central bankers | Sense on Cents Sense on Cents

Posts Tagged ‘central bankers’

Paul Ryan (R-WI): A Choice of Two Futures

Posted by Larry Doyle on February 15th, 2012 10:17 AM |

Markets manipulated by the presence of massive infusions of liquidity from central bankers may give the appearance of calm, smooth sailing but under the surface an explosion of epic proportions continues to build.

What is fueling that volcanic eruption?

Chronic deficit spending.

With our fiscal deficit having grown by trillions of dollars over the last few years, make no mistake the withdrawal pains and devastation from this out of control spending WILL be extraordinary. Not might be. WILL be. Borrowing from future generations may be a political art form in Washington but it is truly nothing more than a failure of governance. (more…)

Tags: A Choice of Two Futures, adult discussion about deficit, budget deficit, central bankers, chronic deficit spending, chronic deficits, Congressional Budget Office, crisis from deficit spending, deficit spending, entitlement programs in America, government intervention in economy, government intervention in our markets, government takeover of economy, government takeover of markets, healthcare plans in America, liquidity injected by central bankers, living beyond one's means, living beyond our means, meaningful deficit reduction, Paul Ryan, Paul Ryan tax policy, Paul Ryan's Roadmap for America, President Obama's budget proposal 2012, retirement security, standard of living in America, The Roadmap Plan, Thomas Jefferson on economy
Posted in Deficit, General | 12 Comments »

What Will the Fed Do When QE2 Fails to Stimulate Economy?

Posted by Larry Doyle on October 29th, 2010 5:56 AM |

Here we are a full three years into our economic malaise, Uncle Sam has thrown everything and the kitchen sink at the economy yet we have little to no traction in terms of growth and momentum. Will another trillion dollars of liquidity do the trick? Well, while the Fed’s liquidity may move markets, will it move the economy? Don’t bet on it. The Fed and its brethren on Wall Street and in Washington are reluctant to truly level with the American people. How so?

Our nation is experiencing a serious structural change in our economy — not a mere ‘enormous downturn’ in the midst of the business cycle. If our central bankers and government officials were to emphasize this point, it may cause a sharper retrenchment in our current growth but it would likely lead to a quicker rebound. Before we get into why our bankers and their political cronies are reluctant to make this acknowledgement, let’s take the pulse of an array of venture capitalists, money managers, and others who provide the capital to a wide array of companies. What do these individuals think the economic impact of another round of quantitative easing might be? (more…)

Tags: Blackstone Group, Buttonwood Gathering, central bankers, Cliff Asness, Cliff Asness of AQR CApital MAnagement, Colm O' Shea, Comac Capital LLP, Economic Stimulus, Fed liquidity, Fed policy of QE2, Fed's credibility, Federal Reserve policy, how to stimulate the economy, Pimco Bill Gross, Pimco Likens US to Ponzi Scheme, QE2, quantitative easing, quantitative easing 2, quantitative easing policy, redistribution, Schwarzman Says Fed Easing Wont Make Much Difference, stimulating the economy, structural change vs business cycle, The Economist, Tony James, UK based The Telegraph, Wall Street Washington relationship, Wall Street-Washington incest
Posted in General | 7 Comments »

Brazil Wants ‘Real’ity Check

Posted by Larry Doyle on October 21st, 2009 9:04 AM |

Brazil is increasingly concerned by the flow of capital pouring into its economy. Why? Isn’t that a good thing? Well, when the money is ‘fast money’ (meaning largely speculative) and it drives a nation’s currency dramatically higher, it can have an extremely negative and potentially destabilizing impact on a nation’s trade flows, primarily its exports. Let’s navigate.

There is no doubt the global markets are being driven largely by the cheap funding that is emanating from the United States. The oft-repeated statement by Fed chair Ben Bernanke that he will leave the Fed Funds rate unchanged at 0-.25% for an extended period has provided real comfort to speculators, traders, and investors around the world. What are these market participants doing? Selling the U.S. greenback to purchase a variety of global risk based assets. While investors may like positive returns generated to date on their investments, rest assured foreign central bankers are significantly less enthused with the strengthening of their own currencies relative to the greenback. Why?

As I highlighted in my weekly recap, October 10, 2009: Month to date Market Review:

While I think Washington is not disappointed in a relatively weak dollar, although they should be (”Dollar Devaluation Is a Dangerous Game”), other countries are not overly keen about further dollar weakness. Why? A weak dollar puts those countries in a marginally less competitive position in international trade. ECB President Jean-Claude Trichet voiced his concerns on this topic. Rest assured, the Asian nations feel the same way although they are careful in their comments.

Let’s navigate south and visit Brazil. The Brazilian currency, the real (pronounced “ray-al”), has appreciated by approximately 36% against the greenback this year alone. The real has appreciated over 50% against the greenback from its lowest valuation a few years ago. While that appreciation is a positive for Brazilian consumers, it is a major headwind for Brazilian exporters. (more…)

Tags: BM&F Bovespa, Brazil imposes 2% tax on investments, Brazil Taxes foreign Portfolioo Flows In Bid to Stem Exchange Rate Rise, Brazilian exports, Brazilian real, Brazilian real vs U.S. dollar, capital controls, central bankers, dollar devaluation, economic destabilization, Edemir Pinto, emerging markets, exports, fast money, flow of capital, foreign currency flows, global risk based assets funded by cheap dollar, international trade, investing in emerging markets, Malaysian capital controls in 1998, risks in emerging market investing, selloff in Brazilian equity markets, selloff in Brazilian real, weak dollar
Posted in Brazil, BRIC, currencies, General | No Comments »