China Pushes For More Stable Reserve Currency - Bye Bye USD?

Helpful non-confrontational, non-trade-war, conciliatory comments from China's finance minister Xie speaking at the IMF meetings.

*CHINA SAYS IMF SHOULD STUDY DEFECTS OF WORLD MONETARY SYSTEM
*CHINA SAYS IMF SHOULD DIVERSIFY GLOBAL RESERVE CURRENCIES
*CHINA SEEKS `STABLE VALUE' IN RESERVE CURRENCY SYSTEM

 

 

This Is NOT Sparta As Greece Threatens To Partially Withdraw From NATO Citing Poverty

In what is a pathetic attempt at Mutual Assured Destruction only in this case this Virtual Assured Suicide, Athens News reports that Greece, in order to demonstrate just how "serious" its fiscal condition is, will slash its defense spending in the form of support for NATO, thereby destabilizing the region even as Turkey and Syria are already on the verge of way: a development which NATO will surely be delighted by. "Greece will significantly reduce its participation in Nato and EU military missions due to the economic crisis in the country, National Defesce Minister Panos Beglitis announced on the sidelines of an informal EU defence ministers' Council held here on Friday. He said that the ministry was preparing to cut down Greece's participation in the Nato and EU missions in Afghanistan, Kosovo and Somalia, noting that local political forces in Afghanistan and Kosovo were anyway entering the phase where they would gradually take over control." So instead of going ahead and doing any of the austerity stuff Greece promise to enact back in 2010, which has been sacrificially pushed forward from 2015 to 2014, pretty much like what the US will need to do soon to avoid more downgrades when the next debt ceiling hike is due in a year, it will instead pack up and leave, most likely giving Turkey the impression it can do whatever it wants in the region, and why not: after all the third coming of the Ottoman Empire has been long in the making.

 

 

Panic And Perspective On Wall Street From Art Cashin

Some much needed veteran trader perspective from the fermentation committee Chairman. "We’re going to adjust our usual format a bit to try and put yesterday in a little bit of perspective. Having done this over 50 years, I’ve seen a good deal of market history - the Cuban Missile Crisis, the Kennedy Assassination, the ’87 Crash, various wars, and much more - and perspective is essential to survival - at least financial survival."

The Harsh Reality In Greece

As rumors circulate regarding recaps, EuroTARPs, nationalizations, no-need-for-new-capital, no-NET-exposure-to-French-banks, we point out that Greek government bonds (GGBs) have quietly crept into the night with the 2Y price breaking below EUR40 for the first time and the long-end bond prices breaking below EUR30 for the first time. Given the 20% haircuts in the stress tests and the 60-70% haircuts the markets are expecting, we can only guess at banks need for capital - or will MtM suspension magically wipe all of those fears away? Meanwhile, away from the headline grabbing PIIGS, Germany CDS is +7bps at 113bps, Austria is 15bps wider at 185bps, and Belgium just broke 300bps.

Quickie Today

Dave in Denver at The Golden Truth - 1 hour ago

Rick Perry: I can't be bought for $5,000 Dave in Denver: Now we've established that you *can* be bought, what is your price then? *Quote of the Week: "Treasuries are getting bought to insanity" - friend and colleague, "Jesse"* He's right. Most of the Treasury curve is yielding close to zero. That means that the prices of Treasuries can't go much higher. But there sure is a lot of downside. If you are "parking" your cash in bonds because they are "safe," you are taking on what will end being a tragic amount of risk. It's time to sell. My thought for the week would be that s... more » 

Guest Post: The Fed, ZIRP And The French Boomerang

Ben Bernanke promised to sit, like an elephant, on short-term interest rates for another two years  - at least. What were US Money Market Funds (MMF) going to do? US Treasury yields are 0.09% for 12 months, 0.02% for 6 and negative 0.01% for 3 months. You can’t deliver negative yields to investors (that would empty the fund pretty quickly) and you still want to charge some management fees. Enter funding-hungry European banks. You might be surprised to learn the following: the world’s largest bank (by assets) is – French...

