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Post by thirsty on Sept 4, 2011 19:06:29 GMT -5
;D Yup. With the loonie at par with the US dollar the canuck economy has never been better. A little devils advocate here.... if the dollar is being driven into the ground/oblivion why is tying the Loonie to par with the dollar a good thing? Kind of like going down with the Titanic ? I didn't imply that it was pegged, just noted that a decade ago the loonie was .60 cents US. I wouldn't discount a pop in the USD index either. As soon as we go over the second waterfall I reckon there will still be a lemming like run to the dollar, this is where things kind of get complicated. If GDP craters, nevermind GDP growth, I can see US govt debt to GDP blowing up and putting drastic pressure on the bond market, with revenues minimal to none, govt will need the Fed Reserve like nothing else to step in and provide financing options (qauntitive easing). This second waterfall, in a triple waterfall decline of the western hemisphere, could see the sovereign nation-state buckle under its debt loads. I think it will be the response, and the obvious debt payment impairment that really gives the impetus to currency devaluation. The BRIC countries (the Shanghai Cooperation Organization in dsguise) will then go to a revised gold standard and simply outbid the western hemisphere with superior currencies (and minimal govt debt) for crucial resource inputs. At that time we will be worse than equals, caught with massive debt loads, devalued currencies in a malthusian era and that is how you get most of the western hemipshere falling ten stories off the olduvai cliff. Gonna be a helluva a decade. |
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Post by Hobbyfarmer on Sept 5, 2011 12:30:54 GMT -5
Something to look forward to tomorrow? Gold is up to as good as $1900an oz....1900 dollars an oz is NOT a sign of a good or strong currency.
Market Pulse
Sept. 5, 2011, 11:41 a.m. EDT
European stocks slump on debt, growth worries
LONDON (MarketWatch) -- European stock markets closed sharply lower Monday, as renewed worries about the euro-zone debt crisis and global growth spooked investors. The pan-European Stoxx 600 index fell 4.1% to 223.45. Germany's DAX 30 index sank 5.3% to 5,246.18 and France's CAC-40 index dropped 4.7% to 2,999.54. Banking shares were particularly hard hit, as Deutsche Bank AG slumped 8.9% in Frankfurt, Societe Generale fell 8.6% in Paris, and Royal Bank of Scotland Group PLC tumbled 12.3% in London.
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Post by jrtheoriginal on Sept 6, 2011 7:46:21 GMT -5
Hobby I was talking to a guy yesterday who swore that if the goverment would spend more we would pull ourselves out a this mess and get back on track. I was working on my chopper at the time and he was kinda be annoying as he was always in the way but not helping at all. SO finally after 20 minutes I stopped and I looked at him and said this which made my Dad roll on the ground laughing. Hope youget a kick out of it.
"Concluding that goverment spending will lead to economic growth and stability in the marketplace is like being for same gender marriage and expecting a population explosion!"
He looked like he didn't understand so I added" Theres a whole lot of screwin going on but no production!"
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Post by linsal on Sept 6, 2011 8:01:49 GMT -5
With Immediate Effect! Simon Black
Holy Red Screen, Batman! If you haven’t seen the news, the Swiss National Bank has just announced that it is putting a ceiling on the franc’s appreciation against the euro… effectively abandoning its economic sovereignty and putting its future in the hands of woefully corrupt and incompetent bureaucrats.
On the news, the franc fell off a cliff, dropping almost 10% INSTANTLY. Gold priced in Swiss francs jumped from 1497 to 1620 per troy ounce, all in about 45 seconds.
Precious metals are now all alone as the only forms of sound money that are truly safe havens.
Just 6-weeks ago on July 27th, in a letter entitled “Should I buy gold at its all-time high”, I wrote:
“Even stronger currencies like the Swiss franc have limits to their appreciation. At some point, the Swiss National Bank will impose capital controls to thwart the rise of its currency. . . [Y]ou’ll probably feel like a sucker for not buying gold at $1600 when you still had the chance.”
Since then gold has soared roughly 20%, and as of this morning, the SNB has imposed capital controls to thwart the rise of its currency.
This is just the beginning.
The Swiss government has basically told the world that they will print as much money as it takes, and buy up as much crap sovereign debt as they can, to competitively devalue the currency.
This essentially puts Switzerland in the same sinking boat as Italy, Greece, and Portugal… with one key difference: Switzerland has 0% interest rates.
In other words, you can now borrow in francs at 0% and buy government-backed euro garbage yielding 5%, 10%, 30%…. with absolutely no downside currency risk.
Here’s a practical example you can do– open a FOREX trading account and borrow Swiss francs at 0.5%. Buy the EURCHF cross and simply hold euro cash, paying 0.65%. At 100:1 leverage (quite common in FOREX trading), that translates into a 15% return simply for HOLDING CASH with no downside currency risk.
It’s free money, courtesy of the Swiss National Bank. I’m just waiting for the next wave of margin hikes. Needless to say, this is utter madness and will absolutely hasten the end game for Europe.
A few other points to make:
1) Big Swiss exporters like Novartis and Nestle are dancing a jig right now as this will surely boost their sales in the short-term. Also, banks in Switzerland and Austria who had heavy exposure to Eastern Europe are breathing a sigh of relief right now.
You see, Swiss interest rates have traditionally been lower than in Europe’s emerging economies. For example, many Hungarians took out mortgage loans in Swiss francs because the borrowing rate was so much cheaper.
Once the Swiss franc began to rise, however, borrowers had a difficult time paying back the loan; suddenly their mortgage payment and balance were much higher than before, and default rates soared.
Banks in Austria, Germany, and Switzerland who wrote most of the loans were sitting on huge potential losses… and this destruction to the financial system has been mitigated thanks to today’s move. I have to imagine this had some influence in the decision.
2) For all the talk of a pullback in gold, this is only further reason for a rise in precious metals. It’s true that nothing goes up (or down) in a straight line, but given that the world just lost nearly its last remaining safe haven currency, there are few other asset classes to turn to.
3) Markets are not functioning properly. Competitive devaluation means that governments are all striving to out-print each other… Europe is printing as much as they can to bail out the PIIGS, Switzerland just signed up to join then, Japan and China are not far behind, and QE3 is set to launch soon in America.
With so much money sloshing around the financial system, there is absolutely no sense of value anymore; people cannot invest with confidence given all the massive bureaucratic intervention.
4) In the Swiss National Bank’s brief statement, they said “With immediate effect, [the SNB] will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.”
The three key words here are ‘WITH IMMEDIATE EFFECT’. This is just another example of a government making instant changes that pose dramatic risk over people’s lives and livelihoods.
Make no mistake, we can all wake up tomorrow to a new reality.
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Post by jabber1 on Sept 6, 2011 12:46:06 GMT -5
"Concluding that goverment spending will lead to economic growth and stability in the marketplace is like being for same gender marriage and expecting a population explosion!" He looked like he didn't understand so I added" Theres a whole lot of screwin going on but no production!" That quote deserved repeating. |
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