World economy talk

[uls]

hehe

like what is said in this blog post

Who was Smuggling $134bn in US Bonds into Switzerland?
http://www.globalpost.com/webblog/co...ds-switzerland

Sometimes a bizarre event seems to capture the madness of the times, and this news from Bloomberg fits the bill. A couple of Asians carrying Japanese passports have been arrested by Italian border police with a case load of non-negotiable US bearer bonds to the value of $134bn. It's not as crazy as it sounds. The Fed did actually issue bearer bonds up to the value of $500m each until the late 1960's (when electronic record keeping superseded them), and these look on initial examination like the genuine article. If they are real, they could only have come from a handful of countries with sufficient dollar reserves to have accumulated such a huge sum, notably China and Japan. In the much more likely event they are fakes, it would be the biggest such operation in history, and would almost certainly imply state involvement, with North Korea the prime suspect. Either way, even in the context of the trillions we have become accustomed to seeing tossed around in bailout plans, we're talking serious money.

The significance of this story is that it highlights the very topical importance of retaining investor faith in a fiat currency; if the supply of money is suddenly perceived to be vastly higher than believed, whether as a result of policy or widespread fraud, confidence can be badly shaken. If this was another crazy North Korean forgery scheme, it gets close to a casus belli on top of the relentless provocation of the US in recent months. If, in the less likely but just about possible case that an Asian country were genuinely but secretly attempting to dump dollar paper for other assets, the implications are very disturbing for international markets.

[uls]

+++++++++++++++++

[tidus1203]

Yep. Siguradong government ito $134Bn is too much for an individual or private entity especially na dindala lang ng ganyan. And since they are Japanese I suspect its the JG if it real cause North Korea has no money of that amount. It could also be China but why hire Japanese?

[uls]

maybe the Chinese govt hired Japanese nationals to do the job so as not to arouse suspicion that China is dumping USG bonds

pag nahuli, the attention will be on Japan

hehe

[CVT]

If those were fake bonds, have you ever thought about NoKor? I heard that they're printing notes like there is no tomorrow.....

8101:oops2:

[uls]

yep

North Korea is prime suspect pag fake

In the much more likely event they are fakes, it would be the biggest such operation in history, and would almost certainly imply state involvement, with North Korea the prime suspect.

but it's more fun to think that those bonds are real

[tidus1203]

But its almost impossible for it to be real. I mean if it was $134M with a "M" then yeah but with a "B" that's ridiculous. Given the bonds are traded electronically now I am even surprised there are paper bonds without names amounting to that much!

[uls]

it's fun to imagine eh

kasi pag fake, there's nothing more to imagine

hehe

anyway, let's move on...

oil is now below $71

as usual, moving opposite to the USD

USD index above 80

Dollar Rises as Russia Says No Alternative to U.S. Currency
http://www.bloomberg.com/apps/news?p...d=aGEOkoTHii4U

June 15 (Bloomberg) -- The dollar rose the most in a week against the euro after Russia’s Finance Minister Alexei Kudrin said the nation has full confidence in the U.S. currency.

The greenback advanced against 15 of the 16 major currencies as Kudrin said in an interview on June 13 that it was too early to speak of an alternative to the world’s reserve currency. The euro extended losses against the dollar after Britain’s Telegraph newspaper cited Germany’s top industrial group as saying credit conditions in Europe’s largest economy are worsening. The yen strengthened as Asian stocks slid, boosting demand for the relative safety of Japan’s currency.

“Investors may put more funds into dollar-denominated securities,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. Kudrin’s comments are “supportive of the U.S. currency,” which may climb to $1.3943 per euro and 98.57 yen today, he said.

[tidus1203]

Sure... More news to make the correction happen. Stock futures are also pointing lower.

[uls]

since nag file na ng Chapter 11 ang GM, credit default swaps on GM bonds have been triggered

sellers of protection now have to pay up

GM's bonds are now valued at 12.5 cents for every dollar value

those who bought protection will be paid 87.5 cents for every dollar value

GM Bonds Valued at 12.5 Cents to Settle Credit-Default Swaps
http://www.bloomberg.com/apps/news?p...d=aZGopZRF4xcg

June 12 (Bloomberg) -- Credit-default swaps traders settling contracts that protected against a General Motors Corp. default set a value of 12.5 cents on the dollar for the automaker’s bonds.

The price, the result of a second round of an auction by 13 dealers including Deutsche Bank AG and Morgan Stanley, means sellers of the swaps will pay 87.5 cents on the dollar to buyers of the protection, according to data from administrators Markit Group Ltd. and broker Creditex Group Inc.

a lot of money yan

Credit swaps traders are facing the largest settlement of the derivatives since the collapse of Lehman Brothers Holdings Inc. last year. Banks, hedge funds, insurance companies and other investors bought or sold about $2.4 billion of protection on GM with the derivatives and roughly another $776 million through indexes that include the automaker, according to data from the Depository Trust & Clearing Corp., which runs a central registry that captures most trades.