The US Government Is About To Shut Down Following Continuing Resolution Fiasco

Last night a GOP controlled Congress passed the Continuing Resolution bill which would provide funding for the government past the end of the Sept 30 fiscal year end. To pass it, Boehner invoked clauses which antagonized Democrats even more. Which is why now that the bill is in the Senate, it appears to have hit a dead end. As Goldman explains, today the bill will likely die, which means that with a one week recess coming up from the government next week, government is about to be well and truly shut down.

Senate Has Enough Votes To Defeat Continuing Resolution: Government Shutdown Imminent

As predicted:

• SENATE HAS VOTES TO DEFEAT HOUSE SPENDING PLAN; VOTE CONTINUES - BBG

Next up: headline risk and a push for Bernanke to print more. Why? Because when all is said and done the market will have plunged (even more) on the realization there is no fiscal stimulus coming in the next two years, despite the Chairman's clever gambit.

Europe Closes On 'Bailouty' Hope As Rumor Of Major Fund Liquidating PMs Grows Louder

The unerring belief that powers greater than mere mortals will vanquish the enemy of lack-of-bank-capital this weekend was enough to spur a significant turnaround in European stocks and spreads as they headed towards the close. While optically, the strength in senior financials spreads appears wondrous, we note that subordinated spreads are underperforming seniors significantly (when one would expect them to be outperforming if all was really well) and broad equity indices (and credit indices) only managed to get back to marginally unchanged. Sovereign risk remains notably wider still - which has the smell of a bailout/nationalization risk-transfer to it in our ever so humble opinion.

Some Paradoxes Worth Thinking About...

Why are the only people smart enough to trick a bank's risk system, so stupid that they lose billions of dollars? The odds that the only rogue traders that exist have phenomenal losses are very small. Some must have small losses, and some must have profits that quickly get converted from "rogue" profits into bonus eligible profits. Why are so many capitalists and "free-market" champions calling for government support? Many of the same people who rant against government regulations and interference, are happy to demand handouts, subsidies, and "helpful" intervention. Can you really be a commucapitalist? I guess if capitalist is redefined as self-serving, this wouldn't be a paradox.

Here Is The Latest Greek Bailout Rumor

Yawn:

• EU PLANS GREEK BUYBACK PROGRAM OPEN TO ALL DEBT, ALL INVESTORS
  
• EU GREEK BUYBACK PLAN FROM DOCUMENT OBTAINED BY BLOOMBERG NEWS

Fade.





Another Soros-funded AG (& Former Rand Paul Opponent) Jack Conway Threatens the Big Bank Settlement






Attempts to Suppress Volatility Could Lead to a Crash in Existing Economic and Political Systems

In The News Today

September 22, 2011, at 10:02 pm
by Jim Sinclair in the category In The News |  Print This Post |  Email This Post

Jim Sinclair’s Commentary

Operation Twist will not have any significant impact on unemployment and the present softening economy. It will set up a situation for which only QE has application. It is that fact that support gold’s bullish trend.

Will Chinese Twist Fight the Fed?
By TOM ORLIK
SEPTEMBER 23, 2011
China doesn’t have much to fear from the latest twist in U.S. monetary policy. But the U.S. might have something to fear from China’s response.
China probably won’t face a new wave of destabilizing hot money into its financial system. "Operation Twist" doesn’t involve printing more money, but only a shift in $400 billion of the Federal Reserve’s holdings of U.S. Treasury’s from the short to the long end of the curve.
Even if there is more cash seeking higher returns, expectations of yuan appreciation—a major reason to bring hot money into China—have collapsed. Forward markets are pricing in a slight depreciation of the yuan against the dollar in the year ahead. China’s equity markets and property sector, the most likely destinations for hot-money inflows, are also in the doldrums.
That doesn’t mean the move will leave China unaffected. With $1.17 trillion in U.S. Treasurys in July and tens of billions more to invest every month, the Fed’s latest move confronts China with the unappealing prospect that returns on its foreign-exchange reserves, already low, will fall still further.
But Beijing has options. As the Fed moves its portfolio to the long end of the curve, pushing down long-term interest rates, the relative appeal of short-term debt is increased. China might be tempted to do a "reverse twist" and move to the short end—muting the impact of the Fed’s twist.
More…

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