Daily Digest

Daily Digest 9/29 - Fears Over World Currency Battle, Yuan Revaluation Bill, Deflation Risk Can't Be Dismissed

Wednesday, September 29, 2010, 10:45 AM
  • (IMF Managing Director) Strauss-Kahn Sees No `Big Risk' of Global Round of Currency Devaluations
  • Brazil Warns Of World Currency War
  • Bank Of Israel Buys $250 Million In Forex
  • Chile Central Bank Governor: Capital Controls Can't Be Ruled Out
  • Taiwan Dollar Falls on Suspected Intervention Before Rate Review
  • BOJ Divided On Need To Ease Policy Next Week
  • Korea Won Reaches 4-Month High as Yuan Gains Deter Intervention
  • MAS Intervened At $1.3200 Vs. US$: Source (Singapore)
  • Senator Schumer Says He Will Push Yuan Revaluation Bill After Elections
  • Georgia Poultry Producers Eyeing China Tarriff
  • Fears Over World Currency Battle
  • Fed's Lockhart: Deflation Risk Can't Be Dismissed
  • Harrisburg City Employees Will Be Paid, At Least This Week
  • As Condos Sit Empty, Florida Voters Enter Growth Battle
  • A Graphic Peek into our Economic Future

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Economy

(IMF Managing Director) Strauss-Kahn Sees No `Big Risk' of Global Round of Currency Devaluations

Japan this month sold the yen for the first time in six years to spur exports and economic growth, joining countries across Asia and Latin America that have tempered gains in their currencies against the dollar. Brazilian Finance Minister Guido Mantega yesterday warned of a “currency war.”

Brazil Warns Of World Currency War

The world is in an "international currency war" as governments manipulate their currencies to improve their export competitiveness, said Guido Mantega, the Brazilian Finance Minister.

Mr Mantega's speech to Brazilian industrial leaders on Monday included some of the strongest comments to date by any senior government official on the recent bout of currency intervention by countries, including Japan and China.

Bank Of Israel Buys $250 Million In Forex

The Bank of Israel bought an estimated $250 million worth of foreign currency on Tuesday, ynet reported, in an attempt to weaken the shekel after Monday’s hike in interest rates.

Chile Central Bank Governor: Capital Controls Can't Be Ruled Out

The Chilean central bank can't rule out capital controls, but the effectiveness of these measures can be disputed, central bank governor Rodrigo Vergara said in prepared remarks in Prague Monday.

Capital controls and other forms of market intervention are in the market limelight currently, as the Chilean peso is trading at two-year highs against the dollar. A strong peso cuts into the competitiveness of Chilean exports and the local economy is highly dependent on its exports.

Taiwan Dollar Falls on Suspected Intervention Before Rate Review

Taiwan’s dollar fell, surrendering gains toward the close of trading, on signs the central bank intervened to check appreciation that may hurt exports. The monetary authority bought the U.S. currency in the final minutes of trading, according to two traders familiar with the matter who declined to be identified.

BOJ Divided On Need To Ease Policy Next Week

Several ministers have called on the BOJ to follow up government intervention to weaken the yen with monetary measures to support the economy.

Japan intervened in markets on September 15 to sell an estimated 2 trillion yen ($23.73 billion) after the currency rose to a 15 year high against the dollar, raising concerns among policymakers that its strength could undermine exports.

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Korea Won Reaches 4-Month High as Yuan Gains Deter Intervention

Korean Finance Minister Yoon Jeung Hyun said Sept. 15 that gains in China’s currency, as well as the Japanese yen, may lead to a stronger won. Measures will be taken to stabilize the exchange rate when ‘exceptional” moves occur, Kim Yi Tae, director of foreign exchange at the Ministry of Strategy and Finance, said the same day.

MAS Intervened At $1.3200 Vs. US$: Source (Singapore)

The Monetary Authority of Singapore intervened in the forex market yesterday to sell the Singapore dollar after it hit yet another record high against the US dollar, Dow Jones quoted an unnamed person familiar with the situation.

The source said the intervention near the $1.3200 level was aimed at smoothing the fall of the greenback after the US unit fell to $1.3192 overnight.

Senator Schumer Says He Will Push Yuan Revaluation Bill After Elections

U.S. Senator Charles Schumer of New York, the lead Democratic sponsor of legislation to get China to raise the value of its currency, said he plans to seek a Senate vote on the measure after the November elections.

