Feel free to comment on huffpo:

The MMT Grand Bargain: Raise Social Security Benefits and Suspend FICA

So glad to see the comments in defense that are as right on as anything I could have written!

Interview by Harry Shearer,
looks like someone at NPR is willing to buck the party line:
http://econintersect.com/b2evolution/blog1.php/2012/10/29/stephanie-shelton-explains-money-in-harry-shearer-interview

On Mon, Mar 12, 2012 at 5:45 PM, Chris Powell <> wrote:
>
> http://www.nysun.com/national/bernankes-zero-interest-rate-policy-turns-out/87738/

yes, and nicely stated as well!
since rate changes have little or no monetary effect, congress should not be having the fed adjust rates.

Morons:

US, Europe Face More Ratings Downgrades in Coming Years
The US tops the list of downgrade candidates because its debt and deficit troubles are unlikely to be resolved with the political infighting in Washington, a new study says.

And Tsy yields at record lows!

Even with $trillion federal deficits!

Even with the S and P downgrade!

Even with large foreign holdings of US Treasury securities!

Who would have thought?

;)

Happy New Year to all!!!

Foreign Central Banks Cut Treasury Holdings by Record

Holdings of U.S. Treasurys by foreign central banks has fallen by a record $69 billion over the past four weeks according to the latest Federal Reserve data. The Financial Times reports

http://bilbo.economicoutlook.net/blog/?p=17528

http://www.economist.com/node/21542174

Well worth a quick read.

John Maynard Keynes Knew What Occupy Wall Street Tells Us Today: “Banks and bankers are by nature blind.”

By James Galbraith

November 11 (Alternet) — Economist Friedrich Hayek is the darling of conservatives. Progressives prefer John Maynard Keynes. But when it comes to sensible policy, there’s really no contest.

Dear Senator Sanders,

Thank you for your attention to this matter!
My comments appear below:

The Veil of Secrecy at the Fed Has Been Lifted, Now It’s Time for Change

By Senator Bernie Sanders

November 2 (Huffington Post) — As a result of the greed, recklessness, and illegal behavior on Wall Street, the American people have experienced the worst economic crisis since the Great Depression.

Not to mention the institutional structure that rewarded said behavior, and, more important, the failure of government to respond in a timely manner with policy to ensure the financial crisis didn’t spill over to the real economy.

Millions of Americans, through no fault of their own, have lost their jobs, homes, life savings, and ability to send their kids to college. Small businesses have been unable to get the credit they need to expand their businesses, and credit is still extremely tight. Wages as a share of national income are now at the lowest level since the Great Depression, and the number of Americans living in poverty is at an all-time high.

Yes, it’s all a sad disgrace.

Meanwhile, when small-business owners were being turned down for loans at private banks and millions of Americans were being kicked out of their homes, the Federal Reserve provided the largest taxpayer-financed bailout in the history of the world to Wall Street and too-big-to-fail institutions, with virtually no strings attached.

Only partially true. For the most part the institutions did fail, as shareholder equity was largely lost. Failure means investors lose, and the assets of the failed institution sold or otherwise transferred to others.

But yes, some shareholders and bonds holders (and executives) who should have lost were protected.

Over two years ago, I asked Ben Bernanke, the chairman of the Federal Reserve, a few simple questions that I thought the American people had a right to know: Who got money through the Fed bailout? How much did they receive? What were the terms of this assistance?

Incredibly, the chairman of the Fed refused to answer these fundamental questions about how trillions of taxpayer dollars were being spent.

The American people are finally getting answers to these questions thanks to an amendment I included in the Dodd-Frank financial reform bill which required the Government Accountability Office (GAO) to audit and investigate conflicts of interest at the Fed. Those answers raise grave questions about the Federal Reserve and how it operates — and whose interests it serves.

As a result of these GAO reports, we learned that the Federal Reserve provided a jaw-dropping $16 trillion in total financial assistance to every major financial institution in the country as well as a number of corporations, wealthy individuals and central banks throughout the world.

Yes, however, while I haven’t seen the detail, that figure likely includes liquidity provision to FDIC insured banks which is an entirely separate matter and not rightly a ‘bailout’.

