Twist Paves The Way For QE III - By Peter D Schiff (26/9/11) PDF Print E-mail
Peter D Schiff   
Monday, 26 September 2011 09:44

Financial Sense

Earlier this week the Federal Reserve ignited a firestorm in the global markets by admitting that the U.S. economy is facing downside risks. Although it continues to sugar coat the unpleasant reality, never has such a stunningly obvious statement resulted is so much turmoil.

Once again we are seeing the knee-jerk market reaction to seek refuge in the perceived safety of the U.S. dollar and U.S. Treasuries. However I expect investors will soon discover that such assets are firmly in the eye of the storm.  As the tempest moves on, those enjoying the dollar's current stability may soon find themselves battered by a category five monster.

Market disappointment was compounded when the Fed failed to follow up its dire outlook with a new round of quantitative easing (QE). Instead, through a policy entitled "Operation Twist" the Fed promised to sell $400 billion of short-term Treasuries and use the proceeds to buy an equivalent amount of long-term Treasuries. The markets evidently perceived this "balance sheet neutral" policy as too timid.



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A Billionaires' Coup In The US - The Debt Deal Will Hurt The Poorest Americans, Convinced By Fox And The Tea Party To Act Against Their Own Welfare - By George Monbiot (26/9/11) PDF Print E-mail
George Monbiot   
Monday, 26 September 2011 09:41

The Guardian

There are two ways of cutting a deficit: raising taxes or reducing spending. Raising taxes means taking money from the rich. Cutting spending means taking money from the poor. Not in all cases of course: some taxation is regressive; some state spending takes money from ordinary citizens and gives it to banks, arms companies, oil barons and farmers. But in most cases the state transfers wealth from rich to poor, while tax cuts shift it from poor to rich.

So the rich, in a nominal democracy, have a struggle on their hands. Somehow they must persuade the other 99% to vote against their own interests: to shrink the state, supporting spending cuts rather than tax rises. In the US they appear to be succeeding.

Partly as a result of the Bush tax cuts of 2001, 2003 and 2005 (shamefully extended by Barack Obama), taxation of the wealthy, in Obama's words, "is at its lowest level in half a century". The consequence of such regressive policies is a level of inequality unknown in other developed nations. As the Nobel laureate Joseph Stiglitz points out, in the past 10 years the income of the top 1% has risen by 18%, while that of blue-collar male workers has fallen by 12%.



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MUST-WATCH VIDEO: Keiser Report - Troika Tanks, Junta Bots & A Run on French Banks (26/9/11) PDF Print E-mail
By Max Keiser   
Monday, 26 September 2011 08:14



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El-Erian: World On Eve Of Next Financial Crisis - By Shamim Adam (23/9/11) PDF Print E-mail
Shamim Adam   
Friday, 23 September 2011 12:29

The world is on the eve of the next financial crisis, with sovereign debt its epicenter, said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., which runs the biggest bond fund.

The European Central Bank hasn’t put in place a “circuit breaker” to contain the region’s debt crisis, El-Erian, who is also Pimco’s co-chief investment officer, said at an event in Washington today.

Finance ministers and central bankers from the Group of 20 are meeting in Washington this weekend as markets tumble on concern the world economy is slowing and Europe’s sovereign debt crisis threatens to spread beyond Greece. The Stoxx Europe 600 Index sank 4.6 percent to 214.89 at the 4:30 p.m. close in London, the lowest since July 2009.



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Economic Warfare - By Walter Block (23/9/11) PDF Print E-mail
Walter Block   
Friday, 23 September 2011 09:59

Mises Daily

Pundits are accustomed to utilizing the language of war and strife to depict economic relationships. This is confusing, irrational and misleading. For the dismal science addresses mutual benefit, or positive-sum games. All participants gain whenever a trade, a purchase, sale, rental agreement, job, etc., gets consummated; necessarily so in the ex ante sense, and in the overwhelming majority of cases ex post.

For example, if I purchase a newspaper for $1, it is an apodictic undeniable truth that at that moment, I ranked the periodical more highly than the money I had to pay for it. Why else, for goodness sakes, would I have been willing to engage in this commercial transaction was this not so? I anticipated that I would benefit from this trade. Even in the ex post sense, from the vantage points of afterward, in virtually all such cases I and everyone else in this position gains. Rare is the case where I, or anyone else for that matter, regrets the purchase of a paper on the ground that there was no good news in it after all, and that was what the buyer was seeking and expecting.



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