Wednesday, February 13, 2013

Top Economic Advisers Forecast War and Unrest

Source: Washington’s Blog
We’re already at war in numerous countries all over the world.
But top economic advisers warn that economic factors could lead to a new world war.
Kyle Bass writes:
Trillions of dollars of debts will be restructured and millions of financially prudent savers will lose large percentages of their real purchasing power at exactly the wrong time in their lives. Again, the world will not end, but the social fabric of the profligate nations will be stretched and in some cases torn. Sadly, looking back through economic history, all too often war is the manifestation of simple economic entropy played to its logical conclusionWe believe that war is an inevitable consequence of the current global economic situation.
Larry Edelson wrote an email to subscribers entitled “What the “Cycles of War” are saying for 2013″, which states:
Since the 1980s, I’ve been studying the so-called “cycles of war” — the natural rhythms that predispose societies to descend into chaos, into hatred, into civil and even international war.
I’m certainly not the first person to examine these very distinctive patterns in history. There have been many before me, notably, Raymond Wheeler, who published the most authoritative chronicle of war ever, covering a period of 2,600 years of data.
However, there are very few people who are willing to even discuss the issue right now. And based on what I’m seeing, the implications could be absolutely huge in 2013.
Former Goldman Sachs technical analyst Charles Nenner – who has made some big accurate calls, and counts major hedge funds, banks, brokerage houses, and high net worth individuals as clients – saysthere will be “a major war starting at the end of 2012 to 2013”, which will drive the Dow to 5,000.
Veteran investor adviser James Dines forecast a war is epochal as World Wars I and II, starting in the Middle East.
Nouriel Roubini has warned of war with Iran.   And when Roubini was asked:
Where does this all lead us? The risk in your view is of another Great Depression. But even respectable European politicians are talking not just an economic depression but possibly even worse consequences over the next decade or so. Bearing European history in mind, where does this take us?
He responded:
In the 1930s, because we made a major policy mistake, we went through financial instability, defaults, currency devaluations, printing money, capital controls, trade wars, populism, a bunch of radical, populist, aggressive regimes coming to power from Germany to Italy to Spain to Japan, and then we ended up with World War II.
Now I’m not predicting World War III but seriously, if there was a global financial crisis after the first one, then we go into depression: the political and social instability in Europe and other advanced economies is going to become extremely severe. And that’s something we have to worry about.
Billionaire investor Jim Rogers notes:
A continuation of bailouts in Europe could ultimately spark another world war, says international investor Jim Rogers.
“Add debt, the situation gets worse, and eventually it just collapses. Then everybody is looking for scapegoats. Politicians blame foreigners, and we’re in World War II or World War whatever.”
Marc Faber says that the American government will start new wars in response to the economic crisis:
We’re in the middle of a global currency war – i.e. a situation where nations all compete to devalue their currencies the most in order to boost exports.  And Brazilian president-elect Rousseff said in 2010:
The last time there was a series of competitive devaluations … it ended in world war two.
Jim Rickards agrees:
Currency wars lead to trade wars, which often lead to hot wars. In 2009, Rickards participated in the Pentagon’s first-ever “financial” war games. While expressing confidence in America’s ability to defeat any other nation-state in battle, Rickards says the U.S. could get dragged into “asymmetric warfare,” if currency wars lead to rising inflation and global economic uncertainty.
As does Jim Rogers:
Trade wars always lead to wars.
And given that many influential economists wrongly believe that war is good for the economy … many are overtly or quietly pushing for war.
Moreover, former Federal Reserve chairman Alan Greenspan said that the Iraq war was really about oil , and former Treasury Secretary Paul O’Neill says that Bush planned the Iraq war before 9/11.    And seethis and this.   If that war was for petroleum, other oil-rich countries might be invaded as well.
And the American policy of using the military to contain China’s growing economic influence – and of considering economic rivalry to be a basis for war – are creating a tinderbox.
Finally, multi-billionaire investor Hugo Salinas Price says:
What happened to [Libya's] Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a golddinar.
Indeed, senior CNBC editor John Carney noted:
Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power? It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.
Robert Wenzel of Economic Policy Journal thinks the central banking initiative reveals that foreign powers may have a strong influence over the rebels.
This suggests we have a bit more than a ragtag bunch of rebels running around and that there are some pretty sophisticated influences. “I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising,” Wenzel writes.
Indeed, some say that recent wars have really been about bringing all countries into the fold of Western central banking.

Many Warn of Unrest

Numerous economic organizations and economists also warn of crash-induced unrest, including:

CHART - It's The Spending, Stupid!

A fiscal cliff drop in the bucket.
CHART - CBO Projection Of Federal Spending 2002 - 2022.
Just a quick chart to demonstrate that the fiscal cliff deal on taxes means essentially nothing in the grand scheme of future federal spending.  Chart is from the following story:
Jobs Report - U6 Rate Holds at 14.4%, Actual Employment Falls to 58.6%
UPDATE - Blink! U.S. Debt Just Grew by $11 Trillion

DOJ COMPLAINS: 'The Untouchables Was A Hit Piece'

Lanny Breuer on line 1.
'We will never co-operate with Frontline in the future.'
Not a huge story but still incredibly satisfying for molecular-level Wall Street revenge seekers.  A win is a win except in the Harbaugh family, and this is a victory for our side.  We can celebrate the fact that the Justice Department contacted Frontline producers last week after 'The Untouchables' aired Tuesday night and and threatened to blackball the award-winning PBS show.
You read that right.  And they called it a 'hit piece' for good measure.
Thin skin much, Lanny and Eric?  The truth hurts and the knives come out.
John Titus, who attempted to participate, offered the following summary.
DB--At your suggestion, I took part in the online chat and submitted nearly 20 questions, none of which was answered or acknowledged.  Moderator Peter Eavis plays an old man's game of 16" slow-pitch softball over there at NYT Dealbook.  Apparently he didn't see any of the four-seam hard balls that I sent over the middle of the plate.  All in all, it would have been a complete waste of 1 hour but for the following exchange:
FRONTLINE: Marty - some viewers have wondered about whether or how the Justice Department or other government agencies have responded to the film.  Any word?
Martin Smith: Well, the Justice Department called and said they thought it was a hit piece, that I came with an agenda and that they will never co-operate with us in the future.
Martin Smith: I'll let viewers decide if we were fair.
Continue reading...
Summary from Frontline:
More than four years after the financial crisis, not one senior Wall Street executive has faced criminal prosecution for fraud.  Are Wall Street bankers simply “too big to jail?”
In The Untouchables, FRONTLINE producer and correspondent Martin Smith investigates why the U.S. Department of Justice has failed to act on credible evidence that Wall Street knowingly packaged and sold toxic mortgage loans to investors, loans that brought the U.S. and world economies to the brink of collapse.
So, after talking with top prosecutors, government officials and industry whistleblowers, what did he find?  Is there a chance some prosecutions may still take place?  What do we really know about the criminal cases that could be have been pursued?  And what does this investigation reveal about Wall Street and its relationship with the government?

