By BILL SPINDLE, BENOÎT FAUCON and FARNAZ FASSIHI
Iranian authorities sent police into the streets of the capital Monday to crack down on informal currency trading and support the rial, signaling Iranians' heightened insecurity over their dwindling buying power and Tehran's increasingly hard-handed efforts to stave off economic panic.
The move follows last week's steep Iranian Central Bank interest-rate increase, a bid to try to stem the growing demand for U.S. dollars in the country as the economy lurches amid fears over a new round of sanctions promised by the U.S. and Europe.
Iran's rial currency has declined 40% to 55% against the dollar on the black market since December. Iranian inflation, meanwhile, now exceeds 20% a month, according to the Central Bank. While the rial has been falling for almost a year, the latest drop appeared to be triggered by a recent U.S. announcement that it would penalize companies that do business with Iran's Central Bank, and a proposed plan to ban Iranian oil purchases in the European Union later this year.
17 January 2012
Irish banks will shrink and shrink
January 16, 2012 Post by David McWilliams
The European debt crisis is moving swiftly to the next phase following the downgrade of France and the collapse of the Greek negotiations with its creditors last Friday night.
It is becoming increasingly obvious that there will be no deal in Greece. This is good news because it means the end of the pass-the-parcel-ponzi-scheme, whereby the bill for more and more institutional debt was passed on to more and more innocent people who had nothing to do with the debt in the first place.
Greece will default – as it should. The bondholders will get roasted – as they should – for making bad investments. The laws of capitalism will be allowed to do their thing. Debtors and creditors will pay – as they both should – with both parties sharing the cost.
Whether this leads to Greece being pushed out of the euro remains to be seen. An opportunistic play by a desperate Greek government might be a total default, followed by the reintroduction of a new currency and then the restart button is hit. Initially, it would be an international pariah, but over time it would recover.
The European debt crisis is moving swiftly to the next phase following the downgrade of France and the collapse of the Greek negotiations with its creditors last Friday night.
It is becoming increasingly obvious that there will be no deal in Greece. This is good news because it means the end of the pass-the-parcel-ponzi-scheme, whereby the bill for more and more institutional debt was passed on to more and more innocent people who had nothing to do with the debt in the first place.
Greece will default – as it should. The bondholders will get roasted – as they should – for making bad investments. The laws of capitalism will be allowed to do their thing. Debtors and creditors will pay – as they both should – with both parties sharing the cost.
Whether this leads to Greece being pushed out of the euro remains to be seen. An opportunistic play by a desperate Greek government might be a total default, followed by the reintroduction of a new currency and then the restart button is hit. Initially, it would be an international pariah, but over time it would recover.
GEAB N°61 is available! Global Systemic Crisis - 2012: The year of the world’s great geopolitical swing
According to LEAP/E2020, 2012 will in fact be the year of the world’s great geopolitical swing: a phenomenon which will without any doubt be the bearer of serious difficulties for most of the planet but which will also allow the emergence of geopolitical conditions favourable to an improvement of the situation in the years to come. Contrary to the previous years, 2012 will not be a “wasted” year, stuck in the “world before the crisis”, through lack of audacity, initiative and imagination on the part of the world’s leaders and because of people’s great passivity since the beginning of the crisis.
In addition in this issue, our team gives an in-depth analysis of the nature and consequences of a possible QE3 which the US Federal Reserve might launch in 2012 (4). Hoped for by some, dreaded by others, QE3 is generally presented as the ultimate weapon to save the US economy and financial system which, contrary to the dominating chatter of these last weeks, continues to deteriorate (5). Whether the FED launches out with QE3 or not, QE3 will be without any doubt the major financial event of 2012 whose consequences will mark the world financial and monetary system definitively. This GEAB issue will enable you to have a precise idea on the subject.
In addition in this issue, our team gives an in-depth analysis of the nature and consequences of a possible QE3 which the US Federal Reserve might launch in 2012 (4). Hoped for by some, dreaded by others, QE3 is generally presented as the ultimate weapon to save the US economy and financial system which, contrary to the dominating chatter of these last weeks, continues to deteriorate (5). Whether the FED launches out with QE3 or not, QE3 will be without any doubt the major financial event of 2012 whose consequences will mark the world financial and monetary system definitively. This GEAB issue will enable you to have a precise idea on the subject.
When Will Silver Make a New High?
By Andrey Dashkov, Research Analyst
In last week's Metals, Mining, and Money, Jeff Clark estimated that given the magnitude of the correction that started last September, it may take until May 2012 for gold to reach a new high. This week let's take a look at how long it may take for silver to rebound.