The US banking system (rightly) works to serve public purpose by insuring deposits and bank liquidity in general. And history continues to ‘prove’ banking in general can work no other way.

And once government has secured the banking system’s ability to fund itself, regulation and supervision is then applied to ensure banks are solvent as defined by the regulations put in place by Congress, and that all of their activities are in compliance with Congressional direction as well.

The regulators are further responsible to appropriately discipline banks that fail to comply with Congressional standards.

Therefore, the issue here is not with the liquidity provision by the Fed, but with the regulators and supervisors who oversee what the banks do with their insured, tax payer supported funding.

In other words, the liability side of banking is not the place for market discipline. Discipline comes from regulation and supervision of bank assets, capital, and management.

The GAO also revealed that many of the people who serve as directors of the 12 Federal Reserve Banks come from the exact same financial institutions that the Fed is in charge of regulating. Further, the GAO found that at least 18 current and former Fed board members were affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis. In other words, the people “regulating” the banks were the exact same people who were being “regulated.” Talk about the fox guarding the hen house!

Yes, this is a serious matter. On the one hand you want directors with direct banking experience, while on the other you strive to avoid conflicts of interest.

The emergency response from the Fed appears to have created two systems of government in America: one for Wall Street, and another for everyone else. While the rich and powerful were “too big to fail” and were given an endless supply of cheap credit, ordinary Americans, by the tens of millions, were allowed to fail.

The Fed necessarily sets the cost of funds for the economy through its designated agents, the nations Fed member banks. It was the Fed’s belief that, in general, a lower cost of funds for the banking system, presumably to be passed through to the economy, was in the best interest of ‘ordinary Americans.’ And note that the lower cost of funds from the Fed does not necessarily help bank earnings and profits, as it reduces the interest banks earn on their capital and on excess funds banks have that consumers keep in their checking accounts.

However, there was more that Congress could have done to keep homeowners from failing, beginning with making an appropriate fiscal adjustment in 2008 as the financial crisis intensified, and in passing regulations regarding foreclosure practices.

Additionally, it should also be recognized that the Fed is, functionally, an agent of Congress, subject to immediate Congressional command. That is, the Congress has the power to direct the Fed in real time and is thereby also responsible for failures of Fed policy.

They lost their homes. They lost their jobs. They lost their life savings. And, they lost their hope for the future. This is not what American democracy is supposed to look like. It is time for change at the Fed — real change.

I blame this almost entirely on the failure of Congress to make the immediate and appropriate fiscal adjustments in 2008 that would have sustained employment and output even as the financial crisis took its toll on the shareholder equity of the financial sector.

Congress also failed to act with regard to issues surrounding the foreclosure process that have worked against public purpose.

Among the GAO’s key findings is that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the GAO, the Fed actually provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

The GAO has detailed instance after instance of top executives of corporations and financial institutions using their influence as Federal Reserve directors to financially benefit their firms, and, in at least one instance, themselves.

For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.

This demands thorough investigation, and in any case the conflict of interest should have been publicly revealed at the time.

Getting this type of disclosure was not easy. Wall Street and the Federal Reserve fought it every step of the way. But, as difficult as it was to lift the veil of secrecy at the Fed, it will be even harder to reform the Fed so that it serves the needs of all Americans, and not just Wall Street. But, that is exactly what we have to do.

Yes, I have always supported full transparency.

To get this process started, I have asked some of the leading economists in this country to serve on an advisory committee to provide Congress with legislative options to reform the Federal Reserve.

Here are some of the questions that I have asked this advisory committee to explore:

1. How can we structurally reform the Fed to make our nation’s central bank a more democratic institution responsive to the needs of ordinary Americans, end conflicts of interest, and increase transparency? What are the best practices that central banks in other countries have developed that we can learn from? Compared with central banks in Europe, Canada, and Australia, the GAO found that the Federal Reserve does not do a good job in disclosing potential conflicts of interest and other essential elements of transparency.

Yes, full transparency in ‘real time’ would serve public purpose.

2. At a time when 16.5 percent of our people are unemployed or under-employed, how can we strengthen the Federal Reserve’s full-employment mandate and ensure that the Fed conducts monetary policy to achieve maximum employment? When Wall Street was on the verge of collapse, the Federal Reserve acted with a fierce sense of urgency to save the financial system. We need the Fed to act with the same boldness to combat the unemployment crisis.

