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The Global Trend Towards Wealth Protection

July 31, 2013 by · Leave a Comment 

The Daily Reckoning

Well, there’s 10 minutes of our life we’re not getting back. This morning, out of begrudging necessity rather than desire, we read the latest statement on monetary policy from the Federal Reserve.

We were no wiser after reading it. But after consulting the opinions of those who make a living out of deciphering the Federal Reserve, it appears the big takeaway was that the Fed thinks growth is now ‘modest’ instead of ‘moderate’.

Talk about controversial.

The Wall Street Journal tells us this is the first time in three years the Fed has cranked out the adjective ‘modest’ to describe the economy. Apparently, modest is not as positive a word as moderate, so the subtle change tells us the Fed is a little more circumspect about raising interest rates, or tapering, or whatever…

As pathetic as all this sounds, language is one of the main tools in the Fed’s kitbag now that interest rates are zero and QE is running at $85 billion per month. Language helps to shape expectations, and expectations make monetary conditions tighter or looser. Sad but true…

As far as we’re concerned, here’s the main point of the Federal Reserves statement:

‘The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.

In other words, it all depends. No wonder US stocks ended the day unchanged.

Gold, which is particularly sensitive to Federal Reserve comments, had a rollercoaster ride as speculators in the futures market did their best to move the price around. But volumes were light so we wouldn’t read too much into today’s action.

It appears as though the speculators are firmly focused on Friday’s payroll report. You should see some real market action then.

Speaking of gold, today’s Australian reports that ANZ, in its attempt to ingratiate itself towards the Asian market, will this month open its first gold vault in Singapore, near Changi Airport.

ANZ is taking advantage of the global trend towards wealth protection and storage of physical gold. The recent price correction hasn’t impacted this trend in the slightest. In fact, it’s accelerated it. And Singapore (and ANZ) wants a slice of the action.

According to the Australian, Eddie Listorti, ANZ’s co-head of fixed income, currencies and commodities, reckons, ‘Singapore really does want to be a serious financial hub and gold is, including paper, an $US88bn-a-day (globally traded) market.

The Australian continues:

ANZ is a major player in gold, handling about 15 per cent of the globe’s production through an exclusive distribution agreement with the Perth Mint.

ANZ sells the bullion solely to central banks, sovereign wealth funds and other banks.

Gold is the only physical commodity ANZ trades, other than a small  amount of silver.

Earlier, we heard that second quarter GDP growth in the US came in at 1.7%, which was better than expected. But that came at the expense of a revision to first quarter growth, down to 1.1% from earlier estimate of 1.8%.

In short, not bad, but not great. The US is keeping its head above water. That’s about the best you can say.

Elsewhere, being the first of the month, manufacturing data is out for a number of countries. In Australia, the news isn’t good. After some positive signs in June, the manufacturing index for July slumped back to 42. Anything below 50 indicates contraction.

So if you were expecting a weaker Australian dollar to reignite the manufacturing sector, you’re going to be disappointed. Australia has some structural cost issues that just makes us uncompetitive on the global manufacturing stage. We need a much cheaper dollar to remedy that, in addition to structural reforms that take years to pay off.

Oh well, luckily we have property to make us all wealthy. We promised earlier this week to publish a few of your responses on property. Here they are. Some are edited for brevity:

As an expat living in Aus for over 15yrs (from US originally) I can truly say I’m dumbfounded by the property zealots. I am a finance broker and financial planner and work with several property spruiking companies providing finance for clients. One thing I’ve learned from these people is that ‘Australian property doubles every 7-10 years’ (getting queasy), we have a land shortage (very queasy now) and that of course we have a shortage of housing (I just vomited).

And here I thought it took hard work, perseverance and a sound plan to build wealth. Apparently all I need to do is go buy 4-6 investment properties and retire (just threw again). It all makes me sick!

I can say that I am very concerned at how eager people are (STILL) to leverage themselves to the hilt. It terrifies me as I think that when the Australian market corrects it will be vicious and many people will lose a tremendous amount of wealth.

PJP

Hi Greg – a very quick observation on my local housing market – Terrigal NSW Central Coast. Properties are selling within days of being listed. A local agent ( who I believe to be knowledgeable and reasonably trustworthy) told me that the 2 drivers are low interest rates and a shortage of housing stock on the market. Hope this adds to the picture of what is happening.