It's a commonly known fact that silver is more volatile than gold. Already in this decade, silver has risen by a factor of 12 from its ten-year low ($48.70 vs. $4.07), while gold has seen about a sevenfold climb ($255.95 vs. $1,895).
This volatility – as you'll see in a minute – holds for corrections as well. On average, silver's retreats have been deeper and longer than gold's. The three big gold corrections we looked at last week averaged 22.8%. Take a look at the three biggest for silver, along with how long it's taken to recover and establish new highs.
In last week's Metals, Mining, and Money, Jeff Clark estimated that given the magnitude of the correction that started last September, it may take until May 2012 for gold to reach a new high. This week let's take a look at how long it may take for silver to rebound.
It's a commonly known fact that silver is more volatile than gold. Already in this decade, silver has risen by a factor of 12 from its ten-year low ($48.70 vs. $4.07), while gold has seen about a sevenfold climb ($255.95 vs. $1,895).
This volatility – as you'll see in a minute – holds for corrections as well. On average, silver's retreats have been deeper and longer than gold's. The three big gold corrections we looked at last week averaged 22.8%. Take a look at the three biggest for silver, along with how long it's taken to recover and establish new highs.
(Click on image to enlarge)
SilverDoctors: Jim Willie: Large Physical Gold Orders Are Clearin...
SilverDoctors: Jim Willie: Large Physical Gold Orders Are Clearin...: Entire 3-part Jim Willie interview With the S&P massively downgrading the Eurozone nations Friday, The Doc interviewed Jim Willie of golden...
Part1:With the S&P massively downgrading the Eurozone nations Friday, The Doc interviewed Jim Willie of goldenjackass.com regarding his thoughts on the Euro crisis and the implications to gold and silver.
Part2:Part 2 focuses on gold, physical gold and silver tightness, and the decoupling of the price of actual physical metal from the paper futures price.
Part 3:Part 3 focuses on the future of silver and gold prices.
Part1:With the S&P massively downgrading the Eurozone nations Friday, The Doc interviewed Jim Willie of goldenjackass.com regarding his thoughts on the Euro crisis and the implications to gold and silver.
Part2:Part 2 focuses on gold, physical gold and silver tightness, and the decoupling of the price of actual physical metal from the paper futures price.
Part 3:Part 3 focuses on the future of silver and gold prices.
16 January 2012
Bam! Bam! Bam! Huge Financial Bombs Just Got Dropped All Over Europe
The European debt crisis has just gone to an entirely new level. Just when it seemed like things may be stabilizing somewhat, we get news of huge financial bombs being dropped all over Europe. Very shortly after U.S. financial markets closed on Friday, S&P announced credit downgrades for nine European nations. This included both France and Austria losing their cherished AAA credit ratings. When the credit rating of a country gets slashed, that is a signal to investors that they should start demanding higher interest rates when they invest in the debt of that nation. Over the past year it has become significantly more expensive for many European nations to borrow money, and these new credit downgrades certainly are certainly not going to help matters. Quite a few financially troubled nations in Europe are very dependent on the ability to borrow huge piles of cheap money, and as debt becomes more expensive that is going to push many of them over the edge. Yesterday I wrote about 22 signs that we are on the verge of a devastating global recession, and unfortunately that list just got a whole lot longer.
Over the past several months we have seen quite a few credit downgrades all over Europe, but we have never seen anything quite like what S&P just did. Standard & Poor’s unleashed a barrage of credit downgrades on Friday....
Over the past several months we have seen quite a few credit downgrades all over Europe, but we have never seen anything quite like what S&P just did. Standard & Poor’s unleashed a barrage of credit downgrades on Friday....
22 Signs That We Are On The Verge Of A Devastating Global Recession
2012 is shaping up to be a very tough year for the global economy. All over the world there are signs that economic activity is significantly slowing down. Many of these signs are detailed later on in this article. But most people don't understand what is happening because they don't put all of the pieces together. If you just look at one or two pieces of data, it may not seem that impressive. But when you examine all of the pieces of evidence that we are on the verge of a devastating global recession all at once, it paints a very frightening picture. Asia is slowing down, Europe is slowing down and there are lots of trouble signs for the U.S. economy. It has gotten to a point where the global debt crisis is almost ready to boil over, and nobody is quite sure what is going to happen next. The last global recession was absolutely nightmarish, and we should all hope that we don't see another one like that any time soon. Unfortunately, things do not look good at this point.
