Health, Myths, Fraud and the Crisis

Archive for the ‘Tidbits from the Economy and Financial Markets’ Category

Brandstifter (Arsonist) Asmussen

 Some will view the appointment of Joerg Asmussen as successor of J. Stark at the ECB as  a blatant mistake, since  in 2006 he assured the German banks that there wont be any unneccessary audits, in other words they should make their balance sheets as non-transparent as possible

“Auch im Koalitionsvertrag schlägt sich die
Bedeutung von ABS nieder;……

Seitens des BMF wird im Umsetzungspro-
zess der Basel II-Regeln für ABS vor allem
auch darauf geachtet werden, dass den Ins-
tituten keine unnötigen Prüf- und Doku-
mentationspflichten entstehen werden….”
 … the Ministry of Finance  will make sure that with the  implementation of the Basel II rules no  unnecessary audits or documentation from the banking institutions will be required …

but I want to point out here that Asmussen is literally a guarantor for another doubling of the gold price …

The original text of the German M of F

U.S. is 244 years old and over one-third of the national debt has been created in just the past three years

said David Rosenberg in one of his Breakfast with Dave musings: “The Fed has allowed its balance sheet to explode even further to obscene levels of $2.43 trillion or triple what it was before the financial crisis took hold. In the past three years, the Fed’s balance sheet has expanded by $1.5 trillion and nominal GDP has only managed to rise over $500 billion. Fascinating. And we had the U.S. public debt explode by $5 trillion over that same time frame — the country is 244 years old and over one-third of the national debt has been created in just the past three years. Incredible. The U.S. government now spends $1.60 in goods and services for every dollar it is taking in with respect to revenues which is unheard of — this ratio never got much above $1.20, not even during the previous severe economic setbacks in the early 1980s and early 1990s.”

This is one of those record numbers that probably wont make it to the Guinness Book, but certainly worth posting.

Mefo bills – QE in the Third Reich

Since the Politclowns of the EUSSR are desperately looking for new sources of finance to bailout bankrupt EU countries, I thought it is a good time to take a look at the clever tricks of Nazi Germany to finance the re-arming of the Wehrmacht.

Mefo bills From Wikipedia, the free encyclopedia

In May 1933 four German companies, i.e. SiemensGutehoffnungshütte,Krupp und Rheinmetall founded with 1 million Reichsmark the limited liability company Metallurgische Forschungsgesellschaft m.b.H., or “MEFO” for short. The company’s “mefo bills” served as bills of exchange, convertible into Reichsmark upon demand. MEFO had no actual existence or operations and was solely a balance sheet entity.

The arms industry issued the bills of exchange, which then were being accepted by Metallurgische Forschungsgesellschaft m.b.H.  Since the MEFO shareholders were highly regarded members of German industry, the Reichsbank was allowed to discount the bills.

Time to payment was up to 5 years. The bills were guaranteed by the Reich ( reminds me of Fannie and Freddie btw ) and paid 4% interest. They were used as money. Because they paid 4% interest, holders were not interested to present them to the Reichsbank for cash. From 1934 until 31. March 1938 Mefo-bills in nominal value of  12 bill. Reichsmark were issued. They financed ca. 45 % of all military spending to this date. Eight of those twelve bill. RM were absorbed by the market. They were not presented to the Reichsbank for payment. In other words the Reichsbank did not have to print the money and therefore avoided inflation. Hjlmar Schachts plan had worked and the German Reichswehr was-  until 1935 –  secretly re-armed.




Eventually Axel Weber got (it) what it takes … to become Trichet’s successor

Yesterday in Paris, Axel Weber, chief of the German CB , in a WSJ interview said something like “if the 750 billion in the bailout fund should not be enough, we will fill it up.  An attack on the Euro has no chance to succeed.”   French business daily La Tribune reported a while ago that Sarkozy is opposed to Weber’s ascent to the ECB helm when Trichet’s term ends next autumn.

Just 4 weeks ago Weber called for the end of the bond buying program –  a.k.a money printing – by the ECB.  Apparently Mr. Sarkozy can be very convincing. I wonder how Mr. Weber is going to mop up all this liquidity when he will be in charge.

Related Articles

It’s Official: Peak Oil is already here

Chris Martenson in his latest article on 321energy ” I cannot state this strongly enough:  The WEO 2010 report is an official admission that Peak Oil is not only real, but it’s already here.”


Mike Maloney on Gold, Oil and Money

Great video for people who would like to understand our fiat money system. Whether his predictions come true is another story, imo it wont be deflation first, as he does predict. I believe we will go straight into hyperinflation from here but I also believe it is going to happen within this decade.


Notional Value of Derivatives on US Banks Balance Sheets

In one word:  SCARY !!!

Banks deleveraging ?

Private households were forced to deleverage , consumer credit is down ca. 4% from 2008, but otherwise nothing has changed! Banks ( and other financial institutions ) have actually increased leverage.

From Allan Newman’s Stock Market Crosscurrents :

If we are correct in our assessment of the threat to the financial system, at least $2.2 trillion is now at risk (!% of total notional values). The banks with the two largest derivative portfolios are JPMorgan Chase (JPM) and Bank of America (BAC), with notional values of $75.3 trillion and $48.5 trillion, respectively. These two banks alone represent 56% of all notional values.


The Muni Market

Municipal bonds suffered a remarkable sell off in the last two weeks. Is this the top in Muni bonds and the beginning of  a long-term rise in interest rates?

Here are two girls with very different opinions on the matter:

First Meredith:

Meredith Whitney Advisory Group is now predicting dramatic declines in US home prices, large layoffs at US banks and widespread defaults in the municipal bond market:  Link Video FT


but Bond Girl offers a very different explanation :

Some thoughts on the muni market

2010-11-19 00:06  My opinion, for whatever it is worth to you, is that there are a handful of factors – mostly unrelated to the relative creditworthiness of muni issuers – that have provoked this correction.  These factors are related, and they will likely contribute to volatility going into next year.  The first, obviously, is a supply glut.  The pending expiration of the Build America Bond (BAB) program has pulled supply forward, and this is going to seesaw over the next several weeks.  Since the BAB program was initiated, most issuers have structured their new issues with the sense that they will go to either the tax-exempt or taxable market, whichever is more advantageous at the time.  It has been almost completely a supply management game since the market for these bonds was established and munis became truly bifurcated.

Japan’s QE revisited

The Pragmatic Capitalist blog posted an interesting graph :

Will history rhyme ??

US Import Export Prices October

US  Export Prices – M/M change  0.8 %, Import Prices – M/M change 0.9 %

Data Source: Haver Analytics

Weimar Ben says Not Enough Inflation  …

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