Some interesting, if not unsurprising, insight from someone who recently attended the SEC panels in DC.

Summary: No representation of retail investors, more banging the drum for Wall Street interests, and short shrift on naked short selling.

After all, why would anyone want to give  up THAT cash-cow?

Eight long hours inside the SEC

by Judd Bagley of Deep Capture

(Washington, DC) The SEC’s roundtable on securities lending and short selling got started today, and Deep Capture was there.

What follows is my assessment, based on my observations thus far.

In the simplest terms, I’d say the situation at the SEC is one of extreme disconnection. This is an agency that has completely lost track of its founding mission.

The day consisted of four panels, all dedicated to examining different aspects of securities lending. The panelists included one academic, one public employees’ pension fund manager, the CEO of FINRA, and 20 representatives of hedge funds and brokerages or companies that provide services to hedge funds and brokerages.

Not a single representative or advocate of retail investors had a voice on any panel, and the substance of the panelists’ comments was consistent with the thinking that obviously called them all together: the discussion never got beyond reforms to benefit the institutions that get rich from lending out the shares entrusted to them by the rest of us.

(more…)

I will with-hold what my own price targets are for silver since I dont typically like discussing that, but there are a few basic fundamentals in regards to silver that makes it very attractive to me.

Silver Bar - Argor-Heraeus

For one, the USGS has indicated that silver will be the first element in the periodic table to become extinct. I have had a friend who is a scientist point out to me this is impossible, since silver is an element and elements cannot be destroyed. Perhaps so, but I contend there may be a time when it is not available in quantity to any man.

Secondly, I would also like to point out that there has been no time in history where the current ratio of available silver to gold has ever existed in an economy except for once, and that was 3000 years or so ago.

I am referring to ancient Egypt. They mined their own gold, but had to import their silver. Thus, in the regional system of the Egyptian economy, the available ratio of silver to gold was 2.5 ounces to every ounce of gold.

Only now, there are identifiable reserves of some 500 million silver ounces, yet there are roughly 4.8 billion ounces of gold – a ratio of 9.6 ounces of gold to every ounce of silver.

Today we do not see a single regional economy, but a global one, with all nations interlinked by a common global reserve currency.

Today, like in ancient Egypt we are not seeing a “once in a lifetime opportunity”. This isnt even once in a century, or once in a millennium.

The last time anything remotely like this happened was 3000 years ago, and even then it was no where near this pronounced a ratio difference.

Something to think about.

The Silver Shortage Will Come

Israel Friedman

Based on the supply and demand situation of silver, it’s only a question of time when a silver shortage will come. Nobody can predict exactly when this is going to happen, but we have more and more signs that those who control the price of silver are sweating to balance the supply.

(more…)

Video: Wiemar Hyperinflation

From Tyler Durden

In an unprecedented disclosure, the FDIC has highlighted that it expects the DIF reserve ratio to be negative as of September 30. As there are a whopping 48 hours before that deadline, one can safely assume that the DIF is now well into negative territory: as of today depositors have no insurance courtesy of a banking system that has leeched out all the capital of the Federal Deposit Insurance Corporation. Let’s pray there is no run on the bank soon.

Full Article

As many of you already know, when central banks turn from net sellers to net buyers of gold, it marks a sea-change that cannot be ignored.

What I find funny is the amazing spin that main stream media places on positive and fundamentally bullish news about the gold markets.

” Bundesbank said it had again decided to limit its sales over the next 12-month period to 6.5 tonnes”

However this of course must be dampened with the ridiculous statement:

“the new central bank gold pact, which aims to keep a floor under prices by preventing a flood of the previous metal onto the market”

Which of course implies that if they didn’t do this gold would fall to some unfathomably low price because all the central banks would be dis-hoarding what they have…which is flat moronic because it has become painfully obvious they have lost their appetite for this and are now buying.

Of course it is well understood as basic journalism (insert sarcasm here) to throw in a little bit about the IMF selling its gold, the same spin trick used for decades any time the gold markets get a little too heated.