Unfortunately employment and output is not a function of what’s called ‘monetary policy’ so what is needed from the Fed is full support of an active fiscal policy focused on employment and price stability.

3. The Federal Reserve has a responsibility to ensure the safety and soundness of financial institutions and to contain systemic risks in financial markets. Given that the top six financial institutions in the country now have assets equivalent to 65 percent of our GDP, more than $9 trillion, is there any reason why this extraordinary concentration of ownership should not be broken up? Should a bank that is “too big to fail” be allowed to exist?

Larger size should be permitted only to the extent that it results in lower fees for the consumer. The regulators can require institutions that wish to grow be allowed to do so only in return for lower banking fees.

4. The Federal Reserve has the responsibility to protect the credit rights of consumers. At a time when credit card issuers are charging millions of Americans interest rates between 25 percent or more, should policy options be established to ensure that the Federal Reserve and the Consumer Financial Protection Bureau protect consumers against predatory lending, usury, and exorbitant fees in the financial services industry?

Banks are public/private partnerships chartered by government for the further purpose of supporting a financial infrastructure that serves public purpose.

The banks are government agents and should be addressed accordingly, always keeping in mind the mission is to support public purpose.

In this case, because banks are government agents, the question is that of public purpose served by credit cards and related fees, and not the general ‘right’ of shareholders to make profits.

Once public purpose has been established, the effective use of private capital to price risk in the context of a profit motive should then be addressed.

5. At a time when the dream of homeownership has turned into the nightmare of foreclosure for too many Americans, what role should the Federal Reserve be playing in providing relief to homeowners who are underwater on their mortgages, combating the foreclosure crisis, and making housing more affordable?

Again, it begins with a discussion of public purpose, where Congress must decide what, with regard to housing, best serves public purpose. The will of Congress can then be expressed by the institutional structure of its Federal banking system.

Options available, for example, include the option of ordering that appraisals and income statements not be factors in refinancing loans originated by Federal institutions including banks and the Federal housing agencies. At the time of origination the lenders calculated their returns based on mortgages being refinanced as rates came down, assuming all borrowers would be eligible for refinancing. The financial crisis and subsequent failure of policy to sustain employment and output has given lenders an unexpected ‘bonus’ through a ‘technicality’ that allows them to refuse requests for refinancing at lower rates due to lower appraisals and lower incomes.

6. At a time when the United States has the most inequitable distribution of wealth and income of any major country, and the greatest gap between the very rich and everyone else since 1928, what policies can be established at the Federal Reserve which reduces income and wealth inequality in the U.S?

The root causes begin with Federal policy that has resulted in an unprecedented transfer of wealth to the financial sector at the expense of the real sectors. This can easily and immediately be reversed, which would serve to substantially reverse the trend income distribution.

Sincerely,

Warren Mosler

In case you thought Sweden knew how it worked:

Sweden Pledges to Keep Budget Balanced as Economy Slows

 
Sept. 20 (Bloomberg) — Sweden pledged to keep budget
surpluses intact as Europe’s debt crisis and slowing U.S. growth
threaten to stifle the largest Nordic economy’s expansion.
Sweden’s budget will be in balance next year after a
surplus of 0.1 percent this year, Finance Minister Anders Borg
said today at a presentation of the 2012 budget in Stockholm.
The economy will grow 4.1 percent in 2011 and 1.3 percent in
2012, the same as estimated in August, he said.
“We now have the freedom to act and room to maneuver that
we need if the situation deteriorates,” Borg said. “If we end
up with a really serious downturn we should of course have some
kind of deficit but those deficits should not be so big that
they create uncertainty.”
Prime Minister Fredrik Reinfeldt said last week that his
minority government will ensure the budget steers clear of
deficits in case more stimulus is needed should the European
debt crisis deepen and global growth slows. The government last
month scrapped planned income tax cuts amid narrowing surpluses
and opposition from a majority of parliament.

thanks, well researched and much needed!!!

http://blogs.independent.ie/independent_blog/2011/09/economic-solutions-political-impediments-and-the-circus-that-we-call-europephilip-pilkington-conflicting-messages-coming-ou.html

