Manulife Financial, a Canadian financial services group, completed its $265 million acquisition of Market Center, a 770,044-square-foot, two-tower office complex in downtown San Francisco. RREEF America sold the Class A assets for approximately $344 per…
“The GMAC/Ally/JPMorgan “Mortgage-gate” problems seem to keep on growing. One small sentence reported by Market Ticker could spell big problems for the housing market”
“The conforming jumbo loan limits, which allow homeowners in certain areas of the country to get government-backed loans of up to $729,750, have been extended for another year, according to the Mortgage Bankers Association.”
“Ambac Assurance Corp. sued Bank of America Corp. over $16.7 billion of mortgage-backed securities, saying the bank’s Countrywide Financial Corp. unit fraudulently induced Ambac to insure bonds backed by improperly made loans. Ambac found that 97 percent of 6,533 loans it reviewed across 12 securitizations sponsored by Countrywide didn’t conform to the lender’s underwriting guidelines… “Bank of America probably didn’t settle because they didn’t want to swallow the amount of money that it’s going to take to satisfy Ambac,” said Alan White, a law professor at Valparaiso University who specializes in housing industry issues. “Nobody wants to be left holding the bag.””
“U.S. courts are clogged with a record number of foreclosures. Next, they may be jammed with suits contesting property rights as procedural mistakes in those cases cloud titles establishing ownership.”
“Prices for homes either in foreclosure or sold by banks rose in the second quarter, according to a real estate group, underscoring competition in the market for distressed properties and the degree to which the mortgage crisis has spread to more affluent neighborhoods.”
Real Homes of Genius – Agoura Hills and a $280,000 discount on a once million dollar home. The expensive foreclosures are now hitting the Southern California market.
The big foreclosures are now hitting the market in a steady stream. It was only a matter of time before the shadow inventory started leaking out into the market for all the public to see. The banking industry made a bet with your tax dollars that home prices would rebound shortly after the bubble burst. […]
By Michael Trinkle, ForexTraders
Today the USD index has hit an 8-month low, as the Euro contiues to rally, and gold consolidates the latest gains above $1300. The Euro is reported to be supported by Swiss banks, and Asian sovereigns, while the prospect of a further bout of easing continues to erode the confidence of USD bulls. We are unphased by the recent movements, however, since the conditions in the background are so bleak from a long-term perspective, that short of the armageddon scenario (such as the Chinese dumping Treasury paper, for example) we find it hard to believe that markets can reverse the USD uptrend existing since 2008 at the moment. Protectionism is by far the worst risk to the USD-bear case, but pressures in this direction are intensifying rapidly as we discuss later in the article, even though we recognize that the latest proposed measures may not be approved by the Senate or the President.
Markets get more bullish as data gets worse on the expectation that the Fed will try to inflate the money supply aggressively to prevent further deterioration. The self-feeding paradox of this viewpoint is obvious: we’re in a new world if stocks appreciate because growth prospects worsen. But it has been like this for a while, and since the whole episode that we are going through is about the reversal of this mindset, we do not mind being patient.
Comments on USD by Kevin Warsh of the Fed surprises markets
In today’s comments FOMC member Kevin Warsh was emphasizing the benefits of the strong dollar, and the investment flows that it entails. While admitting that the weakness of the USD is benefiting manufacturers, he seems to hint that the government is not indifferent to rapid losses in the value of the currency.
We opine that as long as the credit market remains tense and worries about the fundamental health of the global economy persist, the Fed can play its hands with relative ease, notwithstanding the very limited impact that its policies have had so far, and will probably have in the future. After all, markets are bearish on the USD only because they expect the Fed to devalue it. One can imagine that an outright refusal to do so would lead to a massive squeeze and quickly eliminate an enormous amount of dollar shorts in no time. This is not to say that it will be like this always, but the Fed does have immense leverage to its power as long as the dollar is dominating international trade and finance.
Markets are uninterested in anything that is remotely dollar-positive right now, but we note the huge dollar purchase of the Israeli central bank, and interventions by Singapore, Thailand, Indonesia and others early in the day. Demand in the bond market remains very strong, but the enormous amount of money parked there does create a cause for concern.
