Joe Toscano is a former currency trader from Brooklyn (a Brooklyn College alum from the 1970s) who is currently a member of the Ulster County Republican Committee and resident of the Town of Ulster. He is also a public relations expert and consultant. He has started a new blog, "We the People 4 ever". at http://wethepeople4ever.blogspot.com/
In one of his opening blogs, Joe notes that:
"Our elected officials are detached, the press, disengaged and 'Paid Political Pundits' are so full of useless information, (their own opinions), they make the Talking Heads look like heroes."
Well put. He adds that
"It’s nice to see the banking sector made out ok though, did any of you notice an improvement in your financial position? I read in the Wall Street Journal that Goldman Sacks had it’s best year ever! Was 2009 one of your best years financially?"
I've been wondering about that too! I am very excited about Joe's blog and am looking forward to his further work.
Tuesday, January 12, 2010
Frightening US Deficits
Peter Degraaf of Kitco shows the following chart of US deficits since 1900. Degraaf obtained the chart from the St. Louis Fed. It does not appear that these numbers are corrected for inflation (that is, they reflect nominal rather than real dollars) and therefore understate the debt during World War II. However, the graph paints a frightening picture. Those who have faith in the Fed's or the banking system's ability to "mop up" (whatever that rather odd phrase, which has been used by numerous Fed advocates and apologists, really means) newly created money might be able to describe precedents for the current situation and examples of how central banks performed well. There are numerous examples of how past central banks have performed badly, of course. I do not believe that there are many where central banks, including the performance of the Fed in the 1930s and the 1970s, long performed well.
Interview with Governor Gary Johnson
I will be doing an interview of Gary Johnson next week, according to his media relations director, Sue Winchester. Johnson is the former governor of New Mexico and is running for president. He was mentioned by David Brooks of the New York Times as a potential presidential candidate of the Tea Party movement.
China Now Tells You How Rich You Are
Kitco links to a Toronto Globe and Mail article that says that today's fall in the price of gold and the stock market and rise in the dollar is due to a speech by Pen Junming, who works in China Investment Corp., a sovereign asset fund. The Globe and Mail quotes Junming:
“'I think the dollar is at its bottom now. There will be very limited space for the dollar to drop further,' he told an academic forum. 'The yen is what, I think, has the worst outlook. The yen will continue to drop, unlike the dollar, which will not serve for long as a source of funding carry trades.'"
Carry trades involve hedge funds borrowing at low rates in the US and investing around the world at higher rates. Hedge funds have used much of the new money pumped into the economy by the Federal Reserve bank during the Bush and the Obama administrations in this way.
When, later that day Junming said that these views were not official and were strictly personal, the dollar gave back some of its gains. Mr. Peng added:
“'China should have the right attitude about investing in gold. There is no urgent need for China to increase gold buying for now, because prices are high.'”
Yesterday, I bragged of my coin flip method of deciding how to invest in the short term. Today I have a more substantive explanation for staying in dollars for now. Please note, however, that I do not think that Chinese bankers are particularly adept at investment (no more adept than Americans, anyway). They bought into US bonds when the dollar was far stronger than today, and rode a Cyclone roller coaster ride down. The article states that two thirds of China's sovereign assets of 2.27 trillion dollars are invested in dollars.
"Lou Jiwei, CIC's chairman, has been careful not to say much about how the fund invests its money. In October 2009, he said the fund was putting more money into commodities, real estate and infrastructure to hedge against medium- and long-term inflation and a fall in big currencies."
Thus, Pen's statement might reflect a change in position associated with last year's increase in the gold price. The article goes on to say that US asset managers continue to dominate the fluctuations in the dollar. Nevertheless, the Chinese have so entwined themselves in the dollar that their opinion matters. If the US ignores their advice, then we risk a sell off.
I have previously blogged about my fear of a major confrontation with the Chinese occurring in the next (22nd) century. I don't think the dollar will last that long. It should give Americans pause that the purchasing power of their dollars has, under the Federal Reserve Bank's and banking system's regime, become dependent upon the opinions and desires of foreign governments. Unless you idiosyncratically believe that the motives of the Chinese government coincide with your interests, you might wonder about the desirability of a system that has made you dependent on the opinions of a dictatorially and still-communist run nation with a culture very different from our own. I have always loved Chinese culture and the Chinese people, but frankly, I think the Americans have lost their minds.
“'I think the dollar is at its bottom now. There will be very limited space for the dollar to drop further,' he told an academic forum. 'The yen is what, I think, has the worst outlook. The yen will continue to drop, unlike the dollar, which will not serve for long as a source of funding carry trades.'"
Carry trades involve hedge funds borrowing at low rates in the US and investing around the world at higher rates. Hedge funds have used much of the new money pumped into the economy by the Federal Reserve bank during the Bush and the Obama administrations in this way.
When, later that day Junming said that these views were not official and were strictly personal, the dollar gave back some of its gains. Mr. Peng added:
“'China should have the right attitude about investing in gold. There is no urgent need for China to increase gold buying for now, because prices are high.'”
Yesterday, I bragged of my coin flip method of deciding how to invest in the short term. Today I have a more substantive explanation for staying in dollars for now. Please note, however, that I do not think that Chinese bankers are particularly adept at investment (no more adept than Americans, anyway). They bought into US bonds when the dollar was far stronger than today, and rode a Cyclone roller coaster ride down. The article states that two thirds of China's sovereign assets of 2.27 trillion dollars are invested in dollars.
"Lou Jiwei, CIC's chairman, has been careful not to say much about how the fund invests its money. In October 2009, he said the fund was putting more money into commodities, real estate and infrastructure to hedge against medium- and long-term inflation and a fall in big currencies."
Thus, Pen's statement might reflect a change in position associated with last year's increase in the gold price. The article goes on to say that US asset managers continue to dominate the fluctuations in the dollar. Nevertheless, the Chinese have so entwined themselves in the dollar that their opinion matters. If the US ignores their advice, then we risk a sell off.
I have previously blogged about my fear of a major confrontation with the Chinese occurring in the next (22nd) century. I don't think the dollar will last that long. It should give Americans pause that the purchasing power of their dollars has, under the Federal Reserve Bank's and banking system's regime, become dependent upon the opinions and desires of foreign governments. Unless you idiosyncratically believe that the motives of the Chinese government coincide with your interests, you might wonder about the desirability of a system that has made you dependent on the opinions of a dictatorially and still-communist run nation with a culture very different from our own. I have always loved Chinese culture and the Chinese people, but frankly, I think the Americans have lost their minds.
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