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To: frankw1900 who wrote (20482)1/22/2012 3:04:52 PM
From: sixty2nds
of 24344
 
Hello frankw1900. Here goes...from the article


...Solution for Euro: allow only nationals to buy government bonds

One way to solve this eurozone-specific problem of capital shifts would be to prohibit member nations from selling government bonds to investors from other countries. Allowing only the citizens of a nation to hold that government’s debt would, for example, prevent the investment of Spanish savings in German government debt. Most of the Spanish savings that have been used to buy other countries’ government debt would therefore return to Spain. This would push Spanish government bond yields down to the levels observed in the U.S. and the U.K., thereby helping the Spanish government implement the fiscal stimulus required during a balance sheet recession.


<<<Solution for Euro: allow only nationals to buy government bonds One way to solve this eurozone-specific problem of capital shifts would be to prohibit member nations from selling government bonds to investors from other countries.>>>


Hmmm. You want me to buy my own garbage bonds?
I don't think so.
I suppose you could put a gun to my head but...


<<<Allowing only the citizens of a nation to hold that government’s debt would, for example, prevent the investment of Spanish savings in German government debt.>>>

Unless you take my money from me I'd spent it or maybe give it to the local loan shark to put on the street and split da vig.

<<<Most of the Spanish savings that have been used to buy other countries’ government debt would therefore return to Spain.>>>

Unless you impose strict currency controls money will flee or go underground.

<<<This would push Spanish government bond yields down to the levels observed in the U.S. and the U.K., thereby helping the Spanish government implement the fiscal stimulus required during a balance sheet>>> recession.>>>

There is still a lot more "faith" in the U.S. and U.K. gov't than the Spanish gov't.


I do not believe you can stop or contain "capital shifts"
Capital moves as capital wants to move.
Capital chases ROI, aka more "munee" or it buys power.
It can be confiscated but then it becomes worthless. After all, in that case it's all about power.















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To: sixty2nds who wrote (20486)1/22/2012 6:54:03 PM
From: frankw1900
of 24344
 
..Solution for Euro: allow only nationals to buy government bonds

One way to solve this eurozone-specific problem of capital shifts would be to prohibit member nations from selling government bonds to investors from other countries.

Allowing only the citizens of a nation to hold that government’s debt would, for example, prevent the investment of Spanish savings in German government debt.


Spain and everybody else in the EMU are trapped in the Euro currency. Unfortunately it does not fit the needs of, for example, both Germany and Spain, although given the nature of their respective powers it more fits the needs of Germany. For the size of its economy Spain had the largest real estate bubble in the world and most of its banks are toast. It is in total depression: folk are not spending or investing; they are desperately saving and paying down debt and some are starting to go hungry. If it had its own currency, Spain's debt, deficit and banking problems would be something for the Spanish and the market to sort out. But it does not have its own currency. It has the Euro.

Therefor, as Koo points out, Spanish pension funds and banks can, with no currency risk, buy foreign bonds instead of Spanish. Thus Spain can not get access to Spanish savings to create stimulus by either lower taxes or greater government expenditures. (Slashing taxes and running a deficit is the side of fiscal policy that Koo doesn't talk about).

If they are to remain in the Euro, what else might they do but confine nationals to buying the country's bonds? As it stands right now they are confined to the German requirement of austerity which is absolutely the worst thing they can do.

Would this work the way Koo says:

Most of the Spanish savings that have been used to buy other countries’ government debt would therefore return to Spain. This would push Spanish government bond yields down to the levels observed in the U.S. and the U.K., thereby helping the Spanish government implement the fiscal stimulus required during a balance sheet recession.

I could sell it to the Spanish on the basis of this is like war and fuck the Germans and French. Situation there is desperate.


Hmmm. You want me to buy my own garbage bonds?
I don't think so.
I suppose you could put a gun to my head but...


Nothing really wrong with Spanish bonds. Spanish people have been buying them for years. It's their pension funds and banks that have been moving money out. And remember, this does not stop folk from buying foreign corporates, or common stock.

No need for a gun. Just slash taxes (and get a bunch of fat Germans to come and spend). 'It's our deficit we own it, not the f'ing French or Germans.'

This would cause a hell of a row if, for example, the Spanish did it on their own but if the EU is to survive as something other than a fading away gerontological fiefdom of the Germans and French, then this is the sort of thing the smaller nations will have to do.


There is still a lot more "faith" in the U.S. and U.K. gov't than the Spanish gov't.

In Spain? What makes you think that?


I do not believe you can stop or contain "capital shifts"

It's been done.

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From: frankw19001/22/2012 11:04:13 PM
of 24344
 
Interesting interview on Charlie Rose with Jim O'Neil, the chairman of GS Asset Management.

Among other things he thinks the US is starting to look promising.....

Korea on every measure scores better than any G7 economy except Canada, "so why do we call it an emerging economy?"

Rose asked him about the EU at the end of the year and O'Neil said the most likley thing is that it's still altogether including greece simply because the cost of someone leaving is so unknown but he says it's his "best guess." But here's always a small chance of a disorderly Greek default with unfortunate German response - "you're out" - and possible political repercussions in France and elsewhere with maybe a "Lehman moment".... He says in the Anglo-Saxon investing world there are folk who, since they never believed from the start Euro was a good idea think that now it looks so weak,." it will all unravel. But it won't be as easy as that"

What happens in China depends on what China does; they are very set on that particularly since events of last August....effective convertability of Reminbi by 2015....

