Tuesday, September 24, 2013

Interesting bubble note...

The causes of property and financial bubbles are fairly well known...but it does appear to be an interesting confluence among places like London and NYC...

Full article here.

The trouble with nonresident property owners is that they’re fair-weather friends. There are three main groups in London at the moment: the super-rich buying holiday homes, investors looking for a quick buck, and overseas nationals looking for a safe haven. Normally you don’t get those groups all at once. When there’s massive overseas investment, you don’t expect many financial refugees, and vice versa. In the past the global super-rich were few in number—relying broadly on having an oil field in the sandpit or a fleet of tankers on the pond—and they spread their charms more evenly around the world. 

Wednesday, September 18, 2013

The Fed

Its always entertaining to read Fed minutes for their obfuscation and observations on recursivity.  The latest decision to hold off on "tapering" is a good case in point.  So much ado about simple asset swaps that provide no net benefit or detriment to the Economy.  The more insidious effects of QE for financial markets will be felt soon enough.  Removing quality collateral from dealer desks will have some effects with respect to short-term paper, and I fully expect the first convulsions for the next financial seizure to occur within money markets, commercial paper, or other short-term obligations.

Taking into account the extent of federal fiscal retrenchment, the Committee
sees the improvement in economic activity and labor market conditions since it
began its asset purchase program a year ago as consistent with growing
underlying strength in the broader economy. However, the Committee decided to
await more evidence that progress will be sustained before adjusting the pace
of its purchases.

Accordingly, the Committee decided to continue purchasing
additional agency mortgage-backed securities at a pace of $40 billion per month
and longer-term Treasury securities at a pace of $45 billion per month. The
Committee is maintaining its existing policy of reinvesting principal payments
from its holdings of agency debt and agency mortgage-backed securities in
agency mortgage-backed securities and of rolling over maturing Treasury
securities at auction.

Thursday, September 12, 2013


...Putin takes advantage of the situation and provides all sorts of cover for Russian operations in and within its former Soviet satellites.  Prolonging the Syrian question provides a win/win:  Obama capitulation or what will be perceived as a tyrannical bombardment against popular opinion.

One has to chuckle at the rhetoric, however.  Does anyone here really think a man like Putin adheres to constraints of a mere legal nature?  Is Georgia and its Pipeline now safe?

His article from the New York Times here.

From the outset, Russia has advocated peaceful dialogue enabling Syrians to develop a compromise plan for their own future. We are not protecting the Syrian government, but international law. We need to use the United Nations Security Council and believe that preserving law and order in today’s complex and turbulent world is one of the few ways to keep international relations from sliding into chaos. The law is still the law, and we must follow it whether we like it or not. Under current international law, force is permitted only in self-defense or by the decision of the Security Council. Anything else is unacceptable under the United Nations Charter and would constitute an act of aggression.

But I thought...

...the Paper Dragon was to grow indefinitely and create a rising tide for all its suppliers, ad infinitum.  The race is on folks.

Australia suffered a surprising drop in employment in August that pushed the jobless rate up to a four-year high of 5.8 percent, a disappointingly soft report that revived the chance of a cut in interest rates and knocked the local dollar lower.

The currency skidded by almost one U.S. cent as Thursday's data from the Australian Bureau of Statistics showed employers shed a net 10,800 workers in August, well below forecasts of a 10,000 increase and a second straight month of losses.

Wednesday, September 11, 2013

Shots across the bow...

...when pension funds for citizens are considered a strategic asset, anything is possible.  This is even more remarkable given the lack of legal process involved in what appears to be an asset coup from private (foreigners) to public funds.

WARSAW, Sept 4 (Reuters) - Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.
The changes went deeper than many in the market expected and could fuel investor concerns that the government is ditching some business-friendly policies to try to improve its flagging popularity with voters.

The Polish pension funds' organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.

There are Four...

...truly Sovereign countries in the world.  They are the U.S., Russia, China, and the Anglo-Frank-German alliance known as the "EU".

These are the countries that have independent Militaries.  All other countries are purchasers who are by definition removed from the cutting edge of technology from their suppliers.

Please do remember this when someone offers you an investment in a product denominated in a "hard currency" that does not belong to the above list.

This holds doubly when one of the members of the list jumps into pole position by selling a large tranche of bonds.  Russia has certainly unnerved a number of its competitors by this maneuver, as all emerging markets are now wondering if they missed the window to issue their own bonds.

A very clever move, which I am certain has nothing to do with the financing requirements of the Verizon/Vodafone deal or Syria...