The demise of the US dollar.
Posted 27 March 2003 - 06:21 PM
W told his nation that the war will continue as long as it is necessary to free the Iraqi people.
I wonder if he asked the Iraqi people if they wanted to be freed this way.
Posted 27 March 2003 - 09:49 PM
Posted 28 March 2003 - 01:21 PM
March 26 - For months, the prospect, and now the reality, of war with Iraq have unnerved but not yet disrupted global currency markets. The odds are still small that the war will trigger a currency crisis. If it does, you'll see it in a fast-falling dollar; and given our current sour relations with much of the G-7, we might not be able to do much about it.
IN THE INTERNATIONAL ECONOMY, more money is made or lost from currency movements-or at least, more money is made or lost faster-than any other way. Speculators such as hedge funds can sometimes make or lose a fortune overnight in currency bets, but the value of the dollar, the yen, and the euro are fundamentally driven by the normal transactions of the global economy. When a London bank buys U.S. Treasuries or shares in a U.S. company, or a Spanish firm buys computers from a U.S. maker, it has to use pounds or euros to buy dollars, so it can pay the American seller. The more demand for dollars to carry out the daily business of trade and investment, the more euros or pounds it takes to buy them.
Posted 28 March 2003 - 04:13 PM
PROLOGUE: 321 GOLD.COM... Friday, March 28
Our country has embarked on a most dangerous path. As you read, our children and loved ones lie in harm's way. They are tired, dirty and scared. Our soldiers do not choose war, they go where ordered. It doesn't matter how you feel about the war, give some thought to those young men and women and what they face. It's not their war, they just have to fight it and die.
It is our sincere wish they return home safely as soon as possible. There are better ways to solve problems than killing each other and the greatest victory in any war is the end of that war. Our rulers have rolled the dice on the fate of the US dollar and we believe the results will be obvious soon. The budget deficit in February alone was $96 billion dollars and we are up to an international balance of payments deficit of over 5% of GNP, about $2 billion dollars a day. If we turned all the gold the US has in Ft Knox (if there is any gold there), it would only pay the balance of payments for 45 days.
The balance of payments is that exactly. Over time, it must be balanced and it's wildly out of balance now. This war will make the problem far worse than it was. I believe that in a sane world, it could take a 50% devaluation of the dollar to restore balance. That would result in gold going up 75%. And obviously we don't live in a sane world. Get some gold and gold stocks if you wish to retain anything of what you are worth.........
Thursday, 27 March, 2003, 22:13 GMT
Argentina lifts final cash curbs
Argentina has said it will lift the remaining restrictions on citizens withdrawing cash from banks.
The move will unfreeze 14 billion pesos ($4.8bn, ?3.1bn), further easing the country's financial crisis......
Avoiding collapse : They were swiftly followed by Argentina defaulting on its debts and devaluing the currency, the peso.
Many bank depositors realised what was coming and wanted to get their money out to convert it into dollars - a currency that would retain its value......
The housing economy
Home equity debt nearly doubles, prompting fear that borrowers could end up losing homes.
By RIVA D. ATLAS The New York Times
Americans are borrowing against their homes at unprecedented levels, leading some bankruptcy lawyers and consumer advocates to warn that many people could wind up losing their homes.
Homeowners raised $130 billion last year through home equity loans and lines of credit, nearly double the total a year earlier, according to the Federal Reserve.
This boom in borrowing comes at a time when housing prices nationwide are still strong, as they are in Southern California.
As long as their home values rise, borrowers who are having trouble making their payments can take out more loans or can sell their homes for more than they owe. Indeed, people have not fallen behind on their home equity loans nationwide in troubling numbers. "I'm representing a large number of newly homeless people," said Barbara May, a bankruptcy lawyer in St. Paul, Minn. Many of these people have taken on home equity loans in addition to their existing mortgages.
"We are just buried in foreclosures," she said.
Bankruptcy lawyers warn that the problem could spread to other parts of the country if home prices soften or if the economy does not improve. Banks have been particularly active in extending this debt over the last three years. Total outstanding bank credit lines more than doubled, to $216.9 billion, as of January, according to Economy.com. By contrast, credit card and other revolving credit rose 19 percent over the same period....
IRAQ WAR BOON FOR FAST-FOOD NATION
By JOHN CRUDELE
March 27, 2003 -- WAR may be good for TV viewership, but it's bad for just about every other business.
And with the first quarter now drawing to a close, we'll soon be hearing the laments of many companies - in the form of earnings warnings.
The economy, of course, wasn't doing very much of anything even before the detrimental effects of the war.
But the attention of consumers has been on things other than going out to dinner, partying or buying products they don't urgently need. Add that to the sharp decline in confidence about jobs and, well, consumerism is a mess..........
