Currency

Authorities See Worth of Bitcoin

Senior U.S. law-enforcement and regulatory officials said they see benefits in digital forms of money and are making progress in tackling its risks. The price of bitcoin, the most common virtual currency, soared to a record following the comments.

U.S. authorities, appearing Monday at the first-ever congressional hearing on virtual currencies, outlined the pitfalls and promises of bitcoin amid concern the anonymity and decentralized nature of some virtual currencies can help facilitate crimes. The hearing provided a financial lift to bitcoin as U.S. officials, who have previously highlighted the currency’s role in money laundering and other illicit activities, called it a “legitimate” financial service.

Screen Shot 2013-11-21 at 1.30.01 AM


WASHINGTON: Call it a speculative bubble or the rise of a currency of the future: the bitcoin jumped in value Tuesday after US authorities appeared to give the virtual money their blessing. 

The electronic currency that is suspected of being used for illicit transactions on the Internet reached a value of $900 for the first time on specialized currency exchange websites. 

But it is highly volatile, and a few hours later it was down to $700, according to Mt GOX, which manages trad ..

….read more HERE

The Money Bubble Gets Its Grand Rationalization

bubble-pinLate in the life of every financial bubble, when things have gotten so out of hand that the old ways of judging value or ethics or whatever can no longer be honestly applied, a new idea emerges that, if true, would let the bubble keep inflating forever. During the tech bubble of the late 1990s it was the “infinite Internet.” Soon, we were told, China and India’s billions would enter cyberspace. And after they were happily on-line, the Internet would morph into versions 2.0 and 3.0 and so on, growing and evolving without end. So don’t worry about earnings; this is a land rush and “eyeballs” are the way to measure virtual real estate. Earnings will come later, when the dot-com visionaries cash out and hand the reins to boring professional managers.

During the housing bubble the rationalization for the soaring value of inert lumps of wood and Formica was a model of circular logic: Home prices would keep going up because “home prices always go up.”

Now the current bubble – call it the Money Bubble or the sovereign debt bubble or the fiat currency bubble, they all fit – has finally reached the point where no one operating within a historical or commonsensical framework can accept its validity, and so for it to continue a new lens is needed. And right on schedule, here it comes: Governments with printing presses can create as much currency as they want and use it to hold down interest rates for as long as they want. So financial crises are now voluntary. They only happen if a country decides to stop depressing interest rates – and why would they ever do that? Here’s an article out of the UK that expresses this belief perfectly:

….more HERE plus Commentary

Canada Bucking Global FDI Trend

main 79f527f7-003e-4422-9450-c0a4e2a7c3f6World political leaders still have an axe to grind with business. Corporations are still sitting on a vast cash-stash, and don’t seem to me in a hurry to invest. The same is true of cross-border investments. From a low level in 2012, they are eking out very modest growth thus far in 2013. Will business hesitation hold back the world economy indefinitely, or is there hope that things will turn around?

Global foreign direct investment (FDI) plunged by a stunning 33 per cent in 2009 as the world tumbled into the Great Recession. However, by 2011 solid growth lifted FDI up to a level just 9 per cent below the 2008 level. Something spooked investors in 2012, though, shoving FDI back down by 18 per cent. In the first half of 2013, FDI is up, but by a slim 3.8 per cent. Seems like we have waited a long time for a resurgence, only to get a relapse. Is it temporary, or are we in trouble?

So far this year, weakness is widespread. Collectively, emerging markets are growing 8.8 per cent, but take away the impressive gains in Russia and Mexico, and total FDI is actually contracting by 5.5 per cent across a broad swath of markets. Together, developed-market FDI is down 12 per cent in the first half of the year, with few gainers. Five years beyond the crisis-point, the figures aren’t comforting.

Is there a good explanation for current performance? Discouragement could be a factor – after all, five years is a long time to wait for true recovery. Yet business confidence numbers argue against gloom. Could it be the nascent slowdown in emerging markets? Perhaps, but that doesn’t explain either the isolated aggressive gains or the developed-market losses. Is it the multiple, potentially havoc-wreaking global risks that followed the recession? Maybe, but they have recently moderated.

Maybe it’s China’s fault. After all, its labour markets are tightening, dissuading companies scanning the globe for sources of abundant, inexpensive workers. But if so, we would see evidence of that investment going elsewhere, and to date, that’s not obvious in the numbers. Moreover, FDI to China actually posted a reasonable gain in the January-June period. Could it be access to credit? Possibly, but if companies really want to invest, they have the cash. So far, none of these typical factors that stymie investment makes a compelling case for sluggish FDI performance.

Truth be told, the hesitation in current FDI is likely more normal than not. Businesses typically invest when they are convinced that they have to in order to process the inflow of orders. When they have spare capacity – as they did in spades following the recession – they hold back until they’ve used it up. They thought that was the case in 2010 and 2011, when massive stimulus created the illusion of a recovery – but that faded fast, leading to today’s tepid FDI activity. They will invest again – but only when an upsurge of activity compels them to. Until then, we’ll have to be content with what we get.

Fortunately, Canada is one of the few that is bucking the global trend. Thus far in 2013, FDI inflows are up 44 per cent, and the recent $36 billion Petronas announcement, together with interest from other sources, bodes well for future growth. Canada’s rich resources, solid economic structure and economic prospects will likely remain an effective magnet for future foreign investment.

The bottom line? UNCTAD’s mid-year checkup of foreign investment flows is uninspiring – but thankfully, those flows aren’t an economic bellwether. As global activity picks up, so too will investment flows. Widespread aging of the population suggests that FDI will play an even greater role in the next economic cycle, as international sourcing of labour is added to the list of reasons to do it.

 

 

Bitcoin surges over $900…

179114601-resize-380x300….Gold Vulnerable

Today’s AM fix was USD 1,272.25, EUR 942.13 and GBP 790.12 per ounce. Yesterday’s AM fix was USD 1,283.50, EUR 950.04 and GBP 797.01 per ounce.

Gold fell $14.10 or 1.09% yesterday, closing at $1,273.70/oz. Silver slid $0.34 or 1.64% closing at $20.41/oz. Platinum dropped $30.50 or 2.1% to $1,406.99/oz, while palladium fell $15.47 or 2.1% to $714.83/oz.

Gold remains under pressure after the losses incurred yesterday. Gold has failed to rally despite Janet Yellen, the Federal Reserve’s chief in waiting, indicating she would continue the U.S. central bank’s ultra-easy monetary policy.

….read more HERE

China’s Third Plenary says “Market Reform”

black swan…depends on your definition of reform I guess.

“The political object is the goal, war is the means of reaching it, and the means can never be considered in isolation from their purposes.” Carl von Clausewitz 

It is interesting watching the PR machine inside and the dupes in the financial press outside of China spin the Third Plenary Session.  “Gee, it is momentous market reform and the markets are reacting positively to this great news,” seems the spin.   

This is an example of what I am talking about, from Caijing.com:

“Many contend that the reform path of ‘comprehensively deepening reform’ identified during the Third Plenum, which constitutes a continuation of the spirit of reform that dates back to the 1980s, will strengthen China’s market economy system, transcend economic reform, and promote the overall development of China’s future.”

Say what? 

It seems the primary goal was… 

 
 
[Please note our new Auto-Trading Partner