From one of the better analyst out there.
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EurAnalysis Kindergarten 24 replies
DislikedThe 'Carry Trade' a Worry for the Euro
By EVA SZALAY Updated July 6, 2012, 5:08 p.m. ET
The euro could become the currency market's whipping boy in the coming months if investors dump it for currencies linked to higher-yielding assets in emerging markets and elsewhere.
[i][b][color=darkslateblue]In the past, investors often bought assets in Australian dollars...Ignored
“EU Council did not create a new instrument to save banks directly; wrong to say that there will not be conditionality on aid.”
We are seeing -- not only in the US but in Europe and in Asia, as well -- separating bank assets and base money. Base money is comprised of currency in circulation plus bank reserves that are held at central banks -- at the Fed or that is at the ECB, the Bank of Japan, so on and so forth. This is how the global economy rolls, as they say.
Bank assets are loans mostly. And the amounts globally are staggering: something approaching $100 trillion in global bank assets. And in the US we think that is somewhere around $20 trillion held in the US and abroad. And the numbers for the monetary base are much, much lower. Specifically in bank reserves -- that is the amount of reserves that are collateralizing, if you will, all of those $100 trillion in bank assets -- something about $8.5 to $9 trillion dollars. So that gives you a sense of perspective as to how much the global banking system is leverage. We are in a baseless monetary system.
On The Wisdom of Owning Gold & Hard Assets
The point here is you can either monetize debt or you can monetize (sell) assets. Or you revalue an asset on the balance sheet already of the Treasury or the Fed. And obviously that asset, we think, is gold. And that is the monetary asset that they have always reverted in the past. And that is the one we think that currencies, currently baseless currencies will be devalued against.
And so that we think is the mechanism that is ultimately going to play out whether in the marketplace or through some policy administered devaluation. Currencies are going to be devalued and that is where we sit right now. Timing this is impossible. We think the amount it would have to be devalued by, getting back to your original question, has got to be the amount of or something close to the amount of the gap (tens of US$ trillions) between bank assets and bank reserves. So it is a significant number.
And Treasury ministries, being the ultimate issuers of obligors on the hook for currency repayment, we see them as lending the gold to their central banks so that this mechanism, this asset monetization devaluation can take place. And so we think it is the only way out ultimately. And we will see that happen either in the marketplace or through proclamation at some point. And it is really what has to happen.
And so there is no physical limitation on the amount of currency that central banks may manufacture. And so this is a completely viable way to deleverage the system -- by purely destroying the currency that we have. It is debt currency, so we are going to destroy the debt in real terms behind them but not destroy them in nominal terms. That is the net effect of all this.
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Dislikedhttp://www.peakprosperity.com/podcas...e-or-die-stage
"It's impossible to have a political solution to a balance sheet problem" says Paul Brodsky, bond market expert and co-founder of QB Asset Management.
The world has simply gotten itself into too much debt. There are creditors that expect to be paid, and debtors that are having an increasingly difficult time making their coupon payments. No amount of political or policy intervention is going to change that reality. (Unless a global...Ignored
DislikedThis articles take on currency is nonsense. Currencies worldwide are underwritten by the surplus value extracted from labour and high energy assets such as oil. It is this human and commodity based surplus that adds the value difference that workers and capitalists then apportion and use accordingly. So to suggest that printing will devalue a currency as long as there is the capacity for further surplus to be added to this cycle (why do you think Wall Street so loves China despite all the misgivings articulated in some quarters) is to totally fail...Ignored
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Further, staggering amounts of debt are a function of infinite growth. Cap debt and you limit growth which in turn affects sentiment and so on and so forth (As would a gold standard do.). Debt is a necessary evil in a system where annual growth is a mantra. Get used to the complexities of global capitalism.Ignored
DislikedOK guys... hope everyone is having a great weekend. Ive done my homework and here is the outlook .
DOW – down 47.15 points to close at 12,896.67
Oil – down $0.44 to close at $87.22 – next level of support is $84.94
Gold – down $12.40 to close at $1,609.40 – Next level of support at $1,600
Dollar index 82.805 – 52 week range is Low: 73.421 – High: 83.542
NFP showed mere 80k job growth in June, comparing to expectation of 90k. The total figure for Q2 was 225k only, just at 1/3 of Q1′s 677k.
ECB cut the benchmark interest rates...Ignored
DislikedGood manipulating. Do you take any responsibility if it doesn't go to 2200 ? No. Let me i manipulate too: For %100 i am very sure its going to 1400 on next stop.
Or lets leave alone to traders.. This is the most respectable euro thread not gold.Ignored
DislikedEasy tiger, I don't think anyone is trying to manipulate anything. Take it or leave it when it comes to opinions and information posted here, just don't start fights.Ignored
DislikedOK guys... hope everyone is having a great weekend. Ive done my homework and here is the outlook .
DOW – down 47.15 points to close at 12,896.67
Oil – down $0.44 to close at $87.22 – next level of support is $84.94
Gold – down $12.40 to close at $1,609.40 – Next level of support at $1,600
Dollar index 82.805 – 52 week range is Low: 73.421 – High: 83.542
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