NASD MOVIN' ON UP
By ERIC MOSKOWITZ
March 28, 2003 -- NASD officials are now investigating Jack Grubman's boss at Salomon Smith Barney - and the probe will go even higher, sources told The Post.
NASD regulators disclosed yesterday they are investigating Kevin McCaffrey - former head of U.S. equity research at Citigroup's Salomon Smith Barney investment bank - for failing to supervise analysts, including Grubman.
Among the others in the chain of command above Grubman - all of whom could face scrutiny - are John Hoffmann, Salomon's former head of global equity research; Jeffrey Waters, associate director of U.S. equity research; and Michael Carpenter, who formerly was CEO of Salomon......But corporate governance experts believe that individuals need to be called to account for their actions.
"The $400 million fine was clear evidence of a systemic, company-wide problem, and I would hope that the ongoing investigations go all the way up to include the chief executive and the board of directors," said Nell Minow, editor of the Corporate Library, an online corporate governance site. McCaffrey, who now heads up Citigroup's alternative investments unit, was replaced on Oct. 9 as head of U.S. research by Sallie Krawcheck from Sanford C. Bernstein. The move was part of a high-profile effort by Citigroup Chairman Sandy Weill to separate research from banking. NASD spokeswoman Nancy Condon and Citigroup spokeswoman Leah Johnson both declined to comment. ............
WIFE OF STOCK PROMOTER RESIGNS FROM FIRM TIED TO LANCER GROUP By CHRISTOPHER BYRON
March 28, 2003 --
The wife of a California stock promoter now awaiting trial on federal kickback charges has resigned from a New York-based company that figures in the Lancer Group hedge fund affair, The Post has learned.
The woman, Kathryn Braithwaite, stepped down last November as a director of a onetime garment industry company known as Stage II Apparel, which trades on the American Stock Exchange under the name Magic Lantern Group. A source at the Amex, who declined to be identified, said the Braithwaite resignation came after exchange officials questioned her role at Magic Lantern.
The source said the Amex's concerns developed after officials learned that Braithwaite's husband, Bruce D. Cowen, is accused of attempting to sell $5 million worth of unregistered penny stock illegally to an undercover FBI agent. Cowen's trial is scheduled to begin in Miami in June.........
Posted 28 March 2003 - 04:16 PM
Selling off the credit-card unit is supposed to unlock value -- but just look at what's left.
March 26, 2003: 5:55 PM EST
By Adam Lashinsky, CNN/Money Contributing Columnist
PALO ALTO, Calif. (CNN/Money) - Riddle me this: What do you get when a giant credit-card company masquerading as a retailer sheds its credit-card operations?
The answer, of course, is Sears, Roebuck & Co., the venerable company that used to call itself the World's Largest Store and whose softer side of late has been the sales and profits from selling clothes and appliances.
The more important part of the business -- about two thirds of operating earnings -- comes from its various credit-card operations, long a mixed blessing for Sears.
The credit-unit blessing is mixed because on the one hand, obviously, it generates profits. On the other hand, concerns about the business (bad debt, delinquencies, etc...) have been a constant worry for Sears (S: Research, Estimates) and its investors as well as a distraction to management.........
ECONOMICA: IT IS ASTONISHING TO SEE ONCE AGAIN, THAT THOSE CENTRAL BANKERS HAVE BEEN CLAIMING THERE WERE NO DEFLATION RISKS FOR MORE THAN 2 YEARS.... BUT SINCE BUSH RECENTLY SAID THAT WAR COULD LAST MONTHS, HERE WE GO!
World Bank sees U.S. recession risk
Organization cuts global growth outlook and senses the risk of recession and deflation in the U.S.
March 27, 2003: 8:25 PM EST
WASHINGTON (Reuters) - The World Bank has downgraded its outlook for global growth for this year and sees the risk of recession and deflation in the United States, according to a bank report obtained by Reuters on Thursday.
In the last month, the bank has cut its forecast for world gross domestic product growth from 2.4 percent to 2.3 percent this year. The report also warns of risks to the global recovery should the war in Iraq turn out to be a lengthy conflict.
"Our baseline remains one of a gradual recovery," said the report provided for an executive board discussion on the world economy. "However, downside risks are substantial if the war were to be protracted or the region does not stabilize.".....
IMF warns of prolonged conflict jeopardising recovery
Friday March 28, 2003
The International Monetary Fund warned yesterday that a prolonged war in Iraq could depress financial markets and put global economic recovery in jeopardy........
The Profitless Expansion
"...During the 1980s and especially the 1990s, capital expenditures often increased at more than a 20% annual pace, without causing a correction in share prices. The period's spending seemed untethered to any economic reality...or consequence. Capital expenditures - for new semiconductor fabs, wireless networks, global fiber optic networks and new airplanes - were what powered the much talked about 'new economy'. But, as you'll see, the real reason such expenditures seemed disconnected to any other economic rules was because, for the first time ever, capital expenditures were not being paid for out of profits..." ............
