Some big financial news has been coming out recently, so we thought it a good idea to share some of the important recent events with you. You can check out the last few posts of this series here, here, & here. Of course, you’ve probably already seen the biggest news of the week which is that Ben Bernanke and the Fed have lengthened the time that they plan to keep interest rates at near zero until 2014. This means that all the “good news” that the financial media is spinning for the economy is NOT what the Fed itself is seeing.
The Fed also seemingly left the door wide open to more QE (money printing) as they don’t seem to be able to find the inflation that the rest of the world is experiencing. We’ll talk more about that soon as we’re about to make numerous predictions for the coming year. Most markets got a shot in the arm at this additional confirmation that the Fed will print as much as it takes to keep nominal prices higher (particularly gold and silver).
Let’s look at a few other stories…Ever wonder why the US is becoming less and less competitive on the world economic stage? If you think it’s because wages are too high here compared to other countries, you’re wrong. Government intrustion into every facet of business is what’s really killing the American economy. Take a look.
Here’s a story that even better illustrates the insanity of those running the US. Oil companies (who provide the life blood of the economy on very small profit margins (If you’re unaware of this truth you probably don’t believe it because of the media/politician spin, but look it up yourself)…Anyways, these oil companies are being fined for not doing the impossible. The US government says they must do a certain thing that no one on the planet has ever done…or they will pay fines. So they pay fines…which means you pay higher costs for everything you buy.
The IMF just put out a very gloomy chart for where they see the world economy heading. This is in part to try and manipulate European leaders to do what they want them to do, but none the less, they have finally caught up to what we’ve been saying for years.
The EU threats on both Greece and the creditor banks is getting severe. I was stunned at the boldness of the comment (not so much at the terminal reality of the situation). Here’s the core of it from the Telegraph…
“We’re sending a direct message to Greece that the community expects more. We’re not pleased and only when there’s a written message on the table in front of us, can further assistance be discussed,” she said.
The head of the European Commission’s economics team Mario Buti said Brussels is prepared to allow credit default swaps (CDS) on Greek bonds to come into play if talks fail to reach a deal that gives Greece enough debt relief to claw its way back to viability. “Triggering CDS may have to be considered,” he said.
The comment is a clear warning to private creditors holding €206bn (£172bn) of Greek debt that the EU will not step in with fresh money to prevent a default on March 20, when Greece must make a €14.5bn debt payment.
The EU authorities are demanding that banks, insurers, and pension funds accept a cut in the interest rate on new bonds to 3.5pc – on top of the 50pc haircut agreed – to reflect the drastic deterioration in Greece. The creditors are holding out for 4pc. EU officials would leave Greece’s debt at 125pc of GDP by 2020, above the 120pc level deemed the maximum tolerable burden.