China signs currency swap worth 150 billion yuan with Switzerland

The dollar is losing it’s world currency reserve status. Here is today’s deal to trade around the greenback.-Lou

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China signs currency swap worth 150 billion yuan with Switzerland

(Reuters) – China signed a bilateral currency swap agreement worth 150 billion yuan ($24.17 billion) with the Swiss central bank, which can invest up to 15 billion yuan in China’s bond market.

The three-year swap, signed on Monday, will “provide liquidity support for bilateral economic and trade exchanges and help maintain financial stability,” the People’s Bank of China (PBOC) said in a statement on its website, www.pbc.gov.cn.

The swap deal will provide liquidity support for development of the offshore yuan market in Switzerland and will be extended if needed, the PBOC said.

The Swiss National Bank (SNB) is allowed to invest up to 15 billion yuan in China’s interbank bond market under a quota given by the PBOC. “The SNB’s foreign exchange reserves can thereby be diversified even further,” the Swiss central bank said in a statement.

In June, senior Swiss officials touted the SNB’s qualifications to be a hub of renminbi trading during a meeting with China’s central bank governor Zhou Xiaochuan.

Competition is fierce among Europe’s major financial centers to trade in China’s currency. Frankfurt and Luxembourg are vying with London, the favorite of many analysts, and Switzerland is trying to muscle into the competition.

Analysts say London looks best placed to become Europe’s main offshore yuan CNH= center, given its role as the world’s biggest foreign-exchange hub.

In the past five years, China has promoted use of the yuan CNY=CFXS for trade and investment, and also as a reserve currency to help lower currency risks for Chinese companies and challenge the dollar’s global dominance over the long term.

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U.S. Poised to Label MetLife a Potential Threat to the Financial System

The next AIG? This time MetLife will not be bailed out by the taxpayer. I would be a little nervous if I had money invested with MetLife or if I owned the stock.-Lou

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U.S. Poised to Label MetLife a Potential Threat to the Financial System

A U.S. council of regulators is poised to label MetLife Inc. a potential threat to the financial system, subjecting the insurer to oversight by the Federal Reserve, two people with knowledge of the matter said.

A decision by the Financial Stability Oversight Council may come as early as July 31, when the panel is tentatively planning to meet, said the people, who asked not to be identified because the process isn’t public. The vote could be delayed briefly because the council hasn’t formally closed its review of the company, the people said.

MetLife, the biggest U.S. life insurer, could be subjected to stricter capital, leverage and liquidity requirements as a result of Fed supervision. The company has been under consideration as systemically important for more than a year, and its executives have met more than 10 times with council staff members to argue it doesn’t pose a risk.

John Calagna, a spokesman for New York-based MetLife, and Suzanne Elio, a Treasury spokeswoman, declined to comment. The council’s rules prohibit it from disclosing the names of companies unless a designation is made.

MetLife shares were little changed at $55.50 yesterday, after earlier falling as much as 1.8 percent.

The council vote would be a proposed designation, and MetLife would have 30 days to request a hearing before the FSOC to contest the decision. After a hearing, the regulators would hold a final vote on whether to designate MetLife. The company reports earnings after the market closing July 30 and will hold an investor call July 31, the same day the FSOC is planning to meet.

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Price of Beef and Bacon Reach All-Time High

The food inflation genie is out of the bottle. This time cover is from 1973 .-Lou

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Price of Beef and Bacon Reach All-Time High

July 22, 2014

(CNSNews.com) – The price of beef and bacon hit its all-time high in the United States in June, according to data released Tuesday by the Bureau of Labor Statistics (BLS).In January 1980, when BLS started tracking the price of these commodities, ground chuck cost $1.82 per pound and bacon cost $1.45 per pound. By this June 2014, ground chuck cost $3.91 per pound and bacon cost $6.11 per pound.

A decade ago, in June 2004, a pound of ground chuck cost $2.49, which means that the commodity has increased by 57 percent since then. Bacon has increased by 78.7 percent from the $3.42 it cost in June 2004 to the $6.11 it costs now.

In one month, beef increased from $3.85 in May 2014 to $3.91 in June 2014. Bacon increased from $6.05 in May 2014 to $6.11 in June 2014.

