Global Economy Bursting?

[Randolph Kinney]

Central banks pounce on falling gold

http://www.ft.com/intl/cms/s/0/4f9a6076-6f92-11e1-b3f9-00144feab49a.html#axzz1pVCGmE84

A sharp fall in gold prices has triggered large purchases of bullion by central banks in recent weeks, according to several traders with knowledge of the transactions.

The Bank for International Settlements, which acts on behalf of central banks, has been buying significant quantities of gold on the international market amid falling prices, traders said.

According to several estimates, the BIS bought 4-6 tonnes of gold, worth roughly $250m-$300m at current prices, in the over-the-counter physical market last week, with purchases particularly strong at the end of the week. The total purchases over the past three or four weeks were likely to be as much as double that, the traders added.

In a note to clients this week, Credit Suisse referred to “aggressive central bank buying seen last Friday”.

 

[Terrel L. Shields]

They realize the potential for gold to go much much higher...

 

[Randolph Kinney]

Surprise Increase in Rates Is Credited to Signs of Recovery

http://www.nytimes.com/2012/03/19/b....html?nl=todaysheadlines&emc=edit_th_20120319

Investors will be closely watching for another rise in interest rates when trading resumes on Monday, after the bond market’s sharpest move in nearly six months caught some traders by surprise last week.

Despite the sudden swing higher, most Wall Street strategists are playing down the danger of a surge in interest rates, which have been historically low because of demand for bonds from both the Federal Reserve and private investors wary of all but the safest assets.

The sell-off last week was caused by increasing signs that the economy might finally be gaining steam, lifting the yield on 10-year Treasury bonds to 2.31 percent on Friday, from 2.04 percent a week earlier. That was the biggest move in bond yields, which move inversely to bond prices, since October, when rates briefly topped 2.4 percent.

More data confirming that the economy is gaining momentum could come later this week. In addition to data expected on Tuesday and Wednesday on housing starts and existing home sales, the Commerce Department will disclose the latest figures for sales of new homes on Friday. And on Thursday, the Conference Board will announce its index of leading economic indicators for February.

 

[Terrel L. Shields]

Housing starts should come up...after all against the metric of last winter when we were in the midst of record cold, such metrics are often not a particularly good comparison. We need a long term trend but signs are that housing isn't going to go much lower. Phoenix, for instance, believes prices have firmed by 5% or so over the previous year.
But even if bottomed, I don't see any magic upswing in building. Financing is still problematic and continued bankrupcty down here in this part of the world is at record levels.

 

[Randolph Kinney]

ASU sets sights on presence in California

The death of California's higher education

http://tucsoncitizen.com/arizona-news/2012/03/18/asu-sets-sights-on-presence-in-california/

Arizona State University could establish a physical presence in metro Los Angeles this year, ASU President Michael Crow says.

A lease hasn’t been signed, but if ASU finds the right deal on a building, the university would offer classes and would house entrepreneurs in residence as well as technology-transfer workers and student recruiters.

“We’ll open an office in Santa Monica soon,” he predicted.

Crow spoke Thursday to members of the Tempe Chamber of Commerce at a luncheon at the Four Points by Sheraton Tempe. He declined to elaborate further about the presence in the Los Angeles area.

ASU is exploring ways to expand its global presence. Crow mentioned that negotiations are under way for a project in the United Arab Emirates, although he did not elaborate.

Since 2003, ASU has operated a business school that has 220 students in Shanghai, China. In Arizona, the university plans to locate its newest W.P. Carey Evening MBA and Custom Corporate MBA programs at a large executive office park to be built at Chandler Boulevard and Loop 101.

ASU has a partnership with Dublin City University in Ireland to coordinate research involving the Global Grid for Learning, which will let teachers access thousands of digital-learning resources.

It’s no longer rare for colleges to expand beyond their home states.

“Ultimately, competition in general makes everyone stronger … and competition by some schools entering other schools’ regions makes everyone’s institution and the industry stronger,” Stewart said.

“The strongest institutions can expand wherever they like.”

Erik Fallis, spokesman for the California State University system, said he’s not aware of any state organization that would need to approve ASU’s move. But he added that the ASU programs would likely need to be accredited by the Higher Learning Commission. The commission did not immediately return a phone call.

 

[Big ole Boy]

Internal Proletariat nominal incomes still falling .

.... when adjusting for inflation .......... incomes for the internal proletariat are still falling .....

..... the creative minority has failed to find the solutionns to the problems and challenges of runaway government spending .....

.... the universal fiat state of is the evidence that christendom has broken down ...

...

.... precious metals will be the glue between new religions and new civilizations ....

.. the banks know this ...

 

[nm505]

http://www.dailyfinance.com/2012/03/22/uncle-sams-big-bailout-win-a-25-billion-profit-for-taxpayers/

"When Congress announced in 2008 that it would be lending $700 billion in taxpayer money to bail out some of America's biggest (and most careless) banks, a lot of people thought this was a really bad idea."