24 Statistics To Show To Anyone Who Believes That America Has A Bright Economic Future
Beware of bubbles of false hope. Right now there is a lot of talk about how the U.S. economy is improving, but it is all a lie. The mainstream media can be very seductive. When you sit down to watch television your brain tends to go into a very relaxed mode. In such a state, it becomes easy to slip thoughts and ideas past your defenses. Sometimes when I am watching television I realize what the media is trying to do and yet I can still feel it happening to me. In this day and age, it is absolutely critical that we all think for ourselves. When you look at the long-term trends and the long-term numbers, a much different picture of the U.S economy emerges than the one that is painted for us on television. Over the long-term, the number of good jobs in America has been steadily going down. Over the long-term, the number of Americans living in poverty and living on food stamps has been steadily going up. Over the past couple of decades, tens of thousands of businesses, millions of jobs and trillions of dollars of our national wealth have gone out of the country. Our debt is nearly 15 times larger than it was 30 years ago, and U.S. consumer debt has soared by 1700% over the past 40 years. Year after year the rate of inflation goes up faster than our incomes do, and this is absolutely devastating the middle class. Anyone who believes that we can keep doing the same things that we have been doing and yet America will still have a bright economic future is delusional. Until the long-term trends which are taking the U.S. economy straight into the toilet are reversed, any talk of a bright economic future is absolute nonsense.
EFSF Text On Standard & Poors Downgrade Of Long-Term Rating
LUXEMBOURG (MNI) Following is a statement by the European Financial Stability Facility (EFSF) released Monday on the downgrade by Standard & Poor's:
"EFSF takes note of the decision by Standard and Poor's to downgrade the EFSF's long-term rating to AA+.
"EFSF takes note of the decision by Standard and Poor's to downgrade the EFSF's long-term rating to AA+.
Noyer: Banks Must Use ECB Liquidity to Finance EMU Economy
Monday, January 16, 2012 - 12:34
PARIS (MNI) - The European Central Bank will continue to provide liquidity to the Eurozone economy and banks must do their part by lending to business, ECB Governing Council member Christian Noyer said Monday.
The ECB will continue its "determined action to counter abnormal market trends and to ensure the best transmission possible of monetary policy," the governor of the Bank of France said in his New Year's greeting to the French financial establishment.
"Our decision to loosen collateral eligibility criteria for refinancing operations also demonstrates our firm resolution to support financing of the economy," he said.
PARIS (MNI) - The European Central Bank will continue to provide liquidity to the Eurozone economy and banks must do their part by lending to business, ECB Governing Council member Christian Noyer said Monday.
The ECB will continue its "determined action to counter abnormal market trends and to ensure the best transmission possible of monetary policy," the governor of the Bank of France said in his New Year's greeting to the French financial establishment.
"Our decision to loosen collateral eligibility criteria for refinancing operations also demonstrates our firm resolution to support financing of the economy," he said.
Secrets of the Fed Editorial of The New York Sun | January 15, 2012
The Fed is starting to remind people of Woodrow Wilson’s son-in-law, William Gibbs McAdoo. We had a note about McAdoo over the weekend from James Grant, editor of the Interest Rate Observer. It seems that McAdoo, during his campaign for the Democratic presidential nomination in 1924, kept putting his foot in his mouth. “What your friends want out of you is silence,” one of McAdoo’s supporters supposedly told him, “— and damn little of that.” Our sentiments exactly. The Federal Reserve, not to mention the rest of us, would be better off without the all the words that pour from its transcripts, press conferences, and minutes. After the release of the transcripts this week, the New York Times quoted one professor, Justin Wolfers of the Unviersity of Pennsylvania, as saying the latest disclosures were embarrassing not only for the Fed but for all of economics. In any event, the Fed’s words are a poor excuse for money. We say: Let the Fed stand mute. For however much time we still have a Fed, let us discover its policies the way we discover the properties of a black hole, not by the light that comes out — none does — but by the behavior of nearby objects. It would be more credible for the Fed and more efficient for the market, until the day comes when we can get back to constitutional money defined as a given number of grains of specie.
Greece to default following downgrades, says Bill Gross
Source: BI-ME with Bloomberg , Author: Posted by BI-ME staff
Posted: Mon January 16, 2012 12:45 pm
INTERNATIONAL. Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., said Greece is heading for default.
The downgrade of European ratings by Standard & Poor’s last week shows countries can fail to meet their debt obligations, Gross said in a Twitter posting. Greece will prove to be the latest example, Gross wrote.
Greek officials will meet with lenders on Jan. 18 after discussions stalled last week over the size of investor losses in a proposed debt swap, raising the threat of default. European officials and creditors plan a 50 percent cut in the face value of Greek debt by voluntarily exchanging outstanding bonds for new securities, though the two sides haven’t been able to agree on the coupon and maturity of the new debt.
Posted: Mon January 16, 2012 12:45 pm
INTERNATIONAL. Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., said Greece is heading for default.
