Once again, I'm Shocked! Shocked! (Not really)

From today's Open Europe news summary:

The ECB's Money Market Contact Group, a panel of industry members who advise the ECB, have called for the central bank to renew its three year long term refinancing operation (LTRO) next year due to fears over funding pressures as the current loans expire.
WSJ  

Once again, I'm (not really) Shocked!  Shocked! that politicians are prevailing upon a central bank to keep printing money.

Here is a short explanation of the LTRO.  It means that the European Central Bank can print money and funnel it to European banks so that THEY, and not the ECB itself, can monetize their own governments' debt.  This is just one of the many backdoor methods by which the ECB violates the Maastricht treaty, which specifically precludes it from buying sovereign debt.

No surprise that the Fed will continue Quantitative Easing

A friend asked me if I were surprised by Bernanke's statement that the Fed would not end or even slow down it $85 billion per month bond purchases.  Here is my reply:

Not at all.  Bernanke knows that he has a Hobson's Choice or, as Hayek said, a tiger by the tail.  If he keeps printing money, we risk hyperinflation. But if he slows down printing money, we get a recession.  The Fed will always choose to risk hyperinflation, because hyperinflation is not apparent until it is too late.  Thus, we get the inane statements that there is no sign of inflation.  Plus, there are no honorable central bankers anymore.  Paul Volcker was the last of a dying breed.

Here's my dictum: "If you can print money, you will print money."  The politicians will not appoint a central bank chairman that might do otherwise.  The political pressure to print money in order to buy the bonds of governments running massive deficits and keep the bubble economy inflated will always outweigh the political pressure to take our medicine and allow the recession to cleanse the economy of malinvestment.

My advice, prepare as best you can for hyperinflation.

I'm Shocked! Shocked!

Greece not meeting Troika's agreement to cut civil service jobs

I'm shocked! Shocked! (Not really) that the Greeks are not living up to their promises to cut civil service jobs in order to get the latest round of bailout money. Wake up, Europe! There is no enforcement mechanism! The only real enforcement mechanism is to end the madness of the European Monetary Union. It is nothing more than a socialist construct that depletes the capital of responsible people without their consent.

Great Analogy!

From Charles Gave of Gavekal Research:

"Germans might as well load much of their auto exports headed to eurozone countries on to a boat and sink it outside of Hamburg. It would do as much good as selling Audis in exchange for IOUs issued by bankrupt countries."

Mr. Gave goes on to point out the the ECB's TARGET2 balances continue to increase. TARGET2 is an accounting fiction at the ECB whereby bank deposits in deficit countries do not have to fund deposits that their customers transferred to more responsible banks in more responsible countries. They simply get to carry a gigantic overdraft balance at the ECB. The responsible nations carry a credit balance that is unfunded. It is a backdoor bailout that few understand. As of the end of August the Bundesbank's (Germany's central bank) TARGET2 credit balance stood at 573 billion euros. That is money that is owed Germany by the ECB. It represents nothing substantial, not even mostly worthless Greek bonds. Yet Germany continues to deny that it is being robbed by the rest of Europe via the misconstructed European Monetary Union. It has better wake up before its economy is completely depleted of capital.

Is war really the only alternative to a European super state?

From Open Europe news summary of September 11, 2013 (my highlights):

In his ‘state of the Union’ speech in Strasbourg this morning, European Commission President José Manuel Barroso said, “Not everything needs a solution at European level. Europe must focus on where it can add most value. Where this is not the case, it should not meddle.” However, he also said, “Let me say to all those…who rejoice in Europe's difficulties and who want to roll back our integration and go back to isolation: the pre-integrated Europe of the divisions, the war, the trenches, is not what people desire and deserve…I believe a political union needs to be our horizon.”

What is now called the European Union started as the European Coal and Steel Community in the early 1950's. Its purpose was simplicity itself: free trade in coal and steel, the foundation of the modern industrial state at the time, to remove the necessity of war to acquire these goods for the autarkic, warfare state. The Europeans had finally learned Frederic Bastiat's dictum that when goods do not cross borders armies will. Later the idea of free trade was expanded to include almost all goods plus services. Then it was expanded to allow the free flow of capital and people. None of this requires a European state. The people of Europe want freedom, not another layer of parasites taxing and regulating them into poverty. There is nothing that the European Union can offer that cannot be obtained from unilateral free trade. Barroso is disingenuous to equate the building a European super state as the only alternative to war.

Godfrey Bloom explains housing market realities to EU statist politicians

My good friend Godfrey Bloom, member of the European Parliament for Yorkshire and North Lincolnshire, explains housing market realities to statist politicians in the European Parliament. Perhaps the crime of which he speaks is so apparent and so widespread that none dare speak its name. What the politicians and central bankers on both sides of the Atlantic (and Pacific) do not understand is that THEY are the criminals, perhaps criminals by neglect and negligence, but criminals nonetheless.

http://www.ukipmeps.org/articles_710_Godfrey-Bloom-on-the-invention-of-sub-prime-mortgages.html

Peru is NOT the dollar counterfeiting capital of the world

I disagree with this news article that Peru is the dollar counterfeiting capital of the world.

Here is its evidence: "Over the past decade, $103 million in fake U.S. dollars "made in Peru" have been seized..."

The Fed's QE3 program injects $85 billion into the economy each month; therefore, Peru's counterfeiting operations over the last ten years represents only 52 1/3 minutes of money printing by the Fed.

It is beyond a doubt that the Federal Reserve Bank is the largest counterfeiter of dollars in the world.