Fed, FX and 'Barclays of New York'

meanwhile, Bernie Madoff calls the whole government a Ponzi scheme

Fed Unveils Discount-Window Loans

Currency Moves Highlight Global Divide

Will Barclays Turn Its Back on Britain?

Treasury prices fall for eighth day

Comments by St. Louis Fed’s Bullard, other speakers in focus

"Yields on 10-year notes  (UST10Y 3.45, +0.01, +0.32%) rose 2 basis points to 3.46%, after touching 3.49% earlier.

The bond market’s now in the midst of the longest string of days with rising 10-year yields since 2002.

The yield on the five-year note  (UST5YR 2.20, +0.04, +1.95%)  rose nearly 4 basis points to 2.2%.

The one exception, however, was the 30-year bond  (UST30Y 4.50, -.00, -0.09%) , which saw its yield fall less than 1 basis point, to just under 4.5%."

Exports not boosted by weak US$ - buyers expect more weakness?

hmmm, the US$ weak as heck, but exports still down... meanwhile, consumers feel the $4+ gas squeeze

$2,000 gold by year’s end?

Commentary: Gold bugs not worried by last week’s lackluster end

Dan Norcini at his new Trader Dan’s Market Views website had a reasoned analysis of Friday: “…the U.S. dollar’s technical-chart picture is horrendous. It had broken through a critical support level near 77 on the USDX  (DXY 76.34, +0.12, +0.16%)   last week and had further descended down towards the tremendously important 75 level. … The ugly truth is that the dollar was on course for a major crisis if it violated the 75 level.”
“Enter the Fed officials today and yesterday. Apparently the strategy was to get several of the FOMC governors to hit the airwaves talking about ending the QE program. … Result? Up goes the dollar and down goes the precious metals market. Coincidence? I hardly think so.”

Thomas Jefferson's Cut-and-Paste Bible

Our third president sought to separate the words of Jesus from the 'corruptions' of his followers

Rastafarians will enjoy this one, especially ones who are tired and bored stiff by the criticism that we are not christian enough, or not orthodox enough

Dodd-Frank's Threat to Financial Stability (WSJ)

The identification of firms as too big to fail is a mad policy that will confer unfair marketplace advantages and put taxpayers on the hook for future bailouts

so, what else is new?

hmm, is Schumpeter's prophecy coming to pass?

A Nation of Dropouts Shakes Europe (WSJ)

I happen to think the amoral, ultra-bohemian set (like the Bloomsbury group) that Schumpeter thought was the inevitable product of capitalist wealth is really a product of unearned wealth, or wealth gained by use of force, over and above the proper market value (empire, in the case of the Bloomsburians) - for example, if a state bureaucrat earns $75K whereas his real market value is $50K then human nature will view the additional $25K as a 'free money' cushion, resulting in a consumption behavior that reflects the self-indulgence of the old aristocrats - once this sense of an economic cushion is internalized the human desire for upward mobility adjusts itself to its' maintenance, the aspirations for one's children naturally incorporate the same privileges of reduced labor for increased wealth, and also obviously foster a willingness to fight to defend the conditions which make the cushioning possible (the same can be said of corporate workers who work in cartelized industries, the same phenomenon is seen, the same subversion of capitalist values)

these are the people whose children develop unrealistic worldviews, adopt consumption behaviors beyond their earning powers and harbor a bizarre combination of guilt and contempt for the unprivileged in society - this departure from bourgeois values simply does not occur spontaneously, but it certainly has the potential to devalue liberty and demoralize democracy very badly, precipitating a quite ruinous crisis in the society - I don't think the US is too far behind Europe in this regard, there is no cushion of time available for inaction and indecision

when you have a yen for something you have a yen for something

The Japanese Currency Intervention - Robert P. Murphy - Mises Daily

"At best, the G7 currency intervention will simply postpone the inevitable adjustment of world currencies to a change in demand for yen. At worst, the Bank of Japan can enforce a permanent depreciation through money creation, which will redistribute wealth from Japanese relief agencies and average citizens into the pockets of manufacturers."

