- So much for the euphoria: Stores open early on Thanksgiving but shoppers in no rush (Reuters)
- Get to work Mr. Chairwoman: Do-Nothing Congress Dithers on Budget as Deadline Nears (BBG)
- FX to Libor Probes Leave U.K. Traders Looking for Lawyers (BBG)
- Protesters Briefly Storm Thai Army Headquarters (WSJ)
- Berlusconi accused of bribing witnesses in prostitution trial (Reuters)
- Japan Price Gauge Rises Most Since ’98 in Boost to Abe (BBG)
- S&P downgrades Netherlands’ AAA credit rating (FT)
- GrainCorp Verdict Clouds Australia Open-For-Business Pledge (BBG)
- Hertz Fix in Dollar Thrifty Deal Fails as Insider Warned (BBG)
- Narrow Budget Agreement Comes Into View (WSJ)
Still unnoticed by a large part of the population is that we have been living through a period of relative impoverishment. Money has been squandered in welfare spending, bailing out banks or even — as in Europe — of fellow governments. But many people still do not feel the pain. Many people believe the paper wealth they own in the form of government bonds, investment funds, insurance policies, bank deposits, and entitlements will provide them with nice sunset years. However, at retirement they will only be able to consume what is produced by the real economy. Savers and pensioners will at some point find out that the real value of their wealth is much less than they expected. In which way, exactly, the illusion will be destroyed remains to be seen.
To the DOJ, a $13 billion receipt is the "largest ever settlement with a single entity." To #AskJPM, a $13 billion outlay is a 100%+ IRR. And perhaps more relevant, let's recall that JPM holds $550 billion in Fed excess reserves, on which it is paid 0.25% interest, or $1.4 billion annually. In other words, out of the Fed's pocket, through JPM, and back into the government. Luckily, this is not considered outright government financing.
The CFTC has won a consent order against MF Global requiring it to pay $1.212 billion in restitution to customers and a further $100 million civil penalty:
- *MF GLOBAL TO PAY $1.2 BLN RESTITUTION, $100M PENALTY
- *CFTC:PENALTY TO BE PAID AFTER MF FULLY PAYS CUSTOMERS/CREDITORS
- *CFTC:LITIGATION CONTINUES VS CORZINE,O'BRIEN,MF GLOBAL HOLDINGS
- *CFTC: MF GLOBAL ADMITS TO ALLEGATIONS OF LIABILITY IN ORDER
The big question is - of course - where is the money coming from?
An interesting overview of Germany's attempt to solidify its hegemony in Europe.
- What can possibly go wrong: Tepco Successfully Removes First Nuclear Fuel Rods at Fukushima (BBG)
- Japan's Banks Find It Hard to Lend Easy Money (WSJ)
- U.S. Military Eyes Cut to Pay, Benefits (WSJ)
- Airbus to Boeing Cash In on Desert Outpost Made Field of Dreams (BBG); Dubai Air Show: Boeing leads order books race (BBG)
- Sony sells 1 million PlayStation 4 units in first 24 hours (Reuters)
- Russian Tycoon Prokhorov to Buy Kerimov's Uralkali Stake (WSJ)
- Google Opening Showrooms to Show Off Gadgets for Holidays (BBG)
- Need. Moar. Prop. Trading: Federal Reserve considering a delay to Volcker rule (FT)
- Raghuram Rajan plans ‘dramatic remaking’ of India’s banking system (FT)
- SAC Capital's Steinberg faces insider trading trial (Reuters)
Dispassionate discussion of the investment climate.
Nobel Winner Dares To Go There: "No Reason To Fear Deflation... Greece May Benefit From Gold Standard"Submitted by Tyler Durden on 11/16/2013 13:45 -0400
"Historically, there is no reason to fear deflation," Nobel Laureate Thomas Sargent explains to Germany's Wiwo.de, "we all benefit from lower prices." Crucially, he continues, "countries with declining prices, such as Greece, must improve the competitiveness they have lost in recent years," requiring falling wages and rising productivity (and falling unit labor costs) which will lead to companies cutting prices, "this is not a dangerous deflation, but part of the necessary correction so that these countries are internationally competitive again." That central banks pursue an inflation rate of around 2%, Sargent blasts, is because they consider it their job to "make bad debt good debt," adding that inflation is "a major redistribution machine - reducing the real debt burden for the benefit of creditors and devaluing the assets of the creditors." A return to a gold standard,he concludes, to prevent governments and central banks from limitless money-printing "would not be foolish."
