Central Bank

Help Ireland or it will exit euro, economist warns

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A leading Irish economist has called on Dublin to threaten withdrawal from the euro unless Europe’s big powers do more to rescue Ireland’s economy.


David McWilliams, a former official at the Irish central bank, has said that Ireland could withdraw from the euro if they are not given more help Photo: Rex Features

“This is war: countries have to defend themselves,” said David McWilliams, a former official at the Irish central bank.

“It is essential that we go to Europe and say we have a serious problem. We say, either we default or we pull out of Europe,” he told RTE radio.

“If Ireland continues hurtling down this road, which is close to default, the whole of Europe will be badly affected. The credibility of the euro will be badly affected. Then Spain might default, Italy and Greece,” he said.

Mr McWilliams, a former UBS director and now prominent broadcaster, has broken the ultimate taboo by evoking threats to precipitate an EMU crisis, which would risk a chain reaction across the eurozone’s southern belt, where yield spreads on state bonds are already flashing warning signals. The comments reflect growing bitterness in Dublin over the way the country has been treated after voting against the EU’s Lisbon Treaty.

“If we have a single currency there are obligations and responsibilities on both sides. The idea that Germany and France can just hang us out to dry, as has been the talk in the last couple of days should not be taken lying down,” he said.

Read moreHelp Ireland or it will exit euro, economist warns

Ruble Falls to Record Low as Russia Devalues 4th Time in 5 Days

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A pedestrian walks underneath sign advertising exchange rates for the Ruble against the U.S. Dollar and Euro, outside a currency exchange centre in Moscow, Russia, on Monday, Jan. 12, 2009. Photographer: Alexander Zemlianichenko Jr/Bloomberg News

Jan. 15 (Bloomberg) — Russia’s ruble tumbled to a record low against the dollar after the central bank devalued the currency for the fourth time in five days and Vedomosti reported the government slashed its estimate for oil prices by 20 percent.

The currency dropped to as low as 32.4112 per dollar, the weakest since Russia redenominated the currency at the start of 1998, before the financial crisis. The ruble’s trading band versus the dollar-euro basket has been widened, a Bank Rossii official who can’t be identified on bank policy said. The ruble has slumped 27 percent against the dollar since August.

“The bottom line is that they need to get this over with and the faster the better,” said Rory MacFarquhar, Moscow economist for Goldman Sachs Group Inc., which forecasts a further 12 percent depreciation in the ruble versus the basket. “They’re still catching up with what happened in oil last year. They’re still getting it to a sustainable level.”

Russia cut its average oil forecast for this year to $40 a barrel, from a previous $50, Vedomosti cited government officials as saying today. That’s the below the $70 average the government says is needed to balance this year’s budget. Urals crude, the country’s main export oil blend, has slipped 64 percent to $43.47 since August, pushing the energy-fueled economy toward recession.

Read moreRuble Falls to Record Low as Russia Devalues 4th Time in 5 Days

Ruble Falls to Record Low Versus Euro as Russia Weakens Defense

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Dec. 29 (Bloomberg) — The ruble fell to a record low against the euro as Russia devalued the currency for the 12th time in seven weeks after the government forecast its first budget deficit in a decade.

The managed currency weakened 2.6 percent to 41.7245 per euro, the lowest since the European currency started trading in 1999. It fell 0.7 percent to 29.1797 versus the dollar, a four- year low. Bank Rossii allowed the ruble to fall 1.7 percent against its basket of 55 percent dollars and 45 percent euros, the most since the measure was introduced in February 2005, according to a central bank official who declined to be identified, citing bank policy.

Read moreRuble Falls to Record Low Versus Euro as Russia Weakens Defense

Commodity Fundamentals Are ‘Unimpaired,’ Rogers Says

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Dec. 5 (Bloomberg) — The fundamentals of commodities are “unimpaired” and prices will rebound when a lack of new supply leads to shortages, said Jim Rogers, chairman of Rogers Holdings.

“Commodities will be the place to be if and when we come out of” the downturn, Rogers said yesterday in an interview from Miami. “The only thing where fundamentals are unimpaired are commodities. Farmers cannot get loans for fertilizer now. Nobody can get a loan to open a zinc mine. So we are going to have some serious, serious supply problems before too much longer.”

The Reuters/Jefferies CRB Index of 19 commodities has plunged 53 percent from a record in July on concern that a global recession will sap demand for raw materials. The index almost doubled between its low in 2001 and the end of last year.

Rogers said crude oil and agricultural commodities were the most likely to have shortages and the outlook for zinc and cotton had “improved.” “I haven’t sold any commodities since the bull market began,” he said.