No Treason, no. 1 - Lysander Spooner - Mises Daily

No Treason, no. 1 - Lysander Spooner - Mises Daily

1. That two men have no more natural right to exercise any kind of authority over one than one has to exercise the same authority over two. A man's natural rights are his own against the whole world; and any infringement of them is equally a crime whether committed by one man or by millions; whether committed by one man calling himself a robber (or by any other name indicating his true character) or by millions calling themselves a government.

2. It would be absurd for the most numerous party to talk of establishing a government over the less numerous party, unless the former were also the strongest as well as the most numerous: for it is not to be supposed that the strongest party would ever submit to the rule of the weaker party, merely because the latter were the most numerous.

   And as matter of fact, it is perhaps never that governments are established by the most numerous party. They are usually, if not always, established by the less numerous party — their superior strength consisting in their superior wealth, intelligence, and ability to act in concert.

3. Our Constitution does not profess to have been established simply by the majority, but by "the people" — the minority as much as the majority.

4. If our fathers, in 1776, had acknowledged the principle that a majority had the right to rule the minority, we should never have become a nation — for they were in a small minority as compared with those who claimed the right to rule over them.

5. Majorities, as such, afford no guarantees for justice. They are men of the same nature as minorities. They have the same passions for fame, power, and money as minorities and are liable and likely to be equally — perhaps more than equally, because more boldly — rapacious, tyrannical, and unprincipled, if entrusted with power.

   There is no more reason, then, why a man should either sustain or submit to the rule of a majority than of a minority. Majorities and minorities cannot rightfully be taken at all into account in deciding questions of justice. And all talk about them in matters of government is mere absurdity.

   Men are dunces for uniting to sustain any government or any laws except those in which they are all agreed. And nothing but force and fraud compel men to sustain any other. To say that majorities, as such, have a right to rule minorities, is equivalent to saying that minorities have, and ought to have, no rights except such as majorities please to allow them.

6. It is not improbable that many or most of the worst of governments — although established by force, and by a few, in the first place — come, in time, to be supported by a majority. But if they do, this majority is composed in large part of the most ignorant, superstitious, timid, dependent, servile, and corrupt portions of the people; of those who have been overawed by the power, intelligence, wealth, and arrogance; of those who have been deceived by the frauds; and of those who have been corrupted by the inducements of the few who really constitute the government.

   Such majorities, very likely, could be found in half, perhaps in nine-tenths, of all the countries on the globe. What do they prove? Nothing but the tyranny and corruption of the very governments that have reduced such large portions of the people to their present ignorance, servility, degradation, and corruption — an ignorance, servility, degradation, and corruption that are best illustrated in the simple fact that they do sustain the governments that have so oppressed, degraded, and corrupted them.

   They do nothing toward proving that the governments themselves are legitimate, or that they ought to be sustained, or even endured, by those who understand their true character. The mere fact, therefore, that a government chances to be sustained by a majority, of itself proves nothing that is necessary to be proved in order to know whether such government should be sustained or not.

7. The principle that the majority have a right to rule the minority practically resolves all government into a mere contest between two bodies of men, as to which of them shall be masters and which of them slaves: a contest, that — however bloody — can never, in the nature of things, be finally closed so long as man refuses to be a slave.

Why Is Unemployment So High? - Robert P. Murphy - Mises Daily

Why Is Unemployment So High? - Robert P. Murphy - Mises Daily

• Resources were misallocated during the boom period. In the standard Austrian theory of the business cycle, the boom period leads entrepreneurs to start too many long-term projects, for which there are insufficient real savings. The underlying capital structure of the economy becomes distorted, and it takes time for market forces to clean up the mess after the bubble pops. For certain pockets of the labor force, the "optimal" thing to do is wait it out. (See my "sushi article" for a simple numerical example of how this all can play out.)

  In some respects this process is what Keynesians interpret as a "fall in aggregate demand," when businesses and consumers come to believe they are on an unsustainable trajectory and slam on the brakes. Of course, only the Austrians recognize that the boom really is unsustainable, whereas the Keynesian efforts to prop up spending only perpetuate the problem and postpone the genuine recovery.

• The government made low-skilled workers artificially more expensive. In July 2009, the federal minimum wage (due to legislation from 2007) rose from $6.55 to $7.25 per hour. Thus, anyone with productivity worth more than $6.55 but less than $7.25 per hour to an employer was turned into a money-losing proposition when he otherwise would have been profitable to hire.

