patrick.net

Duke

>>I believe the EU is wrong. The US is battling solvency issues in the financial markets. Giving time to recapitalize the banks as opposed to letting them fail which would lead to fire sales which would allows holders of cash to buy assets at a bargain. The Fed’s posion pill (if you will) is to run up inflation. Which Uncle Sam backing our businesses, the EU has to either try to break us, or go with us.

and

>>My feeling is the US should raise rates because the Fed is lending money at 2% to banks when inflation is running (in mymind) at least 7%.

So EU is wrong for having too high interest rates and US is wrong for having too low interest rates, and should raise them, at the same time as it shouldn't because we need to "recapitalize" the banks using a high interest rate spread.

There's some very mixed messages here!

I still think it is not obvious why EU should be reducing rates. I lean towards the US increasing rates to fight inflation. I see no law of economics that says that all the big currencies (dollar, euro, yen, maybe pound) ought to have roughly the same interest rate. If that was the case, why did we not complain for 15 years about the very low interest on Yen? It is still only 0.75%, and borrowing cheap yen caused many of our present problems.

At the moment we have Fed=2%, ECB=4%, BOJ=0.75% and BOE=5%.

Where "should" these numbers be?

Here is a hint why Wall St wants ECB to reduce rates:

"U.S. needs to restructure global policies to compete for foreign capital, vice president of Goldman Sachs International says at Asian banking and finance conference."

In other words, we need help with our bailout. ECB should help us by lowering interest rates and thereby pushing European investors towards the US equity markets.

Now it makes sense. Inflation be damned, both here and in Europe.

Well two of the banksters at Bare Sterns got arrested this morning.

http://biz.yahoo.com/ap/080619/bear_stearns_investigation.html

The US did not complain about low Japanese interest rates as we could afford the trade imbalance with Japan as our debt was relatively cheap during that period. All though, some segments did complain. Ask any electronics manufacturer. We now build no TVs in the US. Few CRTs or flat panels. However, we absorbed people into defense, IT, fnance.

I am not so sure of a mixed message. EU should not be at 5% and thinking of going up. It is too high relative to US. In my estimation if US went to 3% by year end (up from 2%), EU came down to 4%, US promises to balance budget and Oil supply either goes up or a global recession lowers demand, then we can reassess.

SA
I disagree. The commodities bubble is a lot of money chasing a lot of commodities (just less than cash) because people are buying the stuff commodities are turned into. We can think that, perhaps, China is turning dollars into oil reserves (or coppr, or steel, or whatever) but that would be dumb. In truth, a recession will lower demand. Then, people will test their own internal mrkets (and find them failing) and production will slow. In the end, China cannot keep oil prices down for their people, so China will address their own energy problems (which they are doing very well with the hydro-electric) and then find an economical way to dig up their own stuff (they have a ton of resrouces) rahter than try to industrialize the Sub-Sahara - becasue that is just a nihtmare.
To my mind, at its core, the Market finds price points at which it makes sense to do stuff. If shipping copper from Nigeria is super expensive, it will stop and China, if it wants to keep using copper, will pursue the next cheapest alterntive. Either another country, or its own soil.
On last comment. Speculators don't want commodities. The want to sell the contracts on commodities. If people lower their production, a bunch of speculators get killed having paid too much. In the end, the fundamental of world demand is in play, and right now oil is making mpost everything un-economical. Sooooo, I think the commodities rush is just hype as surely as the housng market was hype.

There doesn't seem to be much to report in the latest H.4.1 release. Increase in repos ($7 billion) and $3 billion in Treasuries sold off. TSLF increased but we knew that already from last weeks auction results. The good news is that this weeks auction showed a decline of around $10 billion from the one 28 days previous. Hopefully last weeks auction was just a small blip -- total TSLF should still be slightly north of $100 billion.

EBGuy,

There was also 38B worth of Temporary OMO and 37B worth of TSLF just today.
I received 8 email alerts about this from the New York Fed so far.

Would that show up in the H4.1 report today or next week?

37B worth of TSLF just today.

"This weeks auction" that I referred to in my post is the 37B that you are talking about. Auction was yesterday and the results get posted today. Current and historical TSLF results can be found here. This weeks results won't show up in H.4.1 until next week. Note that terms are 28 days so that you need to compare to the one 28 days previous to get the net increase, or in this case, net decrease (~$10 billion) in the swaps.

