Hyperinflation Comes To Iran
Hyperinflation has struck again, this time at ground zero of the most sensitive geopolitical conflict in ages: Iran. EA WorldView reports:And so the opportunity cost for the Ahmedinejad regime to preserve its status quo gradually grinds to zero, as the entire economy implodes (courtesy of a few strategic financially isolating decisions) making further escalation virtually inevitable, in a 100% replica of the US-planned Japanese escalation that led to the Pearl Harbor attack, and gave America the green light to enter the war.An EA source reports that a relative in Tehran ordered a washing machine for 400,000 Toman (about $240) this week. When he went to the shop the next day, he was told that --- amidst the currency crisis and rising import costs --- the price was now 800,000 Toman (about $480). Another EA source says that the price of an item of software for a laptop computer has tripled from 50,000 Toman to 150,000 Toman within days.
Hyperdeflation Vs Hyperinflation: An Exercise In Centrally Planned Chaos Theory
One of the recurring analogues we have used in the past to describe the centrally planned farce that capital markets have become and the global economy in general has been one of a increasingly chaotic sine wave with ever greater amplitude and ever higher frequency (shorter wavelength). By definition, the greater the central intervention, the bigger the dampening or promoting effect, as central banks attempt to mute or enhance a given wave leg. As a result, each oscillation becomes ever more acute, ever more chaotic, and increasingly more unpredictable. And with "Austrian" analytics becoming increasingly dominant, i.e., how much money on the margin is entering or leaving the closed monetary system at any given moment, the same analysis can be drawn out to the primary driver of virtually everything: the inflation-vs-deflation debate. This in turn is why we are increasingly convinced that as the system gets caught in an ever more rapid round trip scramble peak deflation to peak inflation (and vice versa) so the ever more desperate central planners will have no choice but to ultimately throw the kitchen sink at the massive deflationary problem - because after all it is their prerogative to spur inflation, and will do as at any cost - a process which will culminate with the only possible outcome: terminal currency debasement as the Chaotic monetary swings finally become uncontrollable. Ironically, the reason why bring this up is an essay by Pimco's Neel Kashkari titled simply enough: "Chaos Theory" which looks at unfolding events precisely in the very same light, and whose observations we agree with entirely. Furthermore, since he lays it out more coherently, we present it in its entirety below. His conclusion, especially as pertains to the ubiquitous inflation-deflation debate however, is worth nothing upfront: "I believe societies will in the end choose inflation because it is the less painful option for the largest number of its citizens. I am hopeful central banks will be effective in preventing runaway inflation. But it is going to be a long, bumpy journey until the destination becomes clear. This equity market is best for long-term investors who can withstand extended volatility. Day traders beware: chaos is here to stay for the foreseeable future." Unfortunately, we are far less optimistic that the very same central bankers who have blundered in virtually everything, will succeed this one time. But, for the sake of the status quo, one can hope...Corzine Sued by Montana Farmers Over MF Global Futures Account Money
Following in the footsteps of AIG and Lehman Brothers collapse, money at
least as far as the public is concerned vanishes without a trace ($1.2
billion but likely a lot more). The lawyers enter the fray once the cloud
of uncertainty around hypothecation dissipates. Yet somehow despite a lot
of official finger pointing and extensive legal wrangling investors still
find themselves holding the...
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Blow Off Top In Gold Will Stick Out Like A Sore Thumb
The last three tops in gold, often implied as unstable parabolic moves by the headlines, have been declining in intensity since 2006. Even 2006's 4.15 sigma up thrust takes on an appearance of a mere speed bump relative 1980's mountainous, 5.61 sigma advance. November 2.80 sigma peak, which has many screaming top even louder than 2006, looks exceptional tame. A blow off top in gold is coming. ... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]
As Centralized Systems Devolve, The Solution Is Localism
Those who depend on a strategy of pleading with central authorities to continue funding at old levels are doomed to disappointment--all systems follow an S-Curve of rapid expansion, stasis and decline. The Central State is no different. The solution is localism. By creating cheap housing with its own modest tax resources, then the village attracts young families, whose children will keep the village school from closing, and the commerce brought to the village and its post office will keep it above the "closure" threshold. Passively hoping that centralized concentrations of wealth and power will return to pre-eminence is a losing strategy, the equivalent of a cargo cult ritualistically hoping for a return to World War II-era bounty. Focusing local resources on obvious bootstrap solutions is the winning strategy, not just in the U.S. but globally.3 Year Auction Prices At Record High Bid To Cover, Direct Bidders At 2 Year Low, Even As Debt Ceiling Breached Again
We may well have reached the point where every single bond auction has to be a new record in something, or else (the else being the point where a reversal in yields becomes self-sustaining with trillions and trillions of ZIRP cash sloshing around and the smallest increases in rates could wreak havoc within the entire system)... Today, the record in the just completed $32 billion 3 Year auction was the record high Bid To Cover, which came at an all time high, obviously, 3.73, compared to 3.624 before, and 3.314 last 12 auction average. The bond priced at 0.37% (44.86% allotted at the high), with the low yield coming at a tiny 0.276%. Naturally, there always is more than meets the eye, with the bulk of the demand coming from Dealers, who took down 56.1% in the never-ending game of repo-mediated ponzi, while Indirects were accountable for just 38.%, and Directs coming at a 2 year low of 5.3%: this should probably be a warning sign to some. Probably a far more important question is why the Treasury is issuing debt in the first place: as Zero Hedge first (and so far only) pointed out last week, the Treasury has, or rather had, a $25 million buffer before it breaches the ceiling - in other words no capacity for gross issuance (not even net of the $77 billion Fed remittance). Simply said, this means every auction means more plunder from government retirement accounts - a replay of what happened in late July. Obviously, at some point the president will make it a point to push the interim debt ceiling higher, just probably not before the state of the union speech.