“Critics of our bill say it would start a trade war with China -- but this isn’t right because American companies already are fighting a war for survival in China,” Schumer said today on the Senate floor. “The issue here is not U.S. protectionism, but China’s flouting of the rules of free trade.”

Georgia Poultry Producers Eyeing China Tarriff (Video)

Poultry producers around the nation are being hit with a big tax increase. When these producers export to China they will see tariff rates jump by more than 100% in some cases. WNEG's Amelia Hines has more on what this increased import tax means to us here in Georgia.

Fears Over World Currency Battle (Video)

Analysts warn of a global currency war as countries attempt to devalue their currencies to give their exports a competitive edge.

Fed's Lockhart: Deflation Risk Can't Be Dismissed

The risk of deflation in the United States cannot be written off in an environment of slowing growth, and the Federal Reseve must decide in coming weeks whether to do more to support the economy, a top Federal Reserve official said on Tuesday.

Harrisburg City Employees Will Be Paid, At Least This Week

The political grandstanding is emblematic of a city that narrowly avoided defaulting on its general obligation debt earlier this month and faces lawsuits over missed payments in $288 million in debt tied to an incinerator project, more than four times its annual budget. Last week, Moody's Investors Service noted Harrisburg's "ineffective political process" as contributing to its crisis.

Thompson has opposed filing for bankruptcy, while Miller has advocated such a move. The City Council on Tuesday evening will consider a resolution that would allow it to hire advisers to look into a rare municipal bankruptcy.

As Condos Sit Empty, Florida Voters Enter Growth Battle

Lesley Blackner drove through a maze of condominium towers, rarely seeing any curtains in the windows, or residents, and tried to contain her anger.

"They've crammed as much as they can in here," she said this month, noting that just a few years ago cows grazed on the land west of Interstate 95. "The people around here didn't want it - they objected. But the City Commission did it anyway." Even now, with about 300,000 residential units sitting empty around the state, the push to build continues.

A Graphic Peek into our Economic Future (Adam T.)

As you probably know, I’ve written extensively on the Consumer Metrics Institute and its graphs and data. The CMI is, in my eyes, very useful, and different from others, in that it tracks the behavior and spending habits of consumers, who make up 70% of US GDP, today, and updates its data on a daily basis.

By comparison, the US Bureau of Economic Analysis, which reports on "official" GDP numbers, publishes its findings once a quarter, and then only one full month after a quarter has already expired. In other words: we won’t know what GDP did in the first two weeks of July until early November. This makes CMI a leading indicator vs the lagging BEA.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

15 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

 

"The cost of insuring Portuguese sovereign debt against default hit new record highs on Wednesday as talks to reach a deal on a 2011 budget entered a second day."

"Spain’s top Aaa credit rating, held since 2001, probably will be cut one level by Moody’s Investors Service as the euro region’s fourth-biggest economy struggles to grow, according to investors managing about $700 billion.

Five out of eight money managers surveyed predicted a one- step reduction to Aa1, with the rest forecasting a two-level cut to Aa2. The decision may come this week after Moody’s put Spain’s debt on review for a possible downgrade on June 30, saying it would conclude the analysis within three months."

"Italy’s borrowing costs rose at the sale of 7.9 billion euros ($10.7 billion) of bonds today as concerns about the ability of so-called euro-peripheral nations to cut their deficits prompted investors to demand higher returns to hold their debt."

"THE GOVERNMENT’S borrowing costs hit a record high again yesterday after two credit rating agencies warned that Irish State debt faces further downgrades.

The cost of State borrowing jumped as the yield or interest rate on 10-year Government bonds jumped by a quarter of a percentage point to 6.72 per cent.

The bond yields are now trading at levels similar to Greece at the start of April – only a month before the Athens government sought international support."

 .................4A) Cement Mixer Used in Irish Bank Protest, and Workers Strike in Spain

..................4B) Irish Banks Hooked on ECB Cure as Lenihan's Financing Fails: Euro Credit

"Sept. 28 (Bloomberg) -- The City Council of Harrisburg, Pennsylvania, capital of the sixth most-populous U.S. state, voted to hire lawyers to explore seeking bankruptcy protection.

The City Council voted 5-2 tonight to seek professional advice on bankruptcy or state oversight. Harrisburg needed state aid to avoid default on $3.3 million of bond payments this month.

The city, which has 47,000 residents, has missed about $8 million in debt-service payments this year on bonds issued in connection with a trash-to-energy incinerator. The city owes another $40 million by the end of the year, and was sued by its home county, Dauphin, and Hamilton, Bermuda-based bond insurer Assured Guaranty Municipal Corp. over its failure to honor the commitments."