You can watch the full broadcast here:

PBS Frontline - Wall Street Untouchables

And the details of Lanny Breuer's departure are here:

Wall Street Shill Lanny Breuer Done At DOJ

The Secret of Oz: The Money Masters Sequel (Full Version)

Thirteen years ago, in a documentary called “The Money Masters”, we asked the question why is America going broke. It wasn’t clear then that we were, but it is today. Now the question is how can we get out of this mess. Foreclosures are everywhere, unemployment is skyrocketing – and this is only the beginning. America’s economy is on a long, slippery slope from here on. The bubble ride of debt has come to an end.
What can government do? The sad answer is – under the current monetary system – nothing. It’s not going to get better until the root of the problem is understood and addressed. There isn’t enough stimulus money in the entire world to get us out of this hole.
Why? Debt. The national debt is just like our consumer debt – it’s the interest that’s killing us.
Though most people don’t realize it the government can’t just issue it’s own money anymore. It used to be that way. The King could just issue stuff called money. Abraham Lincoln did it to win the Civil War.
No, today, in our crazy money system, the government has to borrow our money into existence and then pay interest on it. That’s why they call it the National Debt. All our money is created out of debt. Politicians who focus on reducing the National Debt as an answer probably don’t know what the National Debt really is. To reduce the National Debt would be to reduce our money – and there’s already too little of that.
No, you have to go deeper. You have to get at the root of this problem or we’re never going to fix this. The solution isn’t new or radical. America used to do it. Politicians used to fight with big bankers over it. It’s all in our history – now sadly – in the distant past.
But why can’t we just do it again? Why can’t we just issue our own money, debt free? That, my friends, is the answer. Talk about reform! That’s the only reform that will make a huge difference to everyone’s life – even worldwide.
The solution is the secret that’s been hidden from us for just over 100 years – ever since the time when author L. Frank Baum wrote “The Wonderful Wizard of Oz.”
If you like this film, please support the makers by purchasing an official DVD, by spreading the word about the movie, by making a donation on their web page, or by other means available to you. Thank you!
Cast includes:
· Joseph Farah, Founder and CEO of WorldNetDaily.
· Peter Schiff, President of Euro-Pacific Capital, the leading “bear” on Wall Street, author.
· Byron Dale, author and monetary reform expert, author of many books.
· Ellen Brown, author Web of Debt, attorney, and monetary reform expert
· James Robertson, former official in a variety of slots in the UK government, and head of the Inter-Bank Research Organization, author of many books
· Prof. Nick Tideman, VA Tech University School of Economics
· Prof. Michael Hudson, President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire (1972 and 2003)
· John Keyworth, Curator, Bank of England Museum
· Prof. Quentin Taylor, professor of political science at Rogers State University
· Reed Simpson, banker, asset manager
More info at:

Idiots Rule The Country

Monty Pelerin’s World
The insanity that is our Federal government and their lackies at the Federal Reserve apparently is unlimited. Janet Yellen, Vice-Chair of the SF Federal Reserve is the latest example of the idiocy. Apparently she is vying for the Paul Krugman Stool of Economics if any university is foolish enough to create one.
Here is Joe Wiesenthal’s report on her recommendations:
 Janet Yellen Vice-Chair of the San Francisco Federal Reserve has a big new speech out about how slow this recovery has been, and why.
One of the culprits for the slower recovery?
Fiscal policy.
Specifically? Were not spending enough.
Government spending, which usually provides a boost to the economy in the quarters following the recession, has been a net drag this time because the government is spending less than it normally does.
As this chart shows, in the initial 4 quarters since the start of ths recovery, government spending provided its standard boost to GDP.
But in the 8 quarter and 12 quarter period after that, fiscal policy has been a drag, as spending growth has been a lot slower than in past recoveries.
So yes, spending is the problem. We just need to crank it up.

A kinder way to interpret this situation is to assume that Ms. Yellen cannot be this stupid and that she was ordered to produce such a report by higher-ups in government. That would be a reasonable assumption because it is essential for the Fed to continue its QE in order for the government to continue to be able to pay its obligations. Unfortunately, as reported by Mr. Wiesenthal, the recommendation has nothing to do with more monetary policy.The recommendation calls for more spending!  This recommendation could have come from some strange episode of Seinfeld. Are we living in some bizarro world where up means down and everything is devoid of sense?
An additional question involves the opinion of Mr. Wiesenthal. He is either committing subtle humor (“So yes, spending is the problem. We just need to crank it up.”) or his brain has been captured by the same aliens that got a hold of Ms. Yellen.

The Richest 1 Percent Have Captured 121 Percent Of Income Gains During The Recovery

Last year, economist Emmanuel Saez estimated that the richest 1 percent of the U.S. captured a whopping 93 percent of the income gains in 2010, as the U.S. was emerging from the Great Recession. Saez is now back with updated numbers from 2011, and they make the picture look even grimmer:
From 2009 to 2011, average real income per family grew modestly by 1.7% (Table 1) but the gains were very uneven. Top 1% incomes grew by 11.2% while bottom 99% incomes shrunk by 0.4%. Hence, the top 1% captured 121% of the income gains in the first two years of the recovery. From 2009 to 2010, top 1% grew fast and then stagnated from 2010 to 2011. Bottom 99% stagnated both from 2009 to 2010 and from 2010 to 2011.
How is it possible for the 1 percent to capture more than all of the nation’s income gains? The number is due to the fact that those at the bottom saw their incomes drop. As Timothy Noah explained in the New Republic, “the one percent didn’t just gobble up all of the recovery during 2010 and 2011; it put the 99 percent back into recession.”
Saez added that “In 2012, top 1% income will likely surge, due to booming stock-prices, as well as re-timing of income to avoid the higher 2013 top tax rates…This suggests that the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s.”

The Money Masters ~ Full Movie

CNBC: Treasury's Secret 'Break The Glass' Plan

Must watch.
Just discovered this clip.  Broadcast December 1, 2009.
On April 15, 2008, the confidential plan, prepared by Neel Kashkari, is brought to Bernanke by Paulson.  Here is an excerpt from Sorkin's book with details.
Too Big To Fail: Confidential Break the Glass


Source - Andrew Ross Sorkin
New details about what was then a secret Treasury plan to save the banking system presented on April 15, 2008 — five months before TARP was introduced — to Federal Reserve chairman Ben Bernanke.  The plan, called the “Break the Glass” Bank Recapitalization Plan, was written by Treasury staffers Neel T. Kashkari and Phillip Swagel. The plan was the basis for the TARP proposal made in September 2008 after the financial panic began.
The “Break the Glass” plan contemplated that the government would buy toxic assets from the nation’s banks. It also discussed several other strategies for the government to help ailing banks using $500 billion of taxpayer money — including making direct capital injections into the banks. (The ultimate TARP plan called for $700 billion.)
Remarkably , the 10-page document discussed the pros and cons of buying toxic assets. Among the cons, the Treasury staffers identified two that continue to cause public outrage:
“Without a complimentary program, does nothing to help homeowners (for which there would be enormous political pressure)”
“No guarantee banks will resume lending.”
Up until now, the full “Break the Glass” document has never been discosed. The paper, which was obtained by the author during the course of his reporting for the book, was used as a source document in Chapter Five of Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves.