Between 13:00 and 40:00 it gets very interesting as he talks about China and the US. US productivity gains, demographics, energy sufficiency, how soon US might meet Chinese productivity.

Worth watching

charlierose.com 

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To: frankw1900 who wrote (20485)1/23/2012 1:31:20 AM
From: ahhaha
of 24344
 
But what did Kaminski have to do with it?

Kaminsky was trying to put a smiley face on an edifice that has become dark and foreboding. The building looked ominous and empty.

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From: ahhaha1/23/2012 2:12:50 AM
of 24344
 
Iran wants to trade yen for oil with India, Bloomberg, by Pratish Narayanan, Anto Anthony


Tensions with Iran have risen, with Vice President Reza Rahimi warning on Dec. 27 that Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia, may close the Strait of Hormuz if western nations block its crude oil sales.

A potential decision by the EU to freeze Iran’s central bank assets and impose a ban on Iranian oil imports requires unanimous backing among the bloc’s 27 nations. The embargo would hurt Greece, Italy and Spain, which depend on Iranian supplies and would need to find alternative sources.

U.S. President Barack Obama on Dec. 31 signed into law measures that deny access to the U.S. financial system to any foreign bank that conducts business with the central bank of Iran. The law includes language that allows the president to waive the sanctions if he determines they would threaten national security.


With the noose tightening in spite of Indian and other cheating Iran will have to close the Straits to force DM to waive sanctions.

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To: frankw1900 who wrote (20487)1/23/2012 7:49:01 AM
From: sixty2nds
of 24344
 
There is still a lot more "faith" in the U.S. and U.K. gov't than the Spanish gov't.

In Spain? What makes you think that?



The high interest rates on debt Vs U.S/U.K.

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To: ahhaha who wrote (20490)1/23/2012 9:10:26 AM
From: cmg
of 24344
 
From Zero.

Currency Wars - Iran Banned From Trading Gold and Silver

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To: cmg who wrote (20492)1/23/2012 11:36:24 AM
From: ahhaha
of 24344
 
Do you think that hack Durden has better info than I do? Worse, the guy is a headline monger, and that means counter productive exaggerator. If you like what he says, why not make your own comments without referring to him and not posting a link. You have better judgment than he has.

You can't be a loose cannon and make money winning decisions.

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To: ahhaha who wrote (20493)1/23/2012 11:35:08 PM
From: ahhaha
of 24344
 
About Durden :

Zero Hedge

While the news that Mitt Romney has joined Warren Buffet in the “my secretary makes more than me” 15% tax club has come and gone, even as America appears largely confused or dismissive that Romney, at least on paper appears to be precisely the puppet that Wall Street wants to put in charge, we are not so sure how it will react to discovering that in addition to all of the above, Romney also holds a substantial of his assets deep offshore, in the much maligned recently Cayman Islands. As a reminder, it has long been Obama’s “tax-policy” to force repatriation of virtually all individual tax holdings held abroad, both legally and illegally, much to the detrimental collapse in the UBS business model. Yet apparently when it comes to potential future presidents, loopholes are quite welcome. Especially when as ABC reports, “the offshore accounts have provided him — and Bain — with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury.” As a reminder: “Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens.” But who needs taxes when America can just print all the money it will need to fund its deficit in perpetuity. Just ask the Neo-Keynesians. Perhaps all these are questions that the candidate that so hard is trying to channel Ronald Reagan and so far failing, can finally address once and for all, before he moves into one of his patented Obama bashing subject changing routing.

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From: ahhaha1/24/2012 12:58:02 AM
of 24344
 
"Regarding risks to the inflation outlook, some participants noted that increases in energy and other commodity prices as well as in the prices of imported goods from EMEs posed upside risks. Others, however, noted that the pass-through from increases in commodity prices to broad measures of consumer price inflation in the United States had generally been fairly small. Some participants expressed concern that in a situation in which businesses had been unable to raise prices in response to higher costs for some time, firms might increase them substantially once they found themselves with sufficient pricing power. In any case, the factors affecting the ability of businesses to pass through higher prices to consumers were viewed as complex and hard to monitor in real time. Most participants saw the large degree of resource slack in the economy as likely to remain a force restraining inflation, and while the risk of further disinflation had declined, a number of participants cited concerns that inflation was below its mandate-consistent level and was expected to remain so for some time. Finally, some participants noted that if the very large size of the Federal Reserve's balance sheet led the public to doubt the Committee's ability to withdraw monetary accommodation when doing so becomes appropriate, the result could be upward pressure on inflation expectations and so on actual inflation. To mitigate such risks, it was noted that the Committee should continue its planning for the eventual exit from the current exceptionally accommodative stance of policy."

The last sentence shows just how clueless the stooges at FED have become. None of them there now know anything about what FED went through from the ''50s to the '80s. The hard lessons have been lost. When any authoritative group fails to conduct itself by principle they leash disaster on all those whom they influence.

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