 918300 Sudden Debt
Sudden Debt's picture

After you post, I've decided to make myself a good drink to :)

I'm a real fan of brown Habbana Rum :)

Sun, 01/30/2011 - 15:59 | 918285 EscapeKey
EscapeKey's picture

So, is this the end of the beginning, or the beginning of the end?

Sun, 01/30/2011 - 16:01 | 918288 something fishy
something fishy's picture

Even without a concerted effort by TPTB to revive the dollar, the 'flight to safety' trade spurred by escalating geopolitical tensions could be enough of a market driver to push USD higher going forward. If things get bad enough I would think this trade could override interest rate differentials in determining s/t USD direction.

Sun, 01/30/2011 - 16:01 | 918289 Sudden Debt
Sudden Debt's picture

The only reason why I think the dollar could go up is when social unrest spikes even more.

Once a country destablizes, they abandon their own currency in the street because of the bad economic forecasts for that country.

Plenty of countries that are now going to go to the dollar...

at least... it might also be the euro and in that case the dollar will get hughe pressure.

 

Sun, 01/30/2011 - 16:08 | 918311 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

What if people go to, [gasp] gold!

Sun, 01/30/2011 - 16:33 | 918396 Drag Racer
Drag Racer's picture

so true. Ben is a genious for preparing in advance with the printing ramp up. What vision in seeing this future high demand for the dollar... or it could of just been the snow.

Sun, 01/30/2011 - 16:10 | 918321 topcallingtroll
topcallingtroll's picture

thanks for showing me one person who has a kind word to say about the dollar and implicitly treasuries.  I have been a lone troll, crying out in the wilderness..."Watch out for the deflation scare and dollar/treasury turning point!"  I don't have the tranny balls to go long treasuries, which is of course  a sure sign they are about to rally again.

In the race between the core and gdp we need the inflationary flames doused a bit.  Fear is a good dowser of inflationary pressure as people run to the dollar again.  Mrs. Rosy Scenario says fear is building, the canal won't be closed, Saudi Arabia will turn the spigots wide open for a while, and Timmah and Berskanke have a little extra time to get GDP going.  We may yet muddle through this mess yet.

Sun, 01/30/2011 - 18:45 | 918726 unununium
unununium's picture

Make sure you discount GDP by the shadowstats CPI before throwing your victory party.

Sun, 01/30/2011 - 21:50 | 918912 samslaught
samslaught's picture

GDP is a manipulated statistic and no longer reflects anything of importance.  Your a lone troll because you don't understand that the terms deflation and inflation are abreviated terms for two events that are happening at the same time.  What you have is PRICE deflation and MONETARY inflation.  End result = bad 

Sun, 01/30/2011 - 21:50 | 918916 samslaught
samslaught's picture

duplicate

Sun, 01/30/2011 - 16:10 | 918322 ZeroPower
ZeroPower's picture

Totally agree, a high USD is in the interest of many parties - not to mention its irreplaceable world reserve currency title.

China won't let the USD drop further as it holds the majority of reserves. The ECB wont allow the USD to rise much as a weak EUR is key to letting the EU members sort out their shit. And finally the US can manage fine with a slightly stronger USD than before the crisis as long as tech innovation similar to what was occuring around WWII comes back.

 

Sun, 01/30/2011 - 16:36 | 918411 High Plains Drifter
High Plains Drifter's picture

Geez, maybe we should put in a call to Sprott.

Sun, 01/30/2011 - 18:32 | 918707 Lets Hang Parliament
Lets Hang Parliament's picture

The question is do we take out a put or a call on Sprott? A flight to safety normally means a put on the PMs but lets hope the market takes its lead from the ex pres of Tunisia who has gone seriously long and taken delivery into the bargain!

Sun, 01/30/2011 - 17:30 | 918578 Real Estate Geek
Real Estate Geek's picture

. . . as long as tech innovation similar to what was occuring around WWII comes back.