The Party’s Over: How the West Went Bust (Full Version)

Marc Faber Tells CNBC: 'U.S. Will Never Balance Its Budget'

'Expecting the U.S. to balance its budget is like expecting my Rottweilers to hoard sausages.'
'Markets will punish central banks for printing.'
Faber on CNBC Asia - Jan. 31, 2013.



DEM Gets Vulgar Over Obamacare: 'Do You Work For The Cock Brothers?'

This is pretty funny.

'Who's paying you?  The cock brothers...'
Jason Mattera vs. Rep. Jim McDermott, Feb. 11, 2013.
Jim McDermott (D-WA) attempts to walk away from a good question — whatever happened to the price cuts in health-care premiums Democrats promised when they passed Obamacare three years ago?
McDermott doesn't answer the question because there is no good answer.  Premiums have spiked and the promise to bend cost curves lower was empty rhetoric.

RED ALERT: The Gold Police Have Arrived!

This is becoming a disturbing trend.
In Houston you are now considered a criminal if you sell gold or silver.

Info Wars
Law Requires Any Consumer Selling Gold To Submit To Fingerprints And Mugshots
Last week the Houston City Council passed an ordinance requiring people who sell precious metals to be fingerprinted and photographed.  According to KTRK-TV, the ordinance is “meant to help track down criminals who try to resell stolen valuables."
"Gold-buying businesses will now be required to photograph and fingerprint sellers as well as photograph the items that are being sold to the dealer."
In other words, citizens who sell gold will be considered criminals until they demonstrate otherwise.
“It’s going to allow us the tools necessary to combat a lot of the high-end jewelry thefts that’s going on in the city, whether it’s robberies or burglaries,” Houston Police Officer Rick Barajas told the news station last Wednesday.
Audi S8s, Shelby Mustangs, BMW M5s, Dodge Chargers and Honda S2000 roadsters are stolen thousands of times a year and yet people who own them are not required by government to be fingerprinted and photographed in order to sell their cars. Ditto folks who sell expensive items at pawn shops or on eBay. Can you imagine the chaos in commerce that would occur if every item over say $1,000 required the seller to surrender fingerprints and photographs – more accurately, mugshots – which the buyer would be obliged under penalty of law to submit to the state within 48 hours?
"No precious metals thief is going to agree to a mug-shot and thumbprint," said Houston City Council Member Helena Brown in response to the law.
"That’s like declaring that the thieves are going to be turning themselves in.  It’s ludicrous.  I don’t know who told HPD that this is going to help them.  It’s not going to help anyone, but rather it will be damaging to an industry and to our self-respect and liberty."
Continue reading...

Gold Sellers in Houston Must Submit Fingerprints & Mugshots

Is this the start of a trend:

New Bill Requires Gold & Silver Registration In Illinois

Photo by William Banzai7...

Precious metals never looked so good.

The greatest Halloween costume of all time.

Chinese Troop Movements Signal War?

Tanks, one by one, moving along a main road in China’s coastal Fujian province. Driving up speculations that the Chinese military may be warming up for war. 
Local residents took these pictures between February 3 to February 6. At times, the line of tanks and artillery blocked traffic for several miles. 
And it wasn’t just in Fujian province. These military vehicles were spotted further up the coast, in neighboring  Zhejiang province. According to dissident website,, these tanks in Hubei province are being transported from a military base to the coast.
The troop movements come after months of escalating tensions between China and Japan over the disputed territory of the Diaoyun, or Senkaku islands and they’re known in Japan. It’s caused international worries that the two countries may be on the cusp of war. Both sides have scrambled jets and warships in the region. In January, during naval exercise near the disputed waters, Chinese warships reportedly directed their targeting radar at a Japanese vessel. 
On February 7, State-run Global Times published this article saying there is a “serious possibility” a military conflict may flare up between China and Japan. It continues to say that fewer and fewer people are hopeful for a peaceful resolution to the Diaoyu Island crisis. 
Are we in a countdown to war between China and Japan? NTD will continue to keep you posted as the situation develops.

Head Of Italy’s Second Largest Industrial Conglomerate Arrested

Just when you thought you had heard it all – from Spanish politicians to Italian bankers – along comes the CEO of Italy’s Finmeccanica. Giuseppe Orsi has been arrested for his alleged involvement in a bribery to ensure the Italian aerospace company got the order for Indian military helicopters in 2010. The $750 million deal, as reported by the WSJ, is now under investigation by the Indian defense minister but is not the first such ‘bribery scandal’ for Finmeccanica – whose CEO generously offered to step down if the Italian government (which owns 30.2% of the firm) asks him to. The share price plunged over 8% and was halted as analysts suggested – rather remarkably – that this might make it harder for Finmeccanica to compete for contracts in an already difficult market in which governments are cutting back on military spending. The sad truth appears to be that, whether pandemic or recently driven by a tougher economic environment, fraud runs deep – and its just a matter of time before it comes out, especially with the election so close.
more here

IRS: Cheapest Obamacare Plan Will Be $20,000 Per Family

IRS: Cheapest Obamacare Plan Will Be $20,000 Per Family
(Washington) -- In a final regulation issued Wednesday, the Internal Revenue Service said that under Obamacare the cheapest health insurance plan available in 2016 for a family of five will cost $20,000 for the year.  In the new final rules published Wednesday, IRS set in law the rules for implementing the penalty Americans must pay if they fail to obey Obamacare's mandate to buy insurance.

CHART: 50% Of College Grads Are Underemployed

Underemployed America.
Half of college graduates are now in jobs that don't require a degree.
Feb. 4 (Bloomberg) -- In today's "Single Best Chart," Bloomberg's Scarlet Fu explains why it doesn't always help to have a college degree.
The 10 Best-Paid Jobs, No Degree Required - MarketWatch

Last week:

The Chart That Should Force The Fed Out Of Business

Gold Sellers in Houston Must Submit to Fingerprints and Mugshots

‘Last week the Houston City Council passed an ordinance requiring people who sell precious metals to be fingerprinted and photographed.
According to KTRK-TV, the ordinance is “meant to help track down criminals who try to resell stolen valuables. Gold-buying businesses will now be required to photograph and fingerprint sellers as well as photograph the items that are being sold to the dealer.” In other words, citizens who sell gold will be considered criminals until they demonstrate otherwise.’

Bank set to downgrade economic growth forecasts AGAIN as inflation eats away at household spending power

The outlook for the UK economy looks set to take another dent tomorrow, with the Bank of England expected to forecast a grim combination of stagnant growth and persistent inflation.
Sir Mervyn King will present the Bank's quarterly Inflation Report after official figures today confirmed inflation remained at 2.7 per cent in January.
The Bank's monetary policy committee gave a clue to the report's forecasts last week when it warned that inflation was likely rise in the coming months and might remain above the 2 per cent target for another two years.
Price shock: Inflation remains above target but it is everyday essentials such as food and heating that is rising most quickly.
Price shock: Inflation remains above target but it is everyday essentials such as food and heating that is rising most quickly.
Price shock: Inflation remains above target but it is everyday essentials such as food and heating that is rising most quickly.
The attack from rising prices on UK households' income and savings has squeezed spending power for the last three or four years as salaries have been frozen and savings rates slashed.

Consumer prices index inflation has been at 2.7 per cent since October but today's data revealed households have suffered faster rises among essential items such as energy, food and rent.

