Jim Sinclair’s Commentary

Now here is some new news. The problem is where this article originated.

U.S. debt crisis to bring questions to dollar’s long-term status: Standard Chartered chief economist
by Zhang Yuenan

LONDON, Aug. 11 (Xinhua) – The U.S. debt crisis will bring more questions to the longer-term outlook of the U.S. dollar, Standard Chartered chief economist Gerard Lyons told Xinhua in an interview.

Although its current status as a reserve currency would not be changed immediately after the U.S. debt crisis, but the dollar “looks vulnerable,” said Lyons, adding that “worries about the longer-term outlook for the U.S. economy do raise long term questions about its currency.”

Meanwhile, the global context of the crisis, a shift in the balance of power from the west to the east, also raised questions about the dollar, Lyons said.

Rating agency Standard & Poor’s downgraded the U.S. credit rating from AAA to AA+ last Friday, the first time in history for the country to lose its top-grade rating.

Lyons, however, criticized S&P’s downgrade as “a wrong decision at a wrong time for wrong reasons.”

“The U.S. will pay its debt.” Lyons said.

Lyons took the latest U.S. debt crisis as a continuation of the crisis from three to four years ago. As a result, he expected the U.S. Federal Reserve to continue with its intervention policies for the past several years, including keeping interest rates low, providing liquidity and probably a third round of quantitative easing.

More… ^[1]

 

Jim Sinclair’s Commentary

It is all the same, British, French, Italian or US. There might be an exception on a relative basis.

The Canadians never caught the real madness of OTC derivatives. Regardless, here is your guarantee to QE to Infinity.

British banks ordered to disclose debt exposure amid contagion fears
Turmoil on Europe’s markets continues, as bank shares suffer rollercoaster ride
By Sean Farrell
Friday, 12 August 2011

The Financial Services Authority (FSA) has stepped up scrutiny of UK banks’ exposures to foreign government debt as fears of European sovereign debt contagion sent markets into a renewed frenzy yesterday.

The City watchdog is in talks with Britain’s banks and their auditors to ensure consistent disclosure of their sovereign holdings according to the standards of the recent European stress tests in their year-end results.

As fears over which banks could be hit by downgrades of sovereign bonds continue to rattle markets, the FSA has also upped its day-to-day monitoring of UK lenders’ exposures.

An FSA spokeswoman said: “We have been holding discussions with the banks and their auditors in relation to their sovereign exposures. What we are looking for is greater consistency and disclosures across firms to give the market clear information.”

Yesterday marked another round of turmoil for Europe’s banks as fears about exposures to debt-stretched economies made investors question their ability to fund in the market.

More… ^[2]

 

Jim Sinclair’s Commentary

Let see, Yuan in 10 years or dollar in 10 years? Safe havens change with time.

China’s Yuan Strengthens Beyond 6.40 Per Dollar for First Time Since 1993
By Fion Li – Aug 11, 2011 2:17 AM MT

The yuan strengthened beyond 6.4 per dollar for the first time in 17 years, supported by the Federal Reserve’s pledge to keep interest rates at a record low and signs China will use currency gains to help rein in inflation.

The currency rose 0.37 percent to close at 6.3945 in Shanghai, its biggest jump in nine months, according to the China Foreign Exchange Trade System. It touched 6.3895, the strongest level since the country unified official and market exchange rates at the end of 1993. The central bank’s reference rate was boosted 0.27 percent to 6.3991.

The International Monetary Fund said last month a stronger yuan would help stabilize the global economy, as well as aid government efforts to tame inflation and rebalance the nation’s growth toward domestic demand and away from exports. Data this week showed record overseas sales helped drive China’s trade surplus to a two-year high in July and consumer prices rose the most in three years.

“The inflation and trade data, together with the Fed’s policy to maintain extremely low interest rates, have fueled faster appreciation,” said Banny Lam, an economist at CCB International Securities in Hong Kong. “Strong economic growth, supported by the latest export figures, also provides investors with confidence to buy the yuan in these turbulent times.”

U.S. Criticism

The yuan is the sole gainer this month among Asia’s 10 most-used currencies excluding the yen, having advanced 0.7 percent versus the dollar as a Standard & Poor’s downgrade of the U.S. credit rating and a rout in global equities prompted investors to pull back from riskier assets. The MSCI Emerging Markets Index of shares dropped 14 percent since July.

More… ^[3]

 

Jim Sinclair’s Commentary

The following is courtesy of CIGA EP.

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.
– Earnest Hemingway

Jim Sinclair’s Commentary

Now here is some new news. The problem is where this article originated.

U.S. debt crisis to bring questions to dollar’s long-term status: Standard Chartered chief economist
by Zhang Yuenan

LONDON, Aug. 11 (Xinhua) – The U.S. debt crisis will bring more questions to the longer-term outlook of the U.S. dollar, Standard Chartered chief economist Gerard Lyons told Xinhua in an interview.

Although its current status as a reserve currency would not be changed immediately after the U.S. debt crisis, but the dollar “looks vulnerable,” said Lyons, adding that “worries about the longer-term outlook for the U.S. economy do raise long term questions about its currency.”

Meanwhile, the global context of the crisis, a shift in the balance of power from the west to the east, also raised questions about the dollar, Lyons said.

Rating agency Standard & Poor’s downgraded the U.S. credit rating from AAA to AA+ last Friday, the first time in history for the country to lose its top-grade rating.

Lyons, however, criticized S&P’s downgrade as “a wrong decision at a wrong time for wrong reasons.”

“The U.S. will pay its debt.” Lyons said.

Lyons took the latest U.S. debt crisis as a continuation of the crisis from three to four years ago. As a result, he expected the U.S. Federal Reserve to continue with its intervention policies for the past several years, including keeping interest rates low, providing liquidity and probably a third round of quantitative easing.

More… ^[1]

 

 

 

 

Jim Sinclair’s Commentary

It is all the same, British, French, Italian or US. There might be an exception on a relative basis.

The Canadians never caught the real madness of OTC derivatives. Regardless, here is your guarantee to QE to Infinity.

British banks ordered to disclose debt exposure amid contagion fears
Turmoil on Europe’s markets continues, as bank shares suffer rollercoaster ride
By Sean Farrell
Friday, 12 August 2011

The Financial Services Authority (FSA) has stepped up scrutiny of UK banks’ exposures to foreign government debt as fears of European sovereign debt contagion sent markets into a renewed frenzy yesterday.

The City watchdog is in talks with Britain’s banks and their auditors to ensure consistent disclosure of their sovereign holdings according to the standards of the recent European stress tests in their year-end results.

As fears over which banks could be hit by downgrades of sovereign bonds continue to rattle markets, the FSA has also upped its day-to-day monitoring of UK lenders’ exposures.

An FSA spokeswoman said: “We have been holding discussions with the banks and their auditors in relation to their sovereign exposures. What we are looking for is greater consistency and disclosures across firms to give the market clear information.”

Yesterday marked another round of turmoil for Europe’s banks as fears about exposures to debt-stretched economies made investors question their ability to fund in the market.

More… ^[2]