Rates Cut, Dollar Hits New Low, Gold at 27 Year High

[One Eyed Cat]

I'm surprised they don't just fire up the printing presses Yeltsin style.

http://www.bloomberg.com/apps/news?p...er=commodities

Gold Rises to Highest Since 1980 as Dollar Slumps on Fed's Cut

By Pham-Duy Nguyen
Sept. 18 (Bloomberg) -- Gold futures rose to a 27-year high after the Federal Reserve cut interest rates, sending the dollar to a record low against the euro and boosting the appeal of the precious metal as a currency hedge.

The Fed lowered its benchmark rate by 0.5 percentage point, more than economists forecast, to 4.75 percent, the first cut in four years. Five of the past six bear markets for the U.S. currency have sparked a rally in gold.

``Investors are scared,'' said Ron Goodis, futures trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``The rate cut is inflationary, and money is flowing into gold as a hedge.''
Gold futures for December delivery jumped $11.70, or 1.6 percent, to $735.50 an ounce at 3:26 p.m. in electronic trading on the Comex division of the New York Mercantile Exchange. That marked the highest price for the most-active contract since Feb. 11, 1980.

``Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets,'' the Federal Open Market Committee said in a statement after meeting today in Washington.
The reduction in borrowing costs was the first since 2003. Before today's meeting, the Fed kept rates unchanged since June 2006.

`Most Aggressive'
`
`This is the most aggressive move they could have made,'' said William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. ``It's bullish for gold.''

A cut of 50 basis points or more would weaken the dollar further and spark a rally in gold, analysts said before the rate cut was announced.

Gold futures were down 10 cents to $723.70 an ounce at the close of floor trading.

Gold may rally in all currencies as other central banks follow the Fed and reduce rates to ease credit-market turmoil, analysts said. The sudden disappearance of bid or offer prices for securities that are collateralized by some defaulted U.S. subprime mortgages have roiled global equities and debt securities.

``Central banks are certainly on the same wavelength,'' O'Neill said. ``Gold has been anticipating falling global interest rates.''

Gold priced in euros, yen and the British pound have rallied in the past month.

``This is a global bull market in gold,'' Dennis Gartman, economist and editor of the Suffolk, Virginia-based Gartman Letter, said in a report before the Fed announcement. ``Weakness is to be bought rather strength being sold.''

The euro reached a record $1.3981 after the announcement. Gold futures climbed to $873 an ounce, the highest ever, in January 1980.

[Bikerpunk]

And the only way to go is down, down down for the greenback.

Greespan sez double digit interest rates are coming to slam the brakes down on growth...

[One Eyed Cat]

And the only way to go is down, down down for the greenback.

Greespan sez double digit interest rates are coming to slam the brakes down on growth...

I'm looking at ukrainian banks as we speak haha. That's just scary. There has already been a run on several banks in the UK. I hope this was worth a few months of "irrational exuberance" on Wall Street.

JT

[Mindgames]

Screw the dollar - I'm putting my money in cockroaches.

Amazing growth on your investment and they're the only things that'll survive Hilary Clinton's first term in office.

[One Eyed Cat]

Screw the dollar - I'm putting my money in cockroaches.

Amazing growth on your investment and they're the only things that'll survive Hilary Clinton's first term in office.

We're fucked.

JT

[Mr Karl]

Greespan sez double digit interest rates are coming to slam the brakes down on growth...

won't that be fun to see?

[Black Spiral Dancer]

There has already been a run on several banks in the UK.

Only one bank, the Northern Rock, which strangely enough is based in Newcastle not far from us. People all over the country have been panicking and withdrawning their savings. Very funny seeing people lining up outside the branches all over the country. Silly people.

[Mr Karl]

it's only money, they print it every day

[One Eyed Cat]

it's only money, they print it every day

Fiat money has no inherent value though. My old man was in the USSR right towards the end. The people he stayed with had wheelbarrows full of roubles .... to buy bread with. This rate cut will put liquidity into the economy ... until people realize it has lost even more value.

JT

[Bikerpunk]

Actually, it's even more fucking scary than that. Turns out that there's 20 dollars in leveraged debt instruments for every real dollar's worth of actual economy.

In short, there's financial "dark matter" to the tune of EIGHT TIMES the GROSS NATIONAL PRODUCT.... of the PLANET.

There can't be an eighty trillion dollar hole without the ENTIRE banking/economic system, WORLDWIDE, taking it in the ass.

People giving a run on the banks, I mean, if they call in their puts at once, all it means is they'll have useless pretty pieces of paper if the shit hits the fan.

Gold's no goddamn better. How the fuck you're expected to eat it, cook with it, drink it or use it to heal wounds is beyond me.

[Bikerpunk]

Oh, and let's make it scarier. Nobody knows who's holding the bag.

WORLDWIDE.

This isn't about a few Americans borrowing for a house they couldn't afford. This was about spinning straw into gold, and realising it's radioactive and in everyone's drinking water.