Presenting The World's Most Profitable Hedge Fund Ever: FRBNY LP
When one has $2.9 trillion in costless AUM (because if the cost is breached, one just doubles down, especially if one prints the money), it is not all that surprising to generate $77 billion in profits in one year (think of the hubris emanating from that particular year end letter), or even $385 billion in profits in the past 10 years. Yet it is still a stunning number considering the rest of the $2 trillion hedge fund industry lost about 10% in 2011. Which is why we all bow down to what is without doubt the world's most lucrative and profitable generator of P&L in history: the Federal Reserve, which for the second year in a row has printed (pun intended) over $70 billion in profits. And who is the lucky LP? Why the US Treasury of course, which for the second year in a row will pocket all the proceeds from PM Ben's immaculate trading perfection. Of course, there is one caveat for this spotless performance sheet: what happens when Fed interest expense surpasses interest income? But why worry - everyone tells us this can never happen, so it obviously can never happen...
Disappearing Ink
What would a Collective Action clause achieve? Let’s say they institute a 75% agreement clause, so that if at least 75% of the holders of anyindividual bond issue, agree to the terms, then all bondholders are forced to accept the new terms. Will adding a Collective Action Clause make investors agree to the changes? I don’t see why that would happen. If you didn’t agree to the plan being proposed by Greece now, why would you agree to the plan if all they have done is institute a Collective Action Clause. You wouldn’t, so you would still have the same group of holdouts. What happens if a bond doesn’t get 75% agreement? Then those that agree get the new bonds, and those that don’t agree keep the old bonds. Same as now. But if it is the same as now, why bother? Maybe they need to make it 50% agreement? Or 10%? In any case, there may be individual bonds that don’t meet the Collective Action threshold. For those bonds, it is exactly the same as it is now – except that the government changed the rules retroactively and jammed it down your throats (but more on that later). What happens if 80% of the holders of a particular bond agree? Then all bondholders are subject to the agreement. Well, guess what, that is a Credit Event!Visualize: All The World's Gold
01/10/2012 - 07:04
by David Schectman, MilesFranklin.com:
It might come as a surprise, but the single most difficult concept to impart to my readers, and friends, is that gold is NOT an investment. No matter how many times I mention this in the daily, it seems to fall on (mostly) deaf ears. Let me be clear about this – GOLD IS THE HIGHEST QUALITY FORM OF MONEY! Money is not an investment. One of the most important functions that money can play is to hold its value. If money does not hold its value, then you have to spend it quickly and cannot set it aside and save it.
If your great grandfather set aside a $20 Saint Gaudens (one ounce) and a $20 bill in 1933 for his great grandchildren, today the $20 bill would be worth – well, $20 and the Saint Gaudens (even in the lowest circulated grade) would be worth at least $1,650. Which form of “money” served as “a store of value?”
At the peak of gold’s last bull market, in early 1980, if your father set aside a Saint Gaudens and $850 US dollars for his children, today the $850 would be worth – well, $850 and the Saint Gaudens would be worth at least $1,650.
Read More @ MilesFranklin.com
How the European financial crisis could unfold and its global impact
from FinancialSense.com:
Jim
is pleased to welcome back Bud Conrad from Casey Research to discuss
the ongoing European financial crisis and its implications for Europe
and the rest of the world. He also sees more money-printing ahead,
followed by higher gold prices.
