Tuesday, June 7, 2011

Yen Surges: BOJ Intervention Watch At DefCon 1




Starting at 9pm Eastern, something lit up a fire under the Japanese Yen, sending all pairs, but specifically the USDJPY and EURJPY down sharply for no apparent reason. At last check the Dollar Yen was back under 79.85, the level at which the BOJ 3 months ago had to run like a petulant, crying child to its pedophile uncles from the G-7, begging for a rescue. The only mildly related news came out just prior when it was announced that China's net purchases of Japan debt hit a new record in April. From Bloomberg: "China’s net purchases of Japan’s long-term debt reached a record as the larger nation seeks to diversify the world’s biggest currency reserves. China bought a net 1.33 trillion yen ($16.6 billion) in Japanese long-term bonds in April, the biggest amount since records began in January 2005, according to data released today in Tokyo by Japan’s Ministry of Finance. The nation sold a net 1.47 trillion yen of short-term debt, the data shows. “As China tries to diversify its assets with its huge foreign-exchange reserves, it probably wants to have yen- denominated assets to some extent” in the longer term, said Tetsuya Inoue, chief researcher for financial markets for Tokyo- based Nomura Research Institute Ltd. “China has a strong trading relationship with Japan." If anything this would be dollar negative, not so much Yen positive... We will follow and update if anything is noted.




Citizen Sues Atlanta Fed Based on Allegation that It's Issuing Federal Reserve Notes That It Has No Intention of Redeeming, Which Amounts to Counterfeiting ... Asks that Atlanta Fed's Charter be Forfeited
George Washington
06/07/2011 - 18:53
Thomas Jefferson would have approved ...




REJECTED | Massachusetts Register of Deeds John O’Brien is First in the Nation to Say NO to Recording Robo-signed Documents
4closureFraud
06/07/2011 - 13:48
“My Registry will not be a knowing participant in this fraud against homeowners. From today forward, lenders be on notice, the Southern Essex District Registry of Deeds will not record robo-signed documents.” John O'Brien



QE 2 Was A Disaster: Here Is Why US Fiscal "Stimulus" Was A Complete Failure As Well



Two and a half years ago, Christina Romer, then still employed by the Obama administration in the position of Chair of the Council of Economic Advisers penned "The Job Impact of the American Recovery and Reinvestment Plan" - a report predicting the impact of a fiscal "stimulus" that took out $787 billion from the pocket of American Taxpayers (subsequently discovered to cost even more) and put that money...somewhere. We are not sure where, because according to a chart now made legendary for its complete failure to predict the future, it sure did not go into creating jobs. Below we present the original chart that made the January 10, 2009 presentation, and superimpose upon it the reality of the past two and a half years. It is simply stunning. And while we are here, and discussing the abysmal failure of QE2 (the impending arrival of QE3 notwithstanding), it is amusing to hear the whimpering of the likes of one Richard Koo, who is now claiming that all along the money from the Fed's monetary stimulus should have been invested in the form of a fiscal one. Well, Dick, below is the impact of your fiscal stimulus....AND it also includes the impact of $2 trillion in incremental monetary stimulus. Combined, both fiscal and monetary stimulus has now missed the worst case projection for US unemployment for 30 months running. Here is the simple truth: both monetary and fiscal stimuli are abysmal failures, when the economy is mean reverting to a state where it was hijacked from courtesy of 30 years of "great moderation" - and there is nothing that can be done to stop it. Correction: there is one thing - the Fed can destroy the dollar in its attempt to disprove simple physics. And, ultimately, it will.




At 3:45 pm this afternoon Bernanke delivered this on the economy: (Courtesy Bloomberg
author Caroline Salas gage and Steve Mathews)

Stimulus Needed for ‘Frustratingly Slow’ Recovery: Bernanke


Federal Reserve Chairman Ben S. Bernanke said the central bank should maintain record monetary stimulus to boost an “uneven” and “frustratingly slow” economic recovery.
“The economy is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed,” Bernanke, 57, said today in a speech to a conference in Atlanta. “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.”
Recent data showing weakness in the economy, including a rise in theunemployment rate to 9.1 percent in May, has increased the odds the Fed will hold the benchmark interest rate near zero into next year. At the same time, Bernanke and his fellow policy makers plan this month to complete a $600 billion bond purchase program, and they’re discussing the tools they’d use to withdraw stimulus, according to minutes of their meeting in April.
Bernanke said that while the recent increase in inflation is a “concern,” he doesn’t see “much evidence that inflation is becoming broad-based or ingrained in our economy.” Still, “the longer-run health of the economy requires that the Federal Reserve be vigilant in preserving its hard-won credibility for maintaining price stability.”
Treasury two-year note yields dropped two basis points, or 0.02 percentage point, to 0.4 percent at 4 p.m. in New York, the lowest level this year. The Standard & Poor’s 500 Index fell 0.1 percent to 1,284.94 after rallying as much as 0.8 percent.