On December 23, 2013, the U.S. Federal Reserve (the Fed) will celebrate its 100th birthday, so we thought it was time to take a look at the Fed’s real accomplishment, and the practices and policies it has employed during this time to rob the public of its wealth. The criticism is directed not only at the world’s most powerful central bank - the Fed - but also at the concept of central banks in general, because they are the antithesis of fiscal responsibility and financial constraint as represented by gold and a gold standard. The Fed was sold to the public in much the same way as the Patriot Act was sold after 9/11 - as a sacrifice of personal freedom for the promise of greater government protection. Instead of providing protection, the Fed has robbed the public through the hidden tax of inflation brought about by currency devaluation.
The Forex market is the largest in the world and the least understood. Since the late 90's, traders and asset managers have flocked to it as an alternative to trade, compared to other common markets (Stocks, Bonds, Futures).
The notion that the euro area crisis is over has recently been heavily propagated by EU politicians and the mainstream media. However, it is way too early for such victory laps. Hans-Werner Sinn is perfectly correct in pointing out that the ECB's attempts to restore the 'monetary policy transmission mechanism' by suppressing interest rates in the periphery is going to perpetuate capital malinvestment,delay the necessary reforms and these interventions have actually scared private capital away, as investors require adequate compensation for the risks they are taking. Meanwhile, savers are ultimately paying for this ongoing waste of scarce capital. It is high time that central banking is recognized for the disease it is. Without central banks aiding and abetting credit expansion, this situation would never have arisen. Even a free banking system practicing fractional reserve banking could not possibly have created such a gigantic boom-bust scenario. Money needs to be fully privatized – the State cannot be trusted with it.
With global financial company stock prices soaring, analysts proclaiming holding bank shares is a win-win on rates, NIM, growth, and "fortress balance sheets", and a European stress-test forthcoming that will 'prove' how great banks really are; the question one is forced to ask, given the ruling below, is "Why is ISDA so worried about derivatives-based systemic risk?"
Ben Bernanke is participating in an IMF panel with Larry Summers, Ken Rogoff, and fromer Bank of Israel chief Stan Fischer... Full speech below...
"The reality is we're doing less with less," is the dismal reality facing Fresno police chief and appears to sum up the situation facing many of America's cash-strapped cities (as we previously discussed here). Fresno's problem, as the mayor put it, "we have no money in the current account all." The situation was so dire that covering an unexpected expense—a new air-conditioning unit or firetruck, for example, would mean slicing into the payroll or borrowing from another depleted city fund. "We can get through the day to day. [But] if there's a derailed train, a natural disaster, where's the money going to come from?" Like many other cities, Fresno saw its sales- and property-tax revenue plummet as the economy tanked. In response, the city slashed services and staff. Fresno now can pay its bills, but it can't do much more than that.
- Investors are stampeding into initial public offerings at the fastest clip since the financial crisis (WSJ)
- Kerry hails disgruntled Saudi Arabia as important U.S. ally (Reuters)
- SAC Capital prepares for a second life (FT)
- BlackBerry's Fate Goes Down to the Wire (WSJ)
- Dutch Gamble on U.S. Housing Debt After Patience Wins (BBG)
- U.S. Wants Broad Divestitures From AMR, US Airways (WSJ)
- Tensions with allies rise, but U.S. sees improved China ties (Reuters)
- China berates foreign media for Tiananmen attack doubts (Reuters)
- China manufacturers squeezed as costs rise (FT)
- European Borders Tested as Money Is Moved to Shield Wealth (NYT)
- Zurich Probe Finds No ‘Undue Pressure’ Put on Late CFO (BBG)