Danville woman,

I think apostasy gave a very good summary already.

first of all, I do not think that we will ever need to go into Whole Foods paying silver coins, or buying a house with gold bars. I am going into as physical as possible position because I do NOT trust the corrupt financial system, and I do worry about naked shorts, so I choose to hoard it in the most un-shortable way to combat manipulation (all sovereign funds that invest in PM take physical delivery). I also invest in gold and silver knowing that most of the toilet paper USD is in the hands of developing countries where gold=ultimate wealth is a deeply ingrained belief of their cultures. At some point, all these toilet paper will have to be converted into something that is hoardable with worldwide recognition, and I believe gold is the ultimate path for all these sovereign funds which are prohibited from buying critical US assets. They won't stay in USD toilet paper for long.

It really depends on what you want to do with PM. If you are just fearing the worst, and don't want to spend a fortune on PM, just buy a few coins from the US Mint so that you know they are not fake, and if the US falls apart, you and your family will have enough to buy an one-way ticket (extremely unlikely scenario). Now, if you want to have it as a part of a portfolio to fight inflation, the best way is to select a mutual fund that carries the physical bullion, and you don't even need to bother with the 28% collectible tax. If you just want to speculate on the price and make some quick bucks, the best way is GLD, IAU, fast and convenient. If you already have amassed a small fortune and want to protect the earning power of your wealth, then you should spread your gold holdings across several categories including ETF, physical, gold certificate, gold bars in a foreign vault.

So from paper to physical, the progression goes this way: ETFs, then US mutual funds holding gold bullions, foreign funds (developed countries ONLY) holding gold bullions and bars, gold certificate or depository service, gold in direct possession, physical gold stored in vaults of a highly developed country like Switzerland, Canada or Australia (with a foreign residency to complement).

You don't have to go all the way being physical. Where in the continuum you want to be depends on your personal need.

One word of advice, if you cannot have access to a foreign bank account or a foreign vault, and you are buying more than a few coins, buy gold and silver with CASH in this country, and leave NO paper trail. Do not tell anyone, do not report your transaction. Do not even buy coins, go straight for the bars which have the least fabrication cost.

EBGuy,

it seems that H3 has improved as well, the degree of non-borrowed reserve deterioration has slowed down quite substantially.

it seems that H3 has improved as well, the degree of non-borrowed reserve deterioration has slowed down quite substantially

May 19 was the auction where the TAF credit card was maxxed out (they do $75B every other week). The Fed has not upped the limits so they can't do anymore damage (for now).

It’s Thursday, and Mountain View inventory is back up at 167. I guess we’re on track after all.

@Apostasy and OO

Thank you for the wealth of information about Precious Metals.I have read it over many times. I am visiting Scottsdale at the moment (115 degrees in the shade) but as soon as I return home I will print the info and begin taking action.

THANKS AGAIN !!!

The US is more broke than France, by objective measure of deficit/year/GDP.

The US is more broke than France, by objective measure of deficit/year/GDP.

Measures can be "objective," but applications of measures are subjective.

France is broke broke, by subjective measure of their welfare state.

Another obvious fact too obvious to be noticed: France does not control its own currency, America does!

I have a question about investing in or shorting oil. Of course, one can can buy/sell/short oil companies such as CVX or VLO, and there will be some correlation with oil price. On the other hand, there are ETF funds such as

OIL DBO USO USL UGA UHN RJN DBE

Pasting these funds into Google Finance, I see that most if not all are very small (with less than 3B market cap) and have small float. I'm concerned that it may be risky to short them, because it is easy to engineer a short squeeze, somewhat indepedent of the actual oil price.

Any thoughts on this. Needless to say, THIS IS NOT INVESTMENT ADVICE in any way, shape or form. It is a question about the structural properties of the oil market, as seen by a retail investor.

What's wrong with this?

http://www.nymex.com/QM_spec.aspx

Not investment advice.

I have a strange intuition that during this 'great delveraging' there is a host of borrowed dollars trying to make as much last-minute cash as it can on its way out of the hands of the hedgies and back into banks.
One of the few markets big enough to handle the size of this cash-pile is oil. Fit me for a tin-foil hat, but I feel like there is not just some, but a lot of oil speculation and it is te hedgies.