FINANCIAL CRISIS: Deeper malaise at heart of the European project

 
PHILIP PILKINGTON

Conflicting messages coming out of euroland of late. On the one hand we have a German constitutional court ruling that any permanent action on behalf of the European authorities to stymie the current crisis and pose a risk to other countries are unconstitutional. Add to that Angela Merkel saying that eurobonds are ‘absolutely wrong’. Yet on the other hand, we have Jose Manuel Barroso, the president of the European Committee, coming out saying that a eurobond proposal is imminent. Clearly these two official statements conflict with one another.
Lying behind this latest conflict in euroland is a much deeper conflict: that between full fiscal union and breakup. Eurobonds are seen by many in the EU as the first step toward full federal integration. Sure, the proponents tell us that eurozone-wide bonds would only be issued to back the currently deteriorating position of the sovereign nations in fiscal difficulty, but it’s obvious to all that institutional reforms would have to follow.

 
Eurobonds would effectively centralise the burden of government expenditure in the eurozone. All states would back the eurobond and all states would, in turn, be backed by the eurobond. Sovereign government debt would gradually wane in importance as the European-wide bonds rose in prominence. With this would come the debate over how fiscal policy should be managed in the union. If states no longer bear the ultimate burden of financing themselves why should they be allowed to make their own taxing and spending decisions?

 
The trajectory then appears inevitable. Those in the eurozone who want to centralise fiscal policy would soon be front and center stage in the political debate. And those opposed to such centralisation would be equally to the fore. The former would argue that since member states were no longer financing themselves, fiscal responsibilities need to be given to a higher authority. While the latter would make the case that having some eurocrat in Frankfurt or Brussels involved in micromanaging the decisions of a nation state’s taxing and spending is a ghastly prospect — they might allege that it is reminiscent of the old Soviet centralised bureaucracy; now less a Politburo than a Politeuro.

 
Those opposed to centralisation would probably end up calling for the break up of the eurozone proper — that, after all, would be the logical end point of their argument.

 
So, what on earth should we do? The dangers of having a centralised fiscal authority are obvious; but the break up of the eurozone would prove remarkably unpleasant for all those involved.

 
The central question is what the eurocrats would do once they had control over fiscal policy. If they continued on as they are — as arch-conservatives geared only toward curbing inflation, even when such inflation simply doesn’t exist — they would destroy the eurozone. Simple as. Trade imbalances and an uneven economic landscape necessitate government surpluses to be run in some countries and deficits in others. To think otherwise is to think in moral terms rather than economic terms. But if the eurocrats did continue in their highly conservative — dare I say, unrealistic — tracks, we would have constant fiscal crises on our hands and eventually member states who were not allowed to run necessarily loose fiscal policies would drop out of the union.

 
What the eurozone needs is a central authority with an extremely flexible fiscal policy. Without this the project is doomed from the outset and we may as well just start looking for the cheapest way to get out now before further costs are incurred.

 
In fact, the eurozone already has an institution that can effectively allow such a flexible fiscal policy to be pursued: the ECB. The ECB, like it’s US cousin the Federal Reserve, has control over the issuance of currency and in that capacity it can effectively pay for anything it wants — provided, of course, that which it pays for is denominated in the currency it issues (Euros, in the case of the ECB). This simple fact comes as a shock to many, but consider what former Federal Reserve chairman Alan Greenspan recently said regarding the Fed:
“The United States can pay any debt it has because we can always print money to do that,” said Greenspan in an interview with Meet the Press recently.

 
Well, the same is true for the ECB. They have the legal mandate to create as much currency as they see fit and that currency can be effectively used to pay for anything that is denominated in said currency; that includes national government debt. It follows from this that the ECB can, in fact, create any amount of money that can then be used to retire the government debt of those sovereigns now facing default and crisis. This is a much simpler solution than eurobonds because it doesn’t pose any risk to other eurozone countries. And it can also be used in order to ensure fiscal flexibility in the future and ensure that the eurozone prospers rather than collapses.

