Italian government explains how we can all become $250,000 richer
by Simon Black on June 30, 2014
As of today, I am $250,000 richer than I was last week. And thanks to the magic of economics, I didn’t even have to do anything.
You see, following the lead of the Italian and British governments, I’ve taken the liberty of ‘rebasing’ my net worth.
In their case they decided to include proceeds from hookers, coke addicts, and meth heads in their GDP calculations, thereby increasing the sizes of their economies overnight.
So the other day in Singapore as I was filling out an application for a new account at a private bank, there was a box where they wanted me to write in my net worth.
I decided that I would include the "street value" of some of my vital organs; after all, a kidney in a wealthy country like Singapore can fetch over $250,000.
(There was actually a case back in 2008 of a retail tycoon in Singapore who was arrested for trying to buy a kidney for roughly USD $250,000…)
The banker didn’t find my logic particularly convincing, something about ‘not being able to get that past compliance…’ Yet amazingly the market has given these bankrupt European countries a pass on their equally ridiculous idea.
Jim Sinclair’s Commentary
The enemy of my enemy is my friend?
Israeli leader calls for independent Kurdistan
By Associated Press June 29 at 4:22 PM
TEL AVIV, Israel — Seizing on the mayhem in Iraq, Israel’s prime minister on Sunday called for the establishment of an independent Kurdistan as part of a broader alliance with moderate forces across the region, and asserted that Israel would have to maintain a long-term military presence in the West Bank to keep a jihadi juggernaut from powering its way to the outskirts of Tel Aviv.
Prime Minister Benjamin Netanyahu laid out his positions in a policy speech that marked one of the most detailed responses by a world leader to the lightning territorial gains made in recent weeks by Sunni extremists fighting in Iraq, and it underscored how profoundly events can ripple across an increasingly interlocked Middle East.
Netanyahu suggested that the territorial gains made this month by the Al Qaida-inspired jihadi group called the Islamic State in Iraq and the Levant could endanger neighboring Jordan, with which Israel has a peace agreement it considers vital to its security. The group has recently captured wide swaths of Iraq including the important cities of Mosul and Tikrit and several border crossings with Syria, and on Sunday formally declared a caliphate, or an Islam-ruled state, on territory it controls in both countries.
The offensive by the Islamic State’s militants “can be aimed toward Jordan in the shortest time,” Netanyahu warned. Without stating outright that the Western-leaning Jordanian monarchy could fall, Netanyahu suggested as much by saying that the new developments meant a need for Israel to hold on to the West Bank border with the Hashemite kingdom, along the Jordan River.
“We must be able to stop the terrorism and fundamentalism that can reach us from the east at the Jordan line, and not in the suburbs of Tel Aviv,” he said, implying that from Jordan radicals could sweep through the West Bank, whose borders reach within 20 miles (30 kilometers) of Tel Aviv. The metropolis of some 2 million is the business and cultural center of the Jewish state, and the engine of its increasing prosperity.
Gazprom says gas transit via Ukraine may be stopped completely
June 27, 16:55
Gazprom has started pumping gas into European gas storage facilities and it plans to pump 5 billion cubic meters
MOSCOW, June 27./ITAR-TASS/.Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely.
“What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Gazprom CEO Alexei Miller told a briefing on Friday.
Ukainian gas transportation system
Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.
“The train has already departed. It seems it departed yesterday,” Miller said.
“It belongs to no one. The GTS has no owner,” he said. “The GTS of Ukraine does not belong to Naftogaz but to the Ukrainian government. Before discussing things with someone regarding modernization and cooperation, it should appear on the balance sheet of this or that economic entity.”
Another JP Morgan Banker Dead
(Joseph P. Farrell) Surprise surprise! There’s been yet another banker death, and once again, this victim is a JP Morgan banker. On this time, rather than jumping off buildings or in front of trains, the victim, 56 year old Ohio resident Joseph Giampapa, was struck by a hit and run driver while he was bicycling. But that’s not all. Here’s the report of the Columbus Dispatch:
Notice anything peculiar about that singularly uninformative news article?
Well, you probably noticed, that since this blog is titled “Yet Another JP Morgan Banker Death”, that there was no mention of Mr. Giampapa’s connection to that bank, which is mighty strange, since there are indicators that he was a bankruptcy attorney and vice president for JP Morgan:
Isis announces Islamic caliphate in area straddling Iraq and Syria
Jihadist group challenges al-Qaida as it changes name to Islamic State and pledges to free Palestine in video
Mark Tran and Matthew Weaver
theguardian.com, Monday 30 June 2014 06.33 EDT
Islamist militants have declared an Islamic "caliphate" in an area straddling Iraq and Syria, trumpeting the declaration in several videos.