“I own some gold and if gold goes down I’ll buy some more and if gold goes up I’ll buy some more,” Rogers said. “Gold during the course of the bull market, which has several more years to go, will go much higher.”

Read moreCommodity Fundamentals Are ‘Unimpaired,’ Rogers Says

Ron Paul on Russia Today: I am sure they talked even about an International Central Bank

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Behind the scenes at the G20 summit in Washington, world leaders discussed not only future financial regulations, but also the possibility of an International Central Bank, according U.S. congressman Ron Paul.


November 27, 2008, 9:36

Source: Russia Today

Ruble Collapse Prompts Russia to Raise Rate on Currency Plight

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Nov. 28 (Bloomberg) — Russia’s ruble headed for its biggest weekly decline against the euro in at least five years as the central bank let the currency depreciate and raised interest rates to halt an exodus of foreign capital.

Bank Rossii widened the ruble’s trading band for the second time this week by about 30 kopeks (1 U.S. cent), or 1 percent, on each side, according to Mikhail Galkin, head of fixed-income and credit research at MDM Bank in Moscow. The central bank said today it will raise its benchmark refinancing rate to 13 percent from 12 percent to help stem currency losses.

Russia is among a handful of countries raising interest rates after it drained $148 billion from the world’s third largest foreign-currency reserves since August to arrest a 16 percent currency slide against the dollar. BNP Paribas SA estimates that investors pulled $190 billion out of the country since August as oil prices fell below the $70-a-barrel average required to balance Russia’s budget in 2009.

Read moreRuble Collapse Prompts Russia to Raise Rate on Currency Plight

Peter Schiff On Fast Money – The Man Who Called The Collapse – 11/20/2008

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This is important. Watch it. Peter Schiff has been right, is right and will be right in the future.
Forget about deflation that is nonsense, that is like Bush or Paulson telling us that ‘the economy is sound’.

Source: YouTube

IMF may need to “print money” as crisis spreads

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The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.

IMF's work in countries such as Turkey is only just beginning
IMF’s work in countries such as Turkey is only just beginning

The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.

Neil Schering, emerging market strategist at Capital Economics, said the IMF’s work in the great arc of countries from the Baltic states to Turkey is only just beginning.

“When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The Fund may soon have to start calling on the West for additional funds,” he said.

Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil and India have together spent $75bn of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.

“Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We’re in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is,” he said.

The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

“The IMF can in theory create liquidity like a central bank,” said an informed source. “There are a lot of ideas kicking around.”

Read moreIMF may need to “print money” as crisis spreads

Iceland Central Bank Raises Key Interest Rate to 18%

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Pedestrians leave the Central Bank of Iceland in Reykjavik, Iceland, on Oct. 7, 2008. Photographer: Arnaldur Halldorsson/Bloomberg News

Oct. 28 (Bloomberg) — Iceland’s central bank unexpectedly raised the benchmark interest rate to 18 percent, the highest in at least seven years, after the island reached a loan agreement with the International Monetary Fund.

Policy makers raised the key rate by 6 percentage points, the Reykjavik-based bank said in a statement today, taking the rate to the highest since the bank began targeting inflation in 2001.

“I don’t think 6 percentage points will make the krona any more attractive,” said Henrik Gullberg, a strategist at Deutsche Bank AG in London. “Basically what we’re seeing is a complete liquidation of everything in emerging markets, and Iceland, even in the emerging-market universe, is very vulnerable. Six percent isn’t worth a lot if the currency drops another 15 percent.”

The central bank is raising rates as Iceland, the first western nation to seek financial help from the IMF since the U.K. in 1976, faces an economic contraction, coupled with possible hyperinflation and rising joblessness. The economy will shrink as much as 10 percent next year, the IMF forecasts. Iceland will receive about $2.1 billion from the Washington-based fund, according to a deal struck on Oct. 24.

Read moreIceland Central Bank Raises Key Interest Rate to 18%

Ron Paul on The Alex Jones Show: A Global Financial Order

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Ron Paul on The Alex Jones Show”A Global Financial Order”1/2
Added: Oct. 17, 2008

Source: YouTube

Ron Paul on The Alex Jones Show”A Global Financial Order”2/2

Added: Oct. 17, 2008

Source: YouTube

Switzerland Bails Out UBS; Credit Suisse Raises Funds

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Pedestrians walk past a branch of the UBS bank in Bern, Switzerland, on Thursday, Oct. 2, 2008. Photographer: Adrian Moser/Bloomberg News

Oct. 16 (Bloomberg) — Switzerland gave UBS AG, the European bank with the biggest losses from the credit crisis, a $59.2 billion rescue and pushed Credit Suisse Group AG to raise funds, joining authorities around the world in shoring up banks.