ALSO SEE ON FRONT PAGE FOR NOW
DEMOGRAPHY IS DESTINY
The Daily Reckoning
Thursday, 27 March 2003
*** Credit card delinquencies at record...mortgage foreclosures too...grim earnings...
*** Economic demons from hell! Durable orders down...new home sales down...
*** Gold up...a rising star in politics...the field marshal...and more!
The bad news continues to trickle out as though from a leaky sewage pipe.
Credit card delinquencies are at a new high. So are mortgage foreclosures. As people borrowed more and more against the 'equity' in their houses, they found it harder and harder to make the payments. But the borrowers didn't seem to notice...and the lenders didn't seem to mind; refinancings continued to rise alongside foreclosure rates.
In the last two weeks, however, either the borrowers have been distracted by war on prime time...or they've finally begun to come to their senses. Or maybe a slight increase in mortgage rates caught their eyes just as they were getting ready to sign on for another $20,000 slug of debt. Whatever the cause, refinancing activity has fallen over the last couple of weeks, with the most recent week's activity 9% below the previous week.
Consumer confidence is at a 10-year low. And as reported here yesterday, debt is growing at its fastest pace in 15 years.
And how's business? Like the rest of the financial effluent, it is smelly and repulsive. A "Grim Earnings Season" is how TheStreet.com describes the most recent reports........
War Belies the Fundamentals in Stock Market
Japan' Central Bank Collaborates with Government
As we stated in Monday's comment, this war belies the fundamentals of the stock market. Eventually, we will return to a very difficult environment after the war ends.
The latest news hasn't helped the economic environment as yesterday's release showed that the Conference Board Consumer Confidence Index dropped 2.3 points to 62.5 in March, the lowest level since October 1993. The Present Situation portion of the index also hit a 9-year low, while Expectations are at a 12-year low. Business and labor conditions are the worst in years and auto buying plans have dropped to their lowest level since June 1995. We would expect the University of Michigan Confidence report, to be released on Friday, to confirm these numbers.....
Look for new lows in second quarter
Commentary: May-June bottom, then a short-term rally
By Michael L. Burke, Investors Intelligence
Last Update: 12:10 AM ET March 28, 2003
NEW YORK (II) -- There was a lot of up and down action over the first quarter as stocks and the mutual funds that hold them were pressured by a lack of economic strength and worries over the war......This bottom should be a good one, however, and be followed by market strength possibly into the Election period of 2004.
Don't count on 'war rally': The huge gains achieved over the 18-year period from 1982 to 2000 raised valuations well above realistic levels -- and for the most part the market continues to be overvalued. Our sentiment readings at Investors Intelligence now show that 53 percent of the 140 independent advisors that we track maintain a bearish outlook.......
Posted 28 March 2003 - 04:18 PM
Credit Suisse's Mack Buffeted by Wall Street's `Perfect Storm'
By Stephanie Baker-Said and Tom Cahill
New York, March 27 (Bloomberg) -- When John Mack joined Credit Suisse Group's Credit Suisse First Boston as chief executive in July 2001, the investment bank was facing a U.S. Securities and Exchange Commission investigation over its handling of dozens of initial public offerings for technology companies.
Mack also had to confront a system in which a few stars like Frank Quattrone, head of technology banking, ran independent fiefdoms and got special revenue-sharing deals....... Smashed Phone : After graduation in 1968, Mack joined a small brokerage in North Carolina and then went to Smith Barney as a bond salesman before joining Morgan Stanley in 1972. There he was dubbed ``Mack the Knife'' as he cut costs.
``People were afraid of John Mack,'' says Partnoy, the professor and former colleague. ``The Mack the Knife nickname came not just because of his cost cutting. It also came from the perception that he was a very aggressive manager.''
When some bankers received a Lucite trophy for one deal, Mack was given a smashed phone, Partnoy says. ``It was a reference to when he worked on the trading desk,'' Partnoy recalls. ``When he'd get angry, he'd take a phone and smash it against the desk.'' .....Class Action
CSFB and 54 other investment banks are still facing a class- action suit on behalf of investors in hundreds of dot-com dogs. ``Damages in our models are in the multiples of billions,'' says Melvyn Weiss, who is the lead plaintiffs' attorney for a case being heard in New York claiming that 309 IPOs were rigged by CSFB and other firms. The cases will likely be settled out of court for a good deal less, says Bromberg, the law professor and coauthor of the six-volume work ``Securities Fraud and Commodities Fraud'' (Shepard's, 1980). ``Anything beyond the $300 million to $500 million range is probably dreaming by the plaintiffs' side,'' Bromberg says. As part of the settlement with regulators over IPO kickbacks and research, CSFB has set up a new system for allocating shares in IPOs..... and much more!!