One slick video, mostly in English, features a bearded fighter with an AK-47 on his back, explaining the new caliphate.
"This is not the first border we will break, we will break other borders," a jihadist from the Islamic State in Iraq and the Levant (Isis) warned in the video called End of Sykes-Picot, a reference to the agreement between France and Britain that divided up the Ottoman empire territories after the first world war.
Later the fighter pledges that jihadists will free Palestine. "We are not here to replace an Arab cahoot with a western cahoot. Rather our jihad is more lofty and higher. We are fighting to make the word of Allah the highest," the spokesman said.
He is filmed showing abandoned Iraqi army badges and vehicles left by fleeing soldiers. "There is no army in the world that can withstand the soldiers of Islam," he said.
The video features about a dozen men in a cell said to be captured troops and border police. A building, said to be a police station, is shown being blown up, as well as US-made Humvees captured from the border police. "Look how much America spends to fight Islam, and it ends up just being in our pockets," the spokesman taunted.
‘Euphoric’ capital markets are out of step with reality, warns BIS
By Sam Fleming and Claire Jones
Last updated: June 29, 2014 10:05 pm
The Bank for International Settlements has warned that “euphoric” financial markets have become detached from the reality of a lingering post-crisis malaise, as it called for governments to ditch policies that risk stoking unsustainable asset booms.
While the global economy is struggling to escape the shadow of the crisis of 2007-09, capital markets are “extraordinarily buoyant”, the Basel-based bank said, in part because of the ultra-low monetary policy being pursued around the world.
Leading central banks should not fall into the trap of raising rates “too slowly and too late”, the BIS said, calling for policy makers to halt the steady rise in debt burdens around the world and embark on reforms to boost productivity.
In its annual report, the BIS also warned of the risks brewing in emerging markets, setting out early warning indicators of possible banking crises in a number of jurisdictions, including most notably China.
“Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on,” it said.
Argentina at Brink of Default as $539 Million Payment Due
By Camila Russo Jun 30, 2014 4:10 AM MT
Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle.
The nation has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks.
A decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head. The U.S. Supreme Court on June 16 left intact a ruling requiring the country pay about $1.5 billion to holders of defaulted debt at the same time it makes payments on restructured bonds. Argentina last week transferred funds to its bond trustee to pay the restructured notes, only to have U.S. District Court Judge Thomas Griesa order the payment sent back while the parties negotiate.
The judge’s decision “closes Argentina’s options to finally force it to negotiate,” said Jorge Mariscal, the chief investment officer for emerging markets at UBS Wealth Management, which oversees $1 trillion. “Argentina should now stop using these delay tactics and get serious.”
Jim Sinclair’s Commentary
The value of the dollar depends on confidence in the dollar and its leadership.
Iraq Crisis-$150 to $200 Oil Might Seem Cheap-Chris Martenson
By Greg Hunter On June 30, 2014
Chris Martenson is an economic researcher and futurist who produced a popular video seminar called “Crash Course.” Back in early 2008, he explained the “interconnected forces in the economy, energy and the environment.” Now, he has produced a new “Accelerated Crash Course,” and this theme is playing out in places like Iraq. Martenson says, “If you want to understand what is going on in Iraq, you have to understand what is going on with energy in this part of the game. . . .The U.S. media goes out of its way to pretend this is just some random thing that happened. A bunch of crazy people came out of Syria and are causing trouble. . . . The post reconstruction effort in Iraq, if it wasn’t designed to fail, it was the biggest bungling job of all of history. We dismantled key institutions, we dismantled their army and left the country a hollowed out shell. Guess what, now that’s breaking.” Martenson goes on to point out, “Here’s why it affects us. Oil and oil infrastructure is fragile stuff. A refinery is thousands of moving parts and miles of tubes and pipes. One mortar lobbed in there and that whole refinery gets shut down. . . . The idea we can have full blown Sunni, Shia, Kurd conflict where they’re going to duke it out for power, and have all that oil infrastructure remain untouched, I think is a fantasy.”