UBS will get 6 billion Swiss francs ($5.2 billion) from the government and put as much as $60 billion of risky assets into a fund backed by the central bank, the Zurich-based company said. Credit Suisse Group AG raised 10 billion francs from investors including Qatar and Tel Aviv-based Koor Industries Ltd.

Switzerland is the last of the world’s financial centers to pour cash into ailing financial institutions after losses on bad debts reached $647 billion globally and credit markets froze. The Swiss government plans to raise deposit guarantees and is ready to back the short- and medium-term interbank loans of the nation’s banks, after countries across Europe took similar measures.

Read moreSwitzerland Bails Out UBS; Credit Suisse Raises Funds

Fed Lets Europe Central Banks Offer Unlimited Dollars, Removes Swap Limits

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Fed Releases Flood of Dollars, Market Rates Fall

Oct. 13 (Bloomberg) — The Federal Reserve led an unprecedented push by central banks to flood the financial system with as many dollars as banks want, backing up government efforts to revive confidence and helping to reduce money-market rates.

The European Central Bank, the Bank of England and the Swiss National Bank will offer European banks unlimited dollar funds with maturities of seven, 28 and 84 days at fixed interest rates against “appropriate collateral,” the Washington-based Fed said today. The Fed had capped at $380 billion the currency it would swap with the three central banks.

Global economic leaders have redoubled efforts to unfreeze credit markets and avert the worst worldwide recession in thirty years after last week’s 20 percent slide in the MSCI World Index. Policy makers from the Group of Seven nations are committed to taking “all necessary steps” to stem a market panic, and European and U.S. governments today outlined plans to avoid banks failing.

Read moreFed Lets Europe Central Banks Offer Unlimited Dollars, Removes Swap Limits

JIM ROGERS: GLOBAL BANKERS HAVE UNLEASHED INFLATIONARY HOLOCAUST

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Legendary investor Jim Rogers warned during a CNBC interview this morning that global central banks are creating the environment for an inflationary holocaust by their ceaseless overprinting of currency, a measure that isn’t even successful in stabilizing the stock market.

Rogers said that the only solution to the market crisis was to let failing banks and speculators go bankrupt and stop pumping endless amounts of liquidity into the system, labeling it outrageous that responsible investors and taxpayers are being made to bail out crooks on Wall Street.

The way to solve this problem is to let people go bankrupt, Rogers stressed, All of this pumping money into the system is not going to save it – see what the market is saying, its saying we dont buy that, let people go bankrupt, he added.

Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who arent sound and we will start over. This is the way the world has worked for a few thousand years, said Rogers.


Added: Oct: 12, 2008

Source: YouTube

Central banks all but stop lending bullion

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Central banks have all but stopped lending gold to commercial and investment banks and other participants in the precious metals market, in a move that on Tuesday sent the cost of borrowing bullion for one-month to more than twenty times its usual level.

The one-month gold lease rate rocketed to 2.649 per cent, its highest level since May 2001 and significantly above its five-year average of 0.12 per cent, according to data from the London Bullion Market Association.

Gold lease rates for two, three and six months and for a year also jumped to levels not seen in the last seven years.

Read moreCentral banks all but stop lending bullion

Capitalism in convulsion: Toxic assets head towards the public balance sheet

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In the space of just two momentous weeks, the landscape of global finance has been dramatically transformed. President George W. Bush’s administration has mounted a multi-billion-dollar rescue of the financial system at the cost of inflicting severe damage on the US model of free- market capitalism.

Heavy costs will be inflicted on the American taxpayer, who is now subsidising Wall Street – and indeed financial institutions around the world – in a bail-out of unprecedented size.

Read moreCapitalism in convulsion: Toxic assets head towards the public balance sheet

Russian stock markets closed until Friday

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Medvedev calls for more measures

MOSCOW (AP) — Russia closed its stock exchanges for a second day Thursday as President Dmitry Medvedev pledged a 500 billion ruble ($20 billion) injection into financial markets to stem a dizzying plummet in share prices — and quash fears of a repeat of the country’s 1998 financial collapse.

Russian President Dmitry Medvedev reiterated that the government — which sits on the world’s third-largest foreign reserves — is in a strong position to handle the crisis, which threatens to undermine an eight-year economic success story and a resurgence in national pride.

Read moreRussian stock markets closed until Friday

Gold Soars Most Since 1999 as Investors Seek Haven From Turmoil

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Gold up 10%, Silver up 12%
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Sept. 17 (Bloomberg) — Gold surged the most in nine years as investors sought the safety of precious metals on concern that the credit crisis will deepen, leading more financial institutions to fail. Silver soared the most since 1995.