• The government made unemployment more financially attractive. By extending unemployment benefits repeatedly, the federal government has made it easier for job-seekers to maintain unreasonable expectations as they try to find new work.

• The government is making employee health benefits more expensive by an unknown amount. "Obamacare" is leading to rising health-insurance premiums for employers, but on top of that the total impact is unknown, because of court challenges and Republican promises to reform or even repeal the legislation. Consequently, employers have an incentive to postpone long-term hiring decisions until the issues are resolved.

• The Fed is making long-term planning far more difficult. Although most analysts think that the Fed's policies reduce unemployment while possibly risking high price inflation, I submit that the paralysis striking the private sector is partially due to Bernanke's unprecedented actions. If thousands of business owners are stocking up on canned goods and gold, because they think there is a small but definite possibility that the dollar may crash within a few years, that doesn't bode well for expanding employment opportunities.

Leaders Struggle to Define Next Moves (Libya)

Libyan Regime Is Hemmed In as No-Fly Zone Is Quickly Established, but Divisions Emerge Over the Long-Term Mission

I don't get it, what's to define, it has already been defined by the masters - feudal, dynastic model aristocracies are incompatible with capitalism and will always cause enormous social stress, civil war, and so on - the whole model has to give way to representational government, private property, rule of law as well as free markets and individual liberties agreed upon by the whole world as fundamentally human (unless you're a racist, in which case you have already constructed many types of human in your mind, you will recognize the only sense in which men are equal in this world are their rights)

the utter silliness of the "can't have my oil!" attitude when unless they sell oil it is they who can have nothing! capitalism is not a competition between nation states, and to properly participate in the capitalist world order nation states MUST liberate their citizens to establish untrammeled people-to-people relations across the world, own property and do business as they please - turning the state guns on non-violent people for wishing a change of government is something that has to be phased out as a relic of a barbaric history, in order to earn the term civilization

a vital monetary lesson from the 19th-c Brits

Currency and Banking Reform in 19th-Century Britain

convertibility to specie is vital, yes, and fractional reserve lending also has to be done transparently, if at all, without the illusion that deposits are equally safe in any bank - in other words, two banks operating at 1:5 ratio do not represent identical safety for deposits simply deriving from that ratio, the quality of management is critical

“The Relationship of Monetary Policy and Rising Prices” - Congressional hearing video

“The Relationship of Monetary Policy and Rising Prices” - Congressional hearing 03/17/2011 (windows media)

Nock, Nock, Nocking on Liberty's door

The State Can Do No Wrong - Albert J. Nock, American Mercury, 1936

Audio - MP3

"Therefore, the sum of the whole matter is that if and when the people of this country drop the neomedieval conception of the State as an institution completely dissociated from morality, and adopt the republican conception expressed in the Declaration, the thoughtful and intelligent citizen may reasonably be expected to interest himself in the course of the nation's politics; but until then he may reasonably be expected to do nothing of the kind."

Is QE3 Ahead? asks Lew Rockwell

Is QE3 Ahead?

the sep '10 rally setting up near 'classical' (it's eerie, really!) wave shapes, with 5-wave steady climbs, 3-wave orderly retraces - if the pattern holds, the retrace gives way to a strong wave 5 up, with the 'real' correction to follow after

all assuming of course that a new bull market started in mar '09, making sep '10 wave 3 of the rally - the bears could read it as wave C of a retrace, and I'm not talking of "permabears", even the Aden sisters are still bearish long term - here's why I'm giving... ummm, 'unorthodox', 'unconventional' weightage to volume because I know "primary dealer" activity is quite capable of moving price action as if its' on rocket fuel! so, I'm watching how the larger herd is reacting, are they buying in? one should be seeing green bars dominating the volume story, instead we still have sub-average volume on rallies and big volume on sell-offs

*too* classical wave shapes + unorthodox herd behavior = reflation roulette wheel is still spinning... you want to watch the insiders, are they buying on the dips? you see, managers and analysts think from quarter-to-quarter, their reference point is their peer group, they can post a 'win' in their column based upon that - you cannot, it is your money, your family, you have to think safety and long term security first

US$ Spot Index Plunges to New 52-week Low

US$ Spot Index Plunges to New 52-week Low

Nullifying Tyranny

Nullifying Tyranny

Rand Paul "I Won't Vote To Go To War Unless I Would Send My Kids There..."