China imposes tariffs on U.S. poultry imports
This kind of assertiveness from China is certainly a new phenomenon. China’s commerce ministry has released further details on tariffs imposed on chicken parts and whole birds, and if any of us had any doubts about the inevitability of protectionism, this must go a long way to clear the mist. According to reports, the commerce ministry will charge tariffs of 50-100% on a range of chicken products for the next five years, on the pretext that U.S. producers are dumping cheap produce in the Chinese market.
Since the approval of the punish-China bill at the House Ways and Means Commission, the Chinese, in their typical emotional, rash manner, have been looking for a way to retaliate against the humiliation that they suffered, and the new tariffs are almost certainly a reaction in this respect, rather than being a calculated move brought about by economic causes. After all, it is ridiculous and nonsensical that the world’s greatest manipulator of the forex market accuses others of committing these crimes. We have never been very fond of the idea of forcing the Chinese to revalue the Yuan rapidly, since we are not a believer of the China-super power theory, but this type of irrational, tit-for-tat reaction makes one question the basic ability of the Chinese authorities to act logically. In fact, the unpredictability of the Chinese in economic, political, and even military matters has always been a concern at Washington. The lack of communication between the two parties, in spite of improvements made over the years, has been one of the reasons that successive administrations have been so soft to China. But they are overplaying their hands, and clearly they will be the greatest sufferers in consequence. After all, it is not a big deal if the current administration, or the one succeeding it, is removed in an election because people are enraged at the consequences of China economically undermining the U.S. through the various means it has its disposal. But there are no equivalent mechanisms in China, so the cost of putting up with even the most aggressive appreciation scenario will almost certainly be less than the cost of a full-scale economic confrontation with the U.S. with respect to the survivability of the CCP. We always assumed that the Chinese were aware of this fact, but with the DaGong comedy, and now with these tariffs, we are unsure about how irrational the Chinese can become in consequence of their fears about losing face. And what is worse, on a political level, the Chinese seem to be losing friends and becoming isolated as their their aggressive, bully tactics scare their neighbors, and draw them closer to the U.S. China is being too confident for a nation whose closest ally is North Korea. Certainly events in this region deserve close observation.
In other events, today the central parity rate was set at 6.6936, more than 100 points below yesterday’s fix. It is also reported by the Haaretz newspaper that Chuck Schumer and his friends are focusing on Chinese companies violating U.N. Sanctions on Iran (CNPC is the first target), seeking to impose new restrictions on them in consequence.
Portugal CDS break another record, Spain goes on strike
Media reports indicate that the Portuguese minority government is preparing another package of austerity, speculated to include rises in VAT and municipal property taxes. In Ireland, CDS on Anglo-Irish Bank bonds saw interest rates rise to 930 bp, after speculation that the bailout may cost near E35billion, while Portugal CDS broke another record at 450 bp, before coming down later in the day.
These events progress at their own pace, and yet there is another, potentially equally dangerous aspect that is mostly being ignored by the markets. It is reported by the news media that Spanish workers are on general strike today, with just about every kind of service unavailable except on emergencies. Expect these events to be repeated across the continent and around the world, as people seek scapegoats and politics becomes marginalized.
USDJPY depreciates, but the BoJ remains calm for now
The BoJ is not intervening for now, as the pair moves below 84, and comes close to levels where the bank intervened massively just a short while ago. The quote was as low as 83.68 at one point in the day, but ended up higher as traders apparently got nervous about intervention speculation. The last time intervention occurred around 82.90, and it makes sense to expect a repeat around a similar level.
The Japanese predicament is illustrated by the Tankan survey where large manufacturers are reported to expect the USDJPY pair to average 89.66 this fiscal year.In fact the chief of Suzuki Motor is reported have fixed 95 per yen as the preferred rate of his business for competitiveness and profitability. If their hedges were conducted on these assumptions, it is not surprising that the government found itself forced to intervene. We are not interested in this trade, but remain bearish on it in the long-term for reasons elucidated earlier, and regard the BoJ intervention as a disastrous error that will erase the credibility of the central bank. Japan’s export sector must wean itself off from the government, since the implementation of these third world policies in this day and age by one of the world’s most prosperous nations is simply indefensible from any angle.
Today Asian markets were higher, European bourses and, so far, American markets were lower. Europe continues to have its own issues arising from the circle of bankruptcy surrouding it, but traders are unwilling to capitulate until the Fed clarifies the situation. Today the Euribor and Euro Libor rates were higher, but we tie this to tomorrow’s large ECB LTRO expiries and prefer to see the aftermath before reaching a conclusion for the short term, even as we remain utterly bearish on the Eurozone from a longer timeframe.