SM

Government, ATO and RBA policy supporting property market through rates, legislation and tax policy. Can see why some people positive when the big boys are backing you

ND

The following two very recent sales on the Gold Coast pretty much sum up the current state of the real estate market  here in Queensland.

A 21 million dollar home (cost to build) selling for 5.3 million on the Sovereign Islands and a 10 million dollar home on Isle of Capri selling for 4 million!

JS

We built our home in 2005, in an excellent area, close to all shops, amenities, schools, transport, and when it was finished it had an official valuation of $650,000. Just recently we also got a valuation from RP data and the value of the home now was only valued at between $450,000 – $550,000.

Also, another example is : approx. 6 months ago here on the Gold Coast, at the higher end of the market, 2 x luxury beachfront homes that were purchased for $12 million dollars each only a few short years ago, (by the same person I believe) were recently sold for less than $4 million each, a loss of $16 million dollars in total!

WS

Hi Greg,

I have held similar views to yourself regarding the outlook of property for the last five years, and have backed it with action, by not purchasing a residential property. However unfortunately I have to bite the bullet and buy one as recently I got married and the wife would like us to live in a home.

It seems the current market is on the upward trend, from the auctions and open inspections that I have visited, I have noticed in Sydney.

Many buyers in the areas, next to the train lines are from China , who really aren’t to fussed on the price given they wish to diversify their wealth from the communist regime.

Generally those under 32 are priced out the market who wish to live in a house within 20km’s of the market, unless they want to pay a mortgage for the next 15 -20 years minimum.

My parents and their friends in the 80’s and early 90’s generally paid off the mortgage within 5years, given prices relative to income where much lower.

The government is not concerned about its citizens, given it is happy to collect stamp duties and taxes on high prices being generated by foreigners.

The media is very keen to spike the property industry and place pressure on the RBA to reduce rates to raise the market.

DH

I am 58, in business for myself and meet lots of people my age who say that they would not put 10 cents of their SMSF in the stock market as it is " a racket which is rigged against you". They have been burned once too often, and will now only buy real assets, not paper that can all too easily become worthless. Based on the outlook for the health of the economy I would  have been a believer in the theory that property prices should go down, but if enough people consider property to be the least ugly pig, that will support prices.

DF

Dear reckoning,

For many years I have been a housing bear, however at age 40 I have thrown in the towel and joined the masses, first of all my age is a factor, secondary even if prices went down 30 percent it is unlikely that banks will be lending, so I couldn’t take advantage of the low prices then thirdly with a 25 percent deposit I will be paying an extra 40 dollars a week to have a house twice the size than the one I currently rent with no increases in payments for 3 years, the downside is I am an extra 10 minutes out. My biggest gripe is buying a house shouldn’t be a potentially catastrophic life changing gamble, I just want to raise a family! Politicians, banks and the media have a lot to answer for.

DS

Regards,

Greg Canavan+
for The Daily Reckoning Australia

Join The Daily Reckoning on Google+

From the Archives…

Has the Chinese Economy Hit the Great Wall?
26-07-13 – Bill Bonner

Crisis, Capital Controls, and Accidents of Birth
25-07-13 – Doug Casey

Australia’s Mysterious Natural Gas Shortage
24-07-13 ­– Nick Hubble

Bernanke’s QE Train Wreck That’s Heading Our Way
23-07-13 – Vern Gowdie

The Misallocated Savings of the Chinese Banking System
22-07-13 – Dan Denning
 

Similar Posts:

More articles from The Daily Reckoning….

Old Man Rothschild Was Right…

July 31, 2013 by · Leave a Comment 

The Daily Reckoning

Give me control of a nation’s money and I care not who makes its laws.

– Mayer Amschel Rothschilda

When we left you yesterday we were lamenting how the American working classes have lost ground. Today, the typical working stiff has a lower real income than he had in 1950.
Wait…is that possible?

Yes. As we showed yesterday, he has to work longer today to pay for a family car and a house than did six decades ago. In 1950, he could support a family.

Today, he can barely support himself.

Almost everyone misunderstands why. They think deregulation allowed capitalists to take more money away from the proletariat. Or that ‘the rich’ suddenly became greedier.

We presume the rich are always equally greedy — just like the poor. And we note that the total volume of regulation actually increased during the period under review. Just look at the tax code…or SEC rules. There are far more rules now than there were in 1950.

Actually, something else was happening…something subtler and more insidious. Here’s Bloomberg with more evidence:

‘The US homeownership rate, which soared to a record high 69.2% in 2004, is back where it was two decades ago, before the housing bubble inflated, busted and ripped more than 7 million Americans from their homes.’