Let's see, tech innovation back then included jet aircraft, computers, radar, nuclear weapons, ballistic missiles, etc.  That's a rather high bar to clear.  Unless of course we have WWIII.

Sun, 01/30/2011 - 16:14 | 918340 Caviar Emptor
Caviar Emptor's picture

Here's the caveat: Stronger dollar here is also stronger everywhere. Global dollar reserves in foreign hands are astronomical. That won't satiate the thirst for food, energy, industrial raw materials. Instead a strong dollar move is a signal to stockpile, just like in 2008-9. And the leetle leetle problem of peaked out commodities and natural resource depletion isn't changing. Have you tried buying Atlantic cod lately? Nor is geopolitical tension likely to make a turnaround to the calm old days when such things weren't an issue

Sun, 01/30/2011 - 16:34 | 918398 topcallingtroll
topcallingtroll's picture

that san francisco white sturgeon caviar is really good.  It beats all the other farmed caviar and all that shit that marrisol or however you spell them puts out from the polluted caspian sea and its non russian tributaries.  I tried all of the farmed caviars, except China.  I don't like melamine and heavy metal pollutants in my fish eggs.  The USA brand of farmed white sturgeon caviar is the best, and at fifty an ounce is a deal.  You can eat your caviar and not feel guilty that you are causing the extinction of the various sturgeons in the wild, and it is made in the good ole USA

Sun, 01/30/2011 - 18:29 | 918696 eddiebe
eddiebe's picture

All speculation, of course, still your take on it makes more sense. The $ rally in my opinion is very short term. I think the 30 year treasury bull is getting very long in the tooth and is (along with the dollar) heading down. By design of course.

Sun, 01/30/2011 - 16:16 | 918343 SDRII
SDRII's picture

More short termism writ large. All tactics no strategy. When you say world is aghast at what is happening in egypt seems the events in the middle east - lebanon and egypt - this week are boomeranging on bernanke and the usa. Panetta got his drone base in yemen already and sudan looks like the next flare up (china, us proxy fight).

Bernanke from the old book - doesn't believe in resurrection. The psuedo science strong dollar rubin era architecture is a rotting corps and all the jawboning even margin rate hikes doesn't change a thing. Rearranging the deck chairs....

Sun, 01/30/2011 - 16:21 | 918356 Ras Bongo
Ras Bongo's picture

Flight to safety in 3...2...1...

Sun, 01/30/2011 - 16:27 | 918378 High Plains Drifter
High Plains Drifter's picture

But, but , but, a stronger dollar will mean a slide in the equity markets, no?  Not to mention who how will genitle Ben make all of those trillions in debt disappear? 

Sun, 01/30/2011 - 16:31 | 918392 Caviar Emptor
Caviar Emptor's picture

It's magic! He can make the market rise even if the US is nuked. And he would do it too!

Sun, 01/30/2011 - 16:30 | 918388 CrashisOptimistic
CrashisOptimistic's picture

They can flail about with the dollar or gold or anything they want.

There is no answer for oil production that cannot grow at a rate req'd to support economic growth.  You can't print oil.

Sun, 01/30/2011 - 16:33 | 918397 High Plains Drifter
High Plains Drifter's picture

Sir, we have enough oil in the lower 48 to power this country for hundreds of years. Please don't believe that silly "we are running out of " oil argument.

Sun, 01/30/2011 - 16:39 | 918421 topcallingtroll
topcallingtroll's picture

oh my god.  An oil cornucopian!  Enough oil for hundreds of years?  In the lower 48?  Yeah if you can dig out that shale in the Bakken and heat it up till all the oily substrates dribble out.  And that will cost us how much?  Do you have an estimate of capital costs or is this pie in the sky?  I look forward to your link.  I can also give you all the oil you want at 500 dollars a barrel.  I hope your link includes capital costs or it is just a pipe dream.

Sun, 01/30/2011 - 17:04 | 918511 topcallingtroll
topcallingtroll's picture

by the way I didn't junk you.  I think Jw is out lurking again to have a little fun.  I'm on to you JW!

