Realistbear Posted June 24, 2010 Share Posted June 24, 2010 (edited) http://www.telegraph.co.uk/finance/economics/7852945/Ben-Bernanke-needs-fresh-monetary-blitz-as-US-recovery-falters.html Ben Bernanke needs fresh monetary blitz as US recovery falters Federal Reserve chairman Ben Bernanke is waging an epochal battle behind the scenes for control of US monetary policy, struggling to overcome resistance from regional Fed hawks for further possible stimulus to prevent a deflationary spiral. By Ambrose Evans-Pritchard, International Business Editor Published: 9:44PM BST 24 Jun 2010 Ben Bernanke needs fresh monetary blitz as US recovery falters Photo: GETTY IMAGES Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so. "We're heading towards a double-dip recession," said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. "The party is over from fiscal support. These hard-money men are fighting the last war: they don't recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again." .../ Gabriel Stein, from Lombard Street Research, said the US is still stuck in a quagmire because Mr Bernanke has mismanaged the quantitative easing policy, purchasing the bonds from banks rather than from the non-bank private sector. "This does nothing to expand the broad money supply. The trouble is that the Fed does not understand broad money and ascribes no importance to it," he said. The result is a collapse of M3, which has contracted at an annual rate of 7.6pc over the last three months. ..../ " We are now walking on deflationary quicksand," said Albert Edwards from Societe Generale. I took a rather large punt on PIMCO Total Bond Fund a few months back on the basis that this was going to be news about now. The 2 Years hit an all time low this week and that is significant because it reflects what is happening in the short to medium term. That is--what is actually happening as opposed to what may happen. Its deflation folks. Bert Edwards has got it right--at last. Good news if you have cash and don't own a house. Edited June 24, 2010 by Realistbear Quote Link to comment Share on other sites More sharing options...
Liquid Goldfish Posted June 24, 2010 Share Posted June 24, 2010 from the article Rob Carnell, global strategist at ING, said the Obama fiscal boost peaked in the first few months of this year. It will swing from a net stimulus of 2pc of GDP in 2010 to a net withdrawal of 2pc in 2011. "This is very substantial fiscal drag. On top of this the US Treasury is talking of a 'Just War' against the banks, which will further crimp lending. It is absolutely the wrong moment to do this." Am I understanding correctly this guy is saying that's an effect of minus 4% GDP? Quote Link to comment Share on other sites More sharing options...
scepticus Posted June 24, 2010 Share Posted June 24, 2010 maybe its a US state government default that is coming down the pike next. Is that good for dollars? Quote Link to comment Share on other sites More sharing options...
Realistbear Posted June 24, 2010 Author Share Posted June 24, 2010 maybe its a US state government default that is coming down the pike next. Is that good for dollars? The reality is that the West will default. It already has when the banking system collapsed. The only thing holding things together now is the bond market and most of the money is going into US bonds. Japan is already the biggest country in the debt league and the Eurozone is probably going to collapse within a few weeks. The money has nowhere else to go. Quote Link to comment Share on other sites More sharing options...
Injin Posted June 24, 2010 Share Posted June 24, 2010 maybe its a US state government default that is coming down the pike next. Is that good for dollars? It is if you want to fill a wheelbarrow with them. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted June 24, 2010 Share Posted June 24, 2010 When 1 defaults - they'll all default. Quote Link to comment Share on other sites More sharing options...
Injin Posted June 24, 2010 Share Posted June 24, 2010 The reality is that the West will default. It already has when the banking system collapsed. The only thing holding things together now is the bond market and most of the money is going into US bonds. Japan is already the biggest country in the debt league and the Eurozone is probably going to collapse within a few weeks. The money has nowhere else to go. They've had many, nmany opportunities to default. They never have. They have always turned the printer on. Why do you think the next one will be any different? Quote Link to comment Share on other sites More sharing options...
Realistbear Posted June 24, 2010 Author Share Posted June 24, 2010 It is if you want to fill a wheelbarrow with them. If the deflationary forces that are troubling the Fed were inflationary forces you might be right. The bond market is screaming deflation at the moment. But not yet--its just a worry for now. Quote Link to comment Share on other sites More sharing options...
scepticus Posted June 24, 2010 Share Posted June 24, 2010 When 1 defaults - they'll all default. quite. It could be over for the dollar as a safe haven extremely quickly indeed. Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted June 24, 2010 Share Posted June 24, 2010 The reality is that the West will default. can you name an example of a time when a country has defaulted on sovereign debt denominated in its own paper currency (rather than just printing it)? Quote Link to comment Share on other sites More sharing options...
scepticus Posted June 24, 2010 Share Posted June 24, 2010 can you name an example of a time when a country has defaulted on sovereign debt denominated in its own paper currency (rather than just printing it)? russia Quote Link to comment Share on other sites More sharing options...
scepticus Posted June 24, 2010 Share Posted June 24, 2010 russia besides, US states don't have their currency but do issue their own debt. US state default is the next eurozone crisis. In fact, I think its time to sell some treasuries. Quote Link to comment Share on other sites More sharing options...
