Citi Says QE2 Would Be End-Game For The USD

 

Greenspan when Chairman confirmed MOPE (Management of Perspective Economic) as the present school of economic thought and application. Now Bernanke is making the same confirmation.

There comes a time when smoke and mirrors fall flat on their ass. This is the time as we are headed to a double dip with the double being the dip of a lifetime.

The result will without any doubt be "Currency Induced Cost Push Inflation." The problem is that so very few have a clue what that is, yet the fate of nations hangs on the correct understanding.

Regards,
Jim
Bernanke’s top tool now may be power of persuasion CIGA Eric
The power of persuasion – spin, MOPE, propaganda, etc has been a critical tool since humans learned to talk within the context of centralized control. The fact that the media has chosen to recognize it at this point in the cycle reflects the growing fragility of the economic backdrop.
That’s the test facing Fed Chairman Ben Bernanke as he addresses a conference Friday in Jackson Hole, Wyo. Without any easy options left, Bernanke must try to prevent another recession by persuading people and businesses to feel confident enough about the future to spend more today.
Source: finance.yahoo.com
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How Hyperinflation Will Happen.

Fed Completes Monetization Of $1.415 Trillion In Treasurys, Morgan Stanley's Prediction Of Issue "In Play" Spot On Again

 

Albert Edwards: "We Are Returning To 450 On The S&P"

"Enron accounting" Has Bankrupted America; U.S. Deficit Really $202 Trillion Kotlikoff Says


Hussman Funds - Weekly Market Comment: Why Quantitative Easing is Likely to Trigger a Collapse of the U.S. Dollar


Low Pension Return May Soak New York Taxpayers


Investors Have Withdrawn a Staggering $33.12 Billion from Mutual Funds in 2010


Ambrose Evans-Pritchard: Spain Uses Social Security to Prop Up Bond Market




Jim Sinclair’s Commentary
Now tell me this chart does not look like our illustration number one, a ski jump.
How about housing’s first breakdown of strong support?
Failure to return to the support and through it is downright SCARY.

Jim Sinclair’s Commentary
The reason for this is the quiet disaster. The major losses in retirement program investments is twofold:

1. The legal liability that the managers of pension funds absolutely have as compared to your average whacked hedgie.
2. The fact that for decades pension funds have been Wall Street’s circular file for junk.

Illinois Teachers’ Retirement System selling off $3B to cover benefits By: Barry B. Burr August 24, 2010
(Crain’s) — Illinois Teachers’ Retirement System, Springfield, plans to sell $3 billion in investments, or about 10% of its $33.1 billion in assets, in the current fiscal year to pay pension benefits, according to Dave Urbanek, public information officer.
The system is the fifth Illinois statewide defined benefit plan to sell off investments this fiscal year to pay benefits.
Illinois State Universities Retirement System, Champaign, expects to sell $1.2 billion in investments from its $12.2 billion defined benefit fund this fiscal year to raise liquidity to pay benefits to participants.
The Illinois State Board of Investment, Chicago, could sell $840 million investments from its $9.9 billion fund to pay benefits of the Illinois State Employees’ Retirement System, Illinois Judges’ Retirement System and Illinois General Assembly Retirement System. ISBI oversees the investments of the three systems.
The liquidity stress from the investment sales at the five plans could force each of them to restructure their strategic asset allocations, terminate investment managers and search for new managers.
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Jim Sinclair’s Commentary
Gold has ethics for one major reason: because there is no liabilities attached to gold as there are to all Fiat currencies in one degree or another.

The Ethics of Gold Tuesday, 24 August 2010  at  11:14, By Ron Robins, Founder & Analyst – Investing for the Soul
The rising price of gold stands as the ethical barometer of the mismanagement of our fiscal, monetary, and currency systems. Gold is in the early stages of re-asserting its historic role of helping to bring order to monetary and currency chaos. Its price has risen more than fourfold over the past ten years as a result of investors anticipating the predictable financial and currency chaos we have today—and what is likely yet to come.
The central banks and government treasuries, particularly those of the US, Europe, and Japan, have been weakened and our trust in them eroded. For decades they assured us that only they and their paper currencies and fractional reserve banking systems can keep our economies growing forever. They are now failing for all to see. And before the ships of state sink and economies further submerge they bail out their banking friends.
The monetary and currency systems and organisations responsible for them are deteriorating because they essentially lack an ethical standard. That is not to say that most individuals in these organisations are unethical. It is that as organizations they implemented policies over the past several decades that knowingly—or they should have known—would eventually lead to great financial and economic hardship.
One such policy was the encouragement of debt creation way beyond income or economic growth. When this policy failed, it led to tens of millions of people losing their jobs globally, millions losing their homes, and retirees in developed countries losing their savings as interest rates were reduced to near zero. It is in this sense that these organizations were, and are, without an ethical standard.
To rise to the top among many of these banking and financial organizations, requires not only brilliance, but usually subservience to base instinctual values of status and greed.
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Dear Eric,
Recession risk or the bottom will drop out? You are being too gentlemanly.
Regards,
Jim
U.S. Economy: Durables, Housing Signal Recession Risk CIGA Eric
Both CPI and gold-adjusted business core spend (new orders of durable goods ex. defense and aircraft) time series are rolling over. Gold adjusted business core spending, a better reflection real of business activity, has not recorded positive year-over-year growth since 2007. This throws cold water on the heavily MOPE’d economic recovery of 2009-2010.
Real Business Core Capital Spending: Real or CPI-Adjusted New Orders of Durable Goods ex. defense and aircraft (RBCCS) and YOY Change:
Gold-Adjusted New Orders of Durable Goods ex. defense and aircraft (BCCSGLDR) and YOY Change:
Orders for durable goods in the U.S. increased less than forecast in July and sales of new homes unexpectedly dropped, increasing the risk of a renewed recession in the world’s largest economy.
Bookings for goods made to last at least three years rose 0.3 percent, figures from the Commerce Department showed today in Washington. Excluding transportation equipment, demand fell by the most in more than a year. Purchases of new dwellings fell 12 percent to an annual pace of 276,000, the weakest since data began in 1963, figures from the same agency showed.
Source: businessweek.com
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Hourly Action In Gold From Trader Dan

