I'm talking about gold as a commodity as it affects the rest of the real economy and it's not the same as oil.
In terms of gold as a safe haven, I get it! I GOT it! I'm making money off of it! (I bought it a while ago because I believe it will go to above $1150/ounce!).
Gold as save haven, sure, like what? I mean it's used in industrial production but it's just not as critical as oil is.
Roman gold coins were used as money in western europe for hundreds of years after the fall of Rome. When Lehman went under people all over the world started buying gold coins faster than the world could mint them.
At a certain point you have to consider that maybe you don't understand gold. If you want to see a kindred soul, read this.
Gold has positive value. It has had positive value for nigh-on 6000 years. That must make it the longest-lasting bubble in human history.
I don’t want to argue with a 6000-year old bubble. It may well be good for another 6000 years.
The idea that gold is just another commodity is an idea that is only a few decades old. If you think of gold as a commodity then you will never understand the attraction. You will wonder why gold isn't the same value as granite or sandstone. And you will continue to miss out on the bull market.
treasury bonds are the only asset class with negative correlation to most other asset classes.
His main criticism is that investors continue to define asset allocation in terms of the number of assets classes in a portfolio rather than by the correlations between those assets:
Chinese and Japanese investors have notoriously large positions in Treasuries, and may be the only investors today with truly diversified portfolios. If global growth accelerates and their domestic economies perform well, Treasuries are likely to underperform (especially given the associated weakness in the dollar). But those countries’ improving domestic cash flows would probably make up for their investment shortfall in Treasuries. If their economies turn down, the odds are that Treasuries will perform well (and the dollar strengthen), counterbalancing weakening domestic cash flows.
It is remarkable that perhaps today’s best examples of diversified portfolios, namely those held by the Chinese and Japanese, are criticised by the remainder of the investing world.
Investors should be trying to emulate their Chinese and Japanese overweight positions in Treasuries. Instead, Wall Street is striving to get the Chinese and Japanese to “diversify” like everyone else. In my opinion, the Chinese and Japanese should ignore the advice and stick with their Treasuries.
In all seriousness, why should we be buying U.S. debt when policy makers are not putting together policies to really grow/make strong the U.S. economy plus make sure later those T-bills are good?
and a host of blogs are saying the smart money took their profits over the stock market bubble, seeing a lot of reports on this period being yet another bubble and ran.
But I still also point to oil speculation. We're ignoring that and it's not matching at all the laws of supply & demand, which are still down and frankly having a bunch of hedge funds, flash traders, GS, JPMorgan Chase manipulate the most critical commodity for the real U.S. economy is not ok.
Gold as save haven, sure, like what? I mean it's used in industrial production but it's just not as critical as oil is.
Also, check out, I just wrote up some key findings, of the latest China vicious cycle of they lend to us, keep their Yuan pegged and we go into debt.
The dollar devaluation plus their peg ....wouldn't surprise me that this is a major influence on the latest on T-bills.
It's like the vicious cycle has eaten it's young. It's like cronos on the U.S. economy.
treasuries are today's "alternative asset". Richard Bernstein basically called out investors and said we haven't learned the lessons of the last two years. He says that investors should instead of criticizing Japan and China's investments in treasuries we should be emulating them.
I wrote it up when they formed it...but it's possible they might get some bipartisan participation, which would be very nice to see (without some dribble compromise in common sense and sane policy).
So, let's see if they can build up a real voice and power..
lord knows we need it. Defazio, Kaptur need more Reps to come clean and join forces with them to get some real power.
While it's fantastic they speak out, the problem is Congressional leadership is clearly in the corporate agenda camp on a large range of issues...(those being anything with $$ in it). ;)
I've seen you comment many times on EP, so can I recommend creating an account? You an track your comments and bypass the CAPTCHA that way.
Also, can you format your links?
Finally, I just read your post and frankly I know this is a very tough question to answer, so I don't blame anyone for not having an answer...
but the question is what would have happened at that time if the Fed did not issue those foreign currency swaps?
The reason I'm asking is the international finance world is really borderless and they are assuredly using the U.S. dollar as a reserve currency as well. So, I'm wondering what the ramifications were at the time.
Believe me, I am just not into at all bailing out foreign banks or destroying the U.S. dollar, I'm just wondering, because we're an international reserve currency what kind of global financial ramifications would that have had if it wasn't done, right at that moment?
Simple as they had to write down some losses or would it have implied some sudden value dollar spike to the point it killed our exports and real economy?