Each month, the BLS employs data collectors to visit thousands of retail stores all over the United States to obtain information on the prices of thousands of items to measure changes for the Consumer Price Index (CPI). The CPI is simply the average change over time in prices paid by consumers for a market basket of goods and services.

The BLS found that there was a 0.1 percent change in the food index in June, which tracks foods like meats, poultry, fish, eggs and dairy, as well as many others. “The index for meats, poultry, fish, and eggs increased in June, though its 0.2 percent increase was its smallest since December,” stated BLS.

“The index for food at home has increased 2.4 percent over the past year, with the index for meats, poultry, fish and eggs up 7.5 percent,” BLS stated.

“Buying The Car Was The Worst Decision I Ever Made” – The Subprime Auto Loan Bubble Bursts

Cars and Homes are the reasons most Americans have little or no net worth.-Lou

From: Zero Hedge

“Buying The Car Was The Worst Decision I Ever Made” – The Subprime Auto Loan Bubble Bursts

It has been over six months since we first highlighted the growing deterioration in the quality of auto loans and mentioned the ‘s’ word (subprime) as indicative that we learned nothing from the financial crisis. Since then, auto loans (and especially subprime in the last few months) have surged to record highs; and most concerning, recently has seen delinquencies and late payments spike. The reason we provide this background is that, thanks to The NY Times, this story is now hitting the mainstream media as subprime-quality car buyers (new and used) realize the burden they have placed on themselves thanks toexorbitantly high interest rates (and a rapidly depreciating ‘asset’). As one car ‘owner’ exclaimed, “buying the car was the worst decision I have ever made.”

As The NY Times reports, Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640.

Deja vu all over again…

And, like subprime mortgages before the financial crisis, many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds — a process that creates ever-greater demand for loans.

Exorbitant interest rates… (but still demand?)

The New York Times examined more than 100 bankruptcy court cases, dozens of civil lawsuits against lenders and hundreds of loan documents and found that subprime auto loans can come with interest rates that can exceed 23 percent.

The loans were typically at least twice the size of the value of the used cars purchased, including dozens of battered vehicles with mechanical defects hidden from borrowers. Such loans can thrust already vulnerable borrowers further into debt, even propelling some into bankruptcy, according to the court records, as well as interviews with borrowers and lawyers in 19 states.

Will we never learn…?

In another echo of the mortgage boom, The Times investigation alsofound dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford.

“It appears that investors have not learned the lessons of Lehman Brothers and continue to chase risky subprime-backed bonds,” said Mark T. Williams, a former bank examiner with the Federal Reserve.

One painful example…

Rodney Durham stopped working in 1991, declared bankruptcy and lives on Social Security. Nonetheless, Wells Fargo lent him $15,197 to buy a used Mitsubishi sedan.

“I am not sure how I got the loan,” Mr. Durham, age 60, said.

Mr. Durham’s application said that he made $35,000 as a technician at Lourdes Hospital in Binghamton, N.Y., according to a copy of the loan document. But he says he told the dealer he hadn’t worked at the hospital for more than three decades. Now, after months of Wells Fargo pressing him over missed payments, the bank has repossessed his car.

 

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Geopolitical Risk To Financial Markets Is Off The Charts

Listen To This Week’s Radio Show (7/18/14)

This week’s radio show is now available.-Lou Listen Here 120809_radio_mic_istock_photo_328

Gold Manipulators are Desparate

Gold Manipulators are Desparate

From Egon von Greyerz

With virtually empty gold vaults, the central banks and bullion banks are now becoming desperate.

The action we are seeing in the paper gold market with the recent $50 takedown is yet more proof of the corner that the gold manipulators have put themselves into by having virtually no physical gold left.

A rising gold price is dangerous for the manipulators. This would inevitably lead to more physical demand, something that would be disastrous for the manipulators. As the holders of paper gold begin to realise that neither Comex nor the bullion banks or the Central banks have a fraction of the gold required to satisfy the gold paper claims, they will demand delivery. With the paper gold market being up to 100 times the physical market, there will of course be nowhere near the gold available at current prices to satisfy the outstanding paper claims.

The gold manipulators are going to lose this game. This is a certainty. The only question is when. They have managed to frighten investors by manipulating the price down substantially in the last few years. In spite of that gold has gone from $250 in 1999 to $1,300 today.

