Central Bankers: World Is On Brink Of Fresh Outbreak of Currency War

The Vogons, Hitchhiker's Guide to the Galaxy

The global trade and currency regimes are becoming even more dangerously unstable the longer that the real problems underlying the enormous imbalances in the world economy and rigging of the markets to hide that continues.

A war ended the last Great Depression, it is not surprising that this one may end similarly as well.

The finanical engineers have failed, repeatedly.  But rather than admit their failures and corruption it is likely that they will consistently seek more and broader power to manipulate and allocate the wealth of the world.  Fiat is like a Ponzi scheme that must keep enlarging its span of control in order to remain viable.

'Give us more power, suspend the ridiculous constraints of human rights and justice, and we will save you from this peril.'  

To get your way, first you scare them, and then ignore them. The tune may change, but the song remains the same.

Bloomberg
Russia Says World Is Nearing Currency War as Europe Joins
By Simon Kennedy & Scott Rose
Jan 16, 2013 11:24 AM ET

The world is on the brink of a fresh “currency war,” Russia warned, as European policy makers joined Japan in bemoaning the economic cost of rising exchange rates.

“Japan is weakening the yen and other countries may follow,” Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said at a conference today in Moscow.

The alert from the country that chairs the Group of 20 came as Luxembourg Prime Minister Jean-Claude Juncker complained of a “dangerously high” euro and officials in Norway and Sweden expressed exchange-rate concern.

The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies run out of room. The risk is as each country tries to boost exports, it hurts the competitiveness of other economies and provokes retaliation.

Yesterday “will go down as the first day European policy makers fired a shot in the 2013 currency war,” said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London.

G-20 Clash

The skirmish may lead to a clash of G-20 finance ministers and central banks when they meet next month in Moscow, three months after reiterating their 2009 pledge to “refrain from competitive devaluation of currencies.”

While emerging markets have repeatedly complained about strong currencies as a result of easy monetary policies in the west, the engagement of richer nations is adding a new dimension to what Brazilian Finance Minister Guido Mantega first dubbed a currency war in 2010.

After Switzerland blocked the franc’s appreciation against the euro since September 2011, Japan has reignited the latest round of rhetoric as newly elected Prime Minister Shinzo Abe campaigns to spur growth via a more aggressive central bank. The yen has slid 11 percent against the dollar since December and this week touched its lowest level in two years.

Now other policy makers are speaking out. Juncker, who leads the group of euro-area finance ministers, said yesterday that the euro’s 7 percent gain against the dollar in the past six months poses a fresh threat to the European economy just as it shows signs of escaping its three-year debt crisis...

‘Negative Impacts’

In Norway, Finance Minister Sigbjoern Johnsen said in an interview that a strong krone challenges the economy and that the government must ease pressure on the Norges Bank to avoid krone strengthening by conducting a “tight” fiscal policy. Norges Bank Deputy Governor Jan F. Qvigstad said yesterday that if the krone remains strong until policy makers meet in March, “that of course has an obvious effect on the interest rate.”

That pushed the currency, which has emerged as a haven from the European crisis, to its lowest level in more than two months versus the euro...

If Japan continues to pursue a softer currency, reciprocal devaluations would hurt the global economy, Russia’s Ulyukayev said today. That echoes recent concern from other international policy chiefs.

Federal Reserve Bank of St. Louis President James Bullard said Jan. 10 that he’s “a little disturbed” by Japan’s stance and the risk of “beggar-thy-neighbor” policies.  (China has been doing it for about fifteen years, but the imbalances generated favored the American oligarchs. - Jesse)

Reserve Bank of Australia Governor Glenn Stevens said Dec. 12 that there is a “degree of disquiet in the global policy- making community,” while Bank of England Governor Mervyn King said Dec. 10 that he worried “we’ll see the growth of actively managed exchange rates..."

Andrew Nagorski: Hitlerland - Little Eichmanns

The opposite of love is not hate, but callous apathy and uncaring.  Hate is a passion, a counterpart to lust.

And tragedy occurs when such heartlessness is advantaged by careerism, and an ideology that rationalizes unconscionable expediency, sanctioned privation, organized repression, and eventually murder, on a massive scale. 

This is not how monsters are created, but how their enablers and supporters are formed, so that they too can, over time, become as beasts to escape their unbearable shallowness, and the emptiness of their souls.

These are not the Hitlers, but the little Eichmanns. And they are abroad again, making and influencing policy on an alarming scale, today.

"The sad truth is that most evil is done by people who never make up their minds to be good or evil...

The trouble with Eichmann was precisely that so many were like him, and that the many were neither perverted nor sadistic, that they were, and still are, terribly and terrifyingly normal. From the viewpoint of our legal institutions and of our moral standards of judgment, this normality was much more terrifying than all the atrocities put together...

He [Eichmann] was in complete command of himself nay he was more: he was completely himself. Nothing could have demonstrated this more convincingly than the grotesque silliness of his last words.

He began by stating emphatically that he was a Gottgläubiger to express in common Nazi fashion that he was no Christian and did not believe in life after death. He then proceeded: “After a short while gentlemen we shall all meet again. Such is the fate of all men. Long live Germany, long live Argentina, long live Austria. I shall not forget them.”

In the face of death he had found the cliché used in funeral oratory. Under the gallows his memory played him the last trick: he was 'elated' and he forgot that this was his own funeral.

It was as though in those last minutes he was summing up the lesson that this long course in human wickedness had taught us: the lesson of the fearsome word-and-thought-defying banality of evil.”

Hannah Arendt

h/t Andrew

Gold Daily and Silver Weekly Charts

Gold or silver need to take out the intermediate downtrends in order to set up the next major move. This might not occur until the debt cliff plays out.

They can only keep the price down so long.

Germany is said to be announcing the repatriation of much of their gold tomorrow. Let's see if that actually happens.

The Treasury is apparently tapping its employee pension funds to avoid a problem with its debts, in the manner of modern US corporations and past debt limit crises. Thank God there is no commingling of customer (citizen) accounts to raid as was done at MF Global. Or at least not yet.  When you own the currency and the printing press such direct and brutish methods are unnecessary.

I suspect that the currency wars will be rocking and rolling by this summer.

SP 500 and NDX Futures Daily Charts - Wall St. In Denial

The Wall Street wiseguys would like to hand this rally off to mom and pop and their funds. But mom and pop are still largely sitting this one out. And it is making them nervous.

Wall St. blames the government, and the uncertainty over the debt and the currency.

But this is the usual deflection and denial. The markets are so obviously foul that normal honest people want little or nothing to do with them. And they are voting with their feet.

It could be that the Fed and the Administration will choose to inflate another stock bubble, and people will, as some ex-Fed governor turned stock analyst used to snigger, will drive the baby boombers back into stocks because they have no choice.

Those who remember the market doldrums of the 1970's will know that you can cheat the people only so much, and then tend to go away for quite some time, until the next gimmick shows up.