[One Eyed Cat]

Oh, and let's make it scarier. Nobody knows who's holding the bag.

WORLDWIDE.

This isn't about a few Americans borrowing for a house they couldn't afford. This was about spinning straw into gold, and realising it's radioactive and in everyone's drinking water.

Yeah it's hitting a lot of markets. I have no idea what comes of this. It just sucks to be US about now. I'd heard of the derivatives market. I don't have the background in economics to know what happens there either. Off the cuff, you just can't have paper backed by paper backed by paper. The thing with gold is: It's a rare commodity and has backed currency in the past. Gold tends to go up when confidence in fiat currency is down. It's mostly just used as a signpost (although gold traders must be fairly happy)

JT

[Bikerpunk]

Dude, we're in totally uncharted territory right now.

The conventional wisdom was, lower interest rates and you move out of a recession. But that was when recessions were caused when overproductivity caused sales to be overtaken by inventory, which meant hey, stop making stuff, we can't move the widgets we have.

Lower interest rates - people buy more widgets, factories re-hire.

But our current problems weren't being caused by overproductive capacity, so when Greenspan made money cheaper and more available....

the problem was, as I've said before, that money managers demanded to have a product that was "safe" and provided like 8% returns. So the banks came up with a devilish idea.

Rather than lending from the pool of money they had, they simply got a loan, then they grouped the loans together and sold pieces of the pool as a financial instrument. I mean, real estate NEVER goes down, it's appreciating 10% per year, even if people default the house is worth 50% more than the loan on it!

So they could write another loan. This meant pressure to write more loans.

Of course, this led to shenanigans of people get rich quick scheming by flipping real estate. "We got burned by stocks! Which can go down! But Real Estate NEVER goes down!"

On two fronts they're taking it in the ass. People who took 1% teaser loans on the idea that they would buy a house for $150,000, put some paint on it and replace the carpet and resell for $250,000 six months later have come to realise there's only so many houses people can buy and only so much they can buy them FOR.

They're trying to generate sympathy for people who were "misled" or "confused" in the hopes of a government bailout - but do keep in mind the majority of these people are INVESTORS who bought second and third homes, leveraging a teaser ARM against the possibility of a house flip.

But they have to bail it out - because there is ZERO liquidity to the instruments with which banks issue credit. If a bank can't lend, it doesn't mean it can't lend to Jose the guy with no documentation, it means GE can't get the capital it needs for a merger or an expansion.

[One Eyed Cat]

Dude, we're in totally uncharted territory right now.

The conventional wisdom was, lower interest rates and you move out of a recession. But that was when recessions were caused when overproductivity caused sales to be overtaken by inventory, which meant hey, stop making stuff, we can't move the widgets we have.

Lower interest rates - people buy more widgets, factories re-hire.

But our current problems weren't being caused by overproductive capacity, so when Greenspan made money cheaper and more available....

the problem was, as I've said before, that money managers demanded to have a product that was "safe" and provided like 8% returns. So the banks came up with a devilish idea.

Rather than lending from the pool of money they had, they simply got a loan, then they grouped the loans together and sold pieces of the pool as a financial instrument. I mean, real estate NEVER goes down, it's appreciating 10% per year, even if people default the house is worth 50% more than the loan on it!

So they could write another loan. This meant pressure to write more loans.

Of course, this led to shenanigans of people get rich quick scheming by flipping real estate. "We got burned by stocks! Which can go down! But Real Estate NEVER goes down!"

On two fronts they're taking it in the ass. People who took 1% teaser loans on the idea that they would buy a house for $150,000, put some paint on it and replace the carpet and resell for $250,000 six months later have come to realise there's only so many houses people can buy and only so much they can buy them FOR.

They're trying to generate sympathy for people who were "misled" or "confused" in the hopes of a government bailout - but do keep in mind the majority of these people are INVESTORS who bought second and third homes, leveraging a teaser ARM against the possibility of a house flip.

But they have to bail it out - because there is ZERO liquidity to the instruments with which banks issue credit. If a bank can't lend, it doesn't mean it can't lend to Jose the guy with no documentation, it means GE can't get the capital it needs for a merger or an expansion.

Yeah. I really don't know what they're going to try next. Thanks for the info. Post if you hear anything. This reappearance of Greenspan with his book is ominous yet somewhat funny to me.

JT

[keiko]

You want to know what they're going to try next? The Amero.

(I tried to include an image here but it was HUGE, so just click the link and look for yourself)

Full Story Here

The boat leaves in 30 days and I'm on it. This dirty rat is bailing this sinking ship asap.

~K

[One Eyed Cat]

You want to know what they're going to try next? The Amero.

(I tried to include an image here but it was HUGE, so just click the link and look for yourself)

Full Story Here

The boat leaves in 30 days and I'm on it. This dirty rat is bailing this sinking ship asap.

