|Three Trillion Dollars Later: Charting A Recovery Only Failed Fiscal And Monetary Policy Can Buy|
|ZeroHedge, 29/05/2011 (traduire en Français )|
|U.N. sees risk of crisis of confidence in dollar|
|Reuters, Patrick Worsnip, 25/05/2011 (traduire en Français )|
The United Nations warned on Wednesday of a possible crisis of confidence in, and even a "collapse" of, the U.S. dollar if its value against other currencies continued to decline.
In a mid-year review of the world economy, the U.N. economic division said such a development, stemming from the falling value of foreign dollar holdings, would imperil the global financial system.
|Bill Gross: US Default Would Be ‘Disastrous’ For Dollar|
|CNBC via Wall Street Pit, 29/05/2011 (traduire en Français )|
Pimco’s Bill Gross warned Friday that a technical default by the U.S. government on its debt would send the wrong signal to credit markets and have disastrous implications for the greenback.
“I simply think a default of six, twelve days, eighteen days, not only sends the wrong signal, but a disastrous signal to the world credit markets,” Gross said on CNBC Friday.
“It would result in not necessarily a negative for Treasury bonds, but a disastrous implication for the dollar,” Gross added. “The dollar is the world’s reserve currency. It’s what we transact in. If the dollar is defaulted on for any period of time, what type of signal does that send to the rest of the world?”
La spéculation à crédit gratuit retourne vers ses sommets :
|Carl Icahn Confesses That The "System Is Not Working Properly", Warns Of Another "Major Problem" Coming|
|CNBC via ZeroHedge, 29/05/2011 (traduire en Français )|
Confirming pour ongoing observations that the pursuit of leveraged beta is the only game in town ("Levered Beta Uber Alles: NYSE Borse Margin Debt Jumps To Three Year Highs, Investor Net Worth Remains At Record Lows") is this surprising confession by hedge fund titan Carl Icahn, who not only warns that the levels of leverage achieved in the current centrally planned regime is as bad as it ever was, and that some form of Glass-Steagall should return, but that, stated simply, the entire "system is not working properly." His warning, stated in a very politically correct fashion, is that "there could be another major problem" either next week, or next year. Which is not surprising: after all not only has anything changed, but the very same drivers of risk that nearly crashed capitalism in Q3 2008, are back and arguably stronger than ever. That the Fed is the last recourse mechanism preventing an all out systemic wipe out probably should not be a source of comfort to anyone. In the end, the Fed, as any other authoritarian institution promoting central planning, will always lose.
There's just way too much leverage and way too much risk-taking, with other people's money. I know a lot of my friends on Wall Street will hate my saying this, but the Glass Steagall thing or something like it wasn't a bad thing.
La margin debt du NYSE pète le plafond...
Le taux d'épargne repart à la baisse :
|Personal Income and Outlays increased 0.4% in April|
|Calculated Risk, 27/05/2011 (traduire en Français )|
Et le modèle économique basé sur les global imbalancies arrive à une impasse. Très bon post un peu long, j'essaie de faire une sélection de quotes mais ça vaut la lecture :
|Guest Post: The Economic Death Spiral Has Been Triggered|
|ZeroHedge, 27/05/2011 (traduire en Français )|
The Economic Death Spiral Has Been Triggered
For nearly 30 years we have had two Global Strategies working in a symbiotic fashion that has created a virtuous economic growth spiral. Unfortunately, the economic underpinnings were flawed and as a consequence, the virtuous cycle has ended. It is now in the process of reversing and becoming a vicious downward economic spiral.
One of the strategies is the Asian Mercantile Strategy. The other is the US Dollar Reserve Currency Strategy.
These two strategies have worked in harmony because they fed off each other, each reinforcing the other. However, today the realities of debt saturation have brought the virtuous spiral to an end.
With China's acceptance into the World Trade Organization (WTO), China emerged on the scene in full force. Armed with the lessons of the last twenty years, China took the Asian Mercantile Strategy to another level in its ongoing evolution.
The results were one of the largest and fastest transfers of industrial power ever to occur in history. In ten years, China assumed the role of the world's undisputed industrial powerhouse in the world.
The virtuous cycle further accelerated as Asia became more dominant because its reserves, reinvested back in the US, began to have a larger and larger impact. The more Asia bought US Treasury and Agency debt, the lower US interest rates were forced, allowing Americans to finance more and more consumption. The more Asia bought US securities, the stronger the US dollar was against Asian currencies, and therefore the cheaper Asian products were relative to US manufactured products. It was a self reinforcing Virtuous Cycle.