(Including me. I wrote email after email against the bailouts to no avail)

"Between interest collected on these securities while they were in government ownership, and proceeds from their sale back into the market, Treasury says it has netted $250 billion total -- for a whopping $25 billion profit."

"So here's the upshot: Yes, Treasury made a profit on the mortgage-backed securities that it acquired from Fannie Mae and Freddie Mac. Since it saved us all from taking a loss, bully for it -- but don't get too carried away with the applause.

Unlike ordinary investors, the Treasury had unlimited access to funds, unlimited ability to withstand losses without suffering a margin call, and unlimited patience to wait for its "investment" to bear fruit."

 

[Terrel L. Shields]

what about all the fannie mae "stuff" waiting to explode? We will lose money ultimately. In fact, we lost about $5 Billion that will never be recouped bailing out GM. Perhaps it was necessary in one way, but again, we should never have had the government in the business of having to be the "lender of last resort" - The machinations of the Fed was supposed to have ended all that 100 years ago. Perhaps Milton Freidman was right. It is almost always the Fed's fault. Unfortunately (i think) we cannot rewind history and try to do it different until we get it right.

 

[nm505]

I posted about this book earlier...Secret of the Temple..How the Federal Reserve runs the country. http://www.amazon.com/dp/0671675567/?tag=realestatappraat&tag=realestatappraat Someone called it kool-aid.

It is an oldie but goodie. As Bob Brinker (a financial talk show host here) said, if you want to know how the economy is run, read this book. I did...all 700 pages. It is amazing especially the Great Depression discussion. Relevant today. It talked about the impacts on small businesses and farms...so sad.

I remember my grandmother talking about this time. They were so frugal all their lives and as a result and gave us a leg up which I am afraid many of us have squandered. We were the generation that didn't have the direct experience of a major depression and dismissed it as being irrelevant (or at least I did).

While we struggled in our early years, we came to believe in a prosperous future forever. Not sure about that anymore. I worry about my kids and grandkids due to energy/climate challenges. Hopefully we will make good decisions for them. Like the Iroquois (I am originally from Tulsa OK...Indian country), we need to consider the seventh generation.
http://en.wikipedia.org/wiki/Seven_generation_sustainability

 

[Terrel L. Shields]

anymore. I worry about my kids and grandkids due to energy/climate challenges. Hopefully we will make good decisions for them.

The good decisions we need to make are basically financial. Without getting our financial house in order, we will be at the mercy of others for energy and well...as a geologist, I've studied Pliestocene paleoecology to believe that the climate is bigger than humans, therefore the last 20,000 years of warming will continue until a climate nadir is reached and then it will swing back the other way...which is far more dangerous to humans than is warming. The world climate has been much warmer and much colder than it is now.

"In Fed We Trust" is a very good book on the Fed to read. And certainly an excellent history of finance is Neil Ferguson's "Ascent of Money" - which is also an on line PBS series. In particular there is the idea that Milton Freidman took to Chile. Chile was socialist and the economy collapsed, but after the coup, Chile set up a system of letting folks stay with their old SS system or opting into a system of accounts (almost IRA or 401k like) where a government operated advisor invested the money you put in the system. That money was yours and at retirement, you were able to set it up as an annuity, etc.

I think the deficit and the extreme cost of health care are the two issues we must solve. And to do so, we need to stop being police of the world. Stop pretending we can turn radical and ignorant savages into democratic debate social clubs.

Energy will have to be solved by the market place and strategically placed research dollars. Those monies provided directly by government should have strings attached to require a share of any patents or royalties to the government who paid for the research. A megaprize for a break thru technology is one way to put people to work on the problem.

As for the climate issue, it is insovable so long as scientists are frauds. Unfortunately, the debate from both sides is so poison that it has degenerated into politics. Science is never determined by concensus. The issue is clear. The dividing line is obvious. Meteorlogists who do "applied" science, fly planes into hurricanes, and such, are skeptical of anthromorphic warming. Physicists with their elegant climate models and computer generated data tend to "believe" in those models and defend their algorithms to the death. Astrophysists tend to believe that the sun is the biggest factor in climate and that a 44,000 year "wobble" in the orbits may be the major trigger for an Ice Age. Oceanographers tend to believe that it is ocean currents that dictate weather thus are the drivers of climate change. It's the old blind men feeling an elephant problem. Each speciality biases what they "feel" on the basis of their own backgrounds.
Those who rely upon statistics - the most feared group obvious to anyone who read any of the climategate emails - raise an eyebrow at the notion one can predict changes of 1 degree or less per 100 years, when A- you cannot predict the weather over 2 weeks out (a Chaos Theory problem) and B - the difference in average temperature of the winter of 2012 and 2011 was 20 degrees F or more. With such seasonal variation, 1 degree over 100 years is an impossibly small amount to measure. It is only statisical noise. Even this unusally mild winter in the lower 48 was offset by record snow and cold in Alaska, Siberia, and even much of Europe even including Italy and other south European countries. I am afraid the jury is still out and will remain out for decades until a clearer picture emerges.