~K

I feel sorry ..... for Mexico. I doubt they're this daft, but who knows?

JT

[Bikerpunk]

Yeah, right. Like Canada, whose currency is doing just fine thank you very much, will want to join its WELL FUNDED PENSION PLAN as well as its ROBUST ECONOMY to that of the overleveraged credit-drunk southern neighbour?

[Bikerpunk]

sigh.


http://www.snopes.com/politics/business/amero.asp

[Mr Karl]

Yeah, right. Like Canada, whose currency is doing just fine thank you very much, will want to join its WELL FUNDED PENSION PLAN as well as its ROBUST ECONOMY to that of the overleveraged credit-drunk southern neighbour?

What is this well funded pension plan you speak of?

[Bikerpunk]

CPP is actuarially funded for the next 70 years.

[keiko]

sigh.


http://www.snopes.com/politics/business/amero.asp

>> The web site "Snopes.com" has claimed today that the story below is FALSE. I stand-by the story.

I personally vouch for this story and stand-by every world of it no matter who says otherwise. I caught them and they know it.<<

Snopes isn't always right. CNBC coverage

Don't believe everything you read. Makes sure you get more than one source ot confirm or deny things.

~K

[Mr Karl]

CPP is actuarially funded for the next 70 years.

you gotten a pension plan statement lately?

[keiko]

Lou Dobbs Speaks on the Amero Coin and the North American Union Here

The first "North American Union" driver's license, complete with a hologram of the continent on the reverse, has been created in North Carolina. Full Story

~K

[Mr Karl]

I don't think canadian's would really like the idea of the 'amero', we'll talk about it, but it's something that shouldn't happen.

[Bikerpunk]

http://www.dc-coin.com/index.asp?Pag...ATS&Category=8

This is the company that among other things makes fake quarters and the not real Amero.

[keiko]

The coin it self may not yet be a real coin. The point I'm making here is that it is a real concept that has been agreed to. CNBC, Lou Dobbs and North Carolina have all made official statements about the NAU. I'm not just spouting some whack job conspiracy theory. I'm stating a fact that has been reported by several sources.

Believe what you wish.

~K

[Bikerpunk]

I wasn't suggesting that. I was pointing out that the coins in the story happen to be from a fake currency manufacturer who put them together as a gag.

A joined currency has not been agreed to.

[Mr Karl]

http://www.dc-coin.com/index.asp?Pag...ATS&Category=8

This is the company that among other things makes fake quarters and the not real Amero.

it never occurred to me until I looked at that just now that there isn't a hope in hell that canada and the us would ever be able to agree on what the money would look like

[Bikerpunk]

It'd have to be a fucking dice.
English on one side, French on the other, American on another side, Spanish on the fourth.

[Exquisite]

Ok no to the Amero ... thank you I like my colourful Canadian money, even the insane Looney ... which proves we have a sense of humour ... and then there is the Twooney that proves ... we have no imagination!

Secondly and hopefully interestingly I heard that there is a "Conspiracy Theory" that the devaluing of the American dollar is on purpose to even out the trade deficit you guys have going on. Since you guys have all kinds of wacked out things happening down there that 10 years ago I would have sworn never would have happened I'm actually beginning to listen to these things.

[keiko]

Ok no to the Amero ... thank you I like my colourful Canadian money, even the insane Looney ... which proves we have a sense of humour ... and then there is the Twooney that proves ... we have no imagination!

Secondly and hopefully interestingly I heard that there is a "Conspiracy Theory" that the devaluing of the American dollar is on purpose to even out the trade deficit you guys have going on. Since you guys have all kinds of wacked out things happening down there that 10 years ago I would have sworn never would have happened I'm actually beginning to listen to these things.

I know exactly what you mean. the sad part? when my hunny first mentioned these rumors, i wasn't surprised. how things have changed.

~K

[Buster Friendly]

I know exactly what you mean. the sad part? when my hunny first mentioned these rumors, i wasn't surprised. how things have changed.

~K

no matter how cynical you get, you can't keep up- Lili Tomlin

[One Eyed Cat]

Ok no to the Amero ... thank you I like my colourful Canadian money, even the insane Looney ... which proves we have a sense of humour ... and then there is the Twooney that proves ... we have no imagination!

Secondly and hopefully interestingly I heard that there is a "Conspiracy Theory" that the devaluing of the American dollar is on purpose to even out the trade deficit you guys have going on. Since you guys have all kinds of wacked out things happening down there that 10 years ago I would have sworn never would have happened I'm actually beginning to listen to these things.

Interesting. Other countries actually do devalue their currency to help exporters. China is the most obvious (and notorious). Ukrainian Hryvnia exchange rate is about 5 on the dollar. The Economist lists the actual value as 2.71 on the dollar. Still, I think the USD really is simply losing value. I don't think this is being done to aid exporters. (Although it will have that collateral effect)

JT