Dont forget, that China could purchase the entire TOTAL RESERVES of the IMF as an after-thought, and probably would if the IMF was silly enough to do it.

German Bundesbank to keep lid on gold sales this year

FRANKFURT, Sept 25 (Reuters) – Germany’s Bundesbank will refrain from big gold sales in the first year of a new central bank gold sales agreement, it said on Friday.

The Bundesbank is the world’s second-biggest holder of gold, currently holding 3,408 tonnes — worth just over $100 billion at today’s prices XAU=. In response to a query from Reuters, the Bundesbank said it had again decided to limit its sales over the next 12-month period to 6.5 tonnes to the German Finance Ministry.

“The Bundesbank will not make further use of its option to sell to which it is entitled in the first year of the new Gold Agreement,” the central bank said in a statement.

“The remaining selling rights will be offered to the other central banks participating in the Gold Agreement in exchange for future selling rights, or to the IMF (International Monetary Fund).”

The Bundesbank is the first central bank to declare its sales plans under the new central bank gold pact, which aims to keep a floor under prices by preventing a flood of the previous metal onto the market.

Gold fell to a two-week low shortly after the announcement, as the euro dipped against the dollar on weaker than expected U.S. economic data.

Spot gold XAU= fell as low as $984.70 an ounce, its lowest since Sept. 10.

European central banks agreed last month to renew their gold sales pact for another five-year period, starting Sept. 27.

The overall sales cap will reduce from 500 tonnes a year to 400 tonnes, allowing room for the IMF to also sell gold from its reserves. If the Bundesbank passes its sales rights to the IMF rather than another central bank, it will not receive future sales options in exchange.

The IMF plans to sell 403.3 tonnes from its gold reserves over the next several years.  (Reporting by Krista Hughes, editing by Mike Peacock)

Original Article

Interesting read. I happen to agree with what Robert says here, and so do my colleagues.

Essentially, financial foundations must be built in assets that will retain value and cannot be taken from you against your will.

On TOP of these foundations it makes sense to construct the walls and roof of your house, which equals vehicles that generate cashflow.

Taking Steps to Prepare for the Worst

by Robert Kiyosaki

Robert Kiyosaki

In Sunday school I was taught the parable of the pharaoh of Egypt and his dream of seven fat cows being eaten by seven skinny cows. Deeply disturbed, the pharaoh sought the interpretation of his dream. A young slave boy interpreted the dream to mean Egypt would have seven years of plenty to be followed by seven years of famine. The message: Prepare for the lean years during the years of plenty. The pharaoh prepared Egypt for the lean years and led it into an era of prosperity.

My rich dad used the story of the three little pigs to make a similar point. As you know, one pig built his house out of straw, the other of sticks. Once the first two pigs finished their houses they began to party, taunting and laughing at the third pig who was taking longer, building his house of bricks. After the house of bricks was finished, a big bad wolf appeared and blew down the houses of straw and sticks. If not for the shelter of the house of bricks, the first two pigs would have been pork dinner.

In 2007 a big bad wolf known as the ‘subprime crisis’ blew down financial houses made of straw and sticks, houses known as Lehman Brothers, Bear Stearns, AIG, Merrill Lynch, Washington Mutual, Fannie Mae, and Countrywide — as well as the homes and businesses of people who built their lives on straw and sticks.

Lessons of the Pharaoh

Last month’s column was about reasons why people should prepare for the worst. This article is about how to prepare for the worst. Preparation begins with understanding the lessons of the pharaoh and the three little pigs: Prepare for the worst even when times are good.

For me, it was not easy to follow these lessons, especially during the boom years. It was tough preparing for bad times while my friends were enjoying the good times. It was tough not to climb the corporate ladder seeking higher pay and job security or chasing financial fads such as flipping real estate, day trading stocks, gambling on dotcom companies, investing in mutual funds, or using my home as an ATM to pay off my credit cards. Today, many of my fellow baby boomers who enjoyed the boom years are concerned about survival in the lean years.

