Testy Tuesday – Gentle Ben vs. Reality
by phil - June 8th, 2010 8:26 am
Behold the power of prayer!
We had a wild ride in the futures in the last 16 hours as they were up 1% and now are barely holding flat at 7:30. Our catalyst was Dr. Ben Bernanke who, as we expected, attempted to boost the markets in a scheduled speech where the Fed chairman said he is hopeful the economy will gain traction and not fall back into a "double dip" recession. "My best guess is we will have a continued recovery, but it won't feel terrific," Bernanke said.
Bernanke didn't offer new clues about when the Fed would reverse course and start to tighten credit. However, he did say the Fed won't be able to wait until the jobs market is fully healed before it pushed rates up. Observing the economy, Bernanke said the news so far is "pretty good." Both consumers and companies are spending sufficiently to keep the recovery moving forward. The private sector, he said, is "picking up the baton" as government stimulus, which mainly powered the recovery in its earliest stage, starts to fade. n relations between the United States and China, Bernanke said there is a real desire between the two superpowers to work together to ease trade and economic tensions. Both countries sort of understand there is a "co-dependency relationship," Bernanke said. The United States snaps up Chinese goods and the Chinese is a major buyer of the U.S. government's debt.
Wow, really Ben? I guess that's some "good" kind of codependency and not the actual definition of codependency, which is: "A tendency to behave in overly passive or excessively caretaking ways that negatively impact one's relationships and quality of life… Codependency may also be characterized by denial, low self-esteem, excessive compliance, and/or control patterns." According to Mental Health America: "Codependency is an emotional and behavioral condition that affects an individual’s ability to have a healthy, mutually satisfying relationship. It is also known as “relationship addiction” because people with codependency often form or maintain relationships that are one-sided, emotionally destructive and/or abusive." Gee, he's right – we DO have a codependent relationship with China!
Even more interesting is the way the MHA links codependency to Dysfunctional Family Structures, saying:
A dysfunctional family is one in which members suffer from fear, anger, pain, or shame that
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Bullion Denominated in Euros, Pounds and Swiss Francs At New Record Highs as the IMF Prepares for a Currency Crisis
by ilene - May 6th, 2010 11:45 pm
Bullion Denominated in Euros, Pounds and Swiss Francs At New Record Highs as the IMF Prepares for a Currency Crisis
Courtesy of JESSE’S CAFÉ AMÉRICAIN
What many traders are starting to realize is that the precious metals plunged with stocks in the recent market dislocation in 2008 because it was a ‘liquidity crisis’ among private institutions triggered by the credit unworthiness of individuals that provoked a general selling of assets.
What we are experiencing now is a sovereign debt (credit worthiness) crisis, which is really a currency crisis. A fiat currency is backed by nothing except the ‘full faith and credit’ of the issuer. It is not that it would have to be ‘different this time’ as some would think. It’s not even the same thing, a different type of a crisis entirely.
The markets are assessing the risks of various currencies and countries with regard to default. Gold, and to some lesser extent silver bullion, are wealth that is sufficient to itself, requiring no backing from any particular country. Quite the opposite, there are large short positions and highly leveraged paper commitments, that present significant counterparty risk to the upside, because it is unlikely to be deliverable at anything near current prices.
Regulators have long turned a blind eye to what some contend are officially sanctioned shenanigans and secretive leasing and selling. This is becoming increasingly difficult for the central banks to manage, and we may approach a breaking point unless the financial engineers and politicians can head it off once again. They have a strong vested interest in hiding their past dealings, as we saw in the case of Mr. Gordon Brown in the UK.
If there is a new panic selloff, all assets will again be liquidated in the short term, including the metals. But their rebound may be quite sharp and potentially rewarding if the sovereign debt crisis continues, since the search for safe havens will be even more aggressive, as the seats in the shelters are quickly taken.
This is why the IMF is meeting in Zurich on May 11, ahead of the formal discussions scheduled later this year to discuss the reweighting of the SDR. There is a currency crisis on the horizon, and it may involve not only the PIIGS, but the larger developing countries including the US and the UK. And they are preparing contingency plans, and seeking to head it off.
I do…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site