 

"SINGAPORE—The central banks of South Korea, Singapore, Thailand and Indonesia were suspected of intervening in foreign exchange markets Wednesday to contain gains in their currencies, but analysts say the continued weakness of the U.S. dollar means Asian units should extend their rallies.

The wave of intervention, which has continued across the region for most of this year, hasn't been strong enough to reverse the strengthening trend in Asian currencies, as many policymakers are allowing their currencies to rise slowly to limit imported inflation.

That stance was reinforced after China, the top trading partner for key Asian countries, said in June it would let the yuan strengthen against the dollar—meaning that other Asian countries can maintain their export competitiveness against China even if their currencies rise a bit.

On Wednesday the Thai baht and the Malaysian ringgit hit their highest levels since the 1997 Asian currency crisis, while the Singapore dollar rose to an all-time high.

In a note to investors, Standard Chartered analysts said global dollar weakness, closely tied to market expectations that the U.S. Federal Reserve may launch another round of quantitative easing by boosting purchases of U.S. securities, is likely to keep Asian and other emerging market currencies in strong demand. In recent days, the central banks of countries ranging from Russia to Colombia have been suspected of intervening in forex markets because of dollar weakness."

  •  Other news, headlines and opinion:

States Are Poised to Be Next Credit Crisis for US: Whitney (CNBC)

Three-Month Euribor Rises To One-Month High

Iceland's Haarde Indicted by Lawmakers for Role in Crisis

Harris County's financial well may be drying up (Texas)

 Pak debt repayment default feared

Fees must rocket to cover teaching funding cuts, says UUK head

Harlem Hospital Center restructures, Columbia to decrease involvement

Many Cities Hold Off Declaring Bankruptcy (Audio...NPR)

Artists see opportunity in vacant storefronts in Mill Valley, San Rafael (California)

Spain Has First General Strike in Decade as Europe Marches

Moody's downgrades Slovenia's three largest banks - negative outlook

It cold in Detroit, fire houses faced utility shut-offs

Stimulus-subsidized jobs in jeopardy

Junk buying fuels ‘yield chasing’ fears

4% tax on clothing in New York starts Friday

Defense Department Software Upgrades $6.9 Billion Over Estimates, GAO Says

Why the Statistical "Recovery" Feels Bad (Mish...Notice the GDP charts)

New Bill Calls for Refinancing of 30 Million GSE Mortgages

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jhart5
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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

America on the brink of a Second Revolution - By Paul B. Farrell, MarketWatch

Admit it, something historic is brewing. And yes, it’s good for America, even the anarchy. Revolution is renewal. Tea-baggers want to take on both parties, “restore honor” and “take back the country.

OK, maybe most Americans just silently mimic the words, “we’re mad as hell, won’t take it any more.” But watch out: After November the campaign’s shrill rhetoric explodes into action.

http://www.marketwatch.com/story/america-on-the-brink-of-a-second-revolution-2010-09-28

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Treasury Seeks To Cast A Wider Net For Terrorists

This next article is just another in a long string of disappointments....might I humbly suggest that before the Treasury Department seeks to comprehensively erode privacy in the name of 'safety' by demanding Western Union transaction level data, that they demonstrate an ability to capture at least some of the trillion plus dollars that flow through the system as a result of drug money.

I mean if you can't even spot a trillion dollars steamrolling its way through the financial system, it seems unlikely that rooting around in the carpet fibers of the banking system for individual wire transfers will yield anything useful. 

Treasury Seeks To Cast A Wider Net For Terrorists

The Treasury Department will soon publish new rules that would pave the way for tracking all of the money transfers coming in and out of the U.S. As envisioned, the Treasury Department would take all that information, feed it into a giant database, analyze it, and then ferret out patterns associated with terrorism financing. Experts say it isn't clear it is going to work.

Juan Zarate, the first assistant secretary of the Treasury for terrorism financing in the Bush administration, said the new regulations, which would require banks and financial services companies — like Western Union — to automatically provide money-transfer data on all their transactions, are controversial.

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

Hi Guys-

   Not sure what's up, but saw this at Zero Hedge: http://www.zerohedge.com/article/its-really-jpm-tells-cnbc-it-systematically-reviewing-foreclosures

It's Really On: JPM Tells CNBC It Is Systematically Reviewing Foreclosures

Tyler Durden's picture

Submitted by Tyler Durden on 09/29/2010 14:45 -0500

 

And like that, mortgage fraud goes global. JPM stock down on the news, as the American foreclosure process is now effectively shut down. More as we get it.

