|
REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.
This graphic has been popping up all over the place over the last few day, originally appearing in this story at Zero Hedge (apparently) in which Dan Edstrom reverse engineered the securitized mortgage for he and his wife Teri’s house.
Click to Enlarge
It’s enough to make your head spin and it makes me wonder how our short sale deal ever got done. All we ever heard is that “the investors have to sign off” on this or that, but, it was probably a lot more complicated than that.
Channel News Asia reports that the Chinese government has “solutions” planned for that little problem they’re having with inflation and the solution involves prices controls, a move that almost never seems to work as black markets quickly spring up.
China planning inflation solutions: Premier
Premier Wen Jiabao has said China is drafting measures to contain rising prices in the latest sign of official concern after inflation grew at its fastest pace in two years.
“Great attention should be paid to market supply and demand and prices because they are related to the public’s basic interests,” Wen was quoted as saying in a statement on the central government’s website late Tuesday.
“The State Council (Cabinet) is formulating measures to curb the overly fast rises of prices.”
The statement said Wen made the comments during a visit to a supermarket last Thursday in the southern city of Guangzhou.
…
Inflation fears in China have been further fueled by the US Federal Reserve’s decision to pump money into the American economy.
It seems that, when the Fed pumps money into the U.S. economy, that money is more likely to come out in other economies around the world because there’s barely a whiff of inflation in America. The McDonald’s chain in China is also raising prices according to this report in Reuters – anywhere from 0.5 to 1 yuan per item or, roughly, 35 to 70 cents.
The copper price is certainly not taking kindly to news that price controls are being imposed in China, the metal with a PhD in economics plunging $20 yesterday, recouping only a fraction of that today, and now down sharply from the two-year highs of a week ago.
And it’s not just copper. From the price peaks of early-last week, aluminum is now down 9 percent, nickel has dropped 12 percent, lead is 14 percent lower, and zinc, the metal with the least support from “normal” demand factors (i.e., actual demand, rather than just a place for some of the Fed’s easy money to go) has seen its price plunge 17 percent.
It’s no wonder calls are now being heard in Congress for a change to the Federal Reserve’s dual mandate of low unemployment and price stability since the central bank continues to have a rather myopic view of the world, the most recent example being the defense of some $600+ billion in money printing as part of a second round of quantitative easing (now commonly referred to as QE2) as it relates to the 10+ percent plunge in the trade weighted U.S. dollar since the summer that has only recently reversed because the sovereign debt troubles in Europe are now looking even worse than the money printing in the U.S.
Not giving the central bank so much to think about today might be a good idea.
In fact, maybe a gold-backed currency would be an even better idea.
As Jim Grant noted in a NY Times op-ed over the weekend, the central bank would then have an even simpler job where it wouldn’t even concern itself with the level of consumer prices. Rather, it would have “the single public function of exchanging gold for paper or paper for gold” based on whether the public wanted one or the other.
Of course, such a system might put most – or, perhaps all – of Wall Street out of business, but that would just be an added bonus.
The Labor Department reported that consumer prices rose 0.2 percent in October after a gain of 0.1 percent in September, rising energy prices accounting for most of the increase.
On a year-over-year basis, overall inflation is now running at a modest 1.2 percent pace, up from 1.1 percent the month prior, and this is consistent with the general lack of pricing pressure at the retail level reported elsewhere. Of course, at the wholesale level, rising commodity prices have been squeezing profit margins for months now, since talk of a new Fed money printing campaign began over the summer.
MUST READS
China Acts to Slow Rise in Food Prices – NY Times
Greek rescue frays as Irish crisis drags on – Telegraph
Pretty Good for Government Work – Buffett, NY Times
Lawmakers seek to change Federal Reserve’s mission – WaPo
Wall Street quietly seeks to undo new financial rules – McClatchy
Hamtramck seeks state permission to file for bankruptcy – Detroit News
California Will Default On Its Debt, Says Chris Whalen – Tech Ticker
Mr. Obama’s Most Recent “2%” Sellout is his Worst Yet – Michael Hudson
Who deserves the credit for GM? – Salmon, Reuters
Bond Vigilantes Ride Again – Barron’s
King’s Credibility Crumbles – WSJ
MARKETS/INVESTING
Oil falls below $82 despite supply drop – AP
Gold’s slump and why it is temporary – Mineweb
China Behind Chilling Drop in Commodity Prices – CNBC
John Paulson’s high-performance Gold strategy – Commodity Online
VIX Punches Through Upper Bollinger Band – VIX and More
George Soros says conditions “pretty perfect” for gold – Reuters
WGC: Gold Demand in 2010 to exceed 2009 – Commodity Online
Gold price correction? Back up the gold truck! – Mineweb
Munis Continue Collapse – Bespoke
ECONOMY/WORLD/HOUSING/BANKING
The Bad News about the Liquidity Trap – NetNet
Prices for used cars hit a record high – Fortune
Euro Zone Anger at Germany Boils Over – Financial Ties
Is Europe Coming Apart Faster Than Anticipated? – Gonzalo Lira
Analysts: China may raise interest rates this Friday – Reuters
SoCal home sales 31% below average – Orange County Register
30-Year Fixed Mortgage Rise to Four-Month High – Zillow
Homeowners net worth 41 times greater than renters – Housing Wire
The Surprising Rise Of Hard Money Populism – NetNet
Lockhart says Fed not trying to weaken U.S. dollar – Reuters
Is the Fed really “punishing savers”? – CNN/Money
The Pretense of Knowledge Continues – Mises
By Tim Iacono, Since 2005
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Recent Comments