In 1973, returning from the Vietnam War, I found my dad, in his fifties and in the prime of his life, unemployed. Although a highly educated, honest, hard-working man — and former superintendent of education for the state of Hawaii and Republican Party candidate for Lt. governor of the state – he was sitting at home, looking for work. My dad’s situation, combined with my experience of the war, was my wake-up call. I knew something was wrong, but I did not know what was wrong.

The stories of the pharaoh and the three little pigs danced in my head. I knew I had to prepare, but for what I did not know. I just knew I could not follow my dad’s advice, which was to fly for the airlines or go back to school and get my PhD. My instincts, sharpened by the war, knew his advice was not right for me. I decided to follow in my rich dad’s footsteps, not my poor dad’s.

(more…)

Great video interview with Marc Faber

I have written at times that a change in the global reserve currency was likely, but also that it is a normal part of a natural cycle.

The cycle I am referring to is the shift from honest money- aka money with a fixed value, versus fiat money – aka unjust weights and measures. This cycle is longer than a human lifetime and repeats continually through history.

The difference between all of history and the last 38 years, is that at no other time in history has there been a 100% pure fiat global economy. At no point in time has global trade been settled in pure fiat dollars, as it is now, thanks to the Bretton Woods Agreement. This came as a major eye opener to me when I first came to understand it.

From comments I hear all the time, there seems to be some confusion about what this means for the future of this or that currency, be it Euro, Swiss Franc, USD, or Yuan.

The one thing that I DO NOT hear is gold and silver when people are asking which is the best currency moving forward.

The reason this strikes me as interesting is that gold and silver have been money for thousands of years, and its only recently, in fact the last hundred or so years, that people have forgotten this. We have essentially three generations of people who have grown up knowing only fiat currency as money, so people often no longer associate gold or silver with money, and it doesn’t ever enter into their mind as part of the equation when tying to figure out what to do next.

My summary thought on this subject is that if the currency you are interested in has no honest money peg, meaning it is not tied specifically to something of intrinsic value as its measurement, then it is going to devalue versus other currencies (especially honest money) during this economic cycle, because of a nations sovereign requirement to compete in global trade. This is known as ‘competitive devaluation‘.

A chart of the USD Index Versus gold:

Gold versus US Dollar - 10 year

My point here is this, if you put money into any currency, if that currency is fiat, will HAVE TO CONTINUE TO DEVALUE in order to remain competitive in global trade  irregardless of which country prints it, or what type of currency system we go to in the future.

Yes, there will be ups and downs, and compared to other currencies every currency will continue to fluctuate in value, but the major underlying trend WILL BE devaluation in real purchasing power.

During this cycle, only gold, silver or other tangibles will maintain (and increase) in buying power.

HSBC bids farewell to dollar supremacy

By Ambrose Evans-Pritchard

The sun is setting on the US dollar as the ultra-loose monetary policy of the US Federal Reserve forces China and the vibrant economies of the emerging world to forge a new global currency order, according to a new report by HSBC.

“The dollar looks awfully like sterling after the First World War,” said David Bloom, the bank’s currency chief.

“The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP,” he said

Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia’s “mercantilist mindset” of recent decades is about to be broken by the spectre of an inflation spiral.

(more…)

A few years ago I started commenting on the hyperinflation of Zimbabwe.

Back in February, Zimbabwe started using US Dollars as the common transactional currency. This reminds me of how markets have over time usually picked a currency to use, in history the choice was usually gold and or silver.

Interestingly, the Zimbabwe economy is on its way back to recovery with items on store shelves once again as you will see in this video.

What the market place of Zimbabwe seems to have missed, is that the US is doing to its dollar exactly what the Reserve Bank of Zimbabwe did to its own currency.

http://themessthatgreenspanmade.blogspot.com/2009/09/shopping-in-zimbabwe.html

Woman uses currency to heat house during german hyper-inflation

Many do not know what triggers hyper-inflation. It is a monetary event.

The thing that history shows leads up to it, is the rampant printing of money, often buying or paying off the governments own debt (instead of another country or central bank buying it).