The Office for National Statistics added that inflation as measured by the retail prices index had accelerated to 3.3 per cent from 3.1 per cent a month before.

And experts predict energy price hikes, rising food prices and tuition fees could push CPI above 3 per cent by the summer.

Inflation is also being driven higher by the weaker pound, according to Howard Archer, chief UK and European economist at IHS Global Insight.

He said: 'Once again the Bank of England will likely have the dismal task of raising its consumer price inflation forecasts and cutting its gross domestic product growth projections.'

The Bank is likely to admit it was overly optimistic in its November report, when it said inflation would fall back towards target in the second half of 2013.

Its forecast for 0.5 per cent growth in 2012 has already been proven wrong after a worse-than-expected 0.3 per cent decline in fourth quarter GDP left the economy unchanged overall last year.

The contraction - which left the UK on the brink of an unprecedented triple-dip recession - is likely to see the Bank trim its forecasts for 2013. It downgraded its 2013 growth forecast to around 1 per cent in November, but could bring this down yet again.

Graph shows CPI and RPI for the past two years - the rate of price rises has been stuck for four months.
Graph shows CPI and RPI for the past two years - the rate of price rises has been stuck for four months.
Today's inflation figures from the ONS showed prices overall were actually 0.5 per cent lower in January than December - but the change between the months was the same as for the year before, so the annual rate of inflation remained constant.
Prices of clothing and footwear dropped by 5.4 per cent as retailers discounted item after Christmas. The fall was quicker than occurred last year and pushed the overall rate lower.

Conversely, alcohol and tobacco prices rose 4.3 per cent over the month. The ONS said this was because retailers reversed discounts on booze that had been in place in the run up to Christmas.

A shortage of vegetables in the UK contributed to the food price rises as more produce was sourced overseas.

Stubbornly high inflation is causing problems for policymakers as they also weigh up the risks to the economic outlook.
The Bank held off from more money printing measures last week, keeping its quantitative easing programme at £375 billion, while it also kept interest rates at 0.5 per cent.

Vicky Redwood, chief UK economist at Capital Economics, said there could be more QE in the pipeline after the MPC said it was prepared to 'look through' the inflationary pressures.

She said: 'If the economy continues to struggle, above-target inflation should not be a barrier to further stimulus. What's more, we still expect inflation to fall back towards the end of this year as underlying price pressures fade further.'
Contributions to the CPI 12-month rate (in total 2.7%): January 2013

The ONS also supplied analysis of the items that had had most impact on the rate of inflation over the past year.
The biggest contributors to inflation in January included everyday essentials such as home fuel bills, rents and food.
Prices in the 'housing and household services' category rose 3.5 per cent in the year to January with the rise split between higher rents for tenants and home fuel bills. This category contributed 0.5 of the overall 2.7 per cent rise in the CPI.
The figures did not include the impact of price rises from energy suppliers that were announced  around the turn of the year. The hikes will push inflation higher when households begin to receive bills for the winter period.
A similar upward contribution came from 'food and non-alcoholic beverages'.
Prices here rose 4.2 per cent over the year. Alcohol and tobacco prices roses even more quickly, at 8.5 per cent. The ONS said that food bills have been impacted in the past few month by low vegetable stocks, with a shortage of many items pushing prices up.

France fires latest salvo in euro debate as currency wars threaten global economy

France last night demanded a debate about the strength of the euro as global currency wars threatened to spiral out of control.
French finance minister Pierre Moscovici said exchange rates ‘should not be subject to moods or speculation’ amid fears the single currency’s recent surge is damaging exports and the economy.
His comments at a meeting of eurozone finance ministers in Brussels echoed those of French president Francois Hollande who last week tried to blame the deepening economic crisis in his country on the strong euro rather than his own failing policies.
Currency wars: It is feared countries could embark on tit-for-tat action to weaken exchange rates to keep exports cheap
Currency wars: It is feared countries could embark on tit-for-tat action to weaken exchange rates to keep exports cheap
The panic in France was dismissed by other European countries including Germany but marked a new front in the currency wars threatening the global economy.
It is feared that countries could embark on tit-for-tat action to weaken exchange rates to keep their exports cheap in a damaging race to the bottom.
Officials are worried skirmishes in the currency markets could lead to a disastrous new wave of protectionist trade policies like those that exacerbated the Great Depression.

‘Countries might resort to currency depreciation as a deliberate policy instrument to stimulate exports and economic growth,’ said Neil MacKinnon at VTB Capital.
‘If countries then resort to protectionist measures then world trade suffers. In that scenario, there are no winners and the economic outlook then begins to look very similar to the 1930s.’
Jens Weidman, head of the German central bank, the Bundesbank, and an influential figure at the European Central Bank, slapped down French concerns about the euro.
He said ‘politically-brought-about devaluations’ do not lead to improved economic competitiveness and added that the euro is ‘not seriously overvalued’.

Libor-Rigged bank rates: Is there more to come?