By Charles Hugh Smith, OFTWOMINDS
As essayist/farmer Eric Andrews notes, it makes little financial sense to grow one’s own sustenance now due to the all-time lows in the cost of food. We might also conclude that it makes no sense to change the oil in your own vehicle, refinish furniture (new crappy particle board furniture from China is “cheaper” than refinishing) or indeed, to do anything for yourself: it can be outsourced or performed by a global corporation “cheaper” than you can do it.
This may partially explain why Americans have generally lost the skills and curiosity needed to do anything real for themselves, such as cook/bake, effect household repairs, write their own code, or build a business or house from scratch.
As noted earlier this week, the other factor is dependence on the Central State, which enervates those who have sacrificed autonomy and political independence by depending on the State–a condition closely related to addiction.
Self-reliance receives abundant lip-service but few seem to have any interest in pursuing it in the real world. How many hours are spent in households watching TV, checking Facebook and Twitter, IMing on cellphones, playing with iPods, email, websurfing, etc., and how many are spent learning or doing anything of value in the real world?
The answer to that question defines America’s level of self-reliance: poor to zero.
So if there are few if any financial incentives to self-reliance, why should we bother learning to do things for ourselves? In a soulless culture, then the answer is “obvious”: there is no reason, so passive, resentfully entitled complicity with the status quo is the “solution.”
But if a soul flickers even partially alive in a human being, they will desire autonomy and independence, and the joys of curiosity, learning, failure (yes, failure, for it is the Great Teacher) and mastery will arise to fill the vacant darkness at the center of the American Empire and “lifestyle.”
Here are Eric’s recent essays:
Sleep, Dreaming, and National Suicide (June 26, 2010)
True Confessions (on Liberty and the Republic) (August 14, 2010)
MY INTRODUCTION: “If I set out to encapsulate my Survival+ critique in a mere 2,700 words, I could do no better than this: a closely reasoned case for opting out, small-scale, resilient solutions and radical self-reliance–the very heart of the Survival+critique.
Some readers seem to think that this is an implicit recommendation for living in mud huts and a return to a pre-technology Dark Ages. Nothing could be further from the future I envision, which is radically better, more sustainable and more humane than the present dominated by an insatiable Savior State and its Global Empire which protects and empowers a handful of cartels and fiefdoms at the expense of the world and the U.S. citizenry.”
Solutions Start at Home
by Eric Andrews
In my last article I pointed out that the real problem with writing about solutions is that no one can know what you need or tell you what to do. Your situation, your needs are different than my needs and situation, so only you know what is best. That’s Liberty: you are completely in charge but completely responsible when things go good or bad. And isn’t that the way it should be?
But still, solutions are of the essence. So although I can’t tell you what you should do at your house, I can tell you what we do at mine. Hearing things—how solutions of any kind are assembled—can give us ideas for what we all can do.
In this new era, all solutions will be local. Local weather, local availability, local conditions will dictate what will and won’t work. I live in the Northeast, out on the Lake Plains east of Buffalo, NY—a land of small woodlots and small fields. It’s rainy and cold both spring and fall, with sustained snows of 2-3 feet average, 6 feet at a single storm is no surprise, yet also windswept and baking for much of the summer. Things that work for me may not work for the deserts of California or the Southwest, the vastness of Canada, or the moderate Carolinas. But then again, who can say what can or can’t be done?
Apple Lawn is a small farm of 52 acres, which hasn’t been commercially worked in a generation, as the price of food has been too low all that time. I know that may seem impossible, but the price of food has never been this low in human history.
But although food is cheap and I have a job in the city, the farm still calls with rich clay soils and the endless optimism of spring.
Having worked the same quarter acre garden for decades, providing us with year’s supply of tomatoes, sweet corn, green beans, eggplants, peppers, lettuce, asparagus, and whatever strikes our fancy, last year we opened up a second quarter acre plot on soil fallow for more than a decade.