Bud is chief economist for Casey Research and author of the book Profiting from the World’s Economic Crisis. Bud holds a Bachelor of Engineering degree from Yale and an MBA from Harvard. He has held positions with IBM, CDC, Amdahl, and Tandem. Currently, he serves as a local board member of the National Association of Business Economics and teaches graduate courses in investing at Golden Gate University. Bud, a futures investor for 25 years and a full-time investor for a decade, is also a regular lecturer for American Association of Individual Investors. In addition, he produces original analysis for Casey Research, including unique charts and research on the economy and investment markets. Bud’s commentary may be found in The Casey Report every month.
Click Here to Listen to the Interview
It might come as a surprise, but the single most difficult concept to impart to my readers, and friends, is that gold is NOT an investment. No matter how many times I mention this in the daily, it seems to fall on (mostly) deaf ears. Let me be clear about this – GOLD IS THE HIGHEST QUALITY FORM OF MONEY! Money is not an investment. One of the most important functions that money can play is to hold its value. If money does not hold its value, then you have to spend it quickly and cannot set it aside and save it.
If your great grandfather set aside a $20 Saint Gaudens (one ounce) and a $20 bill in 1933 for his great grandchildren, today the $20 bill would be worth – well, $20 and the Saint Gaudens (even in the lowest circulated grade) would be worth at least $1,650. Which form of “money” served as “a store of value?”
At the peak of gold’s last bull market, in early 1980, if your father set aside a Saint Gaudens and $850 US dollars for his children, today the $850 would be worth – well, $850 and the Saint Gaudens would be worth at least $1,650.
Read More @ MilesFranklin.com
How the European financial crisis could unfold and its global impact
from FinancialSense.com:
Jim
is pleased to welcome back Bud Conrad from Casey Research to discuss
the ongoing European financial crisis and its implications for Europe
and the rest of the world. He also sees more money-printing ahead,
followed by higher gold prices.Bud is chief economist for Casey Research and author of the book Profiting from the World’s Economic Crisis. Bud holds a Bachelor of Engineering degree from Yale and an MBA from Harvard. He has held positions with IBM, CDC, Amdahl, and Tandem. Currently, he serves as a local board member of the National Association of Business Economics and teaches graduate courses in investing at Golden Gate University. Bud, a futures investor for 25 years and a full-time investor for a decade, is also a regular lecturer for American Association of Individual Investors. In addition, he produces original analysis for Casey Research, including unique charts and research on the economy and investment markets. Bud’s commentary may be found in The Casey Report every month.
Click Here to Listen to the Interview
from The Daily Bell:
Growth is a priority in eurozone, say leaders … France and Germany have said boosting economic growth across Europe was a priority in efforts to stem the debt crisis showing signs of spreading across the 17 euro currency countries. After a Berlin meeting with French President Sarkozy, German Chancellor Angela Merkel urged Greece and its private creditors to agree to the restructuring of the country’s national debt if it is to receive its next batch of bailout cash. In October the eurozone agreed a second handout for Greece that involves the country’s private creditors accepting a 50% reduction in the value of their holdings of Greek debt. She added that both she and Mr Sarkozy want Greece to receive the money. “We want for Greece to remain in the eurozone,” she said. – UK Telegraph
Dominant Social Theme: Nothing else can act as an engine of job growth more effectively than big government.
Free-Market Analysis: Thank goodness Germany’s Angela Merkel and France’s Nicolas Sarkozy have agreed to save the Western world by creating more jobs. Unemployment is anathema to them and now they have vowed to provide people in Europe with the work they need. They also want Greece to stay in the Eurozone.
Read More @ TheDailyBell.com
Illinois Debt Downgraded Again, Worst in Nation Growth is a priority in eurozone, say leaders … France and Germany have said boosting economic growth across Europe was a priority in efforts to stem the debt crisis showing signs of spreading across the 17 euro currency countries. After a Berlin meeting with French President Sarkozy, German Chancellor Angela Merkel urged Greece and its private creditors to agree to the restructuring of the country’s national debt if it is to receive its next batch of bailout cash. In October the eurozone agreed a second handout for Greece that involves the country’s private creditors accepting a 50% reduction in the value of their holdings of Greek debt. She added that both she and Mr Sarkozy want Greece to receive the money. “We want for Greece to remain in the eurozone,” she said. – UK Telegraph
Dominant Social Theme: Nothing else can act as an engine of job growth more effectively than big government.
Free-Market Analysis: Thank goodness Germany’s Angela Merkel and France’s Nicolas Sarkozy have agreed to save the Western world by creating more jobs. Unemployment is anathema to them and now they have vowed to provide people in Europe with the work they need. They also want Greece to stay in the Eurozone.
Read More @ TheDailyBell.com
Euro Falls to a 15-Month Low Against the Dollar.
Fed Will be Forced to Ease Again Soon, Morgan Stanley
US Economic Forecast for 2012 and the Election Year Cycle
Foreign Central Banks Cut US Treasuries
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