Sun, 01/30/2011 - 17:07 | 918515 snowball777
snowball777's picture

20M/day * 365 * 100 == 730 billion barrels (assuming ZERO growth, which is beyond ludicrous).

Proven reserve estimates in 2006: 21 billion barrels.

You think you can find the other 709 billion in the lower 48?

Smoke some more crack.

Sun, 01/30/2011 - 18:32 | 918706 eddiebe
eddiebe's picture

Balls! the mind is a fantastic thing !white becomes black magically.

Sun, 01/30/2011 - 16:31 | 918393 max2205
max2205's picture

Would this be rinse OR repeat?

Sun, 01/30/2011 - 16:35 | 918402 equity_momo
equity_momo's picture

The problem is that there does not appear to be a market driver for USD strength

 

Oh really? How about the same driver that we saw in 2008? You know , deleveraging and paying down debt.

Sun, 01/30/2011 - 16:55 | 918478 topcallingtroll
topcallingtroll's picture

This is exactly the point I have been trying to get across recently.  We don't know how big this deflation monster is.  I think it is really really really huge.  In the end we may end up spending twice as much on food but half as much on housing.  That would put us back at even.  We just have no way of knowing how this will play out.  All the people assuming inflation  don't have a good measure of how large the deflation monster is either.  A hint came out recently in the estimate of the world needing 100 trillion in credit to sustain growth over the next decade.  If we are close to the zero bound then that string is becoming awfully limp and it is hard to push on it.  Qe2 may be just a drop of piss in the shithouse.  It may not even be noticeable.  Deflation is a very different beast than inflation.  It is very difficult to stop.  We may not be able to stop it even if we print up a trillion or more a year in free money.   Out of fear the rest of the world may start hording more of our paper and we get all sorts of electronic gizmos, cheese curls, and cheap lap dances from Asian babes when we go overseas, and all we are trading for it are little pieces of paper that they don't spend but horde and convert to treasuries.  It's a great deal if it can last, and it may last a lot longer than we think.  We just got to keep the rest of the world scared.  Hehehehe.

Sun, 01/30/2011 - 17:01 | 918498 High Plains Drifter
High Plains Drifter's picture

Hey look fellas. Its a deflationista. Haven't seen one of them in a while. Is that you Douchinger?

Sun, 01/30/2011 - 17:04 | 918507 topcallingtroll
topcallingtroll's picture

No...he's my brother.

Sun, 01/30/2011 - 17:09 | 918524 High Plains Drifter
High Plains Drifter's picture

oh my gosh, oh my gosh, Deflation is coming , deflation is coming. Oh my gosh, oh my gosh, we have oil shortages.  Oh we are in big trouble now......:)

Sun, 01/30/2011 - 17:27 | 918565 ZeroPower
ZeroPower's picture

Actually, i enjoy the deflation posts as it brings a fresh perspective and isnt the same old 'USD WILL BE WORTH EXACTLY ZERO' argument.

Re deflation, i think it *might* be possible we will headfake into inflation as we are doing now and then dive into the abyss of deflation. Assuming the Bernank doesnt have any tricks up his sleeve.

Sun, 01/30/2011 - 17:54 | 918627 bigargon
bigargon's picture

nah..none of the above (or all of the above) Stagflation. we're going to party like it 1979.

Sun, 01/30/2011 - 18:15 | 918670 Silversinner
Silversinner's picture

It will be worse this time.

East will have rising prices and rising wages(summer)

West will have rising prices with equal wages at best(winter)

Both seasons very bullish for gold.

Sun, 01/30/2011 - 18:47 | 918722 eddiebe
eddiebe's picture

Problem is: Debt deflation is not the same as commodities or equities deflation.

 Bernanke does not have a printing press to press more oil for example. Deflate the price of wheat enough and people will starve. (See riots.)

Then there is the dollar chart going back to 1917.Hardly looks like deflation to me.