I think I understand the BIS paper and amendment well enough actually.
I'm really pointing to international interactions, or contagion, which experts in international finance, global banking admit they have no clue on.
Come join us for more complete discussion and posting. This crap is hard!
Currency swaps get confusing, I know, especially when countries holding debt in one currency need to manipulate their own. But after reading this paper from the BIS, what I come away with is an elegant explanation of one chain reaction event in a well-executed coup to set off a global crisis, which attempts to lend academic objectivity to the notion of a U.S. dollar shortage as the pivotal event which evoked a pivotal response by the Federal Reserve.
http://letthemfail.us/archives/2366
To answer your question, what if the Fed had NOT engaged in these liquidity swaps?
Perhaps the necessary response to place this entire pyramid of unregulated risk insurance, leveraged to more than 14 times the entire world's GDP, through a Glass Steagall type bankruptcy procedure to separate the chaff from the wheat.
Better that, than to further bankrupt the already bankrupt US government, as Bernanke did. Grayson's intent is good, but irrelevant. Neither the dollar, nor the country, could ever survive the next counter-party run on dollar denominated derivative risk.
Arguably, we won't (that is didn't) survive this one.
This is what his economic advisers are probably telling him particularly Larry Summers.
If we get a second "jobs bill" it will laden with all kinds of "tax incentives" including a payroll tax credit.
But the thing I don't get and maybe someone can explain it to me:
If there is NO demand for a business' product how is that business will be able to hire anyone even with a payroll tax credit? There is a huge issue of cash flow (remember that). If there is no cash coming through the door in terms of sales then there definitely no cash to go out the door in terms of to pay workers.
But note! While Ed is calling it the Progressives, DeFazio has a new gang, the Populists! I think that's great because no offense to anyone who believes they are a Progressive, that title has been co-opted by more than one special interest agenda that doesn't make a whole lot of sense economically.
Anyway, DeFazio is probably my favorite House Rep. He doesn't lay down. Since he's now head of the Populist caucus, I guess we should be on the look out more on what they are up to.
Read this late post at NC. Grayson may be contagious and more of the Dems are finally growing a pair.
Read the comments too. For instance, here's what Jesse had to say:
Firing Timmy and Larry? A consummation devoutly to be wished. Although I shudder to think what foul beasts might be scraped up to serve in their place.
Obama is hopeless. The US is in thrall to a group of financial interests that control it from top to bottom. How this will be resolved, God only knows.
For Pete's sake, we need more honest dialogue from our elected officials.
Kudos, this is your best effort since I have been following the site. This should go viral!
It appears that we are finally getting somewhere in the vicinity of the real nitty gritty of what is and has been going on. I applaud Grayson's persistence, regardless of the repercussions for the US and global economy.
For me, it is already a fait accomplis...we the sheeple are royally screwed. There is no "soft landing" out of this crisis for those of us at the bottom of the pyramid. The only real "danger" I can see in pursuing the Grayson amendment is that the totality of the fraud itself may be exposed! The old saying goes "the bigger they are, the harder they fall". So, the downside fear is much greater for the TPTB, the bondholders, the hedge funders, and the many other types of capitalist greed bastards, as compared to we, the great unwashed proles.
The truth must be told. Only then can those of us who care about the general welfare of the human race begin to implement a sustainable future.
Most of the fed bank district heads are on the same page so finding 5 to vote for this won't be a problem its not even a majority and Geithner might as well be still back at the Fed.
This is part of the tens of trillions in monopoly money the Fed has created and kept off the books.
We are watching the collapse of the neo-liberal pursuit of globalization and we must return to a very locally based type of economy and community. It is the only sustainable path available.
SIG-TARP nailed it. Treasury (think former NY Fed president in tandem with former GS CEO) took the position "We can't negotiate, it's an emergency!" This reminds me of the distressed phone call people sometimes receive from poor relatives: "They're going to evict us if we don't come up with $500 by tomorrow." My reaction to this kind of call would be "And how long have you known you were facing eviction? Don't you read your mail?"
Did Tim Geithner and Hank Paulson just learn of AIG's problem at the last minute? Did Paulson suddenly ask, "Gosh, what's a counter-party?" And "How much did you say you need before the bank takes the farm?" Bear in mind, these are smart guys. The whole thing smacks of either collusion or extortion.
Ben Bernancke's account makes it sound like extortion, but he's a very smart guy who is supposed to pay attention to Wall Street and the banking system (not to mention non-bank funancial institutions).