Why stock market shifts in sync with war in Iraq
Nonstop coverage and weak economy tie Wall Street swings more than ever to war.
By Ron Scherer | Staff writer of The Christian Science Monitor
NEW YORK - Military commanders talk about the "fog of war." On Wall Street, the war has resulted in a fog for investments as economic news is now secondary to battlefield developments on the Iraqi sands.
The emphasis on war news now means that stock traders look over their shoulders at television screens showing images of jet fighters taking off. MBAs are studying maps of Iraq as well as balance sheets. Some Wall Street firms are listening to retired generals explain the meaning of military moves. And some traders are turning to websites run by war buffs who provide almost instant analysis of the military thrusts and feints.......
War Spurs Fears of Another Recession -- Some Economists Discount Worries -- By Paul Blustein
Washington Post Staff Writer
Friday, March 28, 2003; Page E01
Worries are mounting among economists that a drawn-out war in Iraq could lead to recessions in the United States and overseas.
"The economy is paralyzed. Businesses are reducing payrolls and investments, and consumers are very cautious," said Mark M. Zandi, chief economist at Economy.com Inc., a West Chester, Pa., research firm. "If the conflict wears on for three months, we'll be in full-blown recession." It would be a "debilitating" downturn, Zandi said, because of the weakness simultaneously besetting many of the world's other wealthy nations, including Japan, Germany, France and Italy. "We can't count on anyone to help us out," he said........
War swells the tide of red ink
Bush's $75 billion war-spending request - probably just the
first one - could help set a deficit record, pressure Treasuries
By Ryan Brecht
March 27 - The prospect of military action against Iraq had been one of the main wild cards for the U.S. budget outlook. And now that the shooting has started - and Bush Administration announced on Mar. 25 that it's seeking $74.7 billion to pay for the conflict and the war on terrorism - the risks to Uncle Sam's pocketbook have come into sharper focus.
Airline woes contagious
If AMR files for bankruptcy, it could force other airlines to follow in an effort to cut costs.
March 26, 2003: 3:42 PM EST
By Chris Isidore, CNN/Money Senior Writer
NEW YORK (CNN/Money) - Airlines aren't watching just the war news to determine their next step in dealing with the industry's most severe economic crisis. They're watching each other.
If another major carrier, such as American Airlines parent AMR Corp. (AMR: Research, Estimates), files for bankruptcy court protection, it would allow the carrier to shed debt payments, plane leases and labor contracts it no longer can afford. That could prompt other struggling competitors to file so they are not put at a competitive disadvantage..........
Will the Iraq conflict cause the dollar to collapse?
By Robert Shapiro
Posted Wednesday, March 26, 2003, at 8:32 AM PT
For months, the prospect, and now the reality, of war with Iraq have unnerved but not yet disrupted global currency markets. The odds are still small that the war will trigger a currency crisis. If it does, you'll see it in a fast-falling dollar; and given our current sour relations with much of the G-7, we might not be able to do much about it.
In the international economy, more money is made or lost from currency movements-or at least, more money is made or lost faster-than any other way. Speculators such as hedge funds can sometimes make or lose a fortune overnight in currency bets, but the value of the dollar, the yen, and the euro are fundamentally driven by the normal transactions of the global economy. When a London bank buys U.S. Treasuries or shares in a U.S. company, or a Spanish firm buys computers from a U.S. maker, it has to use pounds or euros to buy dollars, so it can pay the American seller. The more demand for dollars to carry out the daily business of trade and investment, the more euros or pounds it takes to buy them.
The war has not been good for the dollar. Since last November, the greenback has fallen nearly 7 percent against a basket of other major currencies. First, Middle Eastern investors converted a lot of their dollar holdings and took them home: By the New Year, all the imponderables about the coming war left European and Asian investors reluctant to expand their U.S. holdings. The result has been less foreign investment in the United States, translating into less demand for dollars in world markets...... AND MUCH MORE
FEDERAL RESERVE RELEASE:... RECOVERY IN THE LONG HAUL... BUT THERE ARE THOSE *DAMNED* GEOPOLITICAL UNCERTAINTIES..
This Is Only The Beginning
-- March 27, 2003
Just one week into the war, and the Bush Administration has announced a preliminary price tag for it -- a cool $75 billion. We fully expect, though, to hear more "cha-chings" of the cash register if resistance is stiffer and the rebuilding needs in Iraq are more extensive than expected. Heck, we think this is just a first installment EVEN IF the war ends quickly........