Needless to say, I think either long or short positions in oil are exceptionally dangerous as this group has to deep pockets to squash little players at will.

My advice - stay the heck outta oil.

More importantly, stay the heck outta snake oil. I am sure a lot of fraudsters will be preying on little guys.

More importantly, stay the heck outta snake oil.

But it may be a good time to invest in the raw materials themselves: snakes.

Not herpetologist advice.

Peter,

QM looks good. But do any of the major online brokers support commodity trading?

I can't see any advantage to the "Amero". Why would anyone propose such a thing? Any oil we buy from Mexico or Canada is already priced in $US. The only thing worse than an old fiat currency is a new fiat currency.

Already one good chokepoint for illegal aliens from Mexico is the necessity to exchange $US for Pesos prior to shipping funds back home. If required law enforcement would have a good surveilance point. This would go away with a common North American currency.

QM looks good. But do any of the major online brokers support commodity trading?

I think E-Trade does.

Again, please be very careful because futures is a very sharp two-edged sword. Leverage works both ways.

Many people abuse leverage and they get killed. Others over-trade and they suffer. Nevertheless, oil futures has the highest correlation to oil futures prices. (Duh!)

I have lost money in the futures market.

Not investment or brokerage advice.

The Original Bankster Says:

> Another good one: Chrysler guarantees $2.99
> gas for 3 years with the purchase of an SUV.

I heard a radio ad in Sacramento yesterday where the Chrysler dealer has "Hemi" aka "Gas Sucking" pickups and cars on sale for $9K off sticker...

BTW, does anyone know if year 2000 Audi A8 is an okay (reliability-wise) car for occasion uses?

National Review has gotten their hands on an internal BofA memo from last March, which purports to be their "wish list" for a bailout.

http://corner.nationalreview.com/post/?q=ODJkN2Q3NTY0MjAwYjJlNTY0NTJmMWEzZTI1OGZjZTg=

It would appear that the Dodd-Shelby bailout bill is just the BofA memo plus some cleanup.

Fiat lux - UC motto
Fiat slug - UCSC motto
Fiat currency - government motto? :?

# justme Says:
June 20th, 2008 at 11:31 am

QM looks good. But do any of the major online brokers support commodity trading?

How different is this than trading USO options?

2.99 gas is no different from cash back. They limit how much they will chip in. I see no difference from a cash back offer.

Shitty bank (C:NYSE) and SkankAmerika (BAC:NYSE) near 52 week lows!!!

GM at 1982 prices

What does a GM Bailout look like??? Does anyone recall how up in arms this country was with the Chrysler bailout back in the day?

When they had GMAC they could have thrown in a 30 year fixed at 5% when you buy a hummer! Seems they lost their way.

"BTW, does anyone know if year 2000 Audi A8 is an okay (reliability-wise) car for occasion uses?"

I had an A6 - one of the two best cars I have ever had.

Coretexity,

My original concern was that ETF offerings such as USO have low float and low market cap. To me that looks like they are susceptible to manipulation, although the fund manager is supposed to make it track oil futures in some sense. So far the tracking has been pretty decent (just overlay the graphs), but can it be guaranteed on a minute-by-minute basis?

It seems more direct to uy/sell contracts (not options) of QMQ8 (august) and so on, but many brokers do not support commodity trading. Peter mentioned Etrade, I could not find anything on their web site. Ameritrade likewise.

I'm not looking for leverage, options or anything like that, just straight long/short contracts would suit me better.

Speaking of oil futures:

In light if the recent large-scale Israeli air force training exercise (read: preparation for Iran attack), I wonder if the Israeli government or its insiders are going long or short on oil futures? Two reasons, somebody in the government knows what the plans are, and they may also want to hedge against rising oil.

Would that be illegal insider trading ? ;-)

Insider trading is defined in terms of insiders to the corporation of interest, not to some outside party that may cause a change to the fortunes of said corporation. For example, if I shorted ExxonMobile prior to blowing up some of their facilities, I would merely be a criminal terrorist and not (God forbid) an inside trader.

Anyone tried Wakuriya in San Mateo?

If I did, would it be illegal insider eating?

If I did, would it be illegal insider eating?

Huh?

If you did, I would like to hear what you think about the place.