Let's hope the next crisis does not come as a complete surprise to these people. Certainly we expect a better response than, say, Stalin's when he learned that Germany had invaded.
Frank T.
I'm talking about gold as a commodity as it affects the rest of the real economy and it's not the same as oil.
In terms of gold as a safe haven, I get it! I GOT it! I'm making money off of it! (I bought it a while ago because I believe it will go to above $1150/ounce!).
The Paul-Grayson Amendment to audit the Fed just passed the House.
On to the Senate.
Roman gold coins were used as money in western europe for hundreds of years after the fall of Rome. When Lehman went under people all over the world started buying gold coins faster than the world could mint them.
At a certain point you have to consider that maybe you don't understand gold. If you want to see a kindred soul, read this.
The idea that gold is just another commodity is an idea that is only a few decades old. If you think of gold as a commodity then you will never understand the attraction. You will wonder why gold isn't the same value as granite or sandstone. And you will continue to miss out on the bull market.
treasury bonds are the only asset class with negative correlation to most other asset classes.
His main criticism is that investors continue to define asset allocation in terms of the number of assets classes in a portfolio rather than by the correlations between those assets:
RebelCapitalist.com - Financial Information for the Rest of Us.
In all seriousness, why should we be buying U.S. debt when policy makers are not putting together policies to really grow/make strong the U.S. economy plus make sure later those T-bills are good?
What am I missing here (if nothing)?
and a host of blogs are saying the smart money took their profits over the stock market bubble, seeing a lot of reports on this period being yet another bubble and ran.
But I still also point to oil speculation. We're ignoring that and it's not matching at all the laws of supply & demand, which are still down and frankly having a bunch of hedge funds, flash traders, GS, JPMorgan Chase manipulate the most critical commodity for the real U.S. economy is not ok.
Gold as save haven, sure, like what? I mean it's used in industrial production but it's just not as critical as oil is.
Also, check out, I just wrote up some key findings, of the latest China vicious cycle of they lend to us, keep their Yuan pegged and we go into debt.
The dollar devaluation plus their peg ....wouldn't surprise me that this is a major influence on the latest on T-bills.
It's like the vicious cycle has eaten it's young. It's like cronos on the U.S. economy.
treasuries are today's "alternative asset". Richard Bernstein basically called out investors and said we haven't learned the lessons of the last two years. He says that investors should instead of criticizing Japan and China's investments in treasuries we should be emulating them.
RebelCapitalist.com - Financial Information for the Rest of Us.
I wrote it up when they formed it...but it's possible they might get some bipartisan participation, which would be very nice to see (without some dribble compromise in common sense and sane policy).
So, let's see if they can build up a real voice and power..
lord knows we need it. Defazio, Kaptur need more Reps to come clean and join forces with them to get some real power.
While it's fantastic they speak out, the problem is Congressional leadership is clearly in the corporate agenda camp on a large range of issues...(those being anything with $$ in it). ;)
I've seen you comment many times on EP, so can I recommend creating an account? You an track your comments and bypass the CAPTCHA that way.
Also, can you format your links?
Finally, I just read your post and frankly I know this is a very tough question to answer, so I don't blame anyone for not having an answer...
but the question is what would have happened at that time if the Fed did not issue those foreign currency swaps?
The reason I'm asking is the international finance world is really borderless and they are assuredly using the U.S. dollar as a reserve currency as well. So, I'm wondering what the ramifications were at the time.
Believe me, I am just not into at all bailing out foreign banks or destroying the U.S. dollar, I'm just wondering, because we're an international reserve currency what kind of global financial ramifications would that have had if it wasn't done, right at that moment?
Simple as they had to write down some losses or would it have implied some sudden value dollar spike to the point it killed our exports and real economy?
I think I understand the BIS paper and amendment well enough actually.
I'm really pointing to international interactions, or contagion, which experts in international finance, global banking admit they have no clue on.
Come join us for more complete discussion and posting. This crap is hard!
Geithner and Summers are certainly not CHANGE. There are from the same school of thought that got us into this mess.
What it comes down to is fear of pissing off the financial oligarchy? WH administrations believe in placating the financial oligarchy.
RebelCapitalist.com - Financial Information for the Rest of Us.
