A few days ago, CBS Evening News aired a special report on the $1.5 trillion federal budget deficit, which is currently the largest in US history. It features senior business correspondent Anthony Mason’s look inside the US Treasury’s Auction Room, where the nation’s delicately-balanced finances manage to stave off fiscal disaster just one day at a time.
Erskine Bowles, President of UNC, and former Wyoming Senator, Alan Simpson, the co-chairmen of President Obama’s National Commission on Fiscal Responsibility and Reform, are getting political leaders caught up with the obvious reality of the USâ€™ precarious financial stateâ€¦ that the budget deficit is quickly hurtling the nation toward a debt crisis not unlike Greece, but on a much larger scale.
Yesterday, JPMorgan & Chase Co. reported its anticipated impact of $600 billion in additional quantitative easing on the dollar, which will be devastating. JPMorgan finds it likely loose monetary policy could cause the dollar to collapse below 75 yen and become the weakest of planet’s most-traded currencies.
George Soros, famous billionaire investor and currency speculator, was being honored as “Globalist of the Year” earlier this week and took the opportunity to describe China’s rising influence, how it’s been accomplished it, and the uncertainty of how it’ll use its new-found power. The most interesting part is how the nation leverages its trade surplus to accumulate wealth to the government.
Today, an open letter to Fed Chair Ben Bernanke appeared via the Wall Street Journal questioning the wisdom of the Fedâ€™s round two of quantitative easing. Itâ€™s signed by 23 economists, financial writers, fund managers and others, including, to name just a few…
* Richard X. Bove of Rochdale Securities
* Jim Chanos of Kynikos Associates
* Niall Ferguson of Harvard University
* James Grant of Grantâ€™s Interest Rate Observer
* Seth Klarman of Baupost Group
* David Malpass of GroPac
* John B. Taylor of Stanford University
The G-20 meeting wraps up in Seoul today with little more to solve currency devaluation than a 30-page report. In it, the Group of 20 proposes that the IMF help the situation by offering guidance toward more market-determined exchange ratesâ€¦ not exactly a sure-fire plan.
All the while, President Obama played his expected role, blaming China for manipulating the yuan as most other nations were more inclined to level criticism against the US’ own monetary shenanigans. The US was the proverbial pot calling the kettle black, and in the unilateral fashion that seems reminiscent of a previous presidency, the US once again goes it alone.
In the middle of last month, before Bernanke’s dream of QE2 became a reality, he described that “inflation is running at rates that are too low.” By “too low,” he meant of course that inflation is too low to keep artificially propping up asset prices, like the major market indices which in his opinion ought to give the US economy a shiny veneer of growth despite little underlying improvement in production.
Avis Budget Group (NYSE:CAR), the New Jersey-based international car and truck rental company, announced its Q3 earnings and it appears to be headed toward weaker revenue and margins. Dan Amoss, editor of Agora Financial’s Strategic Short Report, peels apart the latest numbers to find out where the company is headed.