So, what happens to oil prices if Iraqi oil is taken off the market because of war? Martenson says, “If that goes away, oil prices are set at the margin. That 2.5 million barrels going off line brings us to $150 oil. If something worse happens, Saudi Arabia gets involved or the Strait of Hormuz gets closed down, then we’re talking about numbers like $200 a barrel, and that might even seem cheap. We don’t know how high oil could go if this turns into regional conflict. That is the risk, and it’s on the table now.”
Martenson goes on to say, “Once you let this genie out of the bottle and you unleash inter-fighting and bad blood, there is no predicting what could happen. I think it’s been a huge mistake to sow chaos and discord. How many countries did we do this to? We broke Libya in exactly the same way. . . . Now, that place has zero oil exports because the country is completely wrecked by sectarian violence. The same thing has happened Egypt. We got rid of the standing government, it’s a mess. Syria is a mess. Iraq, now it’s a mess. I look at this and I see mess, mess, mess. Maybe that is the plan, and that plan is always how we, the West, can better control the oil interests of these countries. This is critical . . . Europe is desperately needing oil and natural gas at this point in time. The U.S. is still a net importer of natural gas and still imports 7 million barrels of crude oil a day of the 15 that we burn. Look at all the countries wading into the Middle East, and all of them are net oil importers . . . . So, this is a real scramble for resources. All wars have been resource wars, and when I look at the geopolitical landscape, the Middle East and in Eastern Europe, I say this story has already started to unravel; and if you don’t understand resources, then this story won’t make a lick of sense.”
Russia, China may reach $200 billion in trade earlier than 2020
Russia-China trade may reach $200 billion earlier than 2020, Russian Deputy Prime Minister Dmitry Rogozin said on Monday.
"We have a task set by the leaders of Russia and China to raise the volume of our trade and economic relations to $200 billion by 2020," Rogozin said at a meeting of Russian and Chinese vice-premiers with governors and business circles from both countries at the first Russia-China EXPO that had opened in Harbin.
"But I believe that if we proceed at such high rates and develop large, primarily infrastructural projects to help unite energy of Russia and China, then we believe that this figure can be achieved before that time," Rogozin said.
Cooperation between Russia’s Global Navigation Satellite System (GLONASS) and China’s Beidou was among the projects both countries had discussed at the exhibition, Rogozin said.
"GLONASS and Beidou fit together well. Owing to the specifics of our systems and the location of satellites, we have no rivals in the Northern Hemisphere, especially in northern latitudes," the Russian vice-premier said.
Jim Sinclair’s Commentary
The Yuan is on the march to significant international status.
China signs yuan accords with France, Luxembourg
China’s central bank said it has signed agreements for yuan clearing arrangements with France and Luxembourg, with the aim of promoting greater use of its currency overseas.
The People’s Bank of China (PBoC) said it would designate Chinese banks as the yuan clearing institutions in the two European countries later, according to statements issued on Sunday.
China earlier this month named the Bank of China as the clearing bank for yuan dealings in Frankfurt, Germany, and the China Construction Bank in London. A top Australian official said last week that China will designate a clearing bank in Sydney.
The moves come as China seeks to make the yuan — also known as the renminbi — used more internationally in keeping with the country’s status as the world’s second biggest economy behind the United States.
China keeps a tight grip on the value of its currency and limits capital flows into and out of the country, but officials have pledged to make the exchange rate more flexible.
Yuan clearing in France and Luxembourg would allow companies and financial institutions to use the currency for cross-border transactions, as well as promote liberalisation of trade and investment, the PBoC said.
European countries are competing to become the dominant hub for yuan business in the continent.
Jim Sinclair’s Commentary
Who are the players? What are the alliances?
Israeli PM Netanyahu endorses Kurdish independence citing chaos in Iraq
Published time: June 29, 2014 17:39
Edited time: June 30, 2014 12:56
Citing the “collapse” of Iraq amid the ISIS insurgency and sectarian violence, Israeli Prime Minister Benjamin Netanyahu has endorsed the de-facto independence of Iraqi Kurds. Netanyahu has also called to support the “Kurdish aspiration for independence.”
The hawkish Israeli leader said on Sunday that Kurds are “fighting people that has proved its political commitment, political moderation, and deserves political independence,” Reuters reported.
Speaking to Tel Aviv University’s INSS think-tank, Netanyahu described the situation in Iraq and the Middle East in general as a “collapse,” due to strife between Sunni and Shiite Muslims.
