Euro zone rot spreads to Germany, China mending … The euro zone’s biggest member Germany is being sucked into the bloc’s worsening economic quagmire, business surveys suggested on Wednesday, as similar data signalled the slowdown in China may be abating. The slump that began in Greece and spread to other smaller euro zone economies was clearly gripping the core in October, marking the worst month for the 17-member bloc since it emerged from recession more than three years ago. – Reuters
Dominant Social Theme: Things go up and down.
Free-Market Analysis: There are problems with Germany but the good news regarding China brings us back to emotional parity.
This seems to be the gist, the dominant social theme of this Reuters article. We’re supposed to be depressed about Germany but excited about China.
The idea the Reuters article (above) is advancing is that the world is involved with a number of different economic trends. We are given to believe from such reporting that there is no specific direction, and thus no extensive conclusions to make.
This is surely a kind of power elite meme. Reuters, a mainstream media conglomerate is eager to provide us with a serial comprehension of economics rather than a holistic one. Here’s some more from the article:
Markit’s Composite Purchasing Managers’ Index (PMI), which polls around 5,000 businesses across the 17-nation ………………………….
full article at source: http://www.thedailybell.com/28198/Elite-View-The-Yo-Yo-Economy
At Jackson Hole, a growing fear for Fed independence … Increasing political encroachment on the Federal Reserve, particularly from the Republican Party, could threaten the central bank‘s hard-won independence and undermine confidence in the nearly 100-year old institution. That was the pervasive sentiment among economists gathered at the Fed’s annual monetary policy symposium in Jackson Hole, Wyoming. – Reuters
Dominant Social Theme: If we don’t have a central bank, what have we got?
Free-Market Analysis: Here at the Daily Bell, we have simple questions that we ask regularly about central banking: How much money is enough, and how do central bankers know it?
The answer is that central bankers DON’T know how much money is too much. Only the market can inform us of the volume and value of money.
The market can do this two ways: via the pricing of gold and silver and the pricing of competitive currencies.
These two money facilities, probably initiated together, can provide us with the market signals to let us know how much money needs to be in circulation.
The system we have now is one of monopoly fiat tender. Taxes are paid in monopoly paper money and gold and silver are not minted by the government and therefore are hard to place in circulation.
The system is stacked toward the use of paper ticker money printed
full article at source: http://www.thedailybell.com/4242/Let-Central-Banking-Lose-Its-Franchise-Not-Its-Independence
A few years ago, when J.P. Morgan grew their derivatives book by 12 Trillion in one quarter[Q3/07] – I did some back of the napkin math – and figured out how many 5 and 10 year bonds the Morgue would have necessarily had to transact on their swaps alone – if they are hedged. The bonds required to hedge the growth in Morgan’s Swap book were 1.4 billion more in one day than what was mathematically available to the entire domestic bond market for a whole quarter?
Put simply, interest rate swaps create more settlement demand for bonds than the U.S. issues.
This is why U.S. bonds “appear” to be “scarce” – which the bought-and-paid-for mainstream financial press explains to us is “a flight to quality”. Better stated, it’s a “FORCED FLIGHT [or sleight, perhaps?] TO FRAUD”.
Assertions that netting “explains” this incongruity are a NON-STARTER. Netting generally occurs at day’s end – the math simply does not even work intra-day.
Further Evidence of Gross Malfeasance in the U.S. Bond Market
Back in 2008, at the height of the financial crisis, folks are reminded how the Fed and U.S. Treasury were unsuccessful in finding a financial institution to either acquire or merge with Morgan Stanley. Unfortunately, Morgan Stanley’s financial condition has continued to deteriorate:
Analysis: How Morgan Stanley sank to junk pricing
REUTERS | June 1, 2012 at 5:45 pm |
(Reuters) – The bond markets are treating Morgan Stanley like a junk-rated company, and the investment bank’s higher borrowing costs could already be putting it at a disadvantage even before an expected ratings downgrade this month.
Bond rating agency Moody’s Investors Service has said it may cut Morgan Stanley by at least two notches in June, to just two or three steps above junk status. Many investors see such a cut as all but certain
full article at source: http://www.marketoracle.co.uk/Article35164.html
By Anthony Wile (Daily Bell)
Here’s some interesting news along the lines of “man bites dog.” According to a recent Reuters article, US financial advisors are actually growing leery of US Treasury bonds.
This is almost unheard of and one could certainly make a case that it is a sign of most unsettled times. Ordinarily, financial advisors, especially those in the US, are disposed to provide Treasuries for most every ill.
They are seen as repositories of value, security and liquidity – and this perspective has been preached relentlessly to the average US consumer. And yet now we now find a much different perspective, being reported by Reuters:
It’s the newest market riddle: where do you go for safety when the traditional option could be in a bubble?
With fiscal problems in Europe once again leading to sharp drops in global stock markets, many investors are seeking out stable assets that can both protect their principal and generate an income stream to keep up with inflation.
full article at source: http://www.thedailybell.com/3883/Anthony-Wile-Treasuries-and-Derivatives-Blow-Up-So-Where-Do-You-Go–
By Bill Bonner
Readers who expect an early end to this Great Correction are going to be disappointed. There is no sign of it reaching its conclusion anytime soon. Just the contrary…there’s no end in sight.
The Great Correction seems to be going along just as you’d expect. Or, just as we’d expect.
Here’s the latest from Reuters:
Home prices fell more steeply than expected in November, and consumers turned less optimistic in January, highlighting the hurdles still facing the bumpy economic recovery.
The S&P/Case-Shiller composite index of single-family home prices in 20 metropolitan areas, released on Tuesday, declined 0.7 percent on a seasonally adjusted basis, a bigger drop than the 0.5 percent economists expected.
Read more: Creating More Debt to Solve the Crisis http://dailyreckoning.com/creating-more-debt-to-solve-the-crisis/#ixzz1lDtdDvZo
A draft statement from an emergency euro zone summit on Wednesday, obtained by Reuters, outlined two options to leverage the 440 billion euro ($600 billion) fund designed to shore up heavily indebted states and thwart market attacks.If the draft is adopted with little change, the second summit in four days will have sketched broad intentions but failed to produce a detailed master plan to scale up the fund, recapitalize banks and reduce Greek debt to a sustainable level.
full article at source:http://www.reuters.com/article/2011/10/26/us-eurozone-idUSTRE79I0IC20111026