I have to run so couldn't check it out.  Anyone know anything about this??

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

Oooo, dissension in the ranks:

http://www.bloomberg.com/news/2010-09-29/fed-presidents-are-far-from-unanimous-on-need-for-further-monetary-easing.html

Quote:

Regional Federal Reserve presidents showed they’re far from unanimous on whether the central bank should try to boost flagging U.S. growth with a second round of unconventional monetary easing.

Policy makers have the tools to act and should respond “vigorously, creatively, thoughtfully and persistently” to a slow recovery, Boston Fed President Eric Rosengren said in a New York speech today. He spoke minutes after Philadelphia Fed President Charles Plosser said in New Jersey that the central bank would put its credibility at stake by taking actions such as buying more securities that may fail to reduce unemployment.

The range of views shows that if Chairman Ben S. Bernanke aims to restart Treasury purchases in November, as some economists project, he may have to do so over the objections of several central bank officials.

Ben may have to start using helicopter gunships.Surprised

Doug

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...
Doug wrote:

Oooo, dissension in the ranks:

http://www.bloomberg.com/news/2010-09-29/fed-presidents-are-far-from-unanimous-on-need-for-further-monetary-easing.html

Quote:

Regional Federal Reserve presidents showed they’re far from unanimous on whether the central bank should try to boost flagging U.S. growth with a second round of unconventional monetary easing.

Policy makers have the tools to act and should respond “vigorously, creatively, thoughtfully and persistently” to a slow recovery, Boston Fed President Eric Rosengren said in a New York speech today. He spoke minutes after Philadelphia Fed President Charles Plosser said in New Jersey that the central bank would put its credibility at stake by taking actions such as buying more securities that may fail to reduce unemployment.

The range of views shows that if Chairman Ben S. Bernanke aims to restart Treasury purchases in November, as some economists project, he may have to do so over the objections of several central bank officials.

Ben may have to start using helicopter gunships.Surprised

Doug

Already has, Plosser has a voice but no vote.

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...
pinecarr wrote:

Hi Guys-

   Not sure what's up, but saw this at Zero Hedge: http://www.zerohedge.com/article/its-really-jpm-tells-cnbc-it-systematically-reviewing-foreclosures

It's Really On: JPM Tells CNBC It Is Systematically Reviewing Foreclosures

Tyler Durden's picture

Submitted by Tyler Durden on 09/29/2010 14:45 -0500

 

And like that, mortgage fraud goes global. JPM stock down on the news, as the American foreclosure process is now effectively shut down. More as we get it.

I have to run so couldn't check it out.  Anyone know anything about this??

it can only have something to do with the GMAC/ally financial fiasco, no? they sent orders to units in 23 states to stop processing all foreclosures because of a "technical matter"...seems all their affidavits of ownership when foreclosures were filed with the courts were signed by low level grunt workers with no knowledge as to their validity...other foreclosures could have been equally fraudulent...to see how this might have happened, one needs to look no further back to what we already know about the bundling of mortgages into CDOs of multiple level tranches, to be packaged and repackaged for resale in the wide variety of financial instruments at the wall street casinos...there was supposed to be an electronic tracking system, MERS, but that had largely broken down...so for a large number of mortgages, current ownership of the original notes is in doubt...

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

There's more on this at the market ticker.  Basically the banks don't have clear title to the property they are foreclosing on as so many loans fraudulently overstated income and so were not properly reasssigned when securitised. Legally the bank has to have the original paper contract with signatures otherwise they have no claim.  A whole new can of worms!!

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

yves smith has had about a dozen articles on it...her latest:

More Foreclosure Mess Updates: 20% of Florida Cases Have Problems, Including Phony Court Summons; JP Morgan ‘Fesses Up to GMAC Type Problems

More shoes are dropping on the foreclosure improprieties front. Let’s not forget the throughline: the parties in the securitization pipeline were so keen to rip out fees and maximize profits that they allotted too little in the way of expense dollars to executing tasks required both by statue and contractual requirements. The result was that they cut corners to such a degree (explained longer form here) that the trusts (the securitization entity) appear not to have been properly conveyed the notes (the borrower IOU which in 45 states is necessary for them to possess to be able to foreclose) on a widespread, if not pervasive basis. I’ve had attorneys tell me that when they have uncovered serious document shortcoming, the trustee’s response to the judge has been, “You can’t expect us to do that. We aren’t paid enough.” Funny, they apparently didn’t raise this issue when they signed up for the job.

