Saturday, October 29, 2011

The US Paper Dump Continues: Norway's Sovereign Wealth Fund Sells All Of Its US MBS Exposure

Two days ago we noted that foreigners are selling US paper at a record pace, whether to raise capital in a locked out liquidity environment like French banks, or to make a politicial statement, like China. Today we get the first confirmation to this from Norway's Sovereign Wealth fund, best known for its prediction that it would buy and hold Greek bonds in perpetuity back in September 2010. Just recall: "Norway has taken the view that [Greek bonds] will not [default]. The Greek holdings are particularly interesting because the consensus in the market is that they will at some point restructure or default." Well, about a year later it is now official that the best the Norway SWF can hope for is a 50% recovery. So what does it do? It proceeds to dump US paper. Mortgage Backed Securities first. Because if it announced that a sovereign wealth fund instead of buying into the biggest ponzi ever, we finally defecting from it, then all bets would be of. Bloomberg reports: "Norway’s $570 billion sovereign wealth fund sold all its holdings in U.S. mortgage-backed securities as part of a shift of its fixed-income portfolio.“We’ve reduced our holdings of mortgage-backed securities,” he said. “MBS has been taken out of our internal policy benchmark. This means that we don’t have mortgage-backed securities issued by Freddie Mac and Fannie Mae any longer." The stated reason for the dump: prepayment risk: "The debt was sold primarily because of the refinancing risk, he said. In the U.S., when a borrower refinances a mortgage it can cut short the maturity of the bond backed by the loan and reduce the expected interest over time, so-called prepayment risk." The real reason? Why shoring up capital of course. "The fund held 36 billion kroner ($6.6 billion) in bonds from Fannie Mae at the end of the second quarter and 11.5 billion kroner from Freddie Mac at the start of the year." And with the Fed telling us that almost $100 billion in US bonds and MBS having been sold in the past two months, one can be absolutely certain that i) it is not just MBS and ii) it is not just Norway.

Guest Post: Mario Draghi, Hawk For Whom?

With ex-­?goldmanite ‘super mario’ at the helm of the ECB, expect more money printing, a two tier banking system, and a bigger role for the IMF. After 8 years of Jean-Claude Trichet, the ECB gets a new face: the Italian Mario Draghi. From his recent statements in the press and elsewhere, many assume he will rather be a ‘hawk’ than a ‘dove’, meaning that Draghi will only print little money and will not lower interest rates aggressively. But a look into the past of this man makes us wonder: hawk for whom?

Another Weapon for OWS: Pull Your Money Out of BofA

the link is here.

Bank of America, Chris Whalen...and King World News

the link is here.




William K. Black...OWS...and Arresting the Banksters

Bill says that the current crisis is about seventy times larger than the S&L debacle, yet nobody has gone to jail over it. This 3:54 minute must watch video.
and the link is here.

A Letter from Goldman Sachs: Concerning Occupy Wall Street

The following is a letter released on October 17th by Lloyd Blankfein, the chairman of banking giant Goldman Sachs: Dear Investor:
Up until now, Goldman Sachs has been silent on the subject of the protest movement known as Occupy Wall Street. That does not mean, however, that it has not been very much on our minds. As thousands have gathered in Lower Manhattan, passionately expressing their deep discontent with the status quo, we have taken note of these protests. And we have asked ourselves this question:
How can we make money off them?
The answer is the newly launched Goldman Sachs Global Rage Fund, whose investment objective is to monetize the Occupy Wall Street protests as they spread around the world. At Goldman, we recognize that the capitalist system as we know it is circling the drain – but there’s plenty of money to be made on the way down.
 It's posted over at the website...and the link is here.

Saturday, October 29, 2011 – by Anthony Wile

Anthony Wile
This is a funny question to ask given that the dollar is in the dumps and the euro has had a strong rally since the region's top Eurocrats "saved" the euro this week. But in Europe, where some DB elves are traveling and especially in Spain, those in the banking community – especially at the commercial banking level – are beginning to speculate that the euro and the dollar may eventually reach parity.
The elite's promotional media guns, of course, are aimed at assuring us once again that the euro-crisis has finally been contained. But given the difference between what the Anglosphere elites say and DO, I'd humbly submit that the crisis is nowhere near finished and that the real objective may be to unwind both Europe and America preparatory to creating the kind of full-blown chaos necessary to usher in a world currency. Stranger things have happened – and we do live in strange times these days.
Of course, I don't have any crystal ball. And betting on a market as large as the currency market is generally a fool's errand. But it's an interesting question nonetheless for those with a stake in the overall global financial system (that means almost all of us).
Read More
Saturday, October 29, 2011 – by Staff Report

Libertarian financial tycoon Peter Schiff has done the free market yet another service by blasting socialist/communist Princeton Professor Cornel West virtually into the stratosphere with a brief debate moderated by CNN's Anderson Cooper on his "360" program.
Dr. West, a leading light of the progressive movement – someone who has worked for the most prestigious universities in the world – proved on-air that he didn't know the first thing about economic history and that his much-vaunted beliefs (endlessly quoted by the media) are based not on faulty analysis but simply on ignorance.
This cannot be denied. It is on video for anyone to see. One example is West's astoundingly ignorant claim that 1930's Depression in America was basically the result of the 1920s rampant capitalist speculation and greed.
Watch Video

Jim’s Mailbox

Hey Jim,

Oh, oh… it must be getting VERY close to game-over time for a central banker to be telling the truth!
"The last duty of a central banker is to tell the public the truth." –Federal Reserve Board Vice Chairman Alan Blinder, Nightly Business Report, 1994

Now if only Mr. Carney would be so forthcoming about the mobilization of Canada’s Gold Reserves, or rather Canada’s lack of them!

Best Wishes,

Bank of Canada Carney: QE’s stealth effect is a weaker currency
Bank of Canada Governor Mark Carney said central banks have been less than forthcoming in admitting that one of the primary aims of quantitative easing is to weaken their foreign-exchange rates, remarks that will fuel a tense debate over the effect the Federal Reserve’s policies have had in stoking the currency war.
“The unspoken issue with quantitative easing writ large is the exchange rate channel,” Mr. Carney said Wednesday evening in New York at a conference organized by the Economist magazine.
“The one area where central banks maybe haven’t been quite as up front is (that) the fact is that when you quantitative ease, the portfolio-balance effect, which is the main transmission mechanism, operates through the exchange-rate channel, just as it does when you lower interest rates,” Mr. Carney continued. “That is part of the stimulus you get.”
With its benchmark interest rate near zero, the Fed has created dollars to buy financial assets worth about $2-trillion (U.S.) to keep downward pressure on borrowing costs. That policy also has contributed to a weaker dollar, which has been a boon for U.S. exporters — and an irritant for some U.S. trading partners, such as Brazil and South Korea, that have had to cope with rising currencies.
But Mr. Carney’s objective was not to criticize quantitative easing. He said Fed chairman Ben Bernanke “has delivered” and the heavy criticism he has received “appears unwarranted.” Mr. Carney said the Fed’s two asset purchase programs — commonly referred to as quantitative easing, or QE — have been a “net positive for Canada,” even though the loonie surged above parity with the U.S. dollar.

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