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Devaluation of the Dollar: On the other hand
invite response
2008 Mar 9, 10:03am 9,884 views 61 comments
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She looked heavily sedated (I'm not kidding) poor dear. Looks like some aide gave her something "to calm her nerves" and over did it. This is a godsend for the REIC.
The New York Times said Spitzer was caught on a federal wiretap arranging to meet a prostitute at a Washington hotel last month. ... Dina McGreevey, the ex-wife of former New Jersey Gov. James McGreevey who resigned in 2004 over a gay affair with a man whom he hired, said Spitzer should start by resigning.
So, a wealthy, powerful man has a courtesan. Why is this such big news? Specially ten years _after_ a president admitted getting hummers in the Oval Office from at least one staffer.
It is not like Spitzer was in bed with someone from NAR. Now, _that_ would be something that would justify calls for his resignation.
justme Says:
Helicopter Ben is out flying again today…
Fiddling with the TAF spigot again. Looks like the DOW went on a 250-point tear for about 3 minutes (seriously) after the market opened, and is now giving it back slowly but steadily.
Does this indicate that Berwankey is favoring TAF over FFR-cuts? Or do you all think we will see another rate-cut at the next meeting?
Does this indicate that Berwankey is favoring TAF over FFR-cuts? Or do you all think we will see another rate-cut at the next meeting?
Ben's got an itchy trigger finger. One finger is on the TAF "button", and the other is on the FFR cutting "button."
Note that the markets are basically expecting a full 100bp cut for the next meeting.
Spitzer made a LOT of enemies in high places, especially Wall Street. Not to bring out the conspiracy theories, but this guy needed to stay perfect - any trip up, and his enemies would be coming out of the woodwork like crazy.
What saddened me the most about Spitzer's demise was that he was probably the only person (other than Ben Jones, Patrick, Schiff, Fleckenstein and a handful of others) that really understood the REIC Cartel.
More specifically how they operate and suck untold resources into their commission-driven scam. I guess now we'll never know but Spitzer seemed to grasp that just like the mutual fund industry, the REIC is more about gathering fees (than it is about performance!)
I have no way to explain it to those outside the securities industry but after Spitzer's impact virtually EVERY mutual fund purchase is scrutinized now.
Could the customer have gotten a "breakpoint" on the commission? Is this the best "share class" given the client's investment objectives? Where there existing options within the existing fund family's product line that could have been substituted without incurring a commission at all?
And just because the trade itself "is a done deal" doesn't mean your own internal compliance officer can't go back and re-evaluate the purchase! There were so many improvements as a result of his efforts it's incredible. Now that level of reform may never strike at the heart of the REIC. They'll quickly gloss over reforms and make toothless concessions to shut us up long enough to get back to biz as usual. What a shame.
Have you guys noticed how lame and soft the UCLA Anderson forecast has become since Chris Thornberg left them?
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/11/BU14VHB63.DTL
"No recession" for California, according to their report. Gimme a break! We're already IN one!
Peter P
2008 Mar 11, 2:21am
“No recession†for California, according to their report. Gimme a break! We’re already IN one!
California is special. It is the FORTRESS.
FFR cuts do not help if banks are unwilling to lend to each other. That is what TAF is about (around 70 banks particpated in the last auction vs. the 20 primary dealers). And just when you think you understand the game, they announce something like the new TSLF. My stomach ChurnOMeter just went from BAD to VERY BAD.
The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS.
non-agency AAA/Aaa-rated private-label residential MBS
That's the longest euphemism for "crap" that I have seen yet.
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The devaluation of the US Dollar is a hot topic in the bubble blogging world. We make fun of the "strong dollar policy", blame the Fed for "trashing" the dollar and argue that a country cannot debase its currency to prosperity.
We also argue about the benefits of dollar devaluation. This includes the possibility of reduced out sourcing, economic war against countries like China who deliberately keep their currency undervalued and spreading the pain from us to foreign holders of USD.
In this post, I want to point out another potentially big result of this phenomenon.
I am going to quote verbatim - with added emphasis - from the book "Reefer Madness: Sex, Drugs, and Cheap Labor in the American Black Market" by Eric Schlosser, who is better known as the author of "Fast Food Nation".
In the introduction, Schlosser writes ...
The US Dollar now serves as the unofficial currency of this new global underground. During the late 1960s and the early 1970s American economists began to notice that the amount of currency in circulation had grown much larger than the amount ordinary citizens were likely to use in their everyday transactions. ... ... ... The $100 bill soon became the underground favorite, not just in the United States, but overseas as well, thanks to its high face value and the relative stability of the dollar. During the late 1970s the outflow of the currency from the United States averaged about $2 billion a year. By the 1990s, about $20 billion in the U.S. currency was being shipped to foreign countries every year. Today approximately three-quarters of all $100 bills circulate outside the United States.
...
The supremacy of the dollar in the global underground has proven a boon to the American economy. The outflow of the U.S. currency now serves, in essence, as a gigantic interest-free loan. ... ... ... The latest threat to the $100 bill comes not from organized crime figures [counterfeiters], but from the central bank of the European Union. The new 500-euro note is perfect for black market activity. It has roughly 5 times the value of a $100 bill [at the time of book's publication], allowing drug dealers and smugglers to lighten their suitcases. Portugal has banned the 500-euro note for those reasons, and its acceptance in other foreign undergrounds is not yet certain.
It may be impossible to gauge the exact influence this "underground" demand has had on the appreciation of Euro against USD. But it certainly cannot be negligible given how globally linked the organized crime has become. I won't be the one to cry if USD devaluation decreases the buying power of international terrorists.
I want to make myself clear. I am not in favor of US devaluation if its happening by design - no matter what the reason is. Definitely not the argument - "let's punish those bad guys by reducing their wealth". Like any economic lever, the value of USD is both the cause and effect - and just one parameter in the grand scheme of things. All I am pointing out is, among the many good and bad side-effects of USD devaluation, this is one very interesting and desirable outcome.
by StuckInBA
#crime