Amid the recent insurgency of the Islamic State in Iraq and the Levant (ISIS/ISIL) militants, Kurds have seized the opportunity to bring a long-sought independent state of Kurdistan closer to reality. Kurdish Peshmerga armed forces have been guarding their provincial borders from ISIS, but also seized the contested Iraqi city of Kirkuk, proclaiming it part of their territory.
US, Philippines start naval drills near China-claimed waters
June 26, 2014 11:21 AM
The United States and the Philippines kicked off joint naval exercises Thursday in the South China Sea near waters claimed by Beijing, amid tense territorial rows between China and its neighbours.
Filipino military officials said the week-long manoeuvres, involving three US warships and more than a thousand servicemen, would address Manila’s "capability gaps" as well as testing its newest military vessels.
The Philippines is engaged in a bitter territorial dispute with China over parts of the South China Sea, which Beijing claims almost in its entirety.
China has increasingly asserted its claims to the sea, which are believed to harbour vast oil and gas deposits, and parts of which are also claimed by Vietnam, Malaysia, Brunei and Taiwan. Beijing placed an oil rig in disputed waters last month, sparking deadly anti-China riots in Vietnam.
Philippine officers said the annual war games, involving more than a thousand US personnel and about 400 Filipino counterparts, would test the Philippines’ two newest warships — a pair of decommissioned US coastguard cutters that were reconfigured into frigates.
Iraqis caught in a state of fear between Isis and Shia militias
Residents of Baquba, an hour from Baghdad, are on the frontline of a sectarian showdown that is fast becoming another civil war
Martin Chulov in Baghdad
The Guardian, Sunday 29 June 2014 15.12 EDT
An hour from Baghdad where the battle lines are drawn, residents of Baquba say they’re caught between two terrifying options. Just to the north are Isis, the Sunni militant group bent on destroying Iraq and the Shias who govern it. To the south are Shia militias who have responded with vehemence and are transforming the frontlines into a sectarian showdown that pays no heed to the state.
"We have Da’ash on one side," said Abu Mustafa, a Baquba resident, using the colloquial word for Isis. "And we have Asa’ib ahl al-Haq on the other. I don’t know who to be more scared of."
Asa’ib ahl al-Haq is the most powerful Shia militia in Iraq, and perhaps the most potent in the land. A direct proxy of the Iranian general Qassem Suleimani, who has extraordinary influence across Iran’s sphere of influence, Asa’ib is untouchable in Baghdad and feared around the country.
Asa’ib, like Isis, has made Baquba and the area that surrounds it one of the most important flashpoints in Iraq. Whoever controls this lethal city will secure an approach to the capital an hour south, and a foothold in the east within striking distance of the Iranian border.
"The police are the most powerful people in this city," said Abu Mustafa. "But only because they are all militias anyway."
King Abdullah calls up Saudi armed forces on high preparedness. Egyptian troops ready to fly to kingdom
DEBKAfile Exclusive Report June 26, 2014, 6:49 PM (IDT)
Thursday, June 26, the day before US Secretary of State John Kerry was due in Riyadh, King Abdullah summoned a National Security Council meeting “upon the current security events in the region, especially in Iraq,” and ordered “all necessary measures to protect the kingdom against terrorist threats.” This meant a general call-up of military units for a high level of preparedness.
DEBKAfile’s military sources disclose that Egypt is assembling an expeditionary commando force to fly to Saudi Arabia and bolster its border defenses.
This flurry of Saudi-Egyptian military steps comes in the wake of intelligence gathered by Saudi reconnaissance planes showing Iraqi Al Qaeda-linked Sunni fighters (ISIS) heading for the Saudi border and aiming to seize control of the Iraqi-Saudi crossing at Ar Ar (pop: 200,000).
ISIS and its Sunni allies are still on the march after capturing Iraq’s border crossings with Syria and Jordan earlier this week.
On Wednesday, Kerry warned Mideast nations against taking new military action in Iraq that might heighten sectarian divisions.
By then, he had been overtaken by a rush of events, as DEBKAfile reported this morning.
When the first of the 300 military advisers US President Barack Obama promised the Iraqi government arrived in Baghdad Wednesday, June 25, Iranian and Saudi Arabian arms shipments were already in full flow to opposing sides in embattled Iraq, DEBKAfile’s military sources report.
Jim Sinclair’s Commentary
Everything economic dances on the head of a pin named interest rates.
