So you want a trillion dollar platinum coin? Ok: here are some facts:
Platinum has traditionally been the most valuable precious metal for one simple reason: it is rare.
It is so rare, that all the platinum ever mined could fit into a 25 cubic foot box.
The weight of that box comes out to just over 16 tons: this is how much platinum has been mined since the start of time.
A coin valued at $1 trillion and made out of platinum would, at today’s price of $1557/ounce, weigh in at 642.3 million ounces.
642.3 million ounces is also roughly 18 thousand tons, or about 1100 times more than all the platinum mined.
via Putting A Trillion Dollars Of Platinum In Perspective | ZeroHedge.
Today, one calendar year later, none other than Bill Gross, in his first investment letter of 2013, admits we were correct: “Zero-bound interest rates, QE maneuvering, and “essentially costless” check writing destroy financial business models and stunt investment decisions which offer increasingly lower ROIs and ROEs. Purchases of “paper” shares as opposed to investments in tangible productive investment assets become the likely preferred corporate choice.”
via Bill Gross On Bernanke’s Latest Helicopter Flyover, “Money For Nothing, Debt For Free” And The End Of Ponzi Schemes | ZeroHedge.
“All that money printing across the globe put a bid under gold,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “There is overall optimism about the fiscal deal so we are seeing buying across the counter.”
via Gold Extends Longest Streak Since 1920 on Central-Bank Stimulus – Bloomberg.
Paul Krugman is one of the leading “names” in economics today. There are reasons for his stature. He’s got a Nobel Prize, he’s an academic at a leading University, he writes for the NY Times, and not a week goes by without him being on some TV show or another. If you asked the average guy on the street to name an economist, there’s a good chance the answer would be – “Krugman”.
PK has been having a slow motion epiphany over the last month. He has posted four articles on a topic since December 8. (Link, Link, Link and Link) He has identified a “phenomenon” that is occurring in the US economy. This new, powerful force that he has stumbled upon, is keeping him awake at night. Clearly, PK is troubled by what he has uncovered. His words:
“It” has really uncomfortable implications. But I think we’d better start paying attention to those implications.
via On Krugman’s Epiphany | ZeroHedge.
The politicization of central banking continues unabated. The resurrection of Shinzo Abe and Japan’s Liberal Democratic Party – pillars of the political system that has left the Japanese economy mired in two lost decades and counting – is just the latest case in point.Japan’s recent election hinged critically on Abe’s views of the Bank of Japan’s monetary policy stance. He argued that a timid BOJ should learn from its more aggressive counterparts, the US Federal Reserve and the European Central Bank. Just as the Fed and the ECB have apparently saved the day through their unconventional and aggressive quantitative easing QE, goes the argument, Abe believes it is now time for the BOJ to do the same.It certainly looks as if he will get his way. With BOJ Governor Masaaki Shirakawa’s term ending in April, Abe will be able to select a successor – and two deputy governors as well – to do his bidding.
via Stephen Roach On Why Abes Aggression Wont Save Japan | ZeroHedge.
In other words, just like last year when things were going from bad to worse in Europe, the old continent’s banks are suddenly facing a major liquidity shortage, which however would not be news to anyone who read our piece from yesterday “Surge In Marginal Lending Facility Usage To One Year Highs Confirms Year End EUR Repatriation” in which we said that Europe’s banks “suddenly find themselves needing gobs of liquidity – not USD-denominated liquidity, but domestic, EUR-based.” Sure enough, today we just got confirmation of how truly bad this issue is.
But what makes things much worse is that sterilization failures like today are not supposed to happen in a post LTRO 1 and 2 world in which the European banks are flush with €1 trillion in excess liquidity. And yet it did.
via Another Flashing Red Light: Euro Liquidity Shortage Leads To First ECB Sterilization Failure Since November 2011 | ZeroHedge.
We know its not Paulson, Ackman, or SAC; is it Dalio’s Bridgewater? No, the world’s most profitable private entity that is in business to generate profits via speculation in financial markets is, drum roll please, the Federal Reserve. Stone & McCarthy (SMRA) estimates the Fed will make around $90bn profits in 2012. Of this around $87.5bn will be remitted to the US Treasury – a new record high (quite helpful when one is trying to avoid a debt ceiling using ‘extraordinary measures’ though we assume this is already penciled in due to its consistency). Since 1947 the Federal Reserve has paid the Treasury roundly $975 bln, about 1/3 of which has been paid over the past 6 years. In other words, the cumulative Federal deficit since 1947 has been reduced by nearly $1 trillion since 1947 due to the repatriation of Fed earnings to the Treasury Department. SMRA estimates that this profitability, thanks to the spread between SOMA coupon income and IOER will likely lift the Fed’s profitability to around $120bn in 2013, but a 1% rise in yields would translate into a $275bn loss.
via The World’s Most Profitable Hedge Fund Is About To Make The US Treasury’s Life Much Easier | ZeroHedge.
The identities and business dealings of these families are often cloaked in secrecy because of state censorship and complex corporate webs. To document them, Bloomberg scoured thousands of pages of corporate filings, property records, official websites and archives, and conducted dozens of interviews from China to the United States, where many were educated and have at times made their homes. To read the related stories click here and here.
via The Octagon Of Oligarchy: Meet China’s “Eight Immortals” – An Infographic | ZeroHedge.
The finance minister’s first task will be to deliver his
party’s pledge of a “large-scale” supplementary budget to
stimulate the economy, which is forecast to shrink for a third
straight quarter. At issue will be averting any sell-off in the
bond market as the nation grapples with debt in excess of twice
the size of gross domestic product.
via Aso Named Next Japan Finance Chief as Abe Primes Fiscal Pump – Businessweek.
But a bigger question is what is the actual collateral backing this gargantuan market which is about 10 times greater than the world’s combined GDP, because as the “derivative” name implies all this exposure is backed on some dedicated, real assets, somewhere. Luckily, the IMF recently released a discussion note titled “Shadow Banking: Economics and Policy” where quietly hidden in one of the appendices it answers precisely this critical question. The bottom line: $600 trillion in gross notional derivatives backed by a tiny $600 billion in real assets: a whopping 0.1% margin requirement! Surely nothing can possibly go wrong with this amount of unprecedented 1000x systemic leverage.
via 1000x Systemic Leverage: $600 Trillion In Gross Derivatives “Backed” By $600 Billion In Collateral | ZeroHedge.