 The dollar and to some extent treasuries are like a transmission that is starting to fail. At first it slips a bit and then more and more til no matter how much you rev the motor ( printing press ) the power just will not drive the vehicle.

Sun, 01/30/2011 - 16:47 | 918451 Sudden Debt
Sudden Debt's picture

Tyler, did you see the Euro news where the treasuries are now proposing that the independent pension funds and the saving of their inhabitants should be used to buy government bonds?

they want this because of the fact that demand for their bonds isn't predictable enough and THAT IS THE REASON WHY THEIR INTEREST RATES GO UP...

I couldn't watch it anymore after that because it made me sick, but if that's what they show to the lemmings, it only takes so much so they will follow that advice.

Sun, 01/30/2011 - 16:54 | 918480 wolphkaat
wolphkaat's picture

Ironically the easiest solution to all of this without deflation would be for the US Senate to stop the ethanol boondoggle and the taxpayer funded destruction of 40 percent of the US corn crop. But then again political careers and kickbacks are at stake so I imagine we'll see millions and millions of people starve before that happens.

Sun, 01/30/2011 - 17:03 | 918504 topcallingtroll
topcallingtroll's picture

Ok.  Starving third worlders and mortgage grifters who want a free house bring out the troll in me.  Ethanol may or may not be part of the solution to our energy problems, but  it's our corn and we can do with it what we want.  YOu mentioned it was 40 percent of the USA CORN CROP didn't you?  It's our corn but it's your problem.  Grow your own damn corn and quit complaining you third worlders.  You third worlders are all overpopulating anyway and turning your countries into polluted wastelands.  Time to accept some of that responsibility yourself.  Change your governments like the egyptians are trying to do if you don't like your industrial, population, and farming policies, but don't blame our corn for your problems.  Now time to go fill my gas tank and turn the air conditioning all the way up even if it is cold outside.

Sun, 01/30/2011 - 17:13 | 918532 topcallingtroll
topcallingtroll's picture

Hmm...I have.to run.the heater atthe same.time. to keep the tempperature even.  gone mobile!  culater!

Sun, 01/30/2011 - 20:44 | 918882 4xaddict
4xaddict's picture

I hear you on the 3rd worlder's complaining about how the US uses their corn however the industrial waste they live in is regularly due to the manufacturing from the US being outsourced to a less litigious location. It's not all one way traffic!

Their governments are also routinely supported by the US muscle and industrial/military complex dollars making it impossible for the average person to vote in a democratic alternative. There's trolling and then there's just being silly...

Sun, 01/30/2011 - 17:45 | 918609 wolphkaat
wolphkaat's picture

I dont make it a habit of feeding the trolls, but occasionally I'll make an exception  "Ethanol may or may not be part of the solution to our energy problems" So you admit you know nothing about it yet you have a strong opinion on it. I happen to find it offensive than MY TAXES are supporting ethanol corn porn and its quite obvious that the boondoogle will continue because there are a lot of opinionated and stupid voting malcontents that are too lazy to actually put time into understanding a problem and would rather just eat and recite corporate and government talking points.

Sun, 01/30/2011 - 17:03 | 918505 tellsometruth
tellsometruth's picture

lets put our money where our mouth is  or err..

Lets do something...I have been badgering Speaker John and Proding Ron Paul's office... but our own Reps and Sen need to heer from us...link below just enter in your zip and/or address and poof.. great numbers to put in your phone and call whenever you feel compelled... I do...

 

http://www.contactingthecongress.org/

 

ps.  I was told by speaker John's office over a week ago that there would be a press realease on the CFTC recent ruling on position limits and there is still nothing on his website which his aid told me is the place to look...

lets force a response from OUR REPRESENTATIVES!

What ever part of the corruption or crony capitalism / facism drives you most nuts and you know the most about and can best speak to, take a few minutes and let your thoughts be known!

Sun, 01/30/2011 - 17:59 | 918636 sellstop
sellstop's picture

It is interesting how the high price of oil causes deflation. Like in '08. And like last week. The specter of an oil price spike causes markets to decline. That is deflation.