BIS Damps $2 Trillion Emerging Market Company Debt Spree
By John Glover Jun 29, 2014 6:30 AM ET
More than $2 trillion of foreign borrowing by emerging-marketcompanies since 2008 is leaving them vulnerable to a sudden drop in funding at the first sign of trouble, according to the Bank for International Settlements.
Bond investors willing to lend generously when conditions are good can pull out in a crisis or when central banks tighten monetary policy, analysts led by Claudio Borio, head of the monetary and economic department, wrote in the BIS annual report. Emerging-market companies that lose access to external debt markets may then be forced to withdraw bank deposits, depriving domestic lenders of funding as well, they said.
Low interest rates and central bank stimulus in developed nations, combined with a retreat in global bank lending, have encouraged emerging-market borrowers to raise debt abroad, according to the Basel, Switzerland-based BIS, which hosts the Basel Committee on Banking Supervision that sets global capital standards. Demand for higher-yielding securities also helped suppress borrowing costs for riskier issuers.
“Like an elephant in a paddling pool, the huge size disparity between global investor portfolios and recipient markets can amplify distortions,” the analysts wrote. “It is far from reassuring that these flows have swelled on the back of an aggressive search for yield: strongly pro-cyclical, they surge and reverse as conditions and sentiment change.”
Libya seeks to continue contacts with Russian oil companies
June 30, 18:04 UTC+4
MOSCOW, June 30. /ITAR-TASS/. Libya does not intend to revise contracts with Russian companies that got concessions to develop oil fields, Russian Ambassador to Libya Ivan Molotkov has said. “These are Gazprom Neft and Tatneft that worked on the Libyan oil market,” Molotkov told ITAR-TASS on Monday.
“At present, oil production has practically stopped. It reaches at least 200 million barrels per day. Major oil fields are controlled by armed groups that prevent oil production,” he said.
“The situation in Libya is similar to Iraq’s. I believe that the crisis in Libya will last for years,” Ivan Molotkov told ITAR-TASS.
“The parliamentary elections were held on June 25. We hope that they will play a stabilising role and give the country breathing room. The elections were recognised invalid. No results are available yet,” he said.
Libyans “should adopt the constitution, elect a new parliament and form a new government”, Molotkov said.
Serbia’s South Stream section will be built on schedule — Russian diplomat
June 30, 16:59 UTC+4
MOSCOW, June 30. /ITAR-TASS/. The Serbian section of the South Stream gas pipeline is being built on schedule, Russia’s Ambassador in Belgrade Alexander Chepurin has said. “Serbia has not created any obstacles,” Chepurin told ITAR-TASS on Monday.
Russia’s Energy Minister Alexander Novak met with Serbian Minister of Energy and Mining Aleksandar Vucic in Moscow on June 20. “Serbia confirmed that it was ready to carry out the project according to schedule,” Chepurin said.
“The construction installation works will start in compliance with the results of the tender that will be announced shortly,” he said.
“Foreign investments are one of Serbia’s priorities,” Chepurin said.
At the same time, he said, “Serbia’s accession to the EU won’t solve deep problems. For 15 years Serbia has implemented two major projects: Fiat’s Italian assembly plant in Kragujevac and Russia’s Gazprom Neft’s oil refinery in Novi Sad.”
Jim Sinclair’s Commentary
Also to trade in Yuan.
Shanghai may launch gold trading bourse in Q4
2014-06-30 08:47Shanghai DailyWeb Editor: Qin Dexing
Shanghai may launch the international trading board for gold in the city’s pilot free trade zone in the fourth quarter of the year, while gold consumption edged up 0.8 percent in China during the first quarter, local media reports said last week.
The new bullion trading board in the FTZ may attract foreign market players as China hopes to raise its influence on global gold prices. The FTZ may draw 1,000 tons of gold.
Physical gold consumption rose to 323 tons in the first quarter from a year earlier, local media reports said, citing Shanghai Gold Exchange data, the world’s biggest market for physical bullion.
Xu Luode, secretary-general of the bourse, said earlier the international board will adopt Shanghai Gold, a spot gold trading mechanism similar to the Loco London Gold.