Equities tumbled even after the Federal Reserve took over the biggest U.S. insurer. The cost of borrowing dollars for three months jumped the most since 1999 as banks hoarded cash. Central banks in the Philippines and Venezuela said they may buy gold. In March, the metal reached a record as the government steered JPMorgan Chase & Co. to buy Bear Stearns Cos.

“With paper assets in question, gold represents the textbook storehouse of value,” said Ron Goodis, the futures trading director at Equidex Brokerage Inc. in Closter, New Jersey.

Read moreGold Soars Most Since 1999 as Investors Seek Haven From Turmoil

Russian Markets Halted Again as Emergency Funding Fails to Halt Rout

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Sept. 17 (Bloomberg) — Russian markets stopped trading for a second day after emergency funding measures by the government failed to halt the biggest stock rout since the country’s debt default and currency devaluation a decade ago.

The ruble-denominated Micex Stock Exchange suspended trading indefinitely at 12:10 p.m. after its index erased a 7.6 percent gain and plunged as much as 10 percent within an hour. The benchmark fell 17 percent yesterday, the biggest drop since Bloomberg started tracking the gauge in May 2001. The dollar- denominated RTS halted trading after similar declines.

Read moreRussian Markets Halted Again as Emergency Funding Fails to Halt Rout

Russia halts trading after 17% share price fall

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(Financial Times) – Russian shares suffered their steepest one-day fall in more than a decade on Tuesday, losing up to 20 per cent, as a sharp slide in oil prices and difficult money market conditions triggered a rush to sell.

The heads of the Russian central bank, the finance ministry and the financial market regulator met on Tuesday night for an emergency discussion on ways to halt the crisis.

Earlier, trading had been suspended on both the Micex and RTS stock exchanges as investors ignored assurances by Russian officials and a cycle of distrust set in amid liquidity fears.

Margin calls forced domestic traders to liquidate positions and brokers pulled credit lines. At least one Moscow bank failed to meet payments.

The rouble-denominated Micex Index closed 17.75 per cent down, the sharpest one-day drop since the August 1998 financial crisis, while the dollar-denominated RTS index closed down 11.47 per cent, its lowest lvel since January 2006.

Read moreRussia halts trading after 17% share price fall

The Collapsing Dollar – Authorities lose patience

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Jean-Claude Juncker, the EU’s ‘Mr Euro’, has given the clearest warning to date that the world authorities may take action to halt the collapse of the dollar and undercut commodity speculation by hedge funds.


Jean-Claude Juncker, who is calling for Washington to
take steps to halt the slide of the dollar

Momentum traders have blithely ignored last week’s accord by the G7 powers, which described “sharp fluctuations in major currencies” as a threat to economic and financial stability. The euro has surged to fresh records this week, touching $1.5982 against the dollar and £0.8098 against sterling yesterday.

“I don’t have the impression that financial markets and other actors have correctly and entirely understood the message of the G7 meeting,” he said.

Mr Juncker, who doubles as Luxembourg premier and chair of eurozone financiers, told the Luxembourg press that he had been invited to the White House last week just before the G7 at the urgent request of President George Bush. The two leaders discussed the dangers of rising “protectionism” in Europe. Mr Juncker warned that matters could get out of hand unless America took steps to halt the slide in the dollar.

Read moreThe Collapsing Dollar – Authorities lose patience

Global “Oil Shock” Rattles World Stock markets

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Cleaning up the mess that Mr Greenspan left behind was never going to be easy. Banks and brokers around the world face more than half-trillion dollars in write-offs as a consequence of the US sub-prime mortgage crisis, which is spreading from the US property market and roiling global stock markets. It’s toppled the US economy into a recession and the tremors are also rattling Asian stock markets.

Roughly $7 trillion has been wiped from world stock markets since the beginning of the year amid fears of a severe US economic recession and financial institutions reporting more mega losses. “The market crisis will preoccupy us well into 2008,” he said German Finance Minister Peer Steinbrueck on Feb 15th. “The financial risks securitized by banks contained packaged explosives,” and he accused rating agencies of having a conflict of interest in the role they played in the process.

So far, the Bernanke Federal Reserve has pumped more than half-a-trillion dollars into the markets with open market operations and special emergency lending schemes, to help cushion the blow to the US economy and stock markets. However, there’s evidence that the Fed’s prescription for dealing with the sub-prime debt crisis, is actually making matters much worse, and leading to “Stagflation.”

Read moreGlobal “Oil Shock” Rattles World Stock markets