It’s been said that the end of oil will be the end of us all as tractors, fertilizer, and pesticides, will become unavailable at any reasonable price. This is misguided perception by people who didn’t further their research into how farms and gardens work. It may be true that you can’t intensively-garden 52 clay acres without 52 well-trained farm hands; however, a modest trip back in time—merely to the 1940’s—shows how it was done by my own grandfather, driving his team Molly and Dolly through the clays of slow-moving Niagara county. It’s true you can’t grow corn year-on-year on the same soils, for it will degrade and wash away into a ruinous hardpan or dustbowl. However, you don’t have to–you simply use the crop rotation that’s been industry standard since the early Middle Ages. You divide your large fields by four and one of them lies fallow each year, renewing the soil. This would be seeded to hay—a weed of your choosing—and fed to the animals who would then fertilize the other three fields.
This is why small farms of the past thousand years included animals, and why before the brief era of cheap oil, pesticides and fertilizers, this diversified, small-farm plan prospered over other methods, nor would an animal-free farming necessarily be recommended. Should the price of oil rise, the clock will rewind as far as it has to, back to the point where oil input meets availability or pasture is replaced by biodiesel. This isn’t terribly hard, but it takes an uncomfortable period of time to retool. Reserving one quarter of your land to pasture nearby animals is an indispensable piece of this. No more agri-business, no more factory farms, and the smaller it becomes, the happier the cows, chickens and other stock, living in the sunlight and unplowed grass they were born to. That makes happy people.
In our county, some changes are already happening: with the price of chemical applicants rising so rapidly, farmers quickly adopted new old methods. Instead of plowing before planting, the farmers here have planted soybeans (a renewing crop) right over existing cornstalks, and under-seeded winter wheat to hay (another renewing crop), thus saving both the diesel plowing costs and the fertilizer costs. Others have gone one better and planted beans following cabbage, wheat following cabbage, or other crop combinations in series, pulling out two crops in a single year. Gains of this sort are scarcely touched upon so long as food is too cheap to grow and harvest, but the answers are out there, waiting for immediate deployment to a hungry world.
Being 10 years fallow, our field needs nothing. Why did we expand to it? No reason at all. I tell you in all honesty, you’re not going to save much growing food compared to buying staples like corn, beans, rice, and hardly anything for your vegetables—and certainly not the storage staples like carrots or winter cabbage. Your food costs really exist only in processed foods: soda, diet microwave dinners, breakfast cereals. We grow food simply because we like to see it grow. I have no words for this, but somehow it’s improper to buy foods made by faceless men 1,000 miles away and leave our backyard untouched. No responsibility. No contact. No reality. No life. No happiness.
So, we plowed it to plant the bulk crops that would have consumed the old garden: our three Seneca sisters: field corn, dry beans, and pumpkins. I know some will be saying, “that’s all well for you rich folks with a 40-year old tractor, but what about the rest of us?” It’s really a small matter: a quarter acre is actually a nuisance to break with a plow and disc, barely room to turn around; besides, I could hire it done for 30 years for the price of a tractor. I could prepare it with a collar and carriage horse, a yoke and a milk cow, or maybe two donkeys, and in fact the equipment to do so remains strategically located in flower beds around our neighborhood. –Or you could do as Thoreau and turn it over in a few evenings with a shovel and a pair of heavy shoes. It only needs to be done once, so your investment will be divided by however many decades it’s in use. Once turned or broken, you can rent a rototiller for a very small sum and finish the seedbeds in two hours once a year, and will be all it requires for every season thereafter.
So we plowed. We planted. When? Why, in the spring, of course! I say that not to be flippant, but in Western NY any time it’s not frosting and dry enough to work is the right time, right up to high summer. We planted this year in mid-May, but have often planted the same garden on the 4th of July with little difference. That’s just where we live with the world’s largest freshwater lakes cooling us. That’s how simple growing is.
Here’s the secret garden books don’t tell you: plants want to grow. A lot. They’re saving their lives, just as you would, dropped from the sky to some small piece of ground somewhere in the world. They do all the work, stretching and growing in the sun. What do we do in comparison? Am I somehow instrumental in pulling them out of the ground? No. Do I bottle-feed or tuck them in at night? Not a bit. All I do is tip conditions in their favor and insure they remain that way, so that one plant grows and not another. So beans and not, say, the amaranth that grows so vigorously here. Not that the amaranth is my enemy—I eat that too—but I happen to be looking for beans in this particular patch. The amaranth is welcome to grow anywhere else it finds.