OR SEE MENU BOTTOM PAGE IF NO LONGER VIEWABLE
Posted 28 March 2003 - 04:20 PM
Fort Worth, Texas, March 27 (Bloomberg) -- AMR Corp.'s American Airlines, the world's biggest carrier, may seek bankruptcy protection as early as next week in part because of the war in Iraq, people familiar with the matter said.
Japan jobless rate falls to 5.2% in Feb.
But consumer spending, prices continue to decline
By Mariko Ando, CBS.MarketWatch.com
Last Update: 11:04 PM ET March 27, 2003
TOKYO (CBS.MW) -- Japan's jobless rate unexpectedly fell in February, but weak consumer spending and prices suggested the world's second-largest economy still stands far off from a solid recovery.
Uncertainty could persist, IMF says Long war could prolong global economic slump By Rex Nutting, CBS
Last Update: 11:24 AM ET March 27, 2003
WASHINGTON (CBS.MW) -- A longer-than-expected war in Iraq could weaken investor confidence around the globe and reinforce "the headwind against global economic recovery," the International Monetary Fund warned Thursday......."The potential for sizable losses could exist for some market participants," the IMF said. With the yield curve so steep, many financial institutions "have invested substantially in long-term treasury and agency securities, funding these positions with short-term money."
"Investors in the U.S. mortgage-backed securities market are even more vulnerable to interest rate risks," the fund said.
HUNGRY FOR CASH, MCDONALD'S TO SELL ITS RESTAURANT CHAINS
By PAUL THARP
March 27, 2003 -- Cash-crunched McDonald's is looking to raise $1 billion by selling its three sister chains, including Boston Market. The world's biggest chain restaurant has been struggling to hold back damage from a fast-food slump, and posted its first ever losses in recent weeks. McDonald's intends to sell Boston Market, Chipotle Mexican Grill and Donato's Pizza in hopes of retiring some of its $10 billion in debt, according to a report in the Daily Deal.
Hundreds at Coke to learn fate today
Scott Leith - Staff ATLANTA JOURNAL
Thursday, March 27, 2003
Today is the day when hundreds of Coca-Cola workers will find out if they still have jobs.
It has been eight weeks since Coke announced it would cut 1,000 jobs in its North American operations, including 500 in Atlanta.
Many of those cuts will happen today, as managers meet with workers from up and down the ranks.
The relatively speedy process is part of Coke's plan to make changes happen fast. In 2000, when the company cut about 5,200 people, staffers were notified over a period of several months. The time in the lurch left many workers nervous and unfocused.
Industrial Bank Makes Record Loans on Consumer Boom (Update2)
By Luo Jun
Shanghai, March 27 (Bloomberg) -- Industrial & Commercial Bank of China, which arranges a quarter of all loans in China, said it lent a record 110 billion yuan ($13.3 billion) in January and February, driven by a surge in borrowing by consumers.
The Beijing-based bank is the nation's largest mortgage lender with 265.6 billion yuan of home loans at the end of last month, it said in a statement.
Chinese banks are turning to consumer lending to counter narrowing interest margins and to lift profit needed to write off bad loans left over from decades of government-directed lending to unprofitable state-owned companies.
``Two out of ten Chinese families have bought homes and the demand for mortgage loans will continue to grow,'' said Wei Yen, a banking analyst at Moody's Investors Service in Hong Kong. ``The concern is that if the economy flops and household income stops growing, the demand for mortgage loans will be sapped and some borrowers may even default on payments.''
European Economies: French Manufacturers' Confidence Declines
By Katrin Bennhold
Paris, March 27 (Bloomberg) -- French manufacturers' confidence dropped in March as export orders fell to the lowest in more than 6 1/2 years and companies prepared to cut production.
Venezuela Bonds Fall After Proposed Debt Swap to Avert Default
By Peter Wilson
Caracas, March 27 (Bloomberg) -- Venezuela's benchmark bond fell to a two-month low after the country said it may ask holders of some of its $15.9 billion of international bonds to accept new securities to help avert a default after a two-month long strike. Venezuela's 9.25 percent dollar-denominated bond due 2027 fell 0.40 cent on the dollar to 59.60, raising the yield to 15.8 percent, according to J.P. Morgan Chase & Co. at 9:40 a.m. New York time. The bond fell as much as 7 percent yesterday, before closing 4.2 percent down, and has lost 16 percent since Dec. 2, when a two-month national strike to force President Hugo Chavez from office began.
Iraq War May Curb Mexican Exports, Stunt Latin Growth (Update1)
By Michael Smith
Sao Paulo, March 27 (Bloomberg) -- Gil Blasque, finance director of Brazilian lamp and light bulb maker Sylvania do Brasil Iluminacao Ltd., was optimistic his country's economy had started to rebound -- until the U.S.-led war against Iraq began.