The reason why the manipulators now are desperate and that we are getting nearer to a cataclysm is that physical demand has been at very high levels in the last few years mainly due to substantial buying from Asia and in particular China. This has led to the physical gold in the vaults of the bullion banks and central banks migrating from the West to the East.

As both the world economic and geopolitical situation deteriorates this autumn, we are likely to see major changes in markets. As the dollar comes under pressure, the precious metals will be major beneficiaries. This will lead to the beginning of the end of the manipulation in the paper gold and silver markets and strongly rising gold and silver prices.

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Insider Trading and Financial Terrorism on Comex

This is organized crime, pure and simple. The only difference is traditional organized crime is investigated and prosecuted. This is another example how the banksters steal from the public. They make millions manipulating the market while investors get fleeced.-Lou

 

Insider Trading and Financial Terrorism on Comex

Paul Craig Roberts and Dave Kranzler

July 16, 2014. The first two days this week gold was subjected to a series of computer HFT-driven “flash crashes” that were aimed at cooling off the big move higher gold has made since the beginning of June. During this move higher, the hedge funds, who typically “chase” the momentum of gold up or down, built up hefty long positions in gold futures over the last 6 weeks. In order to disrupt the upward momentum in the price of gold, the bullion banks short gold in the futures market by dumping large contracts that drive down the price and make money for the banks in the process.

As we explained in previous articles on this subject, the price of gold is not determined in markets where physical gold is bought and sold but in the paper futures market where contracts trade and speculators place bets on the price of gold. Most of the contracts traded on the Comex futures market are settled in cash. The value of the contracts used to short gold and drive down the price is well in excess of the actual amount of physical gold that is kept on the Comex and available for delivery. One might think that regulators would pay attention to a market in which the value of contracts outstanding exceeds by several multiples the amount of physical gold available for delivery.

The Comex gold futures market trades 23 hours per day on a global computer system called Globex and on the NYC trading floor from 8:20 a.m. EST to 1:30p.m. EST (the 8:30 a.m. opening time on the face of the graph below is a draftsman’s error). The Comex floor trading session is the highest volume trading period during any 23 hour trading period because that is when most of the large U.S. financial institutions and other users of Comex futures (jewelry manufactures and gold mining companies) are open for business and therefore transact their Comex business during Comex floor hours in order to achieve the best trading execution at the lowest cost.

The big hedge funds primarily trade gold futures using computers and algorithm programs. When they buy, they set stop-loss orders which are used to protect their trading positions on the downside. A “stop-loss” order is an order to sell at a pre-specified price by a trader. A stop-loss order is automatically triggered and the position is sold when the market trades at the price which was pre-set with the stop-order.

The bullion banks who are members and directors of Comex have access to the computers used to clear Comex trades, which means they can see where the stop-loss orders are set. When they decide to short the market, they start selling Comex futures in large amounts to force the market low enough to trigger the stop-loss orders being used by the hedge fund computers. For instance, huge short-sell orders at 2:20 a.m. Monday morning triggered an avalanche of stop-loss selling, as shown in this graph of Monday’s (July 14) action (click on graph to enlarge):

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In the graph above, the first circled red bar shows the flash crash that was engineered at 2:20 a.m. EST, a typically low-volume, quiet period for gold trading. 13.5 tonnes of short-sales were unloaded into the Comex computer trading system. The second circled red bar shows a second engineered flash-crash right before the Comex floor opened at 8:20 a.m. EST. This was triggered by sales of futures contracts representing 27.5 tonnes of gold. A third hit (not shown) occurred at 9:01 a.m. This time contracts representing 40 tonnes of gold hit the market.

The banks use the selling from the hedge funds to cover the short positions they’ve amassed and book trading profits as they cover their short positions at price levels that are below the prices at which their short positions were established. This is insider trading and unrestrained financial terrorism at its finest.

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Classic Rick Santelli Meltdown On CNBC

An epic rant from one of the only guys I respect at CNBC.  Rick Santelli’s rant a few years ago started the tea party. This rant against The Fed is classic and worth your entertainment time.-Lou

Interesting August

This is the only time you will see this phenomenon in your life!

August, in 2014, will have 5 Fridays, 5 Saturdays and 5 Sundays. This happens only once every 823 years. The Chinese call it ‘ Silver pockets full’.