To insure the beans keep their unfair advantage, I weed them a couple times ahead of their faster-growing competition. Weeding? Aaaaaiii! This is the part where people lose interest and call shenanigans on all this hard work. But I don’t work, I cheat. And why shouldn’t I? Over 100 years ago, a device was invented called the “Planet Jr. wheel hoe” which any thinking man must consider to be the greatest invention of the century. I encourage any one who row-gardens to run, not walk, to get one. They lasted so long and required so little that the original Planet Jr. company went out of business in 1968. It took over 40 years, but finally enough have broken or rusted away that they are being re-cast again, on ebay.com or at Planet Jr.(no affiliation or experience with vendor).
If that’s too expensive, buy one from an antique dealer or out of someone’s front yard. They should go cheap: other than kitschy decoration, nobody remembers what they’re for anyway.
To weed with one of these marvels, simply walk up and down between the rows every five days, like pushing the sweep blades like a grocery broom. You see, weeds germinate but remain tiny and fragile for a week before becoming visible. If you disturb them even slightly in that time, they will wither before you ever see the smallest sprout. Voila: no weeds and rows as clean as wall-to-wall carpet. All you need to do is walk the rows once a week. Or if you’re lazy, do a few rows until you’re tired of it, and the next day walk a few more, and so on back to the beginning.
It has no motor, requires no upkeep, and can stay outdoors indefinitely. When the handles finally rot off in 20 years, they can be replaced. The iron parts could even be cast in your backyard with the right setup: backyardmetalcasting.com. For the purpose, this investment will beat any tractor made. For the secret is in the knowledge not the tools. Five days is that secret.
Contrary to national (or NY City) belief, New York is an large and predominantly rural state as well as an agricultural powerhouse. Here in the Lake Plains we have more in common with Ohio or Iowa than with small and moderate New England—90º in summer is given, and although the lows are limited to 0º by the Great Ontario (809 feet deep!) our total snowfall averages 8 feet. By the time it’s 90º in the summer, the cool morning is too short to weed in, so I don’t.
Sure, I could have a show garden, perfect and weed free, but only by climbing up the law of diminishing returns. For here’s the second secret to gardening: plants like to grow together. In nature, you never find a single plant growing alone in bare soil—bare soil is an anathema to Nature. Plants forever grow together—either their own species or some other—and in my experience they languish when laid out in isolation.
You notice from the picture that the weeds have long outgrown my bean rows. Yes, those are rows. Yet the diminished yield from permitting weeds is negligible compared to the benefits these volunteers provide: microshelter from stripping winds, deep fertility of soil, moderate shade conserving water in drought, and habitat for a wide variety of insects and other creatures who insure that no one species of bean-eating creature can get out of control. This saves me work all around, and is well-known, both to the original natives and in challenging locations like the Amazon, where weeds must grow with the fields or the settler’s garden would be wiped out. (for more information see Weeds: Guardians of the Soil by Joseph A. Cocannouer.)
But today it’s the harvest. Frost is now 30-60 days away and nothing flowering will mature in the time left. To tip the balance in my favor again, I pull up the weeds and throw them aside so their remaining seeds cannot overwhelm the space. This is made easy by the damp shade and deep soils they created for their roots. At the same time, I pull the beans I find and strip them into a bicycle basket and dump them on the patio table, although any blanket or tarp would do. Then I scatter buckwheat on the open ground to hold the soil through winter, a “weed” of my choosing. Soil should never be left bare if it can be helped, and if approached intelligently, there is never a need.
Traditionally, beans were put on the tin roof to dry. Over the tin, if you’re in the dry south, or under, if you’re in the rainy, dewy north. Before tin was available, the pods were threaded on a string and hung on the cabin wall. Then you’d pull out a basket when your friends were over and shell them on the porch. You weren’t doing anything while talking anyway, and it was fun and satisfying. However, as I have to go to work on Monday, I get impatient and we shuck them in the afternoon sun and throw them in the dehydrator. They must be fully dry or they will mold in the jars, yet they mustn’t overheat or it will kill the seed. In the past, a shelf by your wood stove would have served the same purpose. This beautiful variety is called Tigereye, from Seeds of Change. Strangely tropical, this (replantable) purebred flourishes here in wet summer heat while soldier beans and other New England varieties languish. I planted perhaps a cup. As you can see, it returned over 2 gallons. This is what you’d call “tangible return-on-investment,” a positive “Energy-in, Energy-out” ratio of 32:1. This is how you know it is worthwhile, although it does not account my time. But what was I going to do otherwise? Read more about financial fraud and destruction? What good would that do? With my food, my life, under my own control, it’s no longer as important to me whether markets freeze up or not.