``It's a great pity, because Brazil is heading in the right direction,'' said Blasque, whose company, an affiliate of U.S. lighting maker SLI Inc., has boosted exports to the U.S. since last year's devaluation of the Brazilian currency. ``A short war might not have much impact, a long war could be very serious.''
ECONOMICA: IS THERE AN ITALIAN ENRON OUT THERE?
ITALY: UTILITY'S PROFIT FALLS Enel, Italy's largest elec tric company, said it had earned 2 billion euros ($2.13 billion) last year, down 49 percent from 2001 profit, which was increased by the sale of assets. Enel forecast that earnings before interest, taxes, depreciation and amortization will rise 8 percent a year through 2005 as it cuts 1 billion euros in costs. Profit by that measure fell 2.7 percent in 2002 while revenue was little changed at 29.98 billion euros. Despite the drop in profit, Enel left its dividend unchanged at 36 cents a share. Enel, which owns Italy's No. 2 phone company, said it would focus investments on its electricity and gas businesses. Eric Sylvers (NYT)
JAPAN: BANK EXPECTS A LOSS The smallest of Japan's four megabank groups, UFJ Holdings, said it would lose 650 billion yen ($5.4 billion) in the year that ends Monday because of greater losses on its stock portfolio and loan book. The bank, which previously expected a small profit, is the last of the big banks to forecast a loss. UFJ expects to book 620 billion yen in losses on its stockholdings and will not pay a dividend on its common shares this year. Ken Belson (NYT)
Manugistics Posts Loss of $111 Million In Quarter
By Yuki Noguchi
Washington Post Staff Writer
Friday, March 28, 2003; Page E05
Manugistics Group Inc. of Rockville yesterday reported a $111 million loss on a 21 percent drop in revenue last quarter, due in large part to a decline in the value of companies it bought during the past three years.
Broadwing Loses Nearly $2.4 Billion
Thursday, March 27, 2003; 5:57 PM
By Jessica Hall
PHILADELPHIA (Reuters) - Telephone company Broadwing Inc. on Thursday posted a $2.39 billion quarterly loss due to charges to exit the high-speed communications business, and said it restructured its credit agreements to escape a cash crunch.
Sound Money and the Business Cycle
John P. Cochran
As pointed out by Professor Kirzner (2001, pp. 137, 140), Mises did not start out with the intent to develop a theory of the trade cycle. The trade cycle argument first appeared in the last few pages of The Theory of Money and Credit (1912). This early development of Austrian business cycle theory was a direct manifestation of Mises's rejection of the concept of neutral money and "emerged as an almost incidental by-product of his exploration of the theory of banking :" (Kirzner 2001, p. 140). This development was an incomplete sketch of the theory, particularly for those not well versed in the capital theoretical foundations of the argument.
In fact, Hayek's (1999, pp. 105-6 fn.) first exposition of his version of the theory appears in a long footnote in his 1925 paper "Monetary Policy in the United States after the Recovery From the Crisis of 1920." The note was added following a suggestion from Gottfried Haberler. Hayek later explained that since "no sufficient exposition of the theory I had used was to be found in Mises's published works and if I was to expect to be understood, I must give a fuller account of the theory underlying my reports of the events described."
The Austrian theory of the business or trade cycle is an intricate blend of monetary theory and capital theory. Mises's (and Hayek's) monetary and capital theory differs in both significant and subtle ways from the mainstream neoclassical approach. Economists working in the Misesean tradition are still plagued by problems of communication with mainstream economists. While the terminology used is similar in both theories; definition of keys terms, the understanding of the nature of the economic problem, and the role of prices, especially prices for the means of production, differ considerably.
Hayek did much of the work developing the 'real aspects' of the business cycle theory, but, as has been pointed out by others, Hayek had one foot in the Austrian camp and one foot in the Walrasian general equilibrium camp. For this reason, Hayek can be an important bridge between mainstream and Austrian economics. Hayek can be read (or perhaps more easily read-reading Hayek is never easy) by a neoclassically trained economist with a limited background in Austrian economics. In many cases his insights can be assimilated and/or at least partially incorporated into neoclassical analysis....
Posted 28 March 2003 - 05:07 PM
It's not just the $ it's fiat in general that finances nation states and their follies. It's just as important to break the euro, the yen,whatever. Fortunately they are all weak. Over the past 10 years more than half of the gold and nearly all the silver held by governments have been sold into the markets. When the central banks run out of available gold to lease or sell the game will be over. If you really care about peace, liberty, the environment and social justice you can break the fiat cartel by buying the gold they're selling at prices that will never be seen again. We may be at peak oil, but we are way past peak silver and we use a billion ounces a year while we mine considerably less than that. Americans in general don't even realize what's going on, neither do the europeans. I think the africans, arabs, and asians are starting to see the writing on the wall.
