Jim’s Mailbox

Posted at 11:36 AM (CST) by & filed under Jim's Mailbox.

Jim,

To follow the beginning of hHyperinflation, you just have to look at Argentina.

Inflation: "private estimates suggest it is running at an annual 25%, while the government’s suspect numbers puts it at 10."

"But many financial investments in pesos, including bank deposits, are not keeping pace with inflation despite interest rates of about 14-15%, prompting people to buy cars and washing machines instead."

"Investment in everything from energy to manufacturing capacity expanded at a slower clip as interventionist policies like price controls and sales restrictions cut profits and made it hard to plan business."

The Argentinian senate just approved a law letting the Treasury use reserves from the Central Bank.

Best regards,
CIGA Christopher

Argentina Senate Approves Cent Bank Reform to Access Reserves
By Charles Newbery

BUENOS AIRES (MNI) – Argentina’s Senate approved a reform of the central bank Thursday, granting the government access to more of the reserves to use to finance economic growth and pay debt.

Senators voted 42-19 in favor of the government-backed bill, with two absentees, after six hours of debate that ran until 2:00 a.m. local (1:00 a.m. ET).

With no changes introduced from the version approved by the lower house last week, the bill now goes to President Cristina Fernandez de Kirchner to be signed into law.

This will give her administration freer access to central bank funds including its $47 billion in reserves to stimulate the economy and pay debt, including by making loans to commercial banks for lending to businesses for investment.

"The reserves are of all the Argentines and not of a few clever people who want to use the money to make a difference," Sen. Anibal Fernandez, of the ruling Front for Victory party and former chief of cabinet for the president, said during the debate.

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Bailout worries see Spanish bond yields rise
CIGA Eric

Does anyone else recognize the perpetual (bailout) cycle here? The solution is called infinite liquidity through debt issuance and printing currency. Liquidity is lifting all boats – stocks, bonds, precious metals, and commodities. Just like it has down throughout history.

Eric de Groot

Headline: Bailout worries see Spanish bond yields rise

MADRID (AP) — Spain’s borrowing rates continue to rise as uncertainty in global financial markets and concerns about economic growth raise worries the country might eventually need a bailout.

Yields on 10-year bonds are up to 5.47 percent mark after rising all week. In March, the yield was below 5 percent.

The spread between the Spanish yield and the benchmark German equivalent hit 358 basis points on Friday, the highest since early January.

Analysts say the rise is due to doubts over the new conservative government’s commitment to meet deficit reduction targets and concerns that a global growth slowdown and market jitters will hurt Spain’s chances of avoiding a bailout.

Source: finance.yahoo.com

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Dear Jim,

The FT is bashing Gold again. Apparently it has "lost its luster." Goodness me, if that’s not a buy signal, what is?

Regards,
CIGA B’dlam

Dear CIGA B’dlam:

There is no better contra-indicator for gold than the London Financial Times. It has held that fine tradition unbroken since 1968. That adds strength to the belief that we have seen the low in gold in the reaction.

Regards,
Jim

Investors are losing their enthusiasm for gold as signs of improvement in the US economy tempt them away from the traditional haven.

Interest in gold has surged in the past ten years, as prices have risen more than sevenfold from just $253 in 2001 to a peak of nearly $2,000 last year. But investors have become more wary about putting fresh money into the metal as they have been at any point during the last decade’s rally, according to some bankers.

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Jim,

Unification of the Anglo-Saxons and the European banking system continues. The Swiss banking system gave up independency some years ago.

Just for the record, Bank of America Corp is one of the five largest US swap dealers.

Best regards,
Christopher

Orcel to Join UBS as Co-Head of Investment Banking
By JULIA WERDIGIER
March 22, 2012, 12:58 pm

LONDON – Andrea Orcel, the chairman of global banking and markets at Bank of America, has been tapped to be the co-head of investment banking at UBS, the bank announced on Thursday.

Mr. Orcel, a finance veteran who advised on some of Europe’s biggest banking takeovers, will run the investment bank with its current head, Carsten Kengeter, UBS said in a statement.

Mr. Orcel’s departure from Bank of America is part of broader management shakeup at the bank’s European operation. Jonathan Moulds, the president of Europe and Canada, is retiring at the end of the second quarter, the bank said on Thursday in an internal memo. Christian Meissner, the head of global corporate and investment banking, had been appointed interim president of Europe and emerging markets.

The appointment of Mr. Orcel is among the most prominent hires since Sergio P. Ermotti took over as chief executive of the Zurich-based bank last year. The addition of Mr. Orcel, an Italian who is based in London, could be seen as a sign of management’s confidence in the investment banking operation.

“I am pleased that we are adding Andrea’s depth of experience and skill set to our Group Executive Board,” Mr. Ermotti said in a statement. “Taken together, Carsten and Andrea’s expertise and proven track record create very strong impact, and they will co-lead an effective execution-driven leadership team.”

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Dear Jim,

"Thanks to a wave of refinery closings, the northeastern United States is facing the prospect of gasoline shortages this summer."

Best regards,
CIGA Christopher

Why gas prices vary so much from one place to the next
Posted by Brad Plumer at 11:07 AM ET, 03/22/2012

The price of gasoline can differ wildly depending on where you live. A driver fueling up in Denver will pay, on average, $3.64 per gallon. But just a couple states over in Chicago, gas goes for north of $4.28 for gallon. That’s about a $10 difference to fill up an average gas tank. Why the disparity?

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