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    Daily Digest – August 31

    by Davos

    Monday, August 31, 2009, 2:15 PM

  • Could We Have Another 1987-Like Crash in the Not Too Distant Future?
  • And this is just the beginning. Chairman Ben has yet to be fully unleashed.
  • U.S. Markets Flashing Strong Warning Signals
  • Trained Monkeys for Hire (H/T Investorzzo, Video on page)
  • Dollar Stigma (H/T SaxPlayer00o1)
  • Town Hall Asking About Health Care (Video)
  • Rep. Frank Eyes Fed audit, Emergency Lending Curbs (H/T MachineHead)
  • 90 Day Yields (H/T FamerBrown)

Economy

Could We Have Another 1987-Like Crash in the Not Too Distant Future?

And this is just the beginning. Chairman Ben has yet to be fully unleashed.

U.S. Markets Flashing Strong Warning Signals

This begs the obvious question: if the previous, mind-numbingly optimistic description of U.S. banks mentioned above is accurate, then why are the lawyers for the Federal Reserve vehemently arguing that divulging the emergency lending-activities which these companies participated in a year ago could cause the collapse of these “strong and healthy” banks (see “Federal Reserve Fights Judge to Hide Secrets”)?

Trained Monkeys for Hire (H/T Investorzzo, Video on page)

After the Fed video Mish defines inflation and deflation…

Dollar Stigma (H/T SaxPlayer00o1)

Japan has the world’s largest foreign exchange reserves after China. While the currency composition is not known, a large part of its $1 trillion reserves is considered to be in dollars.

About two-thirds of the total is invested in sovereign bonds, the government said last year. In terms of maturity, slightly more than a quarter is in bonds with maturities of five years or longer.

Nakagawa has said he was worried about the future value of the dollar and that Japan should consider asking the U.S. to issue debt in yen as Tokyo should reconsider how it piles up dollar assets.

Nakagawa’s comments put the dollar under pressure in May, especially as China had also called for reserve system reform.

But analysts say he will not automatically get the finance minister post if the DPJ wins. Other prominent party officials have played down any sudden changes and say it is in Japan’s interest to keep the dollar as the main reserve currency.

Town Hall Asking About Health Care (Video)

[video:http://www.youtube.com/watch?v=J2DX9Iu4wNo]

Rep. Frank eyes Fed audit, emergency lending curbs (H/T MachineHead)

OCTOBER TARGET

Frank said the audit and emergency lending provisions would be incorporated in broader legislation to revamp U.S. financial regulation that would likely pass the House in October. By seeking a compromise with Paul, Frank could strengthen the broader legislation’s chance at passage.

As chairman of the House Financial Services Committee, Frank is a key player in the effort to overhaul U.S. financial regulation.

The Obama administration has proposed giving the Fed responsibility for overseeing firms whose collapse could endanger the entire financial system. At the same time, it wants to strip the central bank of its consumer protection function, and invest that authority in a new agency.

90 Day Yields (H/T FamerBrown)

[Note: the graphic that accompanies this audio piece is a bit over the top.]

 

 

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