Posted 31 March 2003 - 10:58 AM
I have just received this from Charleston Voice - email@example.com :
FINDINGS REGARDING US CURRENCY ABROAD
30 March 2003
"This will not be of interest to some of you, but to those concerned with the value of the US dollar & what might be planned for it, or for a restoration of its gold redeemability, you'll need to read the PDF file from the US Treasury:
"It runs to 100 printed pages, but it's very comprehensive, and should be analyzed, the highlights extracted & reported to all of us by one of our sound money newsletter gurus. It's very recent, ie, March 2003.
"The report reveals that of our $620 billion in US currency outstanding, nearly 60% or $370 billion is held outside the United States. This could be significant should the surprise be laid upon us that the US dollar is again redeemable in gold, but - to foreigners only. Could this explain why a multi-colored currency has been printed? How would foreign dollars held as reserves by foreign banks play into this? Can a two-tiered currency for the dollar be planned - one for foreigners, and a lesser valued one for US citizens? We wouldn't be the first one to do such a thing.
"Fascinating study, to say the least."
Posted 02 April 2003 - 12:36 AM
State Constitutional Amendment Repudiates Federal Reserve Note
4/1/03 4:40:49 PM
Discuss this story in the forum
Nevada State Senate Bill
Reno, Nevada -- http://www.leg.state...s/ab/ab532.html
Assembly Bill No. 532
Committee on Constitutional Amendments
March 24, 2003
Posted 02 April 2003 - 05:47 PM
Posted 03 April 2003 - 12:18 AM
But strategists noted the money spent, believed to be mostly buying dollars for yen, had had little impact on the yen's exchange rate this year. The dollar ended 2002 around Y118.6 against the yen - almost exactly the level at which it was trading when the BoJ released its data on Monday.
For a detailed timeline and articles covering recent interventions by central banks Click here
"Given the fact they've spent nearly $10bn with very little impact, they'll certainly be disappointed," said Derek Halpenny, currency economist at the Bank of Tokyo-Mitsubishi. "The question is, however, how much lower would the dollar be [against the yen] if that money had not been spent?"
Posted 04 April 2003 - 05:22 PM
I know the fed the BOJ, EU, G7 and everyoen else has been pouring mega bucks to keep the dollar alive and US look healthy.
BOJ bought 20 bil dollars to prop it up and thinking of another 20 because it did not do anything.
teh amount of futures buying by the FED now equal over 20 billion at least. All those 300 point jumps in a few hours.
After the attacks on September 11, 2001, the Fed pumped $100 billion into the monetary system in four days. On September 12 alone, the Fed lent a handful of key banks $46 billion unconditionally. The Federal Reserve Bank of New York, which runs the Fed's trading operations, flooded the banking system with additional billions of dollars by buying up treasury securities at record volumes throughout the week.
Posted 04 April 2003 - 06:27 PM
A. Nobody HAS any personal savings.
B. Even those foreign investors who do not hate the US (both of them) know the party is over in the USA.
Posted 07 April 2003 - 02:29 PM
Writing in the Sunday Times on March 30, Judge Richard Goldstone stated that there were only two lawful ways in which the U.S. could use military force against Iraq. One was if the UN Security Council sanctioned it; the other was in the case of "dire self-defence". The U.S. war against Iraq is in dire defence of dollar imperialism against the threat of the euro.
Put another way, the war is about world economic dominance. That, according to Australian analyst Geoffrey Heard, is the reason for the Bush Administration's determination to oust Saddam Hussein's regime, because his policy of selling oil in euros is threatening U.S. global hegemony.
The origin of Establishment America's problem with Iraq goes back to 1999 when Iraq broke ranks among the oil producers and began to trade its oil in euros instead of U.S. dollars. As Heard notes, under an Opec agreement all oil has been traded in greenbacks since 1971. America's monopoly of the oil business has premised the U.S. dollar's supremacy among world currencies. Initially the U.S. scoffed at Iraq's move to the euro but by 2001 disdain had turned to alarm. Iran indicated an interest in changing to euros while Russia has been seeking to increase its oil production aimed at European sales - in euros, of course. Venezuela, the world's fourth largest producer, has been cutting out the dollar in its dealings and bartering with various countries, including Cuba.
The net result of these developments meant that the dollar's stranglehold on oil was slipping and with it America's dominance of world trade. With Iraq having the world's second largest oil reserves, the American Establishment, which is sodden in oil investments, simply had to act against Saddam - even if it meant going to war. The alternative was the meltdown of the U.S. economy.