Italy promises to facilitate South Stream project implementation
June 30, 17:49 UTC+4
ROME, June 30. /ITAR-TASS/. Italy has always regarded the South Stream project plans to pipe Russian gas across the floor of the Black Sea to Bulgaria and then ashore for onward transit to Greece, Italy and Austria as a strategic project for Europe and will facilitate its implementation during its presidency of the European Union, Italy’s state secretary for European affairs, Sandro Gozi, said in an exclusive interview with ITAR-TASS on Monday. “The South Stream project has always been and remains most important for Italy, and we have a strong interest in implementing it, first of all, as it is one of those projects aimed to diversify transit routes,” Gozi said.
“We assume that in order to strengthen a single European energy market, it is absolutely necessary to diversify infrastructure connecting it with various suppliers,” he said. “And we believe that the same approach should be applied to everyone”.
Iranian diplomat considers Moscow-Tehran policy towards Syria right
June 30, 18:42 UTC+4
MOSCOW, June 30./ITAR-TASS/. Iran’s top diplomat has said the policy of Moscow and Tehran towards the Syrian crisis was right. Russian and Iranian high-ranking diplomats have discussed the situation in the Middle East due to the events in Syria and Iraq. “Relations between Iran and Russia are on the good level. Despite progress in bilateral relations, the situation in the region leaves much to be desired,” Iranian Deputy Foreign Minister Hossein Amir Abdollahian said on Monday.
“Certain countries of the region support Takfirists (radical Islamists),” he said.
“These countries should take a constructive position or they will reap the rewards of their policy,” the Iranian diplomat added.
“The situation in the region develops quickly and requires intensive discussions. I believe that we’ll discuss the processes in the region in a sincere atmosphere,” Russian Deputy Foreign Minister Mikhail Bogdanov said .
Russia Reveals "Plan B": Gazprom Says Gas Transit Via Ukraine May Be Stopped Completely
A few days ago, when we wrote our "explainer" on the need for Russia to have an alternative pathway for its gas, one which bypasses Ukraine entirely and as the current "South Stream" framework is set up, crosses the Black Sea and enters Bulgaria before passing Serbia and Hungary on the way to the Central European energy hub located in Baumgarten, Austria, we said that "one short month after Putin concluded the Holy Grail deal with Beijing, he not only managed to formalize his conquest of Europe’s energy needs with yet another pipeline, one which completely bypasses Ukraine (for numerous reasons but mostly one: call it a Plan B), but scored a massive political victory by creating a fissure in the heart of the Eurozone, after Austria openly defied its European peers and sided with Putin."
Today we find just what said Plan B is.
As Itar-Tass reports, citing Gazprom CEO Alexei Miller, "Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely."
"What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Miller told a briefing on Friday.
Clearly, this is bad news for Ukraine: Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.
The USD Is Tumbling; Near 2 Month Lows
Tyler Durden on 06/30/2014 11:06 -0400
Equities have flip-flopped this morning, giving up the new normal opening-squeeze higher gains as USDJPY fades. Bonds are rallying. But it is the USD Index that is the most notable this morning as it tumbles back towards 2-month lows in a hurry… This is the biggest 2-day plunge in 3 months.
Pushing the USD to 2-month lows…
Central Bankers, Worried About Bubbles, Rebuke Markets
By JACK EWINGJUNE 29, 2014
FRANKFURT — An organization representing the world’s main central banks warned on Sunday that dangerous new asset bubbles were forming even before the global economy has finished recovering from the last round of financial excess.
Investors, desperate to earn returns when official interest rates are at or near record lows, have been driving up the prices of stocks and other assets with little regard for risk, the Bank for International Settlements in Basel, Switzerland, said in its annual report published on Sunday.
Recovery from the financial crisis that began in 2007 could take several more years, Jaime Caruana, the general manager of the B.I.S., said at the organization’s annual meeting in Basel on Sunday. The recovery could be especially slow in Europe, he said, because debt levels remain high.
“During the boom, resources were misallocated on a huge scale,” Mr. Caruana said, according to a text of his speech, “and it will take time to move them to new and more productive uses.”
The B.I.S. provides financial services to national central banks and also acts as a setting where central bankers can discuss monetary policy and other issues like financial stability or bank regulation. The board of directors includes Janet L. Yellen, chairwoman of the Federal Reserve; Mario Draghi, president of the European Central Bank; and the heads of central banks from Japan, China, India and many other countries.
The organization, which reflects a widespread view among central bankers that they are bearing more than their share of the burden of fixing the global economy, often uses its annual reports to send a message to political leaders, commercial bankers and investors. But the B.I.S.’s language in the 2014 edition was unusually direct, as was its warning that the world could be hurtling toward a new crisis.