And more claptrap solutions:

‘With ownership at 65% and home values rising, housing industry and consumer groups are pressing lawmakers to make the American Dream more inclusive by ensuring new mortgage standards designed to prevent another crash are flexible enough that more families can benefit from the recovery. Regulators are close to proposing a softened version of a rule requiring banks to keep a stake in risky mortgages they securitize, according to five people familiar with the discussions.

How does that work? Easier credit? But not riskier credits? More laws? Good luck with that!

The American Dream did not break down because the lawmakers and the credit industry were not clever enough. It broke down because they were too clever by half.

President Obama is stumping the country now, promising to save the middle class. But he and the feds are the real reason the middle class is suffering. They created a monetary system that robbed society of real capital…and robbed workers of trillions of dollars of income.

But let’s check in on yesterday’s market action…

What? There’s not much to check on. These are summer markets. Markets in hammocks and deck chairs. Markets without action. Nothing worth reporting.

Of course, short-term market action is usually insignificant anyway. Prices go up. Prices go down. It scarcely matters.

What matters is value, not price. Price is what you pay. Value is what you get. Price is what you see. Value is what you don’t see. It’s hard to detect. And especially hard to measure.

It is like real character. Real grace. Real charm. Or real truth. It takes a lot of careful attention to catch even a glimpse of it. Most people don’t bother.

Beauty is only skin deep,’ said our mother, 93, yesterday.

Yes,’ we replied. ‘But that’s the only part you can see. The rest doesn’t count.

Here, dear reader, we enter into deep, philosophical territory…and we take a quick detour to avoid it, lest we sink in over our heads.

Let’s keep it superficial! But not too superficial.

Economists measure quantity. Alas, life is not all quantifiable. What really matters is quality. Right now, the Federal Reserve tries to control prices. But prices are only a part of the picture.

When it comes to art, architecture, music, puppies and women it’s what strikes the senses that matters — what you see, hear and feel.

But when it comes to your money, what you see is not exactly what you get. Price tells you something. But it doesn’t tell you all you need to know.

Why? We’re so glad you asked…

When bullion money was invented government quickly saw the potential. Control the money and you can control people. You control their assets. Their cost of living. Their time.

In ancient times controlling money meant you could buy people outright. You could buy war captives. Those who couldn’t pay their debts often sold their children into slavery too. Or they themselves were forced into debt servitude.

In world’s oldest legal code, the Babylonian Hammurabi’s Code, set down some 4,000 years ago, it says that children of debtors can be kept in slavery for three years. In the fourth year they must be released.

Clever readers will be on the edges of their chairs…ready to leap with indignation. America’s youngsters, heirs to its $16.7 trillion national debt, will be kept in debt servitude far longer. Maybe even all their lives!

Bullion money was a new development. It made cheating harder to do. You didn’t have to take credit. You didn’t have to wonder if the family was honourable or solvent. You didn’t have to wait to see if you’d get something in return. Instead, you could take a little piece of gold or silver and be done with it.

But the people who controlled the money could still diddle it. And the history of central banking is a history of diddling.

Here’s a little excerpt from our new book, as yet unpublished:

‘Bullion money restricted the total quantity of money to the amount of bullion available. It also restricted the amount of credit, since loans had to be settled in bullion.

‘Since the quantity of bullion could not be readily increased, the buying power of bullion money tended to be stable over long periods of time. Prices in 1910 were little different from those in 1810. And as Roy Jastram demonstrated in The Golden Constant, you could buy about as much with an ounce of gold in 1560 as you could 300 years later.

‘Early on, governments took control of the new bullion money. They imprinted it with emperors’ faces. And then they tried to use it to cheat their own subjects. In England, there was a practice of trying to raise or lower the value of money by “crying up” or “crying down” the currency.

‘More typically, government mints made the coins a little smaller… or replaced precious metals with base metals. Naturally, the value of the “debased” currency went down.

‘The gold aureus, for example, was minted during the reign of Julius Caesar with 8 grams of pure gold. Three centuries later, it was replaced by the 4.5-gram solidus.

The denarius, Rome’s silver coin, shrank even faster. In Augustinian Rome it was a day’s wage for the typical laborer. For centuries, it had been fixed at a weight of 4.5 grams of silver. But by the end of the second century AD the silver content had been reduced to just 70% of its weight. By 350 AD there was almost no silver left in the silver denarius; it was worthless.