This is all of the non-cannelloni/non-black beans we need for the year, and what was my investment? $2 for the seeds, $2 for the field, taking in $6 worth of beans—but I already said food is so close to free as not to matter. What we get a variety of bean that’s unavailable, wonderfully beautiful, which has a flavor unmatched, for merely the use of my free time. Square feet? About 120′, the size of a one-car garage.
Less tangibly, our food system is quite long and increasingly fragile. What growing provides in these troubled times is that intangible called “resilience”. It gets me off the single-provider plan—one income and one supplier, and puts my life more under my long-term control. That costs and like other insurance, the accrued benefits aren’t visible while you’re making the payments. For simple as growing food is, to grow in quantities necessary to live on you need the field already broken, the seeds already at hand, and several year’s experience under your belt. During the flood is not when you want to buy a rowboat. Landfall of the first hurricane is not when you want to buy plywood. These things may never happen, but history says that eventually they will. Our nation is no exception.
Should the knowledge of these things die, as they are dying now, they cannot easily be recovered, living as it does in the minds of ten-thousand aging men and women, each knowing only what works for them, in their own area. Neither can any book tell you how things must be done on your property, in the desert, in the mountains, at the bottom of the hill, by the lake, in the sand, in the clay, in the snow. Nor can I advise any other, as conditions a mile from here are different than mine. Knowledge, being the cheapest to acquire, is also the most expensive—it will cost all the years of your life.
“Experience is a dear teacher, but fools will learn in no other.” –Benjamin Franklin
Gardening is not assembly-line work. You can’t read a book and assemble your product by the numbers. Or rather I should say that NO skill is able to be picked up without experience: that’s the difference between information and knowledge. The internet provides a fire hose of unfiltered information. But without long watching, long practice, and personal experience of how to apply it, that knowledge remains as useless as a box of bolts, useful only if applied by the skill and imagination of the workman whose intelligence knows what to add and what to take away.
You expect to read a book on smithing and make yourself a sword? Leave that to the movies. Reality is more like a guitar: easy to play badly, but taking a lifetime of experience to master.
So this is what’s doing at Apple Lawn Farms this week.
If you look behind me, you’ll see a colonial variety of “Bloody Butcher” field corn. Another purebred, non-hybrid with viable seeds, it’s wildly abundant, proven over generations of harsh conditions, and growing over 12’–so high you literally cannot harvest the ears without a ladder. So why are we growing terminator seeds, or specialized hybrid seeds which are equally unviable? Well, because it’s easy and we can. But within a few years I could grow enough seeds to plant the township with purebreds.
We can do these things. As food comes off its all-time, rock-bottom lows, I rather expect we WILL do these things. And what’s more, YOU can do these things. In your backyard, with the minimal effort and expense. Grow them for the happiness of watching things grow, making a rich and beautiful life at your house, a thing money can’t buy.
And the payoff, a world of fresh eats:
Requirements for this project:
Louisa’s Vegetarian Baked Beans:
* 2 1/2 cups dried beans, soaked 5 hours
* 1/3 cup molasses
* 1/4 cup brown sugar
* 1 1/2 Tbsp dry mustard
* 1/4 teaspoon powdered cayenne
* 1 tsp smoked paprika (or a drop of liquid smoke)
* 2 teaspoons soy sauce
* 2 medium onions, chopped into large pieces
* 2 bay leaves
* 3 cloves garlic, minced
* 1 large tomato, chopped
* 1 teaspoon salt
* olive oil or butter
Drain the soaked beans and place in a large pot with water to cover. Simmer over medium heat for two hours or until soft, adding water if it’s needed. Drain any remaining water.
Saute the onions in butter or olive oil until they soften. Mix with the rest of the ingredients and then the beans. Pour into an appropriately sized ovenproof dish and cover, either with a lid or tinfoil. Bake in a 350 degree oven for an hour, give or take 15 minutes or so. It’s not a picky dish.
The beans can also sit in the fridge for a day or so, after being mixed together but before being baked. They’re really very agreeable.