This is known in economics parlance as “Quantitative Easing”

From wikipedia:

The term quantitative easing describes an extreme form of monetary policy used to stimulate an economy where interest rates are either at, or close to, zero. Normally, a central bank stimulates the economy indirectly by lowering interest rates but when it cannot lower them any further it can attempt to seed the financial system with new money through quantitative easing.

In practical terms, the central bank purchases financial assets (mostly short-term), including government paper and corporate bonds, from financial institutions (such as banks) using money it has created ex nihilo (out of nothing).

If you think it cant happen in the USA, please do more research.

I am protected against such an event. Are you?

Federal Reserve Accounts For 50% Of Q2 Treasury Purchases

By Tyler Durden

The degree of intermediation by the Federal Reserve in the issuance of US Treasuries hit a record in Q2, accounting for just under 50% of all net UST issuance absorption.

This is a startling number, as the Fed’s $164 billion in Q2 Treasury purchases dwarfs the combined foreign/household UST purchases of $101 billion and $29 billion, respectively, over the same time period.

In fact, the Fed was a greater factor in UST demand than all three traditional players combined: Foreigners, Households and Primary Dealers, which amounted to a $158 billion in net Q2 purchases.

This dramatic imbalance puts a lot of question marks over how the upcoming hundreds of billions in incremental Treasury purchases will be soaked up, now that QE only has $15 billion of capacity for USTs: with Households lapping up risky assets it is unlikely they will look at Treasuries absent some dramatic downward move in equities, while Foreign purchasers, which many speculate are in a game of Mutual Assured Destruction regarding UST purchases, have in fact been aggressively lowering their purchases of Treasuries (from $159 billion in Q1 to $101 billion in Q2, an almost 40% decline in appetite!).

(more…)

If/when this info comes out, it should be interesting to say the least.

Pay Czar Plans to Disclose Top Salaries

Dan Freed

WASHINGTON (TheStreet) — Treasury “Pay Czar” Kenneth Feinberg is planning to disclose the salaries for the 25 most highly paid employees at Citigroup (C Quote), Bank of America (BAC Quote), American International Group (AIG Quote), GMAC, Chrysler Financial, General Motors and Chrysler within 30 days, according to statements attributed to him in an analyst’s research report.

Feinberg made the statement at a Federal Deposit Insurance Corp. research conference on executive compensation, according to a report from Concept Capital, a research firm. A Treasury Department spokeswoman did not respond to a call or an email message seeking to confirm the report. The analyst who wrote it, Jaret Seiberg, was also not available, according to a Concept Capital spokeswoman.

“As far as I knew he was required to approve or disapprove of the compensation levels for those employees, but not necessarily to make them public,” says Paul Hodgson, senior research associate at The Corporate Library, an independent governance research firm. “That comes as something of a surprise.”

The report did not clarify whether Feinberg would disclose the individuals’ names, or merely how much they were paid. Hodgson says he does not believe it is necessary to name the individuals.

Though public companies disclose the pay of their top five corporate executives, including the CEO and CFO, those aren’t necessarily always the highest paid employees.

Seiberg went on to write that Feinberg “left us with a clear impression he would like his rules to establish a precedent for the rest of the financial sector.”

Hodgson says he thinks that will be difficult to accomplish.

The Securities and Exchange Commission floated a plan in 2006 to get companies to disclose more about how much top employees are paid, which became known as “The Katie Couric Clause,” but that was shot down by corporate lobbyists.

Hodgson notes one effect of Feinberg’s disclosure will be to expose his decisions to public scrutiny.

The report also states that Feinberg “seemed very uncomfortable” about clawing back compensation already paid to recipients of government bailout money, a power that extends to all recipients of Troubled Asset Relief Program investments, rather than just the seven that have received the most funds. Feinberg “suggested it would need to be a very egregious example to warrant recoupment,” the report states.

“I don’t know how egregious it needs to get before somebody might think about clawing back compensation,” Hodgson says. “I mean, good grief! What do they need to do? Steal the office furniture?”