 Governments will have to soon stop aquiring debt. They have been aquiring debt in the hope of economys growing and thus getting them out of their hole. Government debt is inflationary as a monetary phenomenon. But, money is created by debt in the broad economy. The broad economy runs on oil. When the input costs to the economy rise, that limits the ability of business to make a profit. Less borrowing to grow business and less ability to repay loans. Banks and business pulls back. Risk to lend is up, interest rates tend to remain relatively higher. All deflationary. ie, money does not get created by the fractional reserve system.

High energy costs make it more costly to produce food. Inflationary? Not to the whole economy. When money is not being created, then the existing money must go more toward neccessities like food. The economy slows. More unemployment. Deflationary to the general economy.

Oil/energy costs will be a cap on world economies for some time. Until we come up with another cheap source of energy. Cheap is the core idea.....

We, the U.S., had a perfect setup for the last twenty years. Oil declined in the '90's due to various disruptions around the world. Currency crises, etc. Our economy took advantage of the cheap energy to expand debt to huge levels. Now it has to deflate.

High energy prices are deflationary. It is our fighting the inevitable that shows up as inflation.

gh

Mon, 01/31/2011 - 01:33 | 919444 TheGoodDoctor
TheGoodDoctor's picture

I think Jim Rogers says "The cure for high prices is higher prices."

Sun, 01/30/2011 - 18:27 | 918686 Quinvarius
Quinvarius's picture

Realizing, of course, there is no magic Dollar strength switch to throw that will actually contain commodity prices.  The only thing that will stop the prices from rising is the system reaching equilibrium with all the money we printed.  The only thing that will slow that process is the slowing of economic activity to the point of standstill.  Look at what was described as "dollar strength" in the banking crisis.  The dollar barely twitched in the overall downtrend.

Sun, 01/30/2011 - 19:07 | 918754 eddiebe
eddiebe's picture

Wait a minute! The derivative monster who knows how big, let's say 10 times global GDP/ annum will somehow have to be unwound. Deflation cannot do that. 

So far (from figures I get) 13 trillion of debt have been turned into public debt since the crisis of 2008. Whatever deflation happens in the debt world needs to get inflated away in real money or real goods/ labor somehow. Deflation will not do that.

 Also, the economy will not come to a standstill as long as there is human life on the planet.

Am I missing something?

Sun, 01/30/2011 - 21:02 | 918942 Temporalist
Temporalist's picture

The pattern, or switch that is thrown, is: "foreign" crisis > dollar up > borrow and spend to inflate/debase dollar > repeat.  The remnants, however, are left on one side of the scale piling up and it takes considerably more to "save" the system each time.  There will be a straw that breaks the back of the dollar so the "contrarian" play is to finally bet against the dollar as "this time will be different" has to be right as a contrarian play some time.

Sun, 01/30/2011 - 20:48 | 918897 Tyler Durden
Tyler Durden's picture

There is no confirmed source to this.

Sun, 01/30/2011 - 23:01 | 919134 TruthInSunshine
TruthInSunshine's picture

I understand.

With regards to the first link, he claims high level sources, and made that claim of prior thing he published, at least one major one being later confirmed.

For the record, I do not know him, but came across his claim via another forum.

With regards to the second link, the blogger for the BBC seems to be pushing a story that sounds so familiar because it's being duplicated so similarly in so many other publications right now.

I do think something major is underfoot right now in terms of the world of currencies, but as the Zen Master often says, "we'll see."

Sun, 01/30/2011 - 19:03 | 918747 KickIce
KickIce's picture

Except just about everyone has been trying to devalue their currencies for months now and much of the increases have been to supply. 

Sun, 01/30/2011 - 19:04 | 918748 gwar5
gwar5's picture

I don't think the dollar is going to get stronger with endless $1 Trillion US dollar deficits.

Even best case scenarios will only slow down the inevitable.

Instability and wars abroad will cause shortages and higher prices.