Shelters seeing more elderly homeless

On the afternoon of Jan. 17, when the temperature dipped below freezing, a family from Kingman drove to Wichita, dumped a 78-year-old relative at the Inter-Faith Inn homeless shelter and quickly drove away.
They left her on the sidewalk with her wheelchair and a few suitcases.
“She wasn’t crying,” case manager Amanda Merritt recalled. “But she was upset about the situation. She said they were kicking her out.”
They left so quickly that no one from the shelter was able to talk to them, Merritt said. They didn’t even knock on the shelter door to make sure there was room at the inn.
“That’s unbelievable that someone would do that,” said Janis Cox, co-chairwoman of Advocates to End Chronic Homelessness, an area faith-based volunteer group.
Shelter staff took the woman, who was in poor health, inside.
To accommodate her frailties, the staff hustled to set her up with a room on the ground floor.
She stayed at the shelter more than two weeks until she found an out-of-state friend who agreed to take her in. She left Wichita a week ago.
The woman’s story may seem unbelievable, but it’s not that rare, said Sandy Swank, director of housing and homeless services for Inter-Faith Ministries.
A 2010 study by the Homeless Research Institute, an arm of the National Alliance to End Homelessness, projected that the number of elderly people who are homeless would increase by 33 percent, from 44,172 in 2010 to 58,772 by 2020, and would double to 95,000 by 2050.
“It seems like there are two main things going on,” said Nan Roman, president and chief executive of the alliance in Washington, D.C.
“One is that there’s a group of people who are homeless who are becoming older. They were younger homeless people, so the population is aging that way. The other thing is that our whole population is aging. Even though older people are less likely to be homeless than other people because they have more of a safety net, because there are more and more older people in general, we are going to have more and more elderly people vulnerable to homelessness.” Numbers up locally
Swank sees the numbers increasing locally.
“I’ve been working at Inter-Faith since October 1990,” she said. “In the beginning, we’d have an occasional elderly person come in, but if they came in, they came in with someone else. They always had someone to look after them. In the last 10 years, we have seen more elderly people, and each year it seems like the number increases.”
Swank remembers another woman left at the shelter. She arrived in a hospital gown with no shoes. There was snow on the ground. The front left wheel of her wheelchair was off.
“I was just outraged,” Swank said.
The woman eventually was able to move into an apartment of her own.
Inter-Faith’s winter shelter has served 13 people over age 62 this year, more than double last year’s total of five.
Swank points to a few theories about why the numbers are up – including, of course, the economy.
“Years ago, families did look after families,” Swank said. “Today, because of the economy, a lot of people are at risk themselves. I think families can’t afford to take care of each other like they used to. And we’ve become more mobile. We move away from our families of origin. We’re spread out.”
Inter-Faith is seeing mostly elderly people whose spouses have died, Swank said. Their spouses might have left behind a pile of medical expenses or credit card debt. She remembers one elderly woman whose husband died, leaving her with debt she didn’t even know about.
“They end up losing everything,” she said. “They’re pretty vulnerable. They don’t have a lot of experience, especially when the partner that’s deceased was in charge of decisions. So they’re pretty clueless about what to do.” Families ‘very stressed’
Public awareness about the increase in homelessness among the elderly is a good place to start, said Cox, chairwoman of the area task force.
“Families are very stressed,” she said. “With social services being cut by the government and nonprofits not receiving more donations, it just puts normal families under even more stress.”
The Homeless Research Institute recommended as part of its study that policymakers and leaders:
• Increase the supply of subsidized, affordable housing for seniors.
• Create sufficient permanent supportive housing to end chronic homelessness.
• Conduct research to better understand the specific needs of elderly people who are homeless.
“We’re millions of units short of low-cost housing,” said Roman, with the national alliance. “Not attending to it is not very smart because especially with older people, they’re going to get hospitalized, they’re going to get put in nursing homes, and those are very expensive things to happen. It’s much cheaper to keep them in regular housing.”
Roman also emphasized that people who are homeless age much faster. So a 50-year-old person without a home will have far more medical problems than a 50-year-old person who does have a place to call home.
The oldest person at Inter-Faith’s winter shelter was 83, Swank said.
She recalled a military veteran who didn’t have any living relatives.
“We sort of adopted him like a grandpa,” she said. “He had terminal lung cancer. We tore my office out of here and put a hospital bed in there. We’ve done extraordinary things. It’d be real easy to just say ‘no,’ but no can do.”
He stayed at the shelter until his pain became unbearable. He wanted to die at the shelter, Swank said, where he had some semblance of family.
“But we couldn’t administer pain meds,” Swank said. “We put him in an ambulance to the hospital.” Homeless ‘off and on’ for 20 years
Dale Chilen recently landed in Inter-Faith’s winter shelter after a visit to the Robert J. Dole Veterans Administration Medical Center’s emergency room. A cab delivered the 78-year-old to the shelter on a Saturday night.
Swank just happened to see him arrive.
“He was so frail, in a wheelchair,” Swank said. “I paid the cab driver to get him to Safe Haven. He was too vulnerable anywhere else. We’re not a one-size-fits-all shelter, although sometimes I’d like to be.”
Chilen said he was born and raised in Kansas but most recently had been living in Reno, Nev.
He arrived in Salina at the beginning of the year, he said, “walked about 20 feet and fell and broke my hip.”
He said he went to a hospital in Salina and then to a senior center. He eventually came to Wichita.
Chilen stayed at Safe Haven, an Inter-Faith shelter for severely and persistently mentally ill or physically disabled people who are chronically homeless, for about a month.
The shelter “has been real good to me,” he said.
On Wednesday, he started moving into a low-income apartment for seniors with the help of Inter-Faith Ministries and the Veterans Administration.
The VA Center said it could not talk about specific patients because of privacy rules.
“We’re going to review the process to ensure we’re providing the best care for our veterans,” said Tyler Kilian, supervisor of ancillary services there.
Chilen, a Korean War veteran, said he has been homeless “off and on” for 20 years.
“I hate to admit it,” he said from his wheelchair, proudly looking at a brochure about his new apartment complex.

Read more here:

Peter Schiff: Government Being Vindictive, Going After S&P Because They Downgraded US Debt

Peter Schiff: Government Being Vindictive, Going After S&P Because They Downgraded US Debt

Supreme Court Snubs Citizens Whose Social Security Will Be Confiscated If They Refuse Government Health Care

Some of the U.S. Supreme Court’s most significant decisions are those declining to hear a case. Two weeks ago, the Court made such a momentous non-ruling in refusing to hear a lawsuit, Hall v. Sebelius, challenging government policies that deny otherwise eligible retirees their Social Security benefits if they choose not to enroll in Medicare. (I previously wrote about the case, and Cato filed a brief supporting the retirees’ petition for Supreme Court review.)
Despite having paid thousands of dollars each in Social Security and Medicare taxes during their working lives—for which they never sought reimbursement—the five plaintiffs were told by officials at the Social Security Administration and Department of Health and Human Services that they had to forfeit all of their Social Security benefits if they wished to withdraw from (or not enroll in) Medicare. This determination resulted from internal policies that were put in place during the Clinton administration and strengthened by the Bush administration. The plaintiffs sought a judicial ruling that would prohibit SSA and HHS from enforcing these policies, which they believed conflicted with the Social Security and Medicare statutes. A sharply divided U.S Court of Appeals for the D.C. Circuit eventually upheld them. By its decision not to hear the case, the Supreme Court let that controversial ruling stand.
At this point, one might ask why someone would want to give up Medicare. The answer is that some people would prefer to keep their existing (private) health insurance, but that for various regulatory and economic reasons insurance companies are wary of insuring people already covered by Medicare. Talk about the prototypical case of government programs crowding out the private sector!
In any event, the troubling reality of the Supreme Court’s non-ruling is twofold: First, the government now has full authority to force citizens to participate in a financially troubled program (Medicare) that was originally intended to be—and operated for almost three decades as—a wholly voluntary program. If they refuse, SSA and HHS can deny them their Social Security benefits. If they seek to withdraw from Medicare, SSA and HHS can not only deny them future benefits, but force them to repay all benefits received from both programs. Second, the Supreme Court’s unwillingness to address the issue raised here allows federal agencies to bypass Congress with impunity when drafting and implementing their own rules.
The plaintiffs’ lawyer, Kent Masterson Brown, had this to say in a press release following the Supreme Court’s order:
Not only have the Courts allowed these agencies to grant themselves permission to seize a retiree’s Social Security benefits should they opt out of Medicare, but they have allowed those agencies to turn voluntary programs into compulsory ones, giving Seniors no choice whatsoever but to accept the ever more limited health care offered by Medicare. The plaintiffs cannot pay for their own health care—and save the Government and taxpayers money—without forfeiting all of their Social Security benefits.  There is nothing in the Social Security statutes that says a retired individual who chooses not to apply for Medicare coverage will be stripped of his or her Social Security benefits.
Martha de Forest, executive director of a group that supported the lawsuit, the Fund for Personal Liberty, also had a response:
Why would the government tie two programs together when they have different payment mechanisms and different start dates? It is about control, nothing more.  That is why the government forces retirees to participate in Medicare as a condition of receiving Social Security Retirement benefits.
At base, it’s axiomatic that administrative agencies have no powers not granted to them by Congress and that regulations must be anchored in their operative statute. The rules challenged here failed this standard. Combined with the fiscal irresponsibility of forcing citizens to accept costly benefits during hard economic times, the SSA and HHS rules are an arbitrary power grab. Agency overreach imperils the separation of powers and therefore liberty.
Now that the Supreme Court has failed to counter this unauthorized expansion of federal power, it’s time for Congress to do so by legislation—as Quin Hillyer suggests in his commentary on the case. Richard Epstein has further thoughts on how Hall v. Sebelius illustrates the untrammeled growth of the administrative state.