America was in serious trouble long before the Al-Qaeda attacks of September 11, 2001. Its real threat came not from the Middle East so much as from the EU with its new currency, the euro. Commanding 40% of world trade, the EU poses a major challenge to continued U.S. dominance. If only a few Opec members switched to euros, argues Heard, that would hurt the U.S. in two critical ways: it would result in a stronger euro and an increase in the "eurozone" and it would trigger dollar dumping and depress the greenback's value.
With the dollar facing bleak times, the only thing left for the Bush administration as the proxy of Establishment America (Al Gore would have had to have done the same) was to come out fighting. In one respect, Bush has been very frank about the purpose of this war. He has said it is to protect the American way of life. Indeed. And that means ensuring the reign of dollar imperialism.
The war against Iraq is, therefore, a war both to defend and to assert dollar dominance. Heard sees four objectives for the U.S. in this war:
return Iraq's oil reserves to the dollar circle;
send a clear message to other oil producers as to what will happen to them if they try to leave the dollar zone; deal a setback to the EU and its euro; use the war as a cover to get Venezuela's oil back into the dollar circle by means of covert CIA action.
The cost of the war is not measured in terms of the images shown on our television screens. In fact, in Uncle Sam's view the cost of going to war is negligible compared to the cost of not going to war. The possible loss of U.S. power and the end of dollar imperialism, as far as Washington is concerned, far exceeds all other considerations.
The final aspects of Heard's analysis provide insight as to the positions of Australia and the UK. Having significant U.S. dollar reserves and strong trade links with the U.S., it is in Australia's interests to support the U.S. and to see to it that the ascendancy of the euro is checked. Britain, which has yet to adopt the euro as its currency, stands to gain time and room to manoeuvre by siding with the U.S. A U.S. victory would also, in effect, give the EU principals, France and Germany, bloody noses and place the UK in a position either to demand a better deal from the EU for adopting the euro or to distance itself from Europe and to align with America. A weakened and divided EU is a U.S. policy strategy.
Whose side should South Africa be on? It's really a case of Hobson's choice. When the U.S. economy went concave in 1929, the whole world was sucked in to its depression. Only the mad mullahs would want a repetition of that. Which is why the anti-U.S. rhetoric of the ANC government, compounded by Nelson Mandela's virulent anti-Bush remarks, is shortsighted. It would have been far better to have adopted a neutral stance, particularly since an election is due in a year's time. In 1999 the ANC's election expenses enjoyed considerable American and Middle Eastern funding. Given the physical and political costs of the war, the chances of a repeat of such funding in 2004 must range from uncertain to unlikely. Nonetheless, the aftershocks of the war on Iraq may cost the ANC dearly.
Posted 09 April 2003 - 06:05 PM
Posted April 4, 2003
By Kelly Patricia O Meara
As Insight reports this week, there currently are 60 different forms of currency in circulation throughout the United States, and the reasons for issuing this alternative money are as numerous as the currencies themselves [see "Alternative Money Has Redeeming Value"].
While many have begun using new forms of currency to keep the money within their community, there are others, such as Bernard von NotHaus, founder of the National Organization for the Repeal of the Federal Reserve, who are intent on using it to publicize the populist claim that the Federal Reserve is illegitimate. Now it appears that even some states are beginning to question whether the Fed is constitutional.
A bill recently submitted to the Nevada Assembly Committee on Constitutional Amendments directs the issuance of Nevada silver coins. The act, now under consideration, states in part that:
the purported delegation by the Congress of the power to issue money to the Federal Reserve Bank, a privately owned corporation, is a violation of the terms of the U.S. Constitution;
the failure of the Congress to discharge its obligations to issue all the money pursuant to Section 8 of Article I of the Constitution absolves the state of Nevada from its constitutional obligation not to issue money;
the state of Nevada shall issue into circulation coins of the state of Nevada in the amount of $50 million. The coins must contain 1 ounce of fine silver, must be alloyed to 90 percent fineness and must bear the Great Seal of the state of Nevada on one side and the words, "Contains One Troy Ounce Fine Silver," "Twenty Dollars," "Nevada Legal Tender" and the year of issue on the other side. The coins so issued are legal tender for all debts, public and private, in Nevada.
if the Nevada Legislature determines that the U.S. Congress is fulfilling its constitutional obligation to issue money by requiring the Federal Reserve "to retire its circulating notes and causing the issuance of sufficient notes of the United States and other currency to meet the needs of the commerce of the United States and Nevada, the State Treasurer shall retire the coins authorized by this section as they are received into the State Treasury."
Nevada is the first of the 50 states to consider taking such steps against the Federal Reserve, and one has to wonder which, if any state, will be next. At a minimum, it's not good news for a Federal Reserve that has made printing money and manipulating the amount of money and credit in circulation into an art form, especially on its 90th anniversary.
Kelly Patricia O'Meara is an investigative reporter for Insight.
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