Fed seen buying up to $100 billion in assets a month

NEW YORK (Reuters) – Most leading economists expect the Federal Reserve to buy between $80 billion and $100 billion worth of assets per month under a new program to bolster the struggling economy, a Reuters poll found on Wednesday.

Estimates for how long the Fed will print money and how much it will eventually spend varied widely, from $250 billion to as high as $2 trillion.

In a similar Reuters poll of primary dealers conducted on October 8, dealers mostly forecast the total size of the new program at $500 billion to $1.5 trillion.

Manipulation. Of Capitalism, That Is.

Good Morning,

Additional gains recorded overnight brought the US dollar very near the 78 mark on the trade-weighted index and contributed to a fresh dip in gold prices down to the $1,326.00 level. Crude oil felt the rising dollar-induced selling heat as well, losing nearly $1 to fall to $81.72 per barrel.

Much of what was seen overnight was due to rising apprehensions related to next Tuesday’s Fed meeting. While most everyone still expects the US central bank to ‘give’ something in order to add some adrenaline to the economic recovery process, the short-dollar/long-commodities crowd is becoming just a tad less certain that the Fed will be all that generous.

QE2 Is Coming: Sell the Rumor, Buy the Fact?

Wed Oct 27–At the conclusion of the Nov. 2-3 FOMC meeting it is widely expected that another round of quantitative easing, or so-called QE2, will be announced in an attempt to stimulate the growing, but sluggish U.S. economy. In fact, Fed chief Ben Bernanke has been hinting at the potential for additional bond purchases since August.

Taking a look at the Treasury market, stock market and the forex markets, players do indeed expect QE2 and may have already priced that in, amid a drop in 10-year yields in recent weeks, a renewed rally in the stock market and on-going weakness in the U.S. dollar.

DOLLAR SALES

.Gold Prices May Rise in London as Dollar’s Decline Spurs Investor Demand

Yesterday the dollar rallied and gold dropped amid speculation that any monetary program, or quantitative easing, to boost the U.S. economy will be gradual. Gold usually moves inversely to the greenback, which today declined against the euro. Bullion is trading 4.4 percent below a record $1,387.35 an ounce reached on Oct. 14.

“If the dollar stays weak, it probably is supportive” for gold, Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “Some gold investors are getting a bit more cautious on the magnitude of quantitative easing, that it could be less than the market had already priced in.”

Gold: Further to Run?

It’s been an exciting month. Gold rose, surging well above the $1300 level. Silver and gold shares soared even more.

We hear that gold is in a bubble, it can’t rise much further and so on. Many wonder, why it’s even risen so much? For that, you again have to look at history from a global perspective and it’ll provide the answer.

LOOKING BACK…

Why Gold?

Gold is honest money. Unlike paper or fiat money, which we all have been forced to use, its value cannot be undermined by the creation of endless new supplies via accounting entries and the printing press. As honest money with intrinsic value, gold has survived as a currency for thousands of years, while every form of paper money created over that time has become defunct.

Every fiat currency ever created through history has vanished. The U.S. dollar, which is the world’s reserve currency, will be no exception. Unfortunately, when currencies evaporate toward zero from the thin air they came from, wealth denominated in those currencies also heads toward zero. Only by allocating some of your wealth to a money that does not derive its value from the ability of others to pay their debts, will you survive financially when the dollar also heads toward zero. That time-proven money is gold and sometimes silver.

Gold Explained, And Then Some

Before I get to the meat of this short article I’d like to say that the correction in Gold is very welcome by myself.

I was a bit early calling for it, but it was inevitable, and the chopping action would have just teared a trading position to shreds the past two weeks. I am glad we got out when we did.

Now we wait…maybe a few days, maybe a few weeks. There will be an exhaustion low though before it resumes it’s move higher and that low is what I’ll be aiming for.

But enough of that, I will be getting into that and so much more over the weekend in the free weekly letter.

Junaid Anwar Khan wrote an article recently titled “Soaring gold prices explained”.

He did an admirable job, but I thought I’d throw in my comments/thoughts on his views. My commentary is in italics.

GOLD prices have risen about 25 percent this year, reaching a record high of $1,387.35 an ounce on October 14.

The Chances of a War with China are Rising

The United States conducts monetary policy the same way it conducts foreign policy; unilaterally. When Fed chairman Ben Bernanke signaled last week that he was planning to restart his bond purchasing program (Quantitative Easing) he didn’t consult with allies at the IMF, the G-20 or the WTO. He simply issued his edict, and that was that. The fact that the Fed’s policy will flood emerging markets with cheap capital, pushing up the value of their currencies and igniting inflation, is of no concern to Bernanke. He operates on the same theory as former Treasury Secretary John Connally who breezily quipped to a group of euro finance ministers, “The dollar is our currency, but your problem.”

Bernanke’s 15 report could have been reduced to nine words: Inflation is too low and unemployment is too high. That said, Bernanke is not going to sit back hemming and hawing until congress figures out that the economy needs more support. He’s going to put downward pressure on the dollar until inflation rises to the target 2%, increasing the prospects for lower unemployment, a narrowing of the current account deficit, and a faster rebound. Economist Edward Hugh sums it up like this:

The Cuban Revolution: Challenges and