I'm already very worried chocolate is being held hostage by the Ivory Coast.... 

We demand proof of life --- Free the Chocolate!

Sun, 01/30/2011 - 20:02 | 918820 Stuck on Zero
Stuck on Zero's picture

Mercantilist nations peg their currencies too low against the dollar to gain trade advantages.  The reprisal is that our financial gurus in New York see relative bargains in these countries and go after them.  That usually means commodities.  Brazil tries to keep its currency low and the result is NY Funds buying up large tracts of agricultural land, real estate and minerals.  The only solution is some kind of trade currency with a built-in expiration date.  That would once and for all end the trade wars that everyone, except the bankers, is suffering from.  What should we call the trade currency? Expiros.

Sun, 01/30/2011 - 20:06 | 918825 AUD
AUD's picture

If the world’s inflation problem is primarily derived from rising commodity and food prices, it is very likely that a stronger USD will help mitigate this inflation quickly and efficiently

 

No doubt but who is going to be cajoled to buy since it means a concurrent depreciation in their own currencies leading to higher prices? The USD is as unstable as any other currency in terms of commodities & is already a gartantuan credit bubble.

 

Mon, 01/31/2011 - 03:12 | 919526 spekulatn
spekulatn's picture

Mr. Richard Daughty is my go to guy when I'm feeling shitty.....he has a way of cheering a fella/lassy up right quickity.

 

http://www.thedailybell.com/1721/Richard-Daughty-on-the-Fiscal-and-Monet...

Mon, 01/31/2011 - 04:44 | 919591 JW n FL
JW n FL's picture
I have client like to buy FC/BG by 1B on ten tranches each tranch by 100M Euro

1. Instrument : FRESH CUT BG

2. Issuing Bank : HSBC or AA+ RATED BANK

3- Contract Amount : 1 Billion Euros with roll overs and extensions.

4- First Tranche : One Hundred Million Euros (€ 100,000,000.00) and subsequent tranches to be mutually agreed.

5. Term : ONE YEARS AND ONE DAY

6. Delivery pre advice first : by MT799 followed by MT760

7. Rate :??????% of Face Value +1% from Seller side and 1% from Buyer side, commission to be shared 50-50 as specified here below.

8. Hard Copy : within 7 banking days by bank bonded courier

ACCEPTABLE TRANSACTION PROCEDURE FOR our BANK:

1. Buyer sends letter of intent (LOI) to the Seller. The LOI should contain copies of lessee’s passport, Company’s resolution and Client’s Information Sheet (CIS). BCL After the seller signature

2. Within 24 hours Seller countersigns this LOI and returns to Buyer with Details of Issuing bank, passport copy ETC, and this LOI automatically becomes a full commercial recourse contract. Both parties shall lodge the executed contract to their respective banks.

3. within 48 hours Seller will send Corporate Invoice to Buyer and Seller’s Bank will issue the MT-799 pre-advice to buyer’s bank.

4. Upon receipt of MT799 and Corporate Invoice, Buyer Receiving Bank will issue MT 103/23 within max 48 banking hours after received the seller’s MT799, with total amount of ???????% percent of BG’s face value.

5. Upon verification and authentication of MT103/23, Seller Issuing bank will send the bank guarantee to Buyer’s designated bank via SWIFT MT-760 within 3 banking days.

6. Buyer bank confirms the MT760 into Buyer bank account. Within 72 hours Buyer withdraw field 23 from the MT103 conditional payment AND pay broker 2% fees simultaneously.

7. Within 7 banking days after receiving Payment and brokers fees, Hard copy will be sent to buyer’s bank by bank-bonded courier.

8. Any unauthorized calls by any party or its representative lawyers to probes or communication in an improper way to bank(s) in this transaction shall be prohibited and contract terminated.

9. This Letter of Intent is a full recourse commercial commitment governed by the Law of the jurisdiction that both parties reside and standards under ICC Regulation. ************************************************************************************ This Article would explain the Junk Mail...

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