‘Upward Impetus’

If commodity prices stabilize, “the upward impetus to overall price inflation will wane and the recent increase in inflation will prove transitory,” Bernanke said. Inflation is being restrained by “the stability of longer-term inflation expectations” and “weak demand for labor,” he said.
The personal consumption expenditures price index, minus food and energy, rose 1 percent for the 12 months ending April. That’s below the longer-run inflation goal of 1.7 percent to 2 percent for the PCE index forecast by policy makers in April.
The breakeven rate for five-year Treasury Inflation Protected Securities, the yield difference between the inflation-linked debt and comparable maturity Treasuries, has fallen to 2.05 percentage points from 2.47 percentage points on April 29.
Breakeven rates are a measure of the outlook for consumer prices over the life of the securities. The measure has climbed from 1.24 points on Aug. 27, the day Bernanke signaled the Fed may embark on a second round of large-scale asset purchases during a Jackson HoleWyoming, speech.

Job Openings

Job openings in the U.S. declined in April for the first time in three months and payrolls grew in May at the slowest pace in eight months, according to Labor Department figures released since June 3. The 54,000 rise in jobs followed a 232,000 gain in April and was below the 165,000 median increase forecast by economists in a Bloomberg News survey.
“Recent indicators suggest some loss of momentum,” Bernanke said. “I expect hiring to pick up from last month’s pace as growth strengthens in the second half of the year, but, again, the recent data highlight the need to continue monitoring the jobs situation carefully.”
Manufacturing grew at its slowest pace in more than a year in May, according to Institute for Supply Management data released last week. Consumer spending, which accounts for 70 percent of the economy, rose less than forecast in April as households felt the pinch of grocery and energy costs, a Commerce Department report showed.

Oil Prices

Oil prices have climbed 160 percent since February 2009, while non-fuel commodity prices gained about 80 percent, Bernanke said in his remarks. The increase in commodity prices reflects “strong gains in global demand that have not been met with commensurate increases in supply,” he said.
The chairman rejected criticism that the Fed’s actions have pushed down the foreign exchange value of the dollar, and thereby boosted the price of commodities, saying “many factors other than monetary policy affect the value of the dollar.”
Commodities as tracked by the 24-member Standard & Poor’s GSCI Spot Index have rallied about 9 percent this year, led by gasoil and Brent crude.
Bernanke said that waning fiscal stimulus will also exert drag on growth. He warned against sharp cutbacks at a time when the recovery is still fragile, while urging lawmakers to develop a long-term plan for deficit reduction.

Long-Term Plan

“A sharp fiscal consolidation focused on the very near term could be self-defeating if it were to undercut the still-fragile recovery,” Bernanke said. “Consequently, the appropriate response is to move quickly to enact a credible, long-term plan for fiscal consolidation.”
Policy makers have few options left to respond to accumulating signs of a slowdown after their second round of asset purchases sparked the harshest backlash against the central bank in three decades.
“We’ve gotten inconsistency, hesitancy and unevenness” in U.S. economic growth, Atlanta Fed President Dennis Lockhart said today in a speech in CharlotteNorth Carolina. “I’m troubled by what you might describe as a lack of conviction in this economy.”
Two regional Fed bank presidents critical of the so-called quantitative easing program -- Richard Fisher of Dallas and Charles Plosser of Philadelphia -- reiterated their opposition to additional stimulus in comments yesterday.
The central bank has “done enough if not too much” to spur growth, Fisher said in New York, while Plosser said in Helsinki that an exit from stimulus should start “long before” a recovery in the U.S. job market is assured.
“Somewhat tighter monetary policy is possible by the end of the year,” Plosser said. Fisher and Plosser are both voting members of the Federal Open Market Committee.
To contact the reporters on this story: Caroline Salas Gage in New York atcsalas1@bloomberg.netSteve Matthews in Atlanta at smatthews@bloomberg.net.
To contact the editor responsible for this story: Christopher Wellisz cwellisz@bloomberg.net





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