Thursday, August 6, 2009

The Wall Street Journal Asia August 6 2009

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China Warns Developed Nations of Inflation, Currency Threats

China’s central bank warned that monetary easing by developed nations threatens to cause “severe” inflation and currency volatility.

“Failure to manage the degree of easing may lead to concerns about mid- and long-term inflation and exchange-rate stability,” the People’s Bank of China said in a quarterly monetary policy report, posted on its Web site yesterday.

China, the owner of $801.5 billion of Treasuries, pressed the U.S. at a summit in Washington last month for economic polices to protect the dollar’s value. The Bank of England is poised to end a five-month program of bond purchases, part of so-called “quantitative easing,” according to a Bloomberg News survey of firms bidding at government debt auctions. (more)

U.S. Farmland Values Fall for First Time Since 1987

U.S. farmland values declined last year for the first time since 1987 as the country suffered the worst housing crisis since the Great Depression.

The value of all land and buildings on farms averaged $2,100 an acre at the start of this year, down 3.2 percent from a revised $2,170 a year earlier, the U.S. Department of Agriculture said today in an annual report. The change compares with a 19 percent drop in urban home prices. (more)

McAlvany Weekly Commentary, August 5, 2009

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A History Of Stimulus, Funny Money & Central Banking

World history is filled with examples of “funny money policies”, and the Federal Reserve's and our government’s feeble attempts at stimulus are just a new name for old games.

For as Ecclesiastes 1:9 states "What has been will be again, what has been done will be done again; there is nothing new under the sun."

If we look to Roman history we see a story of funny money and stimulus. Rome conquered, grew, and with each conquest returned with more stimulus in the form of gold, silver, land, and slaves. But the stimulus injected into the economy after each conquest only stimulated the need for more stimulus. It did not stimulate real prosperity. It undermined it. (more)

National Guard Needed To Protect Alabama County From Fatal Interest Rate Swaps

Civil unrest alert!

A few years ago Jefferson County, Alabama bought 17 interest rate swaps from JP Morgan, Lehman Brothers and Bank of America with the intention of hedging interest rate risk.

Today the county said it may need the National Guard to hedge the the "anarchy risk" it now faces as a result of the fiscal disaster its venture into "sophisticated" derivatives turned out to be.


The Fabulous Life of Wallstreet Brokers

Ever thought about how those Wallstreet Brokers lived, while speculating with your money and burning it in the financial crisis? In this documentary you see the homes of Billionaires and multi Millionaires who earned their money on Wallstreet. But they don’t only have huge appartements and residences, they have their own private jets, luxury yachts and so on. Not even thinking about small investors they made billions of dollars and enjoy their lives. And you - what are you doing now??? (video)

Banks still getting sicker

The economy may have pulled out of its plunge, but you'd never know by a look at many big banks.

Even after a rousing market rally that spurred new capital into giant institutions such as Wells Fargo (WFC, Fortune 500) and Bank of America (BAC, Fortune 500), numerous large banks around the country are still struggling with deteriorating finances.

Two dozen banks with at least $5 billion in assets get the lowest one-star rating on's safety and soundness test, which is based on an assessment of regulatory filings for the quarter ended March 31. (more)

About half of U.S. mortgages seen underwater by 2011

The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

"We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report. (more)

Wealth for the sensible

The month of August 1971 is significant in that this is the month when US president Richard Nixon told the world, "Kiss my Fat American But (FAB), world, because although we Americans promised to maintain the purchasing power of the dollar against which all other currencies can maintain their value, too, we lied when we said that we would exchange gold for dollars to insure that we did what we said we would! Hahaha!

"So, from now on, no exchanging dollars for gold for you either! Hahaha! You believed us when we guaranteed our promise about the value of the dollar in terms of gold, and then let us keep the gold at our house? Hahaha! Morons! So just come and try to get it, chumps!" (more)