‘Sir Isaac Newton, warden of the Royal Mint, was determined to do better:

“The use and end of the public stamp is only to be a guard and voucher of the quality of silver which men contract for; and the injury done to the public faith, in this point, is that which in clipping and false coining heightens the robbery into treason.”

Paper money was a later innovation. It worked well — as long as the paper was backed by gold at a fixed rate. But it offered more opportunities for cheating.

As we will see, governments are still at it — led by the United States of America.

More to come…

Regards,

Bill Bonner

Join The Daily Reckoning on Google+

From the Archives…

Has the Chinese Economy Hit the Great Wall?
26-07-13 – Bill Bonner

Crisis, Capital Controls, and Accidents of Birth
25-07-13 – Doug Casey

Australia’s Mysterious Natural Gas Shortage
24-07-13 ­– Nick Hubble

Bernanke’s QE Train Wreck That’s Heading Our Way
23-07-13 – Vern Gowdie

The Misallocated Savings of the Chinese Banking System
22-07-13 – Dan Denning
 

Similar Posts:

More articles from The Daily Reckoning….

Developing Big Tech: A Saving Grace?

July 31, 2013 by · Leave a Comment 

The Daily Reckoning

I spent last week in Vancouver, Canada at the Agora Financial Investment Conference. The British Columbia Room of the Fairmont Hotel was packed, wall to wall. There were hundreds and hundreds of people.

The title of my talk was Technology Had Better Work, Because Everything Else Is Failing. My point was that we — our society — need a lot of creative new technology to counter unsustainable government overspending and national debt. Start with Detroit and then think much bigger.

The National Ignition Facility

The heart of my discussion was a description of the National Ignition Facility (NIF) I visited last week at California’s Lawrence Livermore National Laboratory. Basically, I described the massive physics project that the US Department of Energy (DOE) built over the past 20 years or so. It’s a significant, very expensive project. But it is also a truly unique tool for conducting astonishing science while pushing the envelopes of human knowledge and technology.

NIF is a VERY BIG laser system. The building alone is the size of three football fields. The DOE people, and many other outside scientists, use NIF in physics research. Although have to say that one of NIF’s key functions is to help ensure the reliability of the US nuclear weapons arsenal.

Nuclear Testing in the Olden Days

Back in the olden days — up until the early 1990s — the US (and the Russians, Chinese, Brits and French) used to set off real nuclear weapons at test sites. As in, Kaboom! The main US test site was out in Nevada, north of Las Vegas, where the test range is pockmarked with craters from the cave-ins over long-dormant blast chambers.


Craters at Nevada nuclear test site.

Here’s what happened with those Nevada tests. During an underground blast, the rock walls of the blast chamber either vaporized, or melted into a puddle of magma on the floor of the explosion cavity. Part of the magma cooled and turned into a kind of ‘rock glass’.

The shock wave from the blast usually fractured the roof area, forming a ‘chimney’ to the surface. Due to gravity, the roof of the cavity usually collapsed after a blast, falling into the chimney. There was usually extensive fracturing well beyond the blast site, too. The rock buckled and caved in all the way up, hence the craters.

Why mention this?

Underground blasts release toxins into the environment, through vaporized rock. And other particle emissions or underground water can become contaminated. The idea back in the 1990s was to stop all real explosions and thus cause less potential nuclear damage to the Earth’s atmosphere and water. Not a bad idea when you think about it.

Absent actual testing, though, the US government was faced with a problem. How does one ensure the reliability of the nuclear stockpile? It’s not as if the DOE tested nuclear weapons just for the sake of blowing holes in the desert.

No, each test had a specific scientific or engineering purpose, not least of which was to make sure that the circuitry and ‘physics package’ would work as intended. That’s part of what I discussed in part of my talk. I made every effort to explain things in lay terms, without getting all ‘tech’ about it. Plus, I used lots of slides and illustrations to make the presentation eye-catching and to keep people’s attention.

Developing Big Tech

The other angle of my talk was to illustrate the stunning levels of technology that went into designing, constructing and operating NIF. Overall, the system requires over 7,500 meter-scale optics, over 26,000 small optics and over 60,000 control points. That is, when I say it’s complex, I mean complex!

That’s not all, though. The NIF system is contained in over 6,000 modular devices filled with electronics, called line replaceable units (LRUs). And to coordinate it all, NIF uses the world’s most powerful supercomputer, Sequoia.

