2011 November | timiacono.com

Why Central Banks Took Action Today

From this story at Der Spiegel comes the terrifying graphic below about the European debt crisis, one that central bankers were no doubt aware of when they acted to boost the availability and lower the cost of U.S. dollars for European banks today.

Not that what was done will make any difference over the long-term, but, it should alleviate some of the current pressure and, by the looks of the stock market today, enable a nice Santa Claus rally, though, European policymakers could still screw that up.

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More Trouble with the U.K. Economy

I’ve never heard the phrase “Autumn Statement” before, but, apparently the economic report prepared by Her Majesty’s Treasury over in the U.K. is particularly gloomy this year, at least according to these reports at the Telegraph.

Can you imagine a newspaper headline here in the U.S. reading, “Treasury Secretary Geithner Announces Six More Years of Pain”???

It kind of makes the debate on this side of the Atlantic about whether to pay for the extension of the payroll tax cuts and, if so, how, seem insignificant by comparison.

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John Paulson to Investors: “I’m Sorry”

CNBC reports that hedge fund manager John Paulson apologized to investors for misreading macroeconomic conditions in 2011 that led to spectacularly bad performance by his funds.

From the CNBC story, here’s a summary of the performance of Paulson’s funds this year:

  • Paulson Advantage: -32.57 percent
  • Advantage Fund: -45.35 percent
  • Credit Opportunities Funds: -19 percent
  • Credit Opportunities II: -15.31 percent
  • Paulson International Ltd.: -10.40 percent
  • Paulson Partners LP: -9.89 percent
  • Paulson Enhanced Ltd.: -22.11 percent
  • Paulson Partners Enhanced: -19.83 percent
  • Paulson “Recovery funds”: -31 percent
  • Paulson’s gold funds: +1 percent
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Wednesday Morning Links

MUST READS
Debt crisis in ‘critical period’ – BBC
S&P downgrades dozens of banks – CNN/Money
World’s central banks act to ease market strains – AP
China cuts reserve ratio in move to inject cash – Reuters
‘Ten days to rescue euro’ as leaders call for IMF funds – Telegraph
European ministers to turn to IMF for help in crisis – Washington Post
EFSF expansion agreed (to be inadequate) – FT Alphaville
The High Price of Abandoning the Euro – Spiegel
Fed’s No. 2 sees scope for further monetary easing – Reuters
Yes, Virginia. The banks really were bailed out. – interfluidity
How Paulson Gave Hedge Funds Advance Word – Bloomberg
Eurozone fatigue setting in – CNN/Money

MARKETS/INVESTING
Oil price rises to $100 a barrel – Businessweek
Gold reverses losses on China bank move – Reuters
Can markets hold to winning December tradition? – USA Today
John Paulson Apologizes to Investors for ‘Worst’ Year – NetNet
Oil roars back to $100, but does anybody care? – CNN/Money
Will central banks’ hidden gold demand boost gold prices? – Commodity Online
Gold Shares Cheapest Since 2002 Are ‘Coiled Spring’ for Rally – Bloomberg
Gold At Crossroad As ECB Faces Quantitative Easing – HAI
Gold likely to be higher at year’s end – MarketWatch
Politicians are good for gold – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
Recessions for whom? – Economist
Americans feel more confident, but should they? – LA Times
The Cure for an Uncoordinated Economy – Kotlikoff, Bloomberg
Venezuelan monetary policy: Gold rush – Economist
India’s Economy Expands Least Since 2009 as Inflation Bites – Bloomberg
Asia could help drive global economic growth, Fed official says – Washington Post
The World from Berlin: ‘Germany As Isolated on Euro as US Was On Iraq’ – Spiegel
U.S. Housing Market Still On Life Support – Forbes
Why Getting a Mortgage Is Tough Right Now – WSJ
Kocherlakota: Fed May Need to Reduce Accommodation – Businessweek
Federal Reserve Ready To Shield U.S. From Eurozone Crisis – HuffPost
Fed Policy Makers Sharpen Differences Over Conditions for More Bond Buying – Bloomberg

 

Ron Paul on Monetary Freedom

Rep. Ron Paul (R-TX) appeared on Fox Business News yesterday to talk about the nation’s money and a return to the gold standard in the unlikely event that he’s elected president.

His discussion of the U.S. dollar throughout American history reminded me of a Wall Street Journal book review yesterday by James Grant that, from what I could tell, was a lot better than the book – Greenback Planet by H.W. Brands. From the book review:

“Greenback Planet” is the story of this amazing monetary transformation. The narrative begins in the 18th century and races to the present, pausing to catch its breath at some of the great American monetary landmarks: Andrew Jackson’s veto, in 1832, of legislation rechartering a predecessor to the Federal Reserve; Abraham Lincoln’s recourse to greenbacks, or fiat currency, to finance the Civil War; resumption of the gold standard in 1879, with which it once more became possible to exchange gold for paper and vice-versa at a fixed and statutory rate; J.P. Morgan quelling the Panic of 1907; the Federal Reserve not quelling, never mind preventing, the Great Depression; the crazy-quilt monetary improvisations of the 1930s; the halfway gold dollar of the post-World War II era; and the creation, in 1971, of the pure paper (later digital) model of today.

Mr. Brands is a paper-money man, though the subtitle of his book—”How the Dollar Conquered the World and Threatened Civilization as We Know It”—seems to betray some reservations.

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