Currency swaps get confusing, I know, especially when countries holding debt in one currency need to manipulate their own. But after reading this paper from the BIS, what I come away with is an elegant explanation of one chain reaction event in a well-executed coup to set off a global crisis, which attempts to lend academic objectivity to the notion of a U.S. dollar shortage as the pivotal event which evoked a pivotal response by the Federal Reserve.
http://letthemfail.us/archives/2366
To answer your question, what if the Fed had NOT engaged in these liquidity swaps?
Perhaps the necessary response to place this entire pyramid of unregulated risk insurance, leveraged to more than 14 times the entire world's GDP, through a Glass Steagall type bankruptcy procedure to separate the chaff from the wheat.
Better that, than to further bankrupt the already bankrupt US government, as Bernanke did. Grayson's intent is good, but irrelevant. Neither the dollar, nor the country, could ever survive the next counter-party run on dollar denominated derivative risk.
Arguably, we won't (that is didn't) survive this one.
and that's a huge reason to Stimulate an economy, to create demand.
Did you see Rep DeFazio call for the firing of Larry Summers and Tim Geithner?
It's pretty obvious to me, but I wrote about this in the first Stimulus, that they needed to target jobs by directly creating jobs.
Tax cuts obviously do not work. It's pretty nuts, when people do not have any money, a tax cut on zero means nothing.
about reducing deficit until we pull troops out of Afghanistan AND drop this idea of extending TARP.
RebelCapitalist.com - Financial Information for the Rest of Us.
This is what his economic advisers are probably telling him particularly Larry Summers.
If we get a second "jobs bill" it will laden with all kinds of "tax incentives" including a payroll tax credit.
But the thing I don't get and maybe someone can explain it to me:
RebelCapitalist.com - Financial Information for the Rest of Us.
But note! While Ed is calling it the Progressives, DeFazio has a new gang, the Populists! I think that's great because no offense to anyone who believes they are a Progressive, that title has been co-opted by more than one special interest agenda that doesn't make a whole lot of sense economically.
Anyway, DeFazio is probably my favorite House Rep. He doesn't lay down. Since he's now head of the Populist caucus, I guess we should be on the look out more on what they are up to.
Read this late post at NC. Grayson may be contagious and more of the Dems are finally growing a pair.
Read the comments too. For instance, here's what Jesse had to say:
For Pete's sake, we need more honest dialogue from our elected officials.
Kudos, this is your best effort since I have been following the site. This should go viral!
It appears that we are finally getting somewhere in the vicinity of the real nitty gritty of what is and has been going on. I applaud Grayson's persistence, regardless of the repercussions for the US and global economy.
For me, it is already a fait accomplis...we the sheeple are royally screwed. There is no "soft landing" out of this crisis for those of us at the bottom of the pyramid. The only real "danger" I can see in pursuing the Grayson amendment is that the totality of the fraud itself may be exposed! The old saying goes "the bigger they are, the harder they fall". So, the downside fear is much greater for the TPTB, the bondholders, the hedge funders, and the many other types of capitalist greed bastards, as compared to we, the great unwashed proles.
The truth must be told. Only then can those of us who care about the general welfare of the human race begin to implement a sustainable future.
Most of the fed bank district heads are on the same page so finding 5 to vote for this won't be a problem its not even a majority and Geithner might as well be still back at the Fed.
This is part of the tens of trillions in monopoly money the Fed has created and kept off the books.
Tom, I thought I might interest you to read this article from George Monbiot.
We are watching the collapse of the neo-liberal pursuit of globalization and we must return to a very locally based type of economy and community. It is the only sustainable path available.
SIG-TARP nailed it. Treasury (think former NY Fed president in tandem with former GS CEO) took the position "We can't negotiate, it's an emergency!" This reminds me of the distressed phone call people sometimes receive from poor relatives: "They're going to evict us if we don't come up with $500 by tomorrow." My reaction to this kind of call would be "And how long have you known you were facing eviction? Don't you read your mail?"
Did Tim Geithner and Hank Paulson just learn of AIG's problem at the last minute? Did Paulson suddenly ask, "Gosh, what's a counter-party?" And "How much did you say you need before the bank takes the farm?" Bear in mind, these are smart guys. The whole thing smacks of either collusion or extortion.
Ben Bernancke's account makes it sound like extortion, but he's a very smart guy who is supposed to pay attention to Wall Street and the banking system (not to mention non-bank funancial institutions).
Let's hope the next crisis does not come as a complete surprise to these people. Certainly we expect a better response than, say, Stalin's when he learned that Germany had invaded.
Frank T.
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