 
This proposal was originally put together by economist and government bond expert Warren Mosler. Here’s how it would work:

 
The ECB would create €1trn on an annual basis and distribute it among the eurozone nations on a per capita basis. So, Germany, since it has a larger population, would get more than, say, Ireland. Each country would then use their newly acquired funds to begin paying down their stock of public sector debt. When they reached a reasonable level of debt — say 60% debt-to-GDP — the transfers would either discontinue or could be renegotiated to allow compliant countries to spend them (provided, of course, there are no major inflationary pressures in the eurozone at the time).

 
Since the payments take place on an annual basis the ECB and other European authorities could use them as leverage over the sovereign nations to ensure that they complied with responsible deficit targets. This would be far more effective than the current system — which effectively fines member-states for non-compliance — as the penalties for non-compliance would be immediately visible and would not require time-consuming legal and administrative action.

 
This all seems so simple, so what are the objections? Why won’t the ECB do this and solve the crisis?

 
Well, economically speaking the problems are basically non-existent. We’ve learned from the Quantitative Easing (QE) programs in the US and Britain (as well as in Japan some years ago) that so-called ‘debt monetisation’ is not inflationary. Buying up government debt certainly increases the amount of bank reserves in the private sector and according to the old economics textbooks this should lead to increased lending and thus inflation. But such inflation simply has not occurred in either country (yes, there is some inflation in Britain right now but this is largely due to oil/food price increases and VAT rises — it is NOT ‘demand-pull’).

 
This revelation is both surprising and important. Recent studies by economists working within central banks show that mainstream economists have basically been getting the whole thing wrong. In reality expanding bank reserves will not increase lending and so it is not inherently inflationary. Consider this paper by economists at the Bank of International Settlements (BIS) — known among economists as ‘the central bank’s central bank — published in late 2009. The authors write:

 
“The preceding discussion casts doubt on two oft-heard propositions concerning the implications of the specialness of bank reserves. [These are] first, [that] an expansion of bank reserves endows banks with additional resources to extend loans, adding power to balance sheet policy. Second, there is something uniquely inflationary about bank reserves financing.”

 
The authors continue:

“In fact, the level of reserves hardly figures in banks’ lending decisions. The amount of credit outstanding is determined by banks’ willingness to supply loans, based on perceived risk-return trade-offs, and by the demand for those loans. The aggregate availability of bank reserves does not constrain the expansion directly.”

 
So much for the inflation argument!

 
The other argument is that such debt monetisation might lead to a devaluation of the currency in question. If there are more Euros floating around the banking system, even if they aren’t spent into circulation, their value will decrease. In actual fact there is no evidence of any direct link between exchange-rate depreciation and the creation of money.

 
This doesn’t mean that depreciation may not occur due to monetisation but it does mean that we have to consider other variables. For example: what are the trade-off effects? If no action is taken and the eurozone crisis continues to spiral out of control will the currency depreciate anyway? You can bet your socks on that! So, exchange-rate issues are far more complex than simply ‘more money = devalued currency’.

 
In fact, the objections to this sort of plan are typically moral rather than economic in nature. Many commentators have begun to realise that a great deal of the discourse that has cropped up around the eurocrisis is not actually economic at all — it is moral. This is phenomenon about which economic commentators can say little, although it is a very real problem. However, if such moralising leads the eurocrats and the politicians to fiddle while Rome burns we may very well see the ECB creating bank reserves to backstop the banks anyway if a default occurs. Such will be messy. And we have seen it can be avoided. But what can one do? If nothing else necessity is certainly the mother of invention.

http://blogs.independent.ie/independent_blog/2011/09/bailouts-are-wily-germans-really-looking-for-the-fire-escape-.html

Income Slides to 1996 Levels in U.S. The income of the typical American family—long the envy of much of the world—has dropped for the third year in a row and is now roughly where it was in 1996 when adjusted for inflation.

The US government currently owes about $14.2 Trillion. Who did we borrow that money from, and how did those financiers get that money?

Has that money always been on earth? If not, then where did it come from? Did somebody issue it into existence? If so, then by what authority did they do so, and for what reason do nations lack that authority?

This is an excellent question. Where does the money that the Government borrows come form? And the answer is: It comes from the Treasury and the Fed! And it cannot come from any other source. This is what so few people realize, perhaps because economists are too reluctant to explain.
 

