Faber Says Long-Term US Treasuries Are `Suicidal’ Investment – Government bonds are likely to decline, said Faber, who publishes the Gloom, Boom and Doom report. After bottoming in December 2008, the 10-year Treasury yield rose as high as 3.9859 percent in April on government measures to stimulate the economy. Concern about a second recession in three years sent yields lower through October. “This is a suicidal investment,” Faber said in a telephone interview from St. Moritz, Switzerland. “Over time, interest rates on U.S. Treasuries will go up. Investors will gradually understand that the Federal Reserve wants to have negative real interest rates. The worst investment is in U.S. long-term bonds.”
Dollar Share of Global Reserves Fell in Third Quarter, IMF Says – The dollar’s share of global foreign-exchange reserves fell to the lowest in at least 11 years in the third quarter as central banks increased holdings of non-traditional currencies, International Monetary Fund data showed. The U.S. currency’s portion dropped to 61.3 percent in the period ended Sept. 30, the lowest since 1999, according to IMF quarterly data, from 62.2 percent in the prior quarter. The share of “other currencies,” which excludes reserve holdings of U.S. dollars, euros, British pounds, Japanese yen and Swiss francs, rose to 4 percent from 3.7 percent in the previous quarter. “The major reason why they need to diversify their portfolios is the majors like the dollar make up too much of the portfolios with the increased volatility we have now,”
Dude, Where’s My Job? – The storyline being sold to the American public by the White House and the corporate mainstream media is that the economy is growing, jobs are being created, corporations are generating record profits, consumers are spending and all will be well in 2011. The 2% payroll tax cut, stolen from future generations to be spent in 2011, will jumpstart a sound economic recovery. Joseph Goebbels would be proud. According to BEA data, financial industry profits and “rest of world” profits — that is, the money U.S.-based corporations make overseas — are relatively much higher now than they were in the 1950s or 1960s. And the taxes paid by corporations are much lower now than they were then, as a share of national income. The reason that corporate profits are near their all-time highs is that Wall Street corporations and mega multinational corporations are making gobs of loot and paying less of it out in taxes. Isn’t that delightful for the CEOs and top executives of these companies?
Counting The Cost: The Bill Could Run Into Billions, Warns Bligh - QUEENSLAND could face a flood damage bill "like never before" — with Premier Anna Bligh predicting it will run into the billions. So far the torrent has crippled parts of the state’s resources sector, which pumps millions into government coffers daily, wiped out huge swaths of crops, stranded tonnes of produce in transit to southern markets, swamped at least 700 homes, damaged state assets worth in excess of $1.5 billion and left a $500 million bill for councils from damage to local roads, bridges and water supplies.Queenslanders are going to need every bit of help they can get and the support for the disaster appeal has been overwhelming." A spokeswoman for the Premier said the repair costs for state assets alone would be in excess of $1.5bn. Meanwhile, the Local Government Association of Queensland has predicted the damage bill will go well above the $1.5bn estimated. "That bill will be on top of the estimated $600m to $1bn worth of damage to state-controlled public assets and in addition to the repair bill following the devastation wrought by floods in north Queensland earlier this month,"
Fed’s balance sheet falls in latest week (Reuters) – The U.S. Federal Reserve’s balance sheet fell in the latest week, following eight consecutive weeks of growth, as agency mortgage-backed securities holdings fell more than Treasury holdings increased, Fed data released on Thursday showed. The balance sheet declined to $2.403 trillion in the week ended December 29 from $2.410 trillion the prior week. The balance sheet has been expanding since the U.S. central bank last month began a second bout of quantitative easing, known as QE2. The balance sheet had topped the previous record of $2.333 trillion set in May as the Fed was about to end its initial round of bond purchases that involved $300 billion of Treasuries and $1.425 billion in mortgage-related securities. The second round of quantitative easing follows the Fed’s use of proceeds from maturing mortgage securities in its portfolio to buy Treasuries — a move that started in August. Since that time, it has purchased about a combined $236 billion in Treasuries.
Fed’s Balance Sheet Broadly Unchanged In Latest Week – The U.S. Federal Reserve’s balance sheet remained broadly unchanged at a high level in the latest week as the central bank went ahead with a controversial plan to buy government bonds. The Fed’s asset holdings in the week ended Dec. 29 edged just a tad lower to $ 2.423 trillion, from $2.431 trillion a week earlier, it said in a weekly report released Thursday. The central bank’s holdings of U.S. Treasury securities rose to $1.016 trillion Wednesday from $1.007 trillion the previous week. But that was offset by a decline in mortgage-backed securities to $992.14 billion from $1.008 trillion. Meanwhile, Thursday’s report showed total borrowing from the Fed’s discount lending window edged down to $45.08 billion Wednesday from $45.10 billion a week earlier. Borrowing by commercial banks moved up slightly to $58 million from $54 million a week earlier. The report also showed U.S. government securities held in custody on behalf of foreign official accounts fell to $3.351 trillion, from $3.358 trillion in the previous week. U.S. Treasurys held in custody on behalf of foreign official accounts fell to $2.618 trillion from $2.625 trillion in the previous week.
Fed Treasury Holdings Hit $1.02 Trillion; Total Assets Fall – The Federal Reserve’s total assets fell to $2.42 trillion in the latest week from a record $2.43 trillion the previous week as the central bank’s holdings of mortgage-backed securities fell more than the increase in its Treasury portfolio. Mortgage-backed securities held by the Fed fell by $16.3 billion to $992.1 billion in the week ended Dec. 29. Treasuries held by the Fed increased by $8.9 billion to $1.02 trillion, according to a weekly release by the central bank today. Fed holdings of federal agency debt were unchanged at $147.5 billion. The Fed has bought $167.9 billion in Treasuries on its way to purchasing $600 billion of government debt through June 2011. The Fed is also reinvesting the proceeds of its maturing mortgage holdings. M2 money supply rose by $4.9 billion in the week ended Dec. 20, the Fed said. That left M2 growing at an annual rate of 3.2 percent for the past 52 weeks, below the target of 5 percent the Fed once set for maximum growth. The Fed no longer has a formal target.