Category ‘Money & Banking’

The Debt Ceiling and Other Myths

In the land of the broke, there is no shortage of surprises for people used to drink the Kool-Aid. Here are some myths around the debt ceiling saga to the market crash to the US downgrade:

1. The debt ceiling talks between the Democrats and the Republicans were never about cutting the existing budget but cutting (maybe) future spending. Will it be 1.8T$ or 1.85T$ of new money they don’t have? Yes the Tea Partiers talk about cutting the budget like you an I think about cutting a budget but then again – we are calling them the t… word.

2. The …

Monday, August 8th, 2011 Category: Money & Banking No Comments

Got Gold?

Gold is money. I know most find gold a “barbarous relic” as Mr. Keynes once put it. But it’s because most people don’t understand what money is. They confuse money with wealth. It is not the same thing. Money is a medium of exchange used in a complex market economy. It is a commodity like any other good, subject to the law of supply and demand. I know shocking isn’t it?

Money has not been invented by governments but by human beings engaged in trade in a market economy. For centuries, gold and silver have presented the best qualities for …

Tuesday, October 5th, 2010 Tags: Creating wealth, Currency, Gold, Gold and silver
Category: Monetary Policy, Money & Banking No Comments

Credit…the lifeblood of debt based economies

Watch out for the LIBOR rates – they are rising fast these days. The LIBOR rate is the rate charged by banks to lend to each other. A reminder: the LIBOR rates exploded just before the crisis hit in October 2008. Credit froze up and since our economies are debt based – they need on going credit to function. Money markets are now showing rising levels of mistrust between Europe’s banks on concern that the $1T bailout is not enough and that default (or if you prefer – restructuring…) will occur. Their concerns rest in part on the fact that …

Monday, May 17th, 2010 Tags: Central banks, Euro, European Economy, Financial Crisis, Inflation and deflation, Monetary policy, word economy
Category: European Debt Crisis, Money & Banking No Comments

Europe: it’s the speculators’ fault!

If you notice, the euro has given up 100% of its gains: from 1.27 to 1.31 and back, in just over a day is not the norm to say the least. So much for “defending the euro”. Also, in this shock and awe bailout to “save” Europe and the euro, one (of many!) amusing thing to me was the threat to speculators (by EU officials – especially Sarkozy) that these measures would clamp them down. Here’s the thing: they made billions on equity prices going up (the market went up didn’t it?) and they will make billions on their way …

Tuesday, May 11th, 2010 Tags: defending the euro, Euro, European Economy, word economy
Category: European Debt Crisis, Money & Banking No Comments

The SEC goes after Goldman Sachs the villain…

Goldman Sachs is now the villain who is charged by the SEC for wrongdoing in the structuring and marketing of a debt product tied to subprime mortgages. It’s civil not criminal, no one’s going to jail. Reality check: the complaint is for about $1 billion in fraudulent transactions. Goldman Sachs market cap is $84 billion. The SEC had to find a “main villain” in this bread & circus for the masses: a French nobody by the name of Fabrice Tourre. The ONLY employee named in the SEC complaint. They’re kidding right? Now, everybody is “out to get Goldman Sachs” and …

Monday, April 19th, 2010 Tags: crime on Wall Street, economic crime, Goldman Sachs, Wall Street
Category: Money & Banking No Comments