They make a great meal with cornbread and any green vegetable.
For the ultimate in low-work eating, try grapes:
For $12 a vine you can have a gallon of fruit a every year for 100 years.
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It’s an all-out attack on the greenback and everyone else is winning! The Aussie dollar has reached parity with the Canadian dollar (the Loonie) and is fast approaching its previous highs against America’s number one export (the U.S. dollar). So is this a turning point in the currency wars?
Well, like all wars, a sensible question to ask is, what are we fighting for?
Are we fighting for honest money that doesn’t lose purchasing power? Are we fighting for low deficits and strong growth? And who are we fighting anyway? The Chinese? The Europeans? Team America?
The point we’re trying to make is that metaphors are only useful if they reveal some insight into a problem that you can’t get in a straight forward way. Are nation’s using currencies as a weapon against each other? Well, maybe. But it’s more likely that each nation seeks to maximise its trading advantage by managing its currency in a certain way.
In the post World War Two era, for example, it’s been sensible to keep your currency cheap relative to the U.S. dollar. Americans were big spenders, even when they didn’t have money. And from the American perspective, what a great trade! You send paper to people…and they send you real goods and services in exchange. And you get to make as much paper as you want because the rest of the world can’t get enough of it!
It does seem like kind of a fraud. But then, money is a fraud, when it’s not backed by anything tangible. When money is backed by confidence (or a large economy, or the rule of law, or a blue water navy, or a large nuclear arsenal) people don’t ask a lot of questions until it’s too late and the currency is fatally compromised by massive debts incurred in it.
Is it too late for the U.S. dollar? The last time the Aussie neared parity, the whole world fell apart. Correlation is not causation. There’s no reason why the Aussie can’t smash through parity and go beyond. After all, Australia’s terms of trade remain high. And the Treasury expects the roaring commodity trade with Asia to deliver the Federal budget into surplus in just a few years.
Frankly, it all seems just a bit too neat. But over the last few years, we’ve found that our first week from a major overseas trip has been marked by a fuzzy brain. It’s probably something chemical. But you look at the markets right now and it just looks too good to be true. We realise that is an utterly superficial and shallow level of analysis. But it’s our first intuition, so we’re going to keep investigating.
One thing to watch for: the end of the quarter. With such a good month for stocks topping off a good quarter, it will be worth watching to see what the smart fund money does next. We use the word “smart” loosely. September surprised everyone with how good it was. You normally see a lot of “window dressing” by fund managers at the end of the month. They buy whatever went up so it looks like the owned it all along.
But getting ready for the next quarter may require less following and more leading. For example, yields on four-week T-Bills in the US have fallen by 45% in the last few days. They’re down by 60% since late August. This indicates a preference for near-cash, low-yield instruments that are not stocks. It’s an indication of risk aversion.
Will the risk trade go off the boil now? “The ASX is sinking like a stone this morning,” a colleague chimed in from across the room. “But all the gold stocks are up,” said another. “And BHP and Rio are down.” “So what’s falling?”
It must be the banks!
Not that there’s a banking crisis in Australia, at least not yet. There may not even be a problem. Heck, there may not even be any stress. But we’ll find out soon if there should be!
Wire services are reporting that ratings agency Fitch is ready to stress test Aussie banks for a 40% fall in house prices. Since Australian house prices never fall, Fitch probably won’t find anything. But it’s going to look anyway.
The agency is going to design something that tests, “different scenarios of varying property price decline.” What that means is it wants to see if falling house prices or rising mortgage default rates (that could never happen either, even if interest rates went up, which they never do) impact banks and insurers negatively (also probably impossible).
What prompted the stress test of an asset class/market that is immune to stress? Fitch says that, “Weighted average established house prices for Australia’s eight major cities rose by 18.4 per cent in the year to June 2010 according to the Australian Bureau of Statistics, and are now 41 per cent higher than they were in June 2006.”
Rising prices don’t always indicate a bubble. But sometimes they do. And since we’ve already established our position on this issue, we’re going to shut up about it now. Until tomorrow!
for The Daily Reckoning Australia
- Bank Stress Test Not Stressful Enough
- Stress Testing the Banks
- IMF Report Concludes Aussie Banks are “Very Sound”…
- Aussie Dollar Ready to Storm Past US Dollar
- Australian Dollar Set to Grow for the Remainder of 2008