Ron Paul: A Dollar-Crisis Certain to Prompt 2012 Run

Europe Blinks on Bank Test

Regulators Seen Easing 'Stress' Gauge, Undercutting Effort to Restore Confidence

kinda defeats the whole point, doesn't it? well, it all depends on what you interpret the "point" to be... the cozy collusion of high finance and government, improperly understood as it is by the intellectual opinion makers, is liable to cause more public fury and quite impossible political turmoil

UPDATE:

Europe Buys Breathing Space

"Until the market knows who will bear the ultimate costs of clearing up Europe's debt mess, governments and banks will pay the price in higher borrowing costs. But to get an answer, the market may need to apply yet more pressure."

full proceeding of House FinServ Cmte Bernanke testimony

link to full proceeding of House Fin Serv Cmte Bernanke testimony (windows media)

Barney Frank seems to think that doom-and-gloom predictions that have not materialized disqualify further inputs from those sources, whereas the thing to remember is that the administration had predicted 4% GDP growth early in '10 and 7% late in '10 and the reality was a little over half of that prediction - of course that other wonderful prediction that unemployment would be contained under 8% by the stimulus packages turned out to be a little demon that is still making insulting faces at the genie

whatever recovery there is results from the extraordinary resilience (speaking of the buildup of savings), creativity (speaking of the likes of Apple) and work ethic (speaking of those whose labors have increased from payroll cuts at the firm) of the American people, who have not stopped doing the right thing just because their government is frustrating and infuriating them relentlessly, by refusing to act in alignment with their actions, stubbornly reflating failed ideas the people have rejected, certainly intuitively and increasingly consciously

an example is indefinite suspension of mark-to-market accounting, the institutionalization of the TBTF concept as a "necessity", after having raised it as a "problem", the rather naked cronyism between finance and government that has infuriated the people - an example is the stubborn denial that a massive paradigm shift has occurred in the perception of home ownership and real estate, not to mention labor mobility in the age of globalization and the life options presented, i.e. stimulus designed from past behavior will not have the expected effect (this of course is a perpetual hazard of the Keynesian way)

frustrating savers with artificially low interest rates does not make sense, because the loss of appetite for credit has nothing to with the rates in this present time, and is not going to accelerate significantly for a longish while, whereas acceleration in savings will enable banks to get healthier quicker - as the whole system is restructuring and rebalancing in a typically complex, human way, essentially what I am saying is that as far as employment is concerned getting smaller, local banks lending is the key, not a mountain of capital reserves at the top, and of course I am always also saying, not by "policy", by freedom

link to full proceeding of House Fin Serv Cmte Bernanke testimony (windows media)

food prices climb 8th month of record highs

Food Prices Reach Record High (WSJ)

"But while the world isn't yet facing a food crisis..." - exactly, the Austrian idea is this is very much a monetary phenomenon, (excepting weather causes) driven not by real demand and supply issues, but the perception of those issues formed by the investor community trading paper assets - my guess is money is being pumped into banks to stimulate lending on Main St. especially in housing, whereas banks not being charitable exercises, having balance sheet repair objectives ongoing, and institutional managers are simply investing it in what people absolutely need like food commodities since the uncertainty is too great as to where else robust, sustainable demand can be found... er, we're not talking about Apple iPads right at this moment :)

what I find interesting is that the teenagers' stuff led retail sales in Feb, along with the more predictable high-end like Saks, meaning parents are being selectively discretionary for the children, a sign I still read as caution remains the watchword for consumers - the other glimmer of course is that unemployment claims stayed under 400,000 while 200,000 new private sector jobs were created, a few months of good news strung together may do wonders for mood - some of my customers are right back to pre-recession levels in sales, the international share of revenues growing pretty nicely

Food Prices Keep Surging, More Expensive Cheerios Ahead?

and here is the Richmond Fed's governor on growth and employment expectation for '11 and '12, and why he thinks the food and energy run ups are passing events without significant risks to CPI (it would seem to me CPI is a pretty useless number with regard to consumers unless compared to wage rate increases, which are very sluggish and lagging the CPI by orders of magnitude)

Q&A: Fed’s Lacker Sees Inflation ‘Trending Up’

Australia's Second Exchange Could Open in October (WSJ)

Australia's Second Exchange Could Open in October

the green shoots of competition struggling to crack heavy rocks of regulation

"The firm has applied for a "maker-taker" pricing model, where traders adding liquidity to the market receive a small payout while those taking the other side of offers pay a small fee. ASIC said Thursday it has no plans to ban this type of model.
However, with ASX still acting as the country's lone clearer of stock trading, costs aren't expected to move lower too quickly."