Posted: Aug 26 2010     By: Dan Norcini      Post Edited: August 26, 2010 at 2:14 pm
Filed under: Trader Dan Norcini

Dear CIGAs,
It is generally not a good sign when a market moves lower after failing to sustain its gains on the release of “friendly” news. Such has been the case so far today with the S&P 500 as it popped higher when the unemployment numbers came in a bit less than the market had been anticipating. The bump higher attracted sellers instead which is most disconcerting if you happen to be a bull. It is early in the day yet as I write this so the longs can still turn it around but for now you can see the “risk” trades that were put on earlier coming right back off.
The Euro has lost a half a cent against the Dollar as the equity markets have faded off their best levels with the Yen moving a tad higher as once again, both it and the Dollar receive money flows whenever investors become nervous. Speaking of nervous, Forex traders are becoming increasingly worried that the Bank of Japan is getting ready to foray forth and inflict a dose of punishment upon the brazen speculators who have dared to bid the Yen higher. They apparently are getting ticked off that the stronger Yen is crimping their all-important export market as Japanese made products are losing competitiveness. Chatter is that the Japanese monetary lords will engage in a round of intervention and begin selling the yen combined with another dose of QE. We shall see but experience has taught me, all too painfully I might add, that once the Finance Ministry and/or the Bank of Japan begins expressing strong displeasure over the level of their yen, it is not the better part of wisdom to become too cocky or get too aggressive. That perhaps more than anything is keeping the Yen from moving sharply higher for the immediate future although you might see some of the bigger hedgies actually try to push their luck to see exactly what level will bring a potential response. In effect, players have been known to keep prodding until they get the intervention to see where the ceiling is for the short term. They can then buy on dips and sell the ceiling with the knowledge that the lords in Japan are pleased. Problem is that one never knows when the Japanese authorities will decide to play a few mind games and keep selling yen!  Ouch….
I said all that to say that since the Yen has a fairly large weighting in the basket of currencies that make up the USDX, it movements are significant in attempting to ascertain where the Dollar is headed. With the current mindset being one of rushing into the Yen whenever there is an aversion to risk, the effect is to stem somewhat the corresponding rise in the Dollar on such occasions. Were it not for the Yen, the Dollar would respond more strongly to the rush into safe haven play. If the Japanese monetary authorities set a distinct line in the sand for their currency, it could be that any further risk aversion trades would see a much stronger rally in the Dollar.
The effect of the strong yen has been to mute somewhat the performance of gold when priced in Yen terms. Gold continues to remain very strong in terms of the European currencies, and the Canadian Dollar as well but has underperformed when viewed through the prism of the Yen price.
Open interest increased yesterday in both gold and silver but not to the extent I would have expected in silver given the magnitude of its recent rise. That tells me that whomever it is that has emerged in the West to challenge the perma shorts in that pit, they are being successful in squeezing some of their weaker cousins out of the market. I wish that this week’s CFTC today which will be released on Friday would have included yesterday’s positions as well as Tuesday’s to give us a more complete picture of who got forced out. What I am going to be looking at is the positions of the strong-handed shorts in that market. If we are going to see a legitimate commercial signal failure, it will show up here first. My own view at this point is that it is going to take a much stronger push on the part of the longs to get the Morgans of the world to run. The ones that are more than likely running right now are the funds on the short side and some of the CTA’s and other larger reportables. That is just a guess and I could be wrong but until tomorrow, all of us are guessing!
It looks as if some of the longs could not resist the urge to ring the cash register after price stalled out above $19. We will watch to see where chart support develops.
Open interest increases in gold signify that managed money continues to move into the metal. At 565,000 it is well off the record peak above 605,000. With price a mere $20 off its all time nominal high, it would be a relatively easy feat for the big funds to take it through that level. Question is are they ready to do so yet? Pit locals and other assorted option sellers are attempting to ply their craft of screwing the option buyers, which is the norm for the Comex crowd. Nothing like legalized theft. Gotta keep the exchange members employed. Then again, why else does anyone in their right mind pay those kinds of prices for a seat on the exchange? Answer – they get to regularly milk the public with a wink and a nod of the overseers.
Today’s high confirms the selling resistance shown on the daily chart. We watch now to see where buyers emerge.
Gold shares are unusually strong today given the weakness in gold today. It is however having difficulty near the 480 level, which as one can see from an examination of that chart, a region where sellers have surfaced in the past. If the share bulls can force this index up through 480 and hold it there on two consecutive closes, they have a clear shot at 495 – 500.
Bonds continue their relentless march north. There still is no sign of a technical top in that market although it is losing some upside momentum as it nears 137.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

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