Particularly outrageous, Hodgson says, were the findings of New York Attorney General Andrew Cuomo, showing that the nine original TARP recipients, including Goldman Sachs (GS Quote), Morgan Stanley (MS Quote) and JPMorgan Chase (JPM Quote) paid out nearly $9 billion in bonuses despite losing a combined $54 billion in 2008.

A Citi spokesman declined to comment for this article, as did a spokeswoman for GMAC. Messages left with BofA and AIG were not immediately returned.

Representatives for Chrysler Financial, General Motors and Chrysler could not immediately be reached.

I just read one of the better articles I have seen discussing golds true value in todays dollars, written by the fine gentlemen at Zeal, LLC.

An excerpt:

While this week’s $1018 was indeed gold’s best close ever, the media’s insinuation from this true statement is pretty misleading.  Comparing prices today with prices in the past is certainly not a clean apples-to-apples exercise.  Due to the Federal Reserve’s relentless and endless expansion of the US money supply, the dollar yardstick for measuring nominal prices is perpetually changing.

If you were old enough in early 1980 to remember price levels, you know exactly what I mean.  Back when gold hit $850 initially, the US median household income was under $18k.  Across the US, new houses averaged $76k while new cars were less than $6k!  A candy bar only cost a quarter.  It was a different world back then, with each dollar being far more valuable.  So $850 today is worth much less than $850 then.

CPI Adjusted Gold Price

For the full article click the link below

(more…)

Tell me who is going to be buying these again?

Pssst….its gonna be the Fed.

Say hello to QE.

Got gold yet?

Treasury To Sell $112 Billion In Notes Next Week

Deborah Levine
MarketWatch Pulse

NEW YORK — The Treasury Department said Thursday it will issue $112 billion in notes next week. A record $43 billion in 2-year notes will be sold on Tuesday, followed by $40 billion in 5-year debt on Wednesday. The final offering will be $49 billion in 7-year notes on Thursday. The amounts are each $1 billion more than last month — the most ever for each security — and in line with estimates of some of Wall Street’s biggest bond dealers. The government will also sell $85 billion in shorter-term bills. After the announcement, 2-year note yields, which move inversely to prices, remained up 1 basis point on the day, at 1%, the highest this month.

Original Article

Great video

Silver is definitely the start performer so far this year.

Silver outperforms Gold 3 to 1

Silver is in the spotlight at U.S. gold gathering

By Steve James

DENVER, Sept 15 (Reuters) – Silver has outperformed gold this year as investors flocked to precious metals in the economic downturn and silver producers can look forward to good times ahead, the head of Coeur d’Alene Mines (CDE.N) said on Tuesday.

“In the wake of this (financial) hurricane, this is a new golden age for us,” Dennis Wheeler, the silver producers’ chairman, president and chief executive officer told the Denver Gold Forum industry gathering.

Not only were investors buying silver as a safe haven against the recession, but new demand from electronic appliance makers for the metal was likely to strain global supplies, he said.

“We continue to see a deficit of about 100 million ounces for silver this year and it is continuing.”

On a day when silver rose past $17 an ounce, Wheeler noted that the gold price had risen some 15 percent this year to around $1,000 an ounce, but silver was up 50 percent.

“The number one performer this year has been silver. Silver has outperformed gold three-to-one,” said Wheeler, whose company has silver and gold projects in Bolivia, Mexico, Chile, Argentina, Australia and the United States.

“We are seeing the beginnings of a new sustainable global silver market. Clearly investors were driving the market this year.”

He said that as the economy got back on its feet, silver demand was seen increasing, especially after “upbeat” outlooks from computer and appliance makers who use the metal for batteries.

Apart from traditional uses for jewelry, silver is increasingly in demand for solar energy and water purification components, medical uses and photography. (Editing by Leslie Gevirtz)

Original Article

It is appalling to see how careless the government can be when it comes to spending your money.

Just read an interesting article over at Vanity Fair.