How The Fed Is Handing Over Billions In "Profits" To Foreign Banks Each Year

Over the past two weeks we have reported that just like during the spring and summer of 2011, all the cash generated by Fed excess reserves, has gone to foreign banks operating in the US, which according to the Fed, are vastly composed of European financial institutions. In other words, the cash that the Fed is creating out of thin air by monetizing the US deficit, is going solely and exclusively to European banks and a handful of other foreign banks. This can be seen both in the chart below, and is confirmed by the Fed itself, which in a paper from November 2012, admitted just this when it said that "the recent unprecedented build-up of cash balances by [foreign banks] was almost entirely composed of excess reserves."

What is notable about the chart above is that while cash parked at US-domiciled banks, both small and large, has been relatively flat in the past 3 years at just about $800 billion, it was been foreign banks that absorbed the bulk of the Fed's newly created reserves.
All of this was explained in extensive detail previously here and here.
Just as importantly, and as also shown previously, the excess reserve cash parked at foreign banks just hit a record $954 billion as of the week ended January 31.

What is still a mystery, however, is just what do foreign banks use this cash for: does the cash undergo collateral transformation whereby the cash collateral is transformed into various "safe" intermediary securities via the shadow banking system (as Monte Paschi was discovered to have done recently), and if so what is the ultimate use of free Federal Reserve funds.
We hope that before the Fed loses all control of the economy and markets we will get the answer to this budding question.
But even assuming foreign banks do nothing with this cash and it merely sits on the Fed's books, this does pose another question, one which we hope someone from Congress will ask Chairman Ben at the upcoming Humphrey Hawkins presentation at the end of February. Namely: why has the Fed paid some $6 billion in interest to foreign banks, in the process subsidizing and keeping insolvent European and other foreign banks, in business and explicitly to the detriment of countless US-based banks who have to compete with Fed-funded foreign banks and who have to fire countless workers courtesy of this Fed subsidy to foreign workers?
As readers will recall, on December 18, 2008, the Fed dramatically changed its policy to control the suddenly all critical fungible liquidity bailout reserve level, by implementing a cash interest paid on reserve balances held at Reserve banks, amounting to 25 basis points on the excess reserve balance. The Reserve banks included all foreign banks operating in the US. It is these banks that now have a record $954 billion in cash as of the week ended January 30, and it is this $954 billion that now accrues an interest of 0.25% per year.
We show the surge in the foreign bank cash level, as well as the cumulative cash interest paid to these banks assuming a weekly cash interest payment. What the chart shows is that from December 2008 through the last week of January, the Fed has paid out some $6 billion in cash (red line) to European banks simply as interest on excess reserves.

But that's just the beginning. If we are correct in assuming that QE3 will be a replica of QE2 when all the new reserves created ended up as cash on foreign bank balance sheets, it means that we can quite accurately forecast what the total foreign bank cash position will be on December 31, 2013 (as the Fed will certainly not end its open ended monetization of the US deficit before then, or likely, ever). The result: just under $2 trillion in cash held be foreign banks operating in the US, which also means that in calendar 2013, the Fed will fund and subsidize foreign banks a blended interest payment of $3.5 billion! This is entirely separate from the $2 trillion liquidity subsidy that Bernanke will also have handed out to keep these banks afloat, and is $3.5 billion that will flow right through the P&L and end up in the pockets of offshore shareholders who otherwise would very likely be wiped out had it not been for the Fed's relentless efforts to bailout foreign banks.

And since it is improbable that excess reserves held by any banks will decline at all in the coming years, one can also assume that the annualized interest paid to foreign banks, which would amount to at least $5 billion pear year, every year, will continue indefinitely as a direct Fed subsidy to the bottom line of Foreign banks.
All of this, of course, ignores what happens should the Fed hike interest rates across the board, which will also mean rising the rates on IOER, once inflation finally strikes: simple math means a 1% IOER means some $20 billion in interest paid to foreign banks, 2% - $40 billion, 5% - $100 billion paid to foreign banks, and so on. Putting these numbers in perspective, let's recall that Italy's third largest bank just got a €3.9 billion bailout (its third), and has a market cap of some €2.9 billion.
We can only hope someone in Congress asks Ben Bernanke in two weeks just under which Fed charter it is that the Fed is more focused on generating profits (not just trillions in excess liquidity) for European banks, than on opening up consumer lending which has been stuck in "petrified" mode for the past 4 years, with the total amount of loans outstanding currently at all US banks - foreign and domestic - at levels last seen the week Lehman filed for bankruptcy.

Citigroup hasn’t paid taxes in 4 years, got $2.5 trillion from feds

Source: America Blog
In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country. That has got to change.
Here’s the simple truth. You can’t be an American company only when you want a massive bailout from the American people. You have also got to be an American company, and pay your fair share of taxes, as we struggle with the deficit and adequate funding for the needs of the American people. If Wall Street and corporate America don’t agree, the next time they need a bailout let them go to the Cayman Islands, let them go to Bermuda, let them go to the Bahamas and let them ask those countries for corporate welfare.
As Reuters notes, Citigroup was one of 26 companies that paid its CEO more in 2011 than it paid in taxes that year:
* Citigroup, the financial services giant, with a tax refund of $144 million based on prior losses, paid CEO Vikram Pandit $14.9 million in 2011, despite an advisory vote against it by 55 percent of shareholders.
* Telecoms group AT&T paid CEO Randall Stephenson $18.7 million, but was entitled to a $420 million tax refund thanks to billions in tax savings from recent rules accelerating depreciation of assets.
* Drugmaker Abbott Laboratories paid CEO Miles White $19 million, while garnering a $586 million refund. Abbott has 64 subsidiaries in 16 countries considered by authorities to be tax havens, the institute said.
And who used to work at Citigroup? Treasury Secretary nominee Jack Lew. And what did he do to avoid taxes? Lew had up to $100,000 invested in the Cayman Islands, in order to save on taxes. From Chris writing the other day:
Surprise! President Obama’s new Treasury Secretary nominee, Jack Lew, had up to $100,000 in investment in an offshore tax haven in the Cayman Islands. The investment fund “home” was a PO Box.
As I said when President Obama first nominated Jack Lew for Treasury Secretary, Lew is part of the banking problem, not the solution. Jack Lew may not have dumped as much money into offshore locations as, say, Mitt Romney, but like many others from the banking world, he was using the tax-avoidance tools mostly available to only 1% types.
Lew didn’t create the offshore fund, but you have to love thatonce again, Citi – the bank that loves taxpayer money so much it’s practically addicted to it – offers easy ways for employees to once again avoid paying their fair share to the country that kept them alive to the tune of $336.1 billion.
Who did have to pay taxes the past four years? You and me. Who didn’t get a bailout? You and me.

What Do They Know That We Don’t?