[tidus1203]

WASHINGTON (AP) -- Foreign demand for long-term U.S. financial assets fell in April as both China and Japan trimmed their holdings of Treasury securities.

The Treasury Department said Monday that net purchases of stocks, notes and bonds obtained by foreigners fell to $11.2 billion in April, from $55.4 billion in March.
China, the largest holder of U.S. Treasury securities, trimmed its holdings to $763.5 billion in April, from $767.9 billion in March. Japan, the second largest holder of Treasury securities, reduced its holdings to $685.9 billion, from $686.7 billion a month earlier.

http://finance.yahoo.com/news/Foreig...&asset=&ccode=


We were talking awhile ago about that huge smuggled Treasury's to Switzerland. In the official channels we now see the #1 China and #2 Japan holders of US debt has been trimming as well. I guess masyadong mabagal sa official channels and they want to dump at a faster rate bago sila maunahan ng market and the value plummets below their desired levels

[uls]

haha

hot potato ang US assets

--

Elmo rules

[uls]

USD index back above 81



flight to safety again

treasury prices up (yields down)

equities, commodities are dumped

the volatily index - VIX - is creeping up again

[tidus1203]

The correction is upon us. But don't worry its just one of those corrections. Ayan ha! Baka kasi some people always think I am pessimistic but I am quite bullish about the stock markets already but still bearish on the DOLLAR and US Treasuries. Commodities is still kind, stay the course don't let this short term blips phase you out!

[uls]

sensya na ha... i'm just fascinated by the story of those Japanese guys caught by Italian authorities with $134B worth of USG bonds

now Fox news has picked up on the story (so far, there's no coverage of this story on CNN, CNBC, MSNBC, BBC, etc)

[ame="http://www.youtube.com/watch?v=LKjKBr9DFzA"]YouTube - Joe Weisenthal On Italy's Fake Bonds[/ame]

[tidus1203]

Yes as suspected its FAKE! Wala nang mga paper bonds that exist amounting to that much! Lahat ng bonds ngayon electronic na para mabilis ang transfer of ownership and reduces fraud significantly.

Natawa ako kay Glen Beck. It scares me there is someone printing our money en masse, but hey the Federal Reserve does it all the time.

[uls]

totoo yan hehe

gusto ko totoo eh



the first news that reported 2 Japanese men carrying $134B worth of USG bonds caught by Italian police was on June 11

then on June 12, this came out:

Yosano Says Japan’s Trust in Treasuries ‘Unshakable’ (Update2)
http://www.bloomberg.com/apps/news?p...d=agTTqVJ0rhJI

June 12 (Bloomberg) -- Japanese Finance Minister Kaoru Yosano said his government is confident about the outlook for U.S. Treasuries, signaling the second-biggest foreign holder of the securities will keep buying them amid record sales.

“We have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental,” Yosano, 70, said in an interview in Tokyo on June 10 before attending a Group of Eight meeting of finance ministers starting today in Italy. “So our trust in U.S. Treasuries is absolutely unshakable.”

that's damage control

it's kinda suspicious that the statements from the Japanese finance minister came out the following day

If Japan were to liquidate the bonds openly, there would be panic in the Treasury market (which could collapse the Treasury market)

so they had to do it on the black market



(this is for entertainment purposes only. i'm bored. i need some entertainment hehe)

[tidus1203]

Yeah. Probably after the news conference they will be discussing how to unload their holdings at a less obvious manner Pero sa harap ng media plastikan muna!

Pati nga si Jim Rogers natatawa sa "STRONG DOLLAR POLICY" ng US. What strong dollar policy? Isn't inflating the currency and acquiring lots of debt a "WEAK DOLLAR POLICY"?

[tidus1203]

The Japanese Yen is rising more than a full basis point (139 pips) against the US Dollar and the Euro after BOJ (Bank of Japan) officials say that the recession in Japan is easing. They kept their interest rates at 0.1%...

June 16 (Bloomberg) -- The yen rose against higher-yielding currencies and advanced the most in two weeks versus the dollar as stocks declined and the Bank of Japan said the nation’s deepest recession since World War II is easing.

http://www.bloomberg.com/apps/news?p...d=alZXg2zyBTEY

[tidus1203]

Wasn't it 2 days ago that Russian finance dude (forgot his name) said that Russia still trusts the US Dollar as the world's reserve currency. Apparently his boss Russian President Dmitry Medvedev has other things in mind.

Meanwhile, President Dmitry Medvedev pushed his call for new global reserve currencies to complement the dollar at the summit.
"No currency system can be successful if we have financial instruments denominated in just one currency," Medvedev said. "We must strengthen the international financial system not only by making the dollar strong, but also by creating other reserve currencies.

http://finance.yahoo.com/news/Russia...&asset=&ccode=

This is on the BRIC summit. The summit of Brazil, Russia, India and China the 4 emerging economies of the world. China is the wild card there since they are the biggest support of the US Dollar, lose that support it will crumble. Russia is the 5th ata and Brazil is 6th.