Injin Posted June 24, 2010 Share Posted June 24, 2010 If the deflationary forces that are troubling the Fed were inflationary forces you might be right. Inflation is a choice. They press print and it's done. The only reason to whine about deflation is to give an excuse to print. The bond market is screaming deflation at the moment. But not yet--its just a worry for now. The bond market has missed pretty much every event of note, ever. World wars, state failures - all of it the bond market has slept through. The bond market is the Michael Fish of financial weather forecasting. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted June 24, 2010 Share Posted June 24, 2010 can you name an example of a time when a country has defaulted on sovereign debt denominated in its own paper currency (rather than just printing it)? The future is unkown. The past is a small window to view it from - especially when your eyes are shut. Quote Link to comment Share on other sites More sharing options...
Injin Posted June 24, 2010 Share Posted June 24, 2010 russia Printing wasn't an option due to the politicians being scattered all over the place and no one available to press the print button. Would you like to try again? A state that has been able to print but which hasn't done. In your own time.... Quote Link to comment Share on other sites More sharing options...
Injin Posted June 24, 2010 Share Posted June 24, 2010 The future is unkown. The past is a small window to view it from - especially when your eyes are shut. True. However, there is (so far) a 100% print run, accross all places, all nations, all times. Deflation and default would be a black swan. Quote Link to comment Share on other sites More sharing options...
scepticus Posted June 24, 2010 Share Posted June 24, 2010 Printing wasn't an option due to the politicians being scattered all over the place and no one available to press the print button. Would you like to try again? A state that has been able to print but which hasn't done. In your own time.... US states are going to default sooner or later. It its as much about resetting future pension liabilities as it is about paying existing debt. Quote Link to comment Share on other sites More sharing options...
Realistbear Posted June 24, 2010 Author Share Posted June 24, 2010 can you name an example of a time when a country has defaulted on sovereign debt denominated in its own paper currency (rather than just printing it)? It was Keynes who I believe said something to the effect that a sovereign state cannot default. I am not so sure that is true because history shows that they used to do it all the time. In those days the creditor simply invaded the debtor and distrained upon their chattels and carried of their women. We might have a black day tomorrow on the markets (all this bad news came out after NY closed) with some really rough days to follow as the rest of the PONZIs collapse, especially the ETFs and other "innovative" investment products get called on. The dominoes are about to go in the EZ: http://www.bloomberg.com/news/2010-06-24/u-s-index-futures-drop-on-concern-europe-s-debt-crisis-will-stifle-growth.html U.S. stocks fell, sending the Standard & Poor’s 500 Index to its longest losing streak in seven weeks, as banks dropped on concern over financial regulation and after the cost to protect from a Greek default surged to a record , while consumer shares retreated. I have to admit that I am starting to get a bit worried about the next few years. The social implications will be dire from all of this and the joy of a cheap house may be robbed by the grim reality of a nasty period of depression. Quote Link to comment Share on other sites More sharing options...
scepticus Posted June 24, 2010 Share Posted June 24, 2010 True. However, there is (so far) a 100% print run, accross all places, all nations, all times. Deflation and default would be a black swan. nyquist Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted June 24, 2010 Share Posted June 24, 2010 when in Russia? I'm trying to look it up, but there have been so many currency crises in Russia that I'm not sure which one you guys are talking about! Quote Link to comment Share on other sites More sharing options...
Injin Posted June 24, 2010 Share Posted June 24, 2010 US states are going to default sooner or later. It its as much about resetting future pension liabilities as it is about paying existing debt. Or, they can print. Which is a value default but a technical pay out. No legal redress for that. Quote Link to comment Share on other sites More sharing options...
Alan B'Stard MP Posted June 24, 2010 Share Posted June 24, 2010 Printing wasn't an option due to the politicians being scattered all over the place and no one available to press the print button. Would you like to try again? A state that has been able to print but which hasn't done. In your own time.... Argentina. Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted June 24, 2010 Share Posted June 24, 2010 can you name an example of a time when a country has defaulted on sovereign debt denominated in its own paper currency (rather than just printing it)? U.S. stocks fell, sending the Standard & Poor’s 500 Index to its longest losing streak in seven weeks, as banks dropped on concern over financial regulation and after the cost to protect from a Greek default surged to a record , while consumer shares retreated. great, but Greece can't print it's debt away, so is not what I asked for in my question (above). so you can't name an example then? Quote Link to comment Share on other sites More sharing options...
Injin Posted June 24, 2010 Share Posted June 24, 2010 Argentina. Sells lots of beef and wasn't able to print dollars as they were a foreign currency. They did nuke the peso anyway because hell, that's what bankers do. Wanna go and get your kids atlas out and fire a few more random names at me? Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted June 24, 2010 Share Posted June 24, 2010 Argentina. their debt was in USD, no? Quote Link to comment Share on other sites More sharing options...
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