The downgrade of European ratings by Standard & Poor’s last week shows countries can fail to meet their debt obligations, Gross said in a Twitter posting. Greece will prove to be the latest example, Gross wrote.
Greek officials will meet with lenders on Jan. 18 after discussions stalled last week over the size of investor losses in a proposed debt swap, raising the threat of default. European officials and creditors plan a 50 percent cut in the face value of Greek debt by voluntarily exchanging outstanding bonds for new securities, though the two sides haven’t been able to agree on the coupon and maturity of the new debt.
Housing and Oil: Dark Inventory Rules
Ilargi: I'd like to try a little intellectual exercise. There were two pieces in my mailbox this week that concerned posts at Naked Capitalism. Though their topics have at first glance little to do with one another, there is a term that is pivotal to both. Inventory.
When it comes to real estate, it's popularly called "shadow inventory". With regards to commodities, the term "dark inventory" has been coined. While there are plenty of differences in the way the terms are applied, I'm for now intrigued more by - potential - similarities between them.
Not that I have the illusion that I can treat this in a way that could even border on comprehensive, don't get me wrong. I want to lift only part of the veil that hides from view what underlies how and why the financial system that rules our economies is going to the dogs: market manipulation.
In particular, I'm interested in how both shadow and dark inventory phenomena pervert their respective markets, as well as the entire free market system as a whole, where everyone is supposed to have "full access to information". Something both dark and shadow inventories make impossible. Something the 99% general public are not aware of. At all.
And it's not like they're alone. Try your average pension fund manager, banker, politician. Not a clue.
Let' start with a trip back to June 2011, when Izabella Kaminska for FT Alphaville perhaps first used the term "dark inventory":
When it comes to real estate, it's popularly called "shadow inventory". With regards to commodities, the term "dark inventory" has been coined. While there are plenty of differences in the way the terms are applied, I'm for now intrigued more by - potential - similarities between them.
Not that I have the illusion that I can treat this in a way that could even border on comprehensive, don't get me wrong. I want to lift only part of the veil that hides from view what underlies how and why the financial system that rules our economies is going to the dogs: market manipulation.
In particular, I'm interested in how both shadow and dark inventory phenomena pervert their respective markets, as well as the entire free market system as a whole, where everyone is supposed to have "full access to information". Something both dark and shadow inventories make impossible. Something the 99% general public are not aware of. At all.
And it's not like they're alone. Try your average pension fund manager, banker, politician. Not a clue.
Let' start with a trip back to June 2011, when Izabella Kaminska for FT Alphaville perhaps first used the term "dark inventory":
How Long Until People Raise The Alarm About Britain?
The Automatic Earth | Jan. 16, 2012, 8:48 AM
There is a relative silence in the international financial press when it comes to Britain.
The economic situation of continental Europe gets almost all the attention.
Every now and then someone in France or Germany states that Britain, too, should be downgraded, like when S&P cut the ratings of 9 European countries, but such statements attract hardly any interest at all. This might not be overly wise, though.
At the end of last year, Tyler Durden at ZeroHedge published a graph from Haver Analytics/Morgan Stanley that should probably have sounded alarm bells quite a bit louder than it did.
Still, this graph would seem to indicate that the only core issue in the UK is its outsize financial sector with its outsize debt. From time to time, however, news articles pop up that seem to indicate there's more going on than trouble in the City of London.
There is a relative silence in the international financial press when it comes to Britain.
The economic situation of continental Europe gets almost all the attention.
Every now and then someone in France or Germany states that Britain, too, should be downgraded, like when S&P cut the ratings of 9 European countries, but such statements attract hardly any interest at all. This might not be overly wise, though.
At the end of last year, Tyler Durden at ZeroHedge published a graph from Haver Analytics/Morgan Stanley that should probably have sounded alarm bells quite a bit louder than it did.
Still, this graph would seem to indicate that the only core issue in the UK is its outsize financial sector with its outsize debt. From time to time, however, news articles pop up that seem to indicate there's more going on than trouble in the City of London.
Buy Gold: It's oversold, loathed, near major lows
By Adam Hamilton
Since rocketing to new all-time highs last summer, Gold has weathered a major correction. While that selloff was healthy and necessary given the excessive optimism that catapulted gold to very-overbought levels, a strong US dollar accelerated gold's swoon. But with the dollar now as overbought and wildly popular as gold was in August, this currency itself is due for a major selloff that is likely to launch gold.
Since rocketing to new all-time highs last summer, Gold has weathered a major correction. While that selloff was healthy and necessary given the excessive optimism that catapulted gold to very-overbought levels, a strong US dollar accelerated gold's swoon. But with the dollar now as overbought and wildly popular as gold was in August, this currency itself is due for a major selloff that is likely to launch gold.
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