Australia's Second Exchange Could Open in October

Saif Gadhafi's life sounds like what Robin Leach wished he could gossip about

"Saif Gadhafi was born in Tripoli in 1972—the Libyan dictator's eldest son by his second wife. He carved out a niche as a pro-Western liberal, in contrast to his hard-line father and siblings. In 2002, he enrolled at LSE and began work on a Ph.D. thesis on "the role of civil society in the democratization of global governance institutions."

Seen as the presumptive heir of an oil-rich North African country, he became a fixture in London society. Prince Andrew, Queen Elizabeth's second son and Britain's special trade envoy, hosted him at Buckingham Palace in October 2007. Saif later repaid the prince's hospitality in Tripoli.

In 2008, he moved into a £10 million ($16.3 million) mansion in London's tony neighborhood of Hampstead Garden Suburb, near a street known as Billionaire's Row.

He also became friends with Nat Rothschild, scion of the legendary banking dynasty. Over time, Mr. Rothschild hosted Mr. Gadhafi at an engagement party in Greenwich Village; a shooting weekend in the English countryside; and the family villa in Corfu, Greece."

link to WSJ article

Why the Dollar's Reign Is Near an End

For decades the dollar has served as the world's main reserve currency, but, argues Barry Eichengreen, it will soon have to share that role. Here's why—and what it will mean for international markets and companies.

experts chit chat about currencies, the Fx trade and capital flows (video)

UPDATE:

Bridgewater’s Dalio sees China, U.S. dollar relationship ending

$100 crude a "tipping point"?

ominous portents for the nascent "recovery"

the question I suppose is how much of this is Libya reaction, and whether the market really wants to shrug it off - the USO chart sure looks poised for a strong up wave, having completed a pretty classic 3-wave correction, so it could well be a case of Libya simply triggering a psychological number of a well established uptrend, also confirmed by the volume trend - a sharp run up from $100 would almost certainly be a blow to the main street mood, and have rippling effects

Regulating 'mental activity': the commerce clause as thought monitor

Regulating 'mental activity': the commerce clause as thought monitor

quite incredible judgment, really is - this is what results from the intellectual bastardy of the "living constitution" concept, essentially a license for "we'll make it up as we go along", or in other words, our right to rule (yep, I know how it sounds!) and maintain hierarchy by coercion IS the point of the constitution, not minarchy itself, federality itself, individual liberty itself, sound currency itself, etc... so it cannot be read like it was meant by rich, white, gentlemen of the 18th century, it must be read according to the current pleasure of rich, white gentlemen of today... we've got this state-ordered step-laddered caste society going on in which social and economic mobility is shrinking at alarming speed, and having to keep twisting the constitution around to fit these strategies is no doubt proving a great annoyance and frustration for the elites...

the "general welfare" clause is the other one, just incredible abuse, really - the word "general" has been completely weaselled of its' profound import, as practically every idea proposed is "special welfare" instead, attempts to justify wealth redistribution in violation of the principle that all taxes apply equally to all - where is the egalitarian passion for equality in the sense Jefferson actually used it? ah yes, the egalitarian passion is for clinging to state power under every manner of bankrupt saintly pretext

Inflation, subsidies, rebates, plantings... Asia in a tizzy

Moves to Soften Blow Could Backfire On Asian Countries, Economists Argue

meanwhile, the supply adjusts to demand, a recipe for unintended consequences brewing as usual...

Food-Price Fall Seen as Plantings Rise

interestingly, I saw this Hayek interview where he recounts his last meeting with Keynes about some of his famous disciples, weeks before his death, in which Keynes distanced himself from Keynesianism and with his usual indefatigable confidence said he would be the most resolute enemy of inflation, "turn public opinion around like that" *snapping fingers* - I just find this stuff hilarious and mind-boggling at the same time, just astonishing