Saturday, November 27, 2010

HES Radio: World Financial Report

The World Financial Report brings you timely information on the worlds most exciting markets like oil, precious metals, currencies, commodities and hard money markets like very rare color diamonds and collectibles. The World Financial Report makes predictions and gives investment advice and has been very successful in identifying trends in the marketplace.

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The Economist - 27 November 2010

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Why low interest rates do not help the housing market and heavily benefit investment banks – 40 percent of Americans have mortgage rates higher than 6

Poverty is an anomaly to rich people: it is very difficult to make out why people who want dinner do not ring the bell. –Walter Bagehot Over the weekend it was leaked that US authorities were gearing up to bring insider trading charges against investment banks, consultants, and a wide net of Wall Street players. We’ve gone down this road a few times since the crisis started and many of the crony banking institutions merely settled out of court paying the government off with taxpayer money. It’ll be interesting to see that going on our fourth year of the crisis whether anyone will be charged criminally for what has become the biggest Ponzi apparatus known to humankind. Wall Street simply doesn’t understand how so many people can be angry about their record profits as they push people out of their homes through rocket dockets like those in Florida. If you are poor or middle class then not paying your bills is sufficient for you to be “thrown out on the street with prejudice” but for the big banking system it merely means more generous bailouts. And those being thrown out are also selected with bias; for example how is it that many non-payers in expensive California homes have more leeway to ignore paying their mortgage while a person in Florida with a $90,000 loan is ushered out in a McDonalds like court system? If you can rewind to 2007 when the proverbial debt hit the fan, most of the bailouts were pushed with the pretext of “saving” the housing market. If that was the mission, it has been an abject failure. (more)

Next Debt Crisis May Start in Washington: Bair

The US needs to take urgent action to cut its debt in order to prevent the next financial crisis, which may start in Washington, Sheila Bair, chair of the Federal Deposits Insurance Corp. (FDIC) wrote in an editorial in the Washington Post.

The federal debt has doubled over the past seven years, to almost $14 trillion, and the growth is a result of both the financial crisis and the government's "unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit," Bair wrote.

Retiring baby boomers will impact government spending heavily and this year, combined spending on Social Security, Medicare and Medicaid are expected to make up 45 percent of primary federal spending, compared with 27 percent in 1975, she explained.

"Defense spending is similarly unsustainable, and our tax code is riddled with special-interest provisions that have little to do with our broader economic prosperity," Bair wrote. "Overly generous tax subsidies for housing and health care have contributed to rising costs and misallocation of resources." (more)

Currency Crisis! So What Happens If The Dollar And The Euro Both Collapse?

Some analysts are warning that the U.S. dollar is in danger of collapse because of the exploding U.S. government debt, the horrific U.S. trade deficit and the new round of quantitative easing recently announced by the Federal Reserve. Other analysts are warning the the euro is in danger of collapse because of the very serious sovereign debt crisis that is affecting nations such as Greece, Portugal, Ireland, Italy, Belgium and Spain. So what happens if the dollar and the euro both collapse? Well, it would certainly throw the current world financial order into a state of chaos, but what would emerge from the ashes? Would the nations of the world go back to using dozens of different national currencies or would we see a truly global currency emerge for the very first time?

Up until recently, the idea of a world currency was absolutely unthinkable for most people. In fact, the notion that all of the major nations around the globe would agree to a single currency still seems far-fetched to most analysts. However, if enough "chaos" is produced by a concurrent collapse of the U.S. dollar and the euro, would that be enough to get the major powers around the world to agree to a new financial world order? (more)

A Hedge Fund Republic?

Earlier this month, I offended a number of readers with a column suggesting that if you want to see rapacious income inequality, you no longer need to visit a banana republic. You can just look around.

My point was that the wealthiest plutocrats now actually control a greater share of the pie in the United States than in historically unstable countries like Nicaragua, Venezuela and Guyana. But readers protested that this was glib and unfair, and after reviewing the evidence I regretfully confess that they have a point.

That’s right: I may have wronged the banana republics.

You see, some Latin Americans were indignant at what they saw as an invidious and hurtful comparison. The truth is that Latin America has matured and become more equal in recent decades, even as the distribution in the United States has become steadily more unequal. (more)

Surge Of Inexplicable After Hours Selling Takes Gold Volatility Index To All Time Low

In addition to the rout in the ES, VIX and GC which we pointed out earlier, there were some additional fireworks behind the scenes in today's after hours session. The CBOE Gold Volatility Index, the ^GVZ plunged by the most in over a year, as the index hit an all time low of 15.92 without the underlying making much of a notable move. The most curious aspect of the trade was that the entire dump occured in the AH session. Many were left scratching their heads over what caused this monstrous unwind in long vol positions: was this the unwind of a massive long ES/short GC arb? We don't know, although if rumors that a major fund is planning to stand for delivery of Dec gold turn out to be true, then obviously someone got confirmation today. Keep a close eye out on the GVZ. Should this price level persist on Monday, then the front futures contract will likely surge. (more)

US Dollar Collapse Unlikely: Rising Dollar In The Short Term

There’s been a lot of talk about the death of the U.S. Dollar lately.

Ben Bernanke’s seemingly endless money printing campaign may indeed spell doom for dollar holders in the long run. In fact, some investors are convinced the dollar is going the way of the do-do bird.

Famous investors Jim Rogers, Marc Faber, and Peter Schiff think the dollar is eventually headed down the economic toilet.
Judging by recent currency trading action, they may be right…

U.S fiscal uncertainty put the greenback under pressure for most of the summer. The U.S. Dollar Index has been sliding steadily from June all the way through early November.

But that’s just part of the story…

The falling dollar has pushed commodity prices skyward. Precious metals are surging and oil was pushing $90 not long ago. Since the dollar is the reserve currency, nearly everything priced in it has seen quite a jump.

Given all the negative news, one would think a dollar collapse is imminent. Such a scenario would send the price of nearly everything into the stratosphere in a matter of weeks. (more)

China Commodity Bourses Raise Fees to Curb Farm-Product, Metal Speculation

China, where the world’s four biggest agricultural contracts are traded, will raise costs to buy and sell farm-product and metals futures as part of a government effort to limit speculation and tame inflation.

The Dalian Commodity Exchange said today it will scrap a measure that lets some investors pay half the normal fees for contracts bought and sold on the same day and will cease all other discounts as of Jan. 1. The Zhengzhou Commodity Exchange and Shanghai Futures Exchange said they will extend fees now levied on some contracts to other products.

The government has pledged to use price controls and may raise interest rates a second time this year to slow inflation that rose last month to a two-year high and to curb food costs that jumped 10.1 percent in October. Chicago-based CME Group Inc. and other U.S. and European commodity exchanges also are charging more to trade some raw materials after prices jumped.

“Raising fees to be active on the exchange is a predictable move to try to calm down speculative investment,” said Gary Mead, an analyst at VM Group in London. “But high futures prices reflect both speculative investment and fundamental supply-demand factors.” (more)

Bloomberg Businessweek - 5 December 2010

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