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Sense on Cents Central Station

Posted by Larry Doyle on March 28, 2009 6:30 AM |

***UPDATE: The live event has ended, but you can watch the replay at the end of this post.***

central-station-promo-3-boldJoin me at No Quarter USA blog on Saturday morning beginning at 10:30 a.m. ET for Sense on Cents Central Station. This endeavor is a few hours of written Q/A and LiveChat with your resident host, Larry Doyle. I like to utilize the theme of a ride on the rails, so please allow me to expound.

With so many cross currents at play in the markets, economy, and world of global finance, where can one go to develop a framework of understanding, enjoy the company of friends, and make sense of the madness? Welcome to Sense on Cents Central Station. Our ride departs at 10:30 a.m. (I’ll open the chat room at around 10:15 a.m.) with an expected return at 12:30 p.m. While we traverse the curves along our track, we can address a wide range of issues, including: Obama’s economic plans, Secretary Geithner’s outlook, the market performance this week, month, and year to date, developments overseas, the outlook for our financial regulatory structure, issues of personal finance, or anything else on your mind.

Our ride is most productive with as many people participating as possible. Please bring not only your questions, but also your views. Invite friends, neighbors, and colleagues along for the ride as well. Together we can collectively navigate the economic landscape.

Thank you to Larry Johnson and SusanUnPC at No Quarter for the privilege to bring Central Station to the No Quarter readers. I look forward to chatting with you at No Quarter beginning at 10:15 a.m. All Aboard!!

LD

        

  • Andy

    Hello LD:

    Just connected so haven’t had a chance to read much yet but was wondering if you have seen Stiglitz remarks and what do you think/make of them?

    http://www.reuters.com/article/reutersEdge/idUSTRE52N1IQ20090324

    At a gut level I agree with him regarding the Geithner plan but not about the currency; I just wish he would offer an alternative plan for the toxic assets.
    Maybe he did and reuters is just not reporting on it.?

    What do you think about the currency issue ? I am not sure what they refer by

    “Stiglitz welcomed China’s proposal on Monday for an overhaul of the world monetary system in which Zhou Xiaochuan, governor of the People’s Bank of China, said the IMF’s Special Drawing Right has the potential to become a super-sovereign reserve currency [ID:nPEK184558].

    Stiglitz has long called for the U.S. dollar to be replaced as the only reserve currency. Basing a reserve system on a single currency whose strength depends on confidence its own economy is not a good basis for a global system, he says.

    “We may be at the beginning of a loss of confidence (in the U.S. dollar reserve system),” he said. “I think there is support for some sort of global reserve system.”””

    I have lots of mistrust for the IMF; frankly I think they have done more harm than good in lots of places around the world….

    • Larry Doyle

      Andy,

      Our trusty Investing Primer provides all of us with a nice definition for Special Drawing Rights:

      Special Drawing Rights – SDR
      What Does Special Drawing Rights – SDR Mean?
      An international type of monetary reserve currency, created by the International Monetary Fund (IMF) in 1969, which operates as a supplement to the existing reserves of member countries. Created in response to concerns about the limitations of gold and dollars as the sole means of settling international accounts, SDRs are designed to augment international liquidity by supplementing the standard reserve currencies.

      Investopedia further defines it as:
      You can think of SDRs as an artificial currency used by the IMF and defined as a “basket of national currencies”. The IMF uses SDRs for internal accounting purposes. SDRs are allocated by the IMF to its member countries and are backed by the full faith and credit of the member countries’ governments.

      LD’s comments: artificial money? The cynic in me thinks immediately of Monopoly. Should I buy Marvin Gardens and a railroad or save up for Boardwalk?

      In all seriousness, the SDR reflects the creditworthiness of the member countries. Well, one of the largest voting members of the IMF right now is the U.K. …yes, the U.K that may need an IMF bailout.

      Do you recall the two pieces highlighting Paul Keating, former Tsy Secretary and Prime Minister of Australia? Keating highlighted for us how the surplus nations in Asia currently have a miniscule voting weight in the IMF. Those days are changing. Keating also highlighted how those Asian nations felt the IMF financially crushed them in the late 90s.

      I will link the two Keating pieces here:

      A Fresh and Honest Perspective

      Keating Undresses Geithner

      Thanks for sharing the Stiglitz piece. There is no doubt that the taxpayers do bear the brunt of the risk in that program. Without the program as designed, there would be NO movement in these securities or loans. I still think the program will generate some success but not total. In fact I think the forced sale of loans (held on the books likely at origination and never marked down) will bring to light the degree of losses in the industry. That process will lead to the actual failure of some insitutions, or like Citi, the effective failure but remain as govt propped.

      Thanks for that lead. Very good stuff…well maybe not good but certainly INTERESTING!!

      Thx again.

      • Andy

        Thanks LD. Indeed if these SDRs reflect the “creditworthiness of the member countries” then as you say UK being IMF’s largest voting member is enough to run away fast from this idea. Monopoly money indeed…

        I confess to be surprised Stiglitz would suggest this.
        If memory serves me (?) wasn’t he a strong critic in the past of IMF policies for ex. in Latin America? (he wrote several times about Argentina).

        • Andy…I am not aware of Stiglitz’ position in regard to the IMF in any other regions of the world.

  • Andy…thanks for sharing this piece. I will review and respond after Central Station at NQ.

    Please come on over and join the chat !!

  • fiscalliberal

    One can certainly understand the rest of the worlds apprehension regarding the dollar. Those of us who try to follow this stuff, Macro and Micro also have the general thing that things are not right and despite wanting to take the short cuts, we are proping up incompetence or corruption. How else can we explain a insurance company like AIG going into Credit Default Swaps and not holding enough reserves to pay for the catestrophic events.

    So – the AIG and Citi folks for certain are corrupt and we are proping them up. From our article called “Sold Out” we found out how the finance industry spent 50 Billion to crate the climate they wanted. The repeal of Glass Steigliz with Grahm-Leach-Bliley happened in 1999 after Citi merged with Travelers in 1998. It took the financial industry 9 years to collapse the system ( 1999 – 2008) . This was all enabled by the geniuses from the best and brightest, products of the business schools. We can confir degree’s but that does not mean they are educated.

    This was all preventable if Greenspan, Snow and Cox would have done their jobs and enforced rules already on the books. Now we are appointing an oversear to make certain the people in those positions do their jobs.

    The only part of th ecountry not experiencing unemploymnent is Washington.

  • Fiscal…you are not a student of this material. You could teach the class. I meant…should teach the class!!






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