An Excerpt:

“It’s impossible to overstate how casual the process was, or how little Treasury asked of the banks it targeted. Like most bankers, Ray Davis, the C.E.O. of Umpqua Bank, a solid, respectable local bank in Portland, Oregon, followed with great interest all the news out of Washington last fall. But he didn’t see that tarp had much relevance to his own bank. Umpqua was well run. It wasn’t bogged down by a portfolio of bad loans. It had healthy reserves.

Then he got a call from a Treasury Department representative asking if Umpqua would like to participate in the Treasury program and suggesting it would be a good thing for Umpqua to do. Davis listened politely, but the fact was, he says, that Umpqua “didn’t need the funds. Our capital resources were very high.”

The next day, Davis was in his office when another call came through from the same Treasury representative. “Basically what he said was that the secretary of the Treasury would like to have your application on his desk by five o’clock tomorrow afternoon,” Davis recalls.

The “application” was the paperwork for a capital infusion, and Davis was told it would be faxed over right away. By now he was sold on participating. “Here was somebody from the secretary of the Treasury calling,” Davis says, “and complimenting us on the strength of our company and saying you need to do this, to help the government, to be a good American citizen—all that stuff—and I’m saying, ‘That’s good. You’ve got me. I’m in.’”

The most urgent task was to complete the application and get it back to Treasury the next day, and this had Davis in a sweat: “I pictured this 200-page fax that would take me three weeks of work crammed into one evening.” Imagine Davis’s surprise when a staff member walked in soon afterward with the official “Application for tarp Capital Purchase Program.” It consisted of two pages, most of it white space.

If tarp accomplishes nothing else, it has struck a mighty blow for simplicity in government. The application was only 24 lines long, and asked such tough questions as the name and address of the bank, the name of the primary contact, the amount of its common and preferred stock, and how much money the bank wanted. Anyone who has filled out the voluminous federal forms required in order to be eligible for a college loan would die for such an application. Davis recalls that, when the two faxed pages were brought to him, all he could say was “Really?” As soon as Umpqua’s application was approved, Treasury wired $214 million to Umpqua’s account.

What happened in Portland happened elsewhere across the country. Peter Skillern, who heads the Community Reinvestment Association, a nonprofit group in North Carolina, describes a conference he attended where bankers explained that they had been “contacted by their regulators and told by them that they would be taking tarp.”

Full Article Here

I suspect we will be seeing alot less yes men and alot more political alignment with China in the future.

If the USD is replaced as global reserve currency this trend will only gain momentum.

Incoming Tokyo government threatens split with US

A split is emerging between the United States and Japan over the new Tokyo government’s anti-globalisation rhetoric and its threats to end a refueling agreement for US ships in support of the war in Afghanistan.

Yukio Hatoyama, the leader of the Democratic Party of Japan, has caused alarm in Washington after publishing an article blaming the US for the ills of capitalism, the global economy and “the destruction of human dignity”.

(more…)

Central Banks - Net Buyers of Gold

Now where have I heard this before?

The reason this is so critically important is that for decades, the worlds mines have produced roughly 2500 tons of gold per annum, scrap has produced another 800 or so tons, and Central banks have sold around 500 tons. These three factors constitute the entire supply of gold aside from private sales.

Interestingly, each year gold demand has surpassed the combined scrap recycling and mine production by roughly 500 tons.

If that shortfall has for decades been made up by Central Banks sales, and now Central banks are becoming buyers, it not only removes that 500 tons of supply but ADDS TO THE DEMAND ON TOP OF IT.

This is not a small development, this is huge.

Got gold yet?

Central banks seen becoming net gold buyers-expert

DENVER, Sept 14 (Reuters) – Central banks are expected to buy 6 million to 10 million ounces of gold annually due to currency uncertainties after being net sellers in past decades, Jeffrey Christian, managing director of CPM Group, told the Denver Gold Forum on Monday.

In a keynote speech kicking off North America’s biggest gold conference, which runs through Wednesday, Christian gave what he said was a conservative forecast for gold to average $914 an ounce over the next 10 years. Spot gold XAU= was trading at around $1,000 on Monday.