The result was a staggering 46,000 factories transferred from the US to Asia over the same 10 year period. The transfer set the stage for chronic unemployment and public funding problems, but it was temporarily hidden by equally massive increases in debt spending.
The low interest rate driven housing bubble, being of historic proportions, made Americans feel richer than they were. They took on excess debt in various forms such as Home Equity Loans (HELOCs) at unprecedented levels. The acceleration of debt materially impacted both the GDP and employment of the nation through Real Estate, Construction and Mortgage Finance job growth further hiding underlying problems.
The Asian Export Strategy and the US Reserve Dollar Strategy were symbiotic for a number of reasons:
1. Though the Asian Export Strategy was an Export Trade Imbalance game and the US Dollar Reserve Strategy a Volume Trade game, both were centered on global trade. The US won by increased global trading and the growing requirement for the US dollars it required - dollars that could be increased to pay for the military industrial complex without increasing taxation and used as reserves for global banking growth. Asia won by getting an ever increasing share of a growing volume of trade.
2. The US as a 70% consumption economy needed cheap financing to sustain its insatiable consumption. Asia needed consumption to absorb its growing exports.
3. The US needed a strong dollar to attract financing for its debt. Asia saw US debt as a store for its growing reserves that additionally reduced financing costs for its export products. In a way Asia was offering a form of vendor financing or 'lay away' financing.
4. US corporations saw 'off-shoring', 'outsourcing' and 'rightsizing' as major productivity improvements. The Asian Mercantile Strategy offered American corporations an opportunity to significantly increase profitability while Asia needed every increasing and larger market segments to penetrate. US corporations brought know-how, branding and capital to the Asian economies who desperately needed these strengths to employ unskilled populations, increase standards of living and reduce the always present and potential social unrest.
5. The US economy which had shifted from an industrial economy to a services economy was quickly becoming a financial economy with 44% of the stock market being financials. The financial economy needed increasing capital inflows to sustain itself.
Additionally, stimulus spending by governments has now reached the point where it is actually counterproductive.
The level of nonperforming bank assets is growing at such a rate that global banks have serious concerns with their existing loans and potentially their own solvency.
Growth in Non Performing Bank Loan Levels is shown below.
It is my view that the Basel BIS Bankers have orchestrated their balance sheet growth to offset the contracting Shadow Banking System liabilities. For those that are not aware, Federal Reserve Chairman Ben Bernanke, Bank of England Governor Mervyn King, ECB President Jean-Claude Trichet and Bank of Japan Governor Masaaki Shirakawa all sit as Board Members and meet regularly.
FED'S DUAL TRIPLE MANDATE
To do this the central bankers have increased their balance sheets to their political limits which can be seen in the following Federal Reserve chart from Zeal.
The strong correlation between the Fed’s monetization and the post-panic stock-market recovery is remarkable, perhaps even scary.
The Federal Reserve is no longer the "Lender of Last Resort"
The Federal Reserve is now the "Buyer of First Resort"
There can be little doubt, despite Federal Reserve rhetoric, that Quantitative Easing , ZIRP (Zero Interest Rate Policy) and negative real interest rates have caused a surge in global inflation rates.Là dessus, je suis toujours sceptique... Je rejoins plutôt Mish, comme quoi l'inflation, c'est chez les émergents qu'on la trouve... En occident, ils ne créent pas de monnaie. Ils gravent juste la mauvaise dette existante dans le marbre...
I believe a decision has been taken to temporarily remove some of the pressures off increasing money supply before resuming expansion of money and credit later in Q3 or Q4. There is little choice.
Make no mistake about it however, central bank money printing must continue and at an accelerated rate. I suspect it will emerge not as QE III, but in another form to address the massive and growing problems with non-performing assets, foreclosures and REOs occurring at Fannie, Freddie and the FHA.
Don't get fooled. Watch the balance sheets of the central banks. They will by necessity continue to grow to stop the vicious spiral from accelerating.
The Basel BIS Bankers have no real answers. The eventuality of a fiat currency crisis is ordained and has been since the early warnings in 2007 of the Financial Crisis. The roadmap has been clear to all that actually wanted to look.
Petite pointe de couleur dans tout ça quand même, le taux de prêts en retard sévère de paiement des GSE est en baisse :
|Fannie Mae and Freddie Mac Serious Delinquency Rates decline|
|Calculated Risk, 27/05/2011 (traduire en Français )|