For purposes of the talk, NIF was my ‘big’ example. In other words, I was on my ‘make a big point’ conference soapbox during the talk. So first, I discussed the merits of government doing BIG projects like NIF. Then I made analogies.

I used the Erie Canal as an example of the national government doing big, important things. I also discussed the government’s role in sponsoring the transcontinental railways of last century. I pointed out how the US government built the giant dam projects of the 1930s, like the Grand Coulee and Hoover dams. Finally, I mentioned the Apollo program to go to the moon.

My point was that in many respects, NIF was/is the Apollo program of the past 20 years. NIF engaged the minds of tens of thousands of the country’s best scientists, engineers, designers, builders and more. And today, we have a tool with which to explore fundamental issues of nuclear science and energy.

Doing Big Things

It gets to a philosophical point. Should the federal government do big, important things? Should the government husband resources to do great things for the nation? Well, we make our political choices, don’t we? In this case, I’m talking about building NIF, not three big pyramids in the desert or something.

We’re not building much that’s big in the US anymore, however. We seem to think small. Indeed, we’re tearing down dams, not building them, in the US. Heck, we can’t even launch our own astronauts into space, so we pay the Russians for rides. Something has changed within US culture, and that’s worth pondering.

So what about NIF? What’s the point? What does it cost? It cost about $10 billion over 20 years to build NIF. Compare that with the Detroit bankruptcy, which is $18 billion. Should the nation be more proud of an achievement like NIF? Or of creating a situation like that in Detroit?

Or consider that the Federal Reserve pumps about $85 billion per month (!) into the stock and bond markets, allegedly to keep the economy from crashing. Is that a good or bad thing for the country over the long haul? I suppose we’ll live long enough to find out.

At any rate, that’s my summary of what I told the audience in Vancouver. My goal was to offer plenty of food for thought while highlighting a technological triumph like NIF.

At root, a key question is whether or not technology can create wealth faster than our civilisation destroys it with debt. It’s a serious issue, but another discussion for another time.

Keep an eye on the big tech space, it’s one of the last bastions of hope for investors.

Regards,

Byron King
for The Daily Reckoning Australia

Ed Note: Developing Big Tech: Our Saving Grace? first appeared in The Daily Reckoning USA.

Join The Daily Reckoning on Google+

From the Archives…

Has the Chinese Economy Hit the Great Wall?
26-07-13 – Bill Bonner

Crisis, Capital Controls, and Accidents of Birth
25-07-13 – Doug Casey

Australia’s Mysterious Natural Gas Shortage
24-07-13 ­– Nick Hubble

Bernanke’s QE Train Wreck That’s Heading Our Way
23-07-13 – Vern Gowdie

The Misallocated Savings of the Chinese Banking System
22-07-13 – Dan Denning
 

Similar Posts:

More articles from The Daily Reckoning….

Fine Line Between "Administrative" and Congressional Law.

July 31, 2013 by · Leave a Comment 

Congress passes our laws and most people think that whatever the government directs them to do is the because of   laws directly passed by Congress.  That’s not quite right. Congress creates an executive Agency and that department writes rules or codes which when issued become what are called CFR’s (code of federal regulations) or administrative laws.

For example, Congress created the Department of Agriculture.   The Department of Agriculture is part of the administrative branch of government; it is under control of the President.  So when Congress passed the Healthy Hunger-Free Kids Act of 2010. It directed the USDA to establish nutrition standards for all foods and beverages sold to students in school during the school day.  They did that, no big deal.  I’m sure several food nutritionists got together and put together a school lunch menu and considered it a done thing. At that point, whatever they wrote became an administrative law. Then Obama’s wife came out with the ideal school lunch menu that included whole wheat and other items that you couldn’t even get a kid to eat at home.  One phone call, and guess what your kids get for lunch now? –and it’s the law.

Then there is the Treasury Department, more specifically, the IRS, another department controlled by the executive.  “Kill all Tea Party applications” isn’t written anywhere in the laws, but hey, the applications are not going anywhere soon. Did they violate any law, probably not, they get to write the laws they need, to function as directed by Congress.  Our representatives gave them the power to create administrative laws that many people believe border on being extremely arbitrary and harsh.

We are surrendering more of our freedom with each government agency created. A government agency can create a directive that will have the full force of law until it is challenged by a court of law. Recently the Mayor of NY City, had the Board of Health approve a regulation limiting soda sizes. That was an “Administrative Law.”  The court overturned it stating that the mayor’s ban on sugary sodas of more than 16 ounces was a violation of executive powers.