The failure to transfer ownership properly creates fundamental problems under securitization processes. Bottom line is we’ve spoken to a lot of people, there seems to be no simple or even not so simple fix. Put it another way: why would law firms and servicers be engaging in widespread document fabrication and other improprieties if there were a straightforward remedy?

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Visibility 0, Dense Fog, Guard Rail Down, Night, Cliff Ahead

Visibility 0, Dense Fog, Guard Rail Down, Night, Cliff Ahead - and the momos are accelerating. Some stuff in the news today:

  1. Congress wants to find a way to revalue the Yuan - brilliant we manufacture very little, bah bye Wally World.
  2. Banks falsifying court subpoenas to get houses from delinquent borrowers.
  3. 12/1 Fed's going to have to give up the ER or should I say EL list of those in the ER.
  4. Foreclosures may be halted and homes foreclosed on already????????

 

 

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

All I can tell you for sure is that if you, as a private individual, falsify court documents you are in a deep trouble, and rightly so.  If you are a small mortgage company, ditto.

But if you are GMAC, JPM, etc then all you've done, apparently, is created a bit of extra work.  Maybe not even that if you can convince a judge to retroactively amend the rules in play when you initially signed the binding agreements.

It's the same lesson as the with the bailouts; there appears to be one set of rules for the private and small business segments of society and a completely different, if not orthogonal, set of rules for the institutional/corporate segments.

Anybody searching for why the Tea Party has such purchase in society right now should consider starting with the premise that injustice and separate rule sets for the corporate and citizen classes is an irritant to some folks.  I think it's really that simple in many cases.

Were we to seriously consider righting some wrongs here, then I would humbly propose that whenever and wherever court documents are falsified, specific individuals should be held accountable, and face jail time.  Otherwise, without equal accountability, what's the point?  It might as well be true that each of us are in the clear to make up our own rules to suit our personal circumstances as we see fit.  Both are reasonable organizing principles, just not at the same time.

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...
cmartenson wrote:

All I can tell you for sure is that if you, as a private individual, falsify court documents you are in a deep trouble, and rightly so.  If you are a small mortgage company, ditto.

But if you are GMAC, JPM, etc then all you've done, apparently, is created a bit of extra work.  Maybe not even that if you can convince a judge to retroactively amend the rules in play when you initially signed the binding agreements.

It's the same lesson as the with the bailouts; there appears to be one set of rules for the private and small business segments of society and a completely different, if not orthogonal, set of rules for the institutional/corporate segments.

Anybody searching for why the Tea Party has such purchase in society right now should consider starting with the premise that injustice and separate rule sets for the corporate and citizen classes is an irritant to some folks.  I think it's really that simple in many cases.

Were we to seriously consider righting some wrongs here, then I would humbly propose that whenever and wherever court documents are falsified, specific individuals should be held accountable, and face jail time.  Otherwise, without equal accountability, what's the point?  It might as well be true that each of us are in the clear to make up our own rules to suit our personal circumstances as we see fit.  Both are reasonable organizing principles, just not at the same time.

+1. We can start with the fraudulent loans made in the late 90s and early 2000s.

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Re: Daily Digest 9/29 - Fears Over World Currency Battle, ...

Fitch Considering Downgrading Servicers Over Affidavits - Yves Smith - Boy, if Fitch thinks servicer problems are limited to affidavits, it is gonna learn a lot more in the coming weeks and months. This report comes via BusinessWeek: The agency believes that if more errors are found by other servicers, that could stall foreclosures in some states and increase losses related to residential mortgage-backed securities. That could prompt Fitch to downgrade ratings on servicers that are affected, the agency said.

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90 years later, Germany closes book on WWI war reparations

Amazing!  This should serve as a lesson on the dangers of debt.  90 years - wow!  It doesn't make any difference whether the US racked up its debt voluntarily or via war.  90 years is a long time.  Someone at the Fed should also note that the Weimar era hyperinflation did not serve to pay off the debt faster.

http://www.spiegel.de/international/germany/0,1518,720156,00.html

Germany will make its last reparations payment for World War I on Oct. 3, settling its outstanding debt from the 1919 Versailles Treaty and quietly closing the final chapter of the conflict that shaped the 20th century.

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