Source: Wolf Richter, Testosterone pit
Friday evening when no one was supposed to pay attention, Google announced that Executive Chairman Eric Schmidt would sell 3.2 million of his Google shares in 2013, 42% of the 7.6 million shares he owned at the end of last year—after having already sold 1.8 million shares in 2012. But why would he sell 5 million shares, about 53% of his holdings, with Google stock trading near its all-time high?
“Part of his long-term strategy for individual asset diversification and liquidity,” Google mollified us, according to the Wall Street Journal. Soothing words. Nothing but “a routine diversification of assets.”
Routine? He didn’t sell any in 2008 as the market was crashing. He didn’t sell at the bottom in early 2009. And he didn’t sell during the rest of 2009 as Google shares were soaring, nor in 2010, as they continued to soar. In 2011, he eased out of about 300,000 shares, a mere rounding error in his holdings. But in 2012, he opened the valves, and in 2013, he’d open the floodgates. So it’s not “routine.”
Liquidity, Google said. In 2012, he reaped about $1.2 billion from stock sales, and if he can sell this year’s portion at the current price, he’ll reap $2.5 billion. $3.7 billion in total. What exactly would he need that kind of liquidity for? He could buy a Boeing 787, if it ever becomes airworthy again, plus a few castles, dozens of handmade exotic cars.... And it would barely scratch the surface.
Diversification, Google said. Sure, don’t put all your eggs in one basket. Though he didn’t need to diversity from 2008 through 2011, he now needs to diversify urgently. The landscape has changed. And he is reacting to it.
He could diversify into treasuries, for example, which would guarantee him a loss after inflation, thanks to the Fed-imposed financial repression that governs our crazy lives. Or he could buy lots of gold or a myriad of other assets that he thinks make more sense than holding Google stock at the current price.
So, we’re left wondering if there’s something waiting to happen at Google that prescient execs with a phenomenal understanding of the company and the industry can see on the horizon. Google has plowed a lot of money into startups, green energy, and other mind-boggling projects. He might be worried that they won’t pan out, that they’ll have to be cleared off the balance sheet with a huge write-off. He might be worried about a million things.
Yet the fact that he sold practically nothing during the bull market of 2009-2011 suggests that he may see something beyond Google: the hoped for Great Rotation, for example—from those who know to those who don’t. From the Eric Schmidts to mom-and-pop retail investors. And once that’s accomplished....
Small investors lost a bundle in the last crash. At the end of their wits, they got out at the bottom, and stayed out during the subsequent run-up. But now, they’ve been driven to desperation by the Fed’s zero-interest-rate policy, as inflation has hammered their CDs that yield almost nothing. In order to stop losing money slowly but surely, they’re jumping into the stock market once again, buying the very shares Schmidt is selling—or so the smart money hopes—only to face once again the risk of losing a lot of money fast.
That was the Fed’s policy every time. They didn’t care in 2000 that the market demolished a bunch of young upstarts that had gotten unjustifiably and unnecessarily rich. Let them crash. They did it again during the financial crisis. Let them crash. Only when it started taking down their cronies, did they get nervous—and handed them trillions.
Mr. Schmidt isn’t alone. Corporate insiders were “aggressively selling their shares,” reported Mark Hulbert. And they were doing so “at an alarming pace.” The buy sell-to-buy ratio had risen to 9.2-to-1; insiders had sold over 9 times as many shares as they’d bought. They’d been aggressive sellers for weeks. That they dumped shares in December, when the sell-to-buy ratio was 8.38-to-1, could have been the result of the fiscal-cliff theatrics, but the latest sell-to-buy ratio was even worse.
Instantly, soothing voices were heard: “don’t be alarmed,” they said. But Mr. Schmidt and his colleagues at the top of corporate America, multi-billionaires many of them, are immensely well connected, not only to each other but also to the Fed, whose twelve regional Federal Reserve Banks they own and control.
For the mere public, there have been vague and mixed signals that the Fed might finally stop its drunken printing frenzy—that the only thing it is waiting for is the completion of the Great Rotation of equities from the smart money to mom-and-pop money. Once that’s completed, to heck with the markets. But for Mr. Schmidt and his buddies, the signals might not have been vague and mixed, but clear and actionable.
At the other end of the income spectrum: with the average cost of attending college at $120,000, a family of four should expect their children’s college to cost more than a home. Optimism about the value of education provided justification for students to borrow $42 billion from the US this year. Yet many of them will end up as student-loan debt slaves. Read.... College Graduates Are The New Debt Slaves.

What Are The G-20 Rules For Talking Down Your Currency?

With Abe talking his down explicitly, Weidmann talking his up explicitly, Draghi's subtle talk-down, Hollande's outright plea, and the developing world in full 'war' mode, Citi's Steven Englander sets out some brief 'rules of engagement' for the G-20 nations as competitive devaluation escalates.
Via Citi's Steven Englander:
There are rumors that G2, G7 or G20 will make some comments on currency wars/competitive devaluations, in response to Japan’s perceived transgressions. Oddly enough Japan has not actually implemented any policy yet. It is unclear whether G20 rules apply to what they say, rather than to what they do. Most likely some statement will merge this week. It will possibly have a short term effect on the yen, but it seems very likely that a modest shift in language and no shift in intended policies will enable Japan to do all that it intends to do, including weaken the yen.
The parameters of acceptability on comments influencing the exchange rate are not well defined, but seem pretty broad. At the end of this note, we have a selection of comments that suggest it is ok say:
1) my currency is expensive;
2) my currency’s depreciation has done a lot of good;
3) our currency affects our exchange rate;
4) we really don’t like the appreciation of our currency.
You can even say “we will expand our balance sheet by 40% at an annual rate and if you don’t like it, you can do the same, but you can’t intervene” (which is basically the Fed/Treasury’s stance).
Unilateral intervention is debated in G20, and is supposed to be a no-fly zone in G7. Set aside Switzerland, which doesn’t bother answering the phone when G7 calls. It is unlikely that direct criticism of Japan will get very far in G20, given intervention and reserves accumulation by EM countries and balance sheet expansion by G4. Too many fingers will point back at accusers.
Japanese officials may also point out that their share of global trade is back where it was in 1965.

The degree to which yen depreciation affects global trade is not what it used to be when Japan had a 10+% share. Its export share is now about 40% of what it was in the mid-1990s and falling.
G7 (and G20) like to operate by consensus, so they will try and get Japan to agree to some non-offensive language that other members will view as limiting Japan’s ability to weaken its currency. Given how broad the parameters are, there is likely some broad language that Japan can agree to – they are already shifting their language to Fed/BoC-like comments that depreciation is neither a target not a tool, but a consequence of their domestic policies. My personal advice is that Japan adopt the language in the Bernanke quote below and insist they are pursuing policies that will strengthen the yen  in the medium term.
It is possible the US and the euro zone will issue a joint statement on currency manipulation, but it is unlikely to be specific to Japan. It will cite a number of practices that Japan will deny represent its intentions. And JPY can keep falling.
As a footnote, there is a strong academic case that countries with deflation and zero rates should be allowed to pursue a weaker currency openly as a policy tool. The reason is that there is no real conventional monetary tool they have left and if they are in a true liquidity/deflation trap, adding more domestic liquidity will not have much impact on real rates. The only way to get activity going may be to crowd in both exports and inflation via a weaker currency. It is a case both Japan and Switzerland can make, but not one that most EM interventionist countries can plausibly argue applies to them.