I’m not so upset about the delegation of authority to a Federal agency, but some of these departments have run amok.  Just getting your kids to eat the food served at home is a real challenge. Why screw it up with whole wheat? School lunch sales are down quite a bit for kids not on the subsidized lunch program. It’s McDucks if you have cash or the school cafeteria for the free lunch. When I was a kid, the school would send a proposed food menu home for the parent’s approval.  The current message I get; the American public is too stupid for their own good and some government created Agency like the Food and Drug Administration will save us from ourselves.

I use to love McDonalds French fries made with real animal fat, they were delicious.  Some pencil pusher in the FDA wrote a directive that ruined French fries forever. Even our fast food is now “Politically Correct.”

Here is a real test, make a peanut butter and jelly sandwich using whole wheat bread.   Woof it down. Do you think you’ll ever want another one of those? If you say yes, that’s probably a good indication that you need to cut down on the amount of weed you’re smoking. Gimmie my white bread and greasy (animal fat) French fries, freedom tastes better without government regulations. Our fast food is now terrorist friendly—no pork fat—Go figure!  I guess we want them to live longer also.

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MCX Natural Gas negative may decline till 205 5 EIA data awaited

July 31, 2013 by · Leave a Comment 

For intra-day, support for the commodity is seen at 209 and 205.5 levels while resistance is seen at 212.5 and 215 levels. and nbsp;MCX natural gas for August delivery was seen trading down by 0.38% at Rs.210 mmBtu as of 02.43 PM IST on Thursday.

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Petrobras Oil and Gas output in Brazil rises 4 8% M M in June

July 31, 2013 by · Leave a Comment 

In June, Petrobras’ non-liquefied natural gas output in Brazil was 63,430 thousand cubic meters per day, 6.2% higher than May. Total gas production in Brazil, including the share operated by the company for its partners, was 70,834 thousand cubic meters per day, a 6.8% rise compared to the previous month.

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MCX Crude Oil bullish on strong international fundamentals resistances 6500 6528

July 31, 2013 by · Leave a Comment 

For intra-day, support for the commodity is seen at 6400 and 6350 levels while resistance is seen at 6500 and 6528 levels. and nbsp;MCX crude oil futures for August delivery was seen trading up by 1.23% at Rs. 6493 per barrel as of 06.32 PM IST on Thursday. and nbsp;Crude oil prices in the global market edged up on Thursday after data releases from China, Europe and the United States shown a positive trend.

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Crude Oil markets take positive cues from official China PMI

July 31, 2013 by · Leave a Comment 

However, according to HSBC PMI readings of China, compiled by Markit, the PMI actually slipped to 47.7 from 48.2 in June. A figure below 50 is indicative of contraction in the economy.

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Monetarists see recovery danger from ‘Summers Fed’

July 31, 2013 by · Leave a Comment 

President Barack Obama has signalled over recent days that he wants a shift towards a hard money stance at the Fed, calling for a new chairman willing to “keep our dollar sound” and ensure financial stability. “Let’s also keep an eye on inflation, and if it starts heating up, if the markets start frothing up, let’s make sure that we’re not creating new bubbles.”The comments have been taken as a desire to move beyond the era of quantitative easing (QE) under current chairman Ben Bernanke, who steps down in January and is already a lame duck.They come amid leaks that Mr Obama has narrowed his choice to Professor Summers, a titanic figure in US finance with a hot temper to match….Prof Summers, a former Treasury Secretary, is a “General Theory” Keynesian who sees fiscal stimulus as the only effective way to fight slumps once interest rates reach zero. Yet the Fed has no role in fiscal policy. Budgetary matters belong to the Treasury and Congress.He has been disdainful of monetary stimulus, the Fed’s sole domain, questioning whether QE does much good. He wrote last year that it distorts investment, worsens inequality, and stokes “asset bubbles” without helping the real economy.

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U.S. Deepens Scrutiny of Banks’ Roles in Commodities

July 31, 2013 by · Leave a Comment 

Under pressure from a handful of lawmakers to explain why banks including JPMorgan Chase & Co. and Goldman Sachs have been allowed to own warehouses and trade physical commodities, regulators have scrambled this month to demonstrate that they are tackling the issue. On Tuesday, Securities and Exchange Commission Chairwoman Mary Jo White said for the first time that the SEC was looking into the question of insider trading, a concept that has never been formally applied to the broad commodity markets.

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