International Monetary Fund
"There’s a lack of faith in monetary policy -- you’ve thrown the kitchen sink at it, you’ve cut rates to zero, you’re printing money -- and still inflation is lower. I think this is a dangerous situation if people perceive that it has the responsibility and it doesn’t have the tools."
"The reason the markets aren't going lower is people are holding and hoping." Incidentally, there is a reason why hope is not a strategy: in the end, it always fails.
"The impotence of monetary policy in boosting growth and staving off deflationary pressures has become painfully apparent, especially when it is acting in isolation and when a large number of countries are resorting to the same limited playbook."
- After Rough Quarter, Investors Buckle Up (WSJ)
- From heroes to bystanders? Central banks' growth challenge (Reuters)
- Russian Airstrike in Syria Targeted CIA-Backed Rebels, U.S. Officials Say (WSJ)
- Kremlin says Syria air strikes target list of groups, not just Islamic State (Reuters)
- That’s information warfare? Russia accused of killing civilians in Syria (RT)
- Euro zone factory growth eases in August despite modest price rises (Reuters)
- How Glencore's Crazy Month Makes Greek Banks Look Tame (BBG)
- Asia shares rally, but on track for worst quarterly loss in four years (Reuters)
- Global Rally Shows Relief at End of $11 Trillion Stocks Meltdown (BBG)
- Glencore Extends Rebound as Turmoil Shows Signs of Easing (BBG)
- Putin wins parliamentary backing for air strikes in Syria (Reuters)
- China Cuts Minimum Home Down Payment for First-Time Buyers (BBG)
- German Unemployment Unexpectedly Rises in Sign of Economic Risks (BBG)
- Japan Industrial Output Slide Hints at Recession (WSJ)
Most economists and financial analysts think that 'currency war' merely refers to the competitive devaluations that nations sometimes engage in to help boost their domestic economies, as they had done in the 1930's for example. This time the currency war is a much more profound confrontation of differing agendas revolving around the historically unusual role of the US dollar, based on nothing more than the will of the Federal Reserve and the 'full faith and credit' of the US, as the reserve currency for global central banks and international trade.
Gold had a 3 percent weekly gain and silver had a 3.5% weekly gain. Gold ended with a gain of 0.73% on Friday while silver rose to as high as $15.43 before ending with a gain of 0.26%.
The Chinese economy will soon move into contraction, its leaders will panic and jump in with both feet. Fiscal and monetary stimulus, bail-outs, more political control, increased use of censorship, talk about patriotic duty and who know what else. What we do know is that it will look like this...
The growing roar of 'the establishment' crying for help from The Fed should make investors nervous. While your friendly local asset-getherer and TV-talking-head will proclaim how a rate-hike is so positive for the economy and stocks, we wonder why it is that The IMF, The World Bank, Larry Summers (twice), Goldman Sachs, China (twice), and now no lessor nobel-winner than Paul Krugman has demanded that The Fed not hike rates for fear of - generally speaking - "panic and turmoil," however, as Krugman notes, “I think it would be a terrible mistake to move. But I’m not confident that they won’t make a mistake."
Fed Hike Will Unleash "Panic And Turmoil" And A New Emerging Market Crisis, Warns World Bank Chief EconomistSubmitted by Tyler Durden on 09/08/2015 17:25 -0400
Earlier today we got the most glaring confirmation there had been absolutely zero coordination at the highest levels of authority and "responsibility", when the World Bank's current chief economist, Kaushik Basu warned that the Fed risks, and we quote, triggering “panic and turmoil” in emerging markets if it opts to raise rates at its September meeting and should hold fire until the global economy is on a surer footing, the World Bank’s chief economist has warned. And just in case casually tossing the words "panic in turmoil" was not enough, Basu decided to add a few more choice nouns, adding a rate hike "could yield a “shock” and a new crisis in emerging markets"
- Sure, why not: China Rebounds as Trade Data Disappoints (BBG)
- Oh, that's why: China's Stock-Rescue Tab Surges to $236 Billion, Goldman Says (BBG)
- Can't make this up: German finmin says must avoid reliance on debt, cenbank stimulus (Reuters)
- Stocks rise after contrasting China, Germany trade data (Reuters)
- Euro zone second-quarter GDP revised up as Italy grows faster (Reuters)
- Brent oil rises on European, Chinese data; oversupply weighs (Reuters)
- Corporate Prosecution Deals Headed for a Legal Test (WSJ)
The fallout from the demise of the petrodollar is becoming impossible to sweep under the rug even as Gulf states are keen to downplay the severity of the budget crunch. For the Saudis, who need crude at $100 to plug a budget deficit that’s projected at a whopping 20% of GDP, the situation is becoming particularly acute. For Qatar, the situation isn't quite as dire but that doesn't mean the country's officials aren't acutely aware that the world is now scrutinizing the budgets of petrostates in the wake of collapsing crude and indeed on Monday, Qatari Finance Minister Ali Sherif al-Emadi was at pains to reassure the market.
There is strong evidence that economies perform better with a tight labor market and, as the International Monetary Fund has shown, lower inequality (and the former typically leads to the latter). Of course, the financiers and corporate executives who pay $1,000 to attend the Jackson Hole meeting see things differently: Low wages mean high profits, and low interest rates mean high stock prices. Statements from Fed officials that the economy has virtually returned to normal are met with derision. Perhaps that is true in the neighborhoods where the officials live. But, with the bulk of the increase in incomes since the US “recovery” began going to the top 1% of earners, it is not true for most communities. Simply put, in the US, workers are being asked to sacrifice their livelihoods and wellbeing to protect well-heeled financiers from the consequences of their own recklessness.
The centrally-planned house of cards is finally starting to shake uncontrollably.
To summarize: in order to get the Saudis to "agree" to the Iran deal, all the US had to do is remind King Salman, that as long as oil is where it is to a big extent as a result of Saudi's own record oil production, crushing countless US oil corporations and leading to the biggest layoffs in Texas since the financial crisis, the country will urgently need access to yield-starved US debt investors. If in the process, US corporations can invest in Saudi Arabia (and use the resulting assets as further collateral against which to take out even more debt), while US military corporations sell billions in weapons and ammo to the Saudi army, so much the better.