A Currency War Has Broken Out And Is Intensifying: Japan Will Keep Printing Until Nikkei Hits 13,000, The Fed Is Buying $85 Billion A Month Until Unemployment Hits 6.5%, ECB Launched Unlimited Bond Buying To Cap Governments’ Borrowing Costs, Venezuela And Egypt To Devalue Their Currency… Banks: G20 Must Act To Avert Currency War!!

Brazil Minister Says Global Currency War Is Intensifying –

SÃO PAULO—A global “currency war” will intensify this year as the world economy slows, Brazilian Finance Minister Guido Mantega said, adding that Brazil is “well prepared” to defend its currency against unwanted appreciation.
“Global economic growth in 2012 will be below that of 2011,” Mr. Mantega said ahead of his participation at a meeting of finance and monetary officials from the Group of 20 nations this weekend in Mexico City. “One of the results of the slowdown is that the global currency war is intensifying.”
As developed economies have aggressively eased monetary policies in a bid to revive their sputtering economies, their currencies have weakened. That, in turn, has made their exports more competitive and has prompted investors to move money into higher-yielding assets—in many cases in emerging markets such as Brazil, where economic growth and base interest rates are considerably higher.

Japan Will Print Until Nikke Hits 13000 and  inflation rate reaches 2%

Japan’s stock market is going nuts today.
The Nikkei is up 2.3%


The main reason?
This weekend, Japan’s economic minister Akira Amrai said that it was a goal for the Nikkei to hit 13,000 by the end of March.
Japan’s market has already been on a mega-tear, and now the economic minister is aiming for another 17% rally by the end of March?
We have no recollection of a senior economic official in a developed economy saying anything like this before.
So is it smart? Felix Salmon says it’s worth a shot, based on wealth effect argument.
I like this move: it shows imagination, and the upside is much bigger than the downside. The worst that can happen is that it doesn’t work, and the stock market ends up doing what the stock market would have done anyway; the best that can happen is that it helps accelerate the broad recovery that everybody in Japan is hoping for this year.

Bank of Japan sets 2inflation target

The Fed Is Buying $85 Billion In Bonds a Month Until Unemployment Hits 6.5%

In an unprecedented and surprising move, the Federal Reserve announced on Wednesday that it will keep interest rates near zero and will purchase $85 billion in bonds every month until unemployment falls from its present 7.7% to 6.5%. 
The new plan will maintain the $40 billion a month of mortgage-backed bond buying it began in September while adding another $45 billion in Treasuries.
Where will the cash to bankroll the $85 billion-a-month bond-buying binge come from? The Fed plans to expand its $2.8 trillion balance sheet.

ECB President Draghi Announces Unlimited Bond-Buying Program (09/06/2012)

European Central Bank chief Mario Draghi on Thursday overrode German concerns and announced a program allowing for unlimited purchases of sovereign bonds from struggling euro-zone member states. The plan, however, is not without conditions.
The European Central Bank has resembled a sieve this week. Ahead of Thursday’s much anticipated press conference, financial websites and business papers were full of reports detailing ECB President Mario Draghi’s plan for holding down the borrowing costs of debt-plagued euro-zone member states. Discretion was in short supply.

When Draghi did finally step in front of the microphone on Thursday, he confirmed what most already knew. The ECB is to launch a new bond-buying program to hold interest rates on euro-zone sovereign bonds in check. The program, called Outright Monetary Transactions (OMTs), allows for unlimited ECB purchases of sovereign bonds on the secondary market. The program is to focus on bonds with a period of three years and less.

Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46%

While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, “quantitative easing” being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:


As Egypt Runs Out Of Dollars, Is It Next On The Devaluation Bandwagon?

Late on Friday Venezuela shocked the world when instead of reporting an update on the ailing health of its leader, as many expected it would, it announced the official devaluation of its currency, the Bolivar by nearly 50% against the dollar yet still well below the unofficial black market exchange rate. By doing so, it may have set off a chain reaction among the secondary sovereigns in the world, those who have so far stayed away from the “big boys” currency wars, or those waged by the Big 6 “developed world” central banks, in an attempt to also “devalue their way to prosperity” and boost their economies by encouraging exports even as the local population sees a major drop in its purchasing power and living standards. So in the game, where the last player to crush their currency inevitably loses, the question is who is next. The answer may well be America’s latest best north African friend, and custodian of the Suez Canal: Egypt.

Banks: G20 must act to avert currency war

The G20 group of richest nations must act to avoid a currency war and halt a damaging drift toward fragmented regulation, the world’s leading banks said Monday.
The Institute of International Finance, representing more than 470 financial firms, warned of the consequences of “possible discord on exchange rates” as countries rely on monetary policy easing to get their economies growing again.
“We believe major central banks should focus on enhancing their cooperation, especially of their communication strategies, to guide market expectations and thus help avoid a disorderly interest rate adjustment process and undue exchange rate volatility,” the IIF wrote in a letter to Russian Finance Minister Anton Siluanov, who is chairing the G20 meeting later this week.

The Complete World Currency War Heatmap

A regular feature back in 2010 when we had our first taste of global currency warfare as Brazil’sfinance minister accurately summarized when he said “a currency war has broken out” (and yes: currency war existed then, and especially in the 1930s which led to the Great Depression, long before the recent eponymous book came out desperate to take credit for this simplistic concept) were the global FX heatmaps which showed how any given currency is doing on any given day. Since currency warfare is now back and more violent than at any time in the past 80 years, it only makes sense to bring back a long-time reader favorite: the currency warfare heatmaps which show who, on any given day, is winning and losing, the global race to debase and in the process beggar all globalized and SWIFT-interlinked neighbors. But don’t forget: in a relativistic fiat world, nobody can actually win the global race to debase. Well, not nobody: gold (and other precious metals) can, assuming it is not confiscated as it was the last time the US ended the global currency war with a 50%+ devaluation of the USD relative to gold… and promptly confiscated all gold.
Legend for the charts below for any given currency:
  • red indicates a given country/insolvent monetary union is winning the FX debasement war relative to any given currency;
  • green indicates it is losing it.
Below are the currency warfare charts for today:
USD - doing solidly well, trouncing Brazil, South Africa, India, Canada and Russia showing Europe who is boss. The only clear winners against King Dollar: tiny Iceland.



Our friend Sean from the has released a local coin show update titled Coin Show Ghost Town.  The next time CNBC attempts to claim that gold or silver are in a bubble, please remember that less than 1% of American’s assets are held in gold or silver- while the percentage was nearly 26% at the top of the last precious metals bull market in the early 19080?s.
Coin show ghost town in the US. As the Banksters debase currencies worldwide, the sheeple people slumber, blindly grasping their fiat dollars as the FED “monetizes” the debt and spends this and future generations of Americans into economic oblivion. Last week, Venezuela devalued its currency by 46% overnight, while Argentina tries to implement price controls to prevent hyperinflation as social chaos erupts. By the time the average American sheeple wakes up to the realities we face, the empty coin shows will be long gone – and it will be too late to prepare.