“What we are seeing is that central banks are making the transition from large net sellers to large net buyers,” Christian said.

“You will see a net buying of 6 (million) to 10 million ounces per year by central banks, and that is an extremely conservative projection,” he said.

Christian said that European central banks appeared to be done with their gold selling, and that central banks in emerging countries which have been building up foreign reserves were now diversifying into gold due to volatility in the dollar and other major currencies.

Recently, China and other emerging economies have signaled growing interest in gold rather than stockpiling their currency reserves in U.S. dollar-denominated assets. (Reporting by Frank Tang; editing by Jim Marshall)

Original Article

As I mentioned earlier, the bailouts have not fixed the problem.

OTC Derivatives are alive and well, waiting for an opportunity.

Massive volatility and speculation in financial derivatives has happened before, interestingly it often accompanies the end of a fiat currency cycle.

Stiglitz Says Banking Problems Are Now Bigger Than Pre-Lehman

By Mark Deen and David Tweed

Sept. 13 (Bloomberg) — Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc.

“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview today in Paris. “The problems are worse than they were in 2007 before the crisis.”

Stiglitz’s views echo those of former Federal Reserve Chairman Paul Volcker, who has advised President Barack Obama’s administration to curtail the size of banks, and Bank of Israel Governor Stanley Fischer, who suggested last month that governments may want to discourage financial institutions from growing “excessively.”

(more…)

I dont suppose these chants of ‘down with the dollar’ are going to go away anytime soon.

No, Im pretty sure the world is just about fed up with the money printing madness.

But then what? Let some super sovereign entity play global cop of international currency issues?

Let this august international body enforce exchange rates?

See the problem with fiat money is and always has been the fact that governments like to spend more money than they earn (well not really earn, but tax).

This has happened over and over through history and humans are really no different now than we were thousands of years ago, regardless of how much intellectuals would like to argue to the contrary.

So what would happen in a scenario where a ‘world bank’ type authority was required to enforce exchange rates when governments like to spend the big bucks?

I it works, right up until the point that they try to enforce a ruling and a sovereign nation gives them the finger.

If you dont have the guns and bombs to back it up, is a sovereign really going to listen to some external body?

Are the Chinese doing it right now? Dont think so.

Either way…this is not good for the dollar. When dollar goes down, gold goes up.

UN wants new global currency to replace dollar

The dollar should be replaced with a global currency, the United Nations has said, proposing the biggest overhaul of the world’s monetary system since the Second World War.

In a radical report, the UN Conference on Trade and Development (UNCTAD) has said the system of currencies and capital rules which binds the world economy is not working properly, and was largely responsible for the financial and economic crises.

It added that the present system, under which the dollar acts as the world’s reserve currency , should be subject to a wholesale reconsideration.

Although a number of countries, including China and Russia, have suggested replacing the dollar as the world’s reserve currency, the UNCTAD report is the first time a major multinational institution has posited such a suggestion.

In essence, the report calls for a new Bretton Woods-style system of managed international exchange rates, meaning central banks would be forced to intervene and either support or push down their currencies depending on how the rest of the world economy is behaving.

The proposals would also imply that surplus nations such as China and Germany should stimulate their economies further in order to cut their own imbalances, rather than, as in the present system, deficit nations such as the UK and US having to take the main burden of readjustment.

“Replacing the dollar with an artificial currency would solve some of the problems related to the potential of countries running large deficits and would help stability,” said Detlef Kotte, one of the report’s authors. “But you will also need a system of managed exchange rates. Countries should keep real exchange rates [adjusted for inflation] stable. Central banks would have to intervene and if not they would have to be told to do so by a multilateral institution such as the International Monetary Fund.”

The proposals, included in UNCTAD’s annual Trade and Development Report , amount to the most radical suggestions for redesigning the global monetary system.

Although many economists have pointed out that the economic crisis owed more to the malfunctioning of the post-Bretton Woods system, until now no major institution, including the G20 , has come up with an alternative.

Original Article