When the Government ‘borrows’, it sells Treasury securities and receives reserves from banks. Bank reserves are deposits at the Fed owned by banks. Deposits at the Fed can only come into existence through two channels:
1. Government spending (e.g., when the Treasury buys output from business or pays federal employees); and
2. Fed lending (e.g., when the Fed makes loans to banks).
This means that the money that government borrows (bank reserves) ultimately comes from the Treasury or from the Fed.
 

This simple statement has significant consequences:
-The Government does not borrow money created by others,
-The Government does not borrow anything it cannot create itself,
-The Government has no functional need to borrow,
-The Government issues securities because if it did not, the banks would have an excessive amount of reserves and the interest rate would go to zero,
-When the Government borrows, it functionally makes monetary policy (in the same way as the Fed doing open market operations),
-Governments self inflict deficit and debt rules onto themselves that are causing the world economy to collapse
-Rules for governments that aim to promote jobs and prosperity should be:
1. Do not overtax the economy for any desired size of the government sector;
2. Let deficits grow until we reach full employment;
3. Do ‘quality spending’ to create jobs and control prices.

Lots of public purpose here…

Subject: The Disruptor Algo

Perhaps this explains some of the craziness.

 

A Trillion Bytes of Data Friday Hides A Lot of Sins

Jon “DRJ” Najarian | ask-drj@optionmonster.com

 
Last night over 14 months after the Flash Crash, US regulators finally sent subpoenas to HFT firms. In light of that and the games that were played last week, I offer more insights into HFT from my friends at Nanex, which supports what our HeatSeeker saw as the quants had their way with the markets to the detrement of all investor classes:

 

On Friday, Aug 5, 2011, we processed 1 trillion bytes of data for all U.S. equities, options, futures, and indexes. This is insane. A year ago, when we processed half of that, we thought it was madness. A year before that, when it was 250 billion bytes, we thought the same. There is no new beneficial information in this monstrous pile of data compared to 3 years ago. It is noise, subterfuge, manipulation. The root of all that is wrong with today’s markets.

 
HFT is sucking the life blood out of the markets: liquidity. It is almost comical, because this is what they claim to supply. No one with any sense wants to post a bid or ask, because they know it will only get hit when it’s at their disadvantage. Some give in, and join the arms race. Others leave.

 
Take the electronic S&P 500 futures contract, known as the emini, for example. This is, or used to be, a very liquid market. The cumulative size in the 10 levels in the depth of book was often 20,000 contracts on each side. That means a trader could buy or sell 20,000 contracts “instantly” and only move the market 10 ticks or price levels. Even during the flash crash, before the CME halt, when hot potatoes were flying everywhere, the depth would still accommodate an instant sale of 2,000 contracts.

 
Not anymore. On Friday, 2,000 contracts would have sliced right through the entire book. Not during a quiet period, or before a news event. Pretty much any minute of trading that day after the 9:54 slide. And it wasn’t just Friday, the trend in the depth of book size has been declining rapidly over the last few week. What used to be the most liquid and active contract in the world, which served as a proxy for the true price of the US stock market for decades, is getting strangled by the speed of light, a weapon wielded by HFT.

 
Without going into detail at this time, we think we know one cause of the drop in liquidity. A certain HFT algorithm that we affectionately refer to as The Disruptor, will sell (or buy) enough contracts to cause a market disruption. At the same exact time, this algo softens up the market in ETFs such as SPY, IWM, QQQ, DIA and other market index symbols and options on these symbols. When the disruptor strikes, many professional arbitrageurs who had placed their bids and offers in the emini suddenly find themselves long or short, and when they go to hedge with ETFs or options, find that market soft and sloppy and get poor fills. Naturally, many of these arbitrageurs realize the strategy no longer works, so they no longer post their bids and offers in the emini. Other HFT algos teach the same lesson — bids or offers resting in the book will only become liabilities to those who can’t compete on speed.

 
In summary, HFT algos reduce the value of resting orders and increase the value of how fast orders can be placed and cancelled. This results in the illusion of liquidity. We can’t understand why this is allowed to continue, because at the core, it is pure manipulation.

http://www.huffingtonpost.com/warren-mosler/congress-you-are-the-scor_b_914306.html

Yes, to support exports the region by supporting the value of the euro vs the yuan.

China Raises Holdings of Euro Debt, Including Spain
Published: Thursday, 6 Jan 2011 | 4:38 AM ET
By: Reuters
 

China has increased its holdings of euro debt, including Spanish debt, and has confidence in the European financial markets, according to the Chinese Commerce Ministry.
 

China’s Vice Premier Li Keqiang has said his country is willing to buy about 6 billion euros of Spanish public debt, Spanish newspaper El Pais reported earlier on Thursday, citing government sources.
 

The sources told El Pais Li had said at a meeting that China is willing to buy as much Spanish public debt as Greek and Portuguese debt combined.
 

They said that added up to about 6 billion euros in Spanish government bonds.
 

Li leaves Madrid today, where he has been on a three-day visit, before visiting the United Kingdom and Germany.
 

The report echo remarks by Li earlier this week, although the report is the first to give a figure.
 

“China is a responsible, long-term investor in the European financial market and particularly in Spain, and we have confidence in the Spanish financial market, which has meant the acquisition of its public debt, something which we will continue to do in the future,” Li wrote in an editorial in El Pais on Monday.
 

Spain has come under increasing pressure from international debt markets on concerns it may be forced to follow Greece and Ireland and seek an EU or International Monetary Fund bailout, but while bond yields have risen, demand for Spanish debt remains solid.

High Gold Prices Giving Old Mine New Life
Published: Wednesday, 5 Jan 2011 | 5:02 PM
By: Bertha Coombs
CNBC Reporter

The easy gold was mined more than 100 years ago in Cripple Creek, Co. The town is now more of a gambling attraction.

The gold left in the hills just above the town, about an hour outside Colorado Springs, is in low-grade, small concentrations, which take a lot more work to mine and process.

But with gold well north of $1,000 an ounce, the economics of mining, even low-grade gold, have never been better.

“We’re actually plowing more money into this operation nowadays than we are drawing off of it, and that’s so we can extend the life of this mine,” says Ray Dubois, VP and general manager of the Cripple Creek & Victor Mine.

Anglogold Ashanti gained full ownership of this mine in 2008, and the gold producer has been investing in expanding production, literally giving the mine and the 300 jobs that it supports a new lease on life.

“We’re at the end of a major extension project here that took the mine life, added four years from 2012 to 2016″ says Dubois. “We’re going to put a hundred more into the place to take it into the mid 2020s.”

The mine operates 24 hours a day. Crews literally blast the gold out of the rock, then trucks that stand two stories carry the stones to a crusher.

The smaller crushed stones are then soaked in a giant vat of low-grade cyanide, which leaches the gold from the rock.

The gold is refined and poured into rough cones of gold, that average 60 to 70 pounds.

It takes about 750 truckloads—a full day’s work—to make one of those cones. It works out to about 250 tons of rock to produce two ounces of gold.

In 2010 the Cripple Creek & Victor Mine produced 230,000 ounces of gold.

By comparison, the world’s largest mine produced 10 times that. Yanachocha in Peru, a joint venture of Newmont and Buenaventura, likely produced around two million ounces in 2010, according to Jeffrey Christian of CPM Group.

Anglogold is betting that high gold prices will make its investment in Cripple Creek & Victor pay off in the years to come.

The workers and the communites that depend on the mining jobs here are hoping it does, too.

Blatantly delaying action on something that can help the economy for presumed political gain is a blunder equal to the Republicans saying they would oppose the proposed Obama tax cuts.

It doesn’t get more insulting to the voters than this.

Vote on Bush Tax Cuts Is Now Unlikely Before Nov. Elections

Congress will not vote on extending Bush-era tax cuts before the November elections, a U.S. Senate leader said Thursday, reflecting fear among some Democrats that it could hurt their chances at the polls.

“The reality is, we are not going to pass what needs to be passed to change this, either in the Senate or in the House, before the election,” said the Senate’s assistant majority leader, Dick Durbin.

Durbin told reporters he saw no hope for a quick decision on the controversial tax cut question in the current tense political atmosphere.

He said the final decision on the timing of a vote in the Senate would be made by Senate Majority Leader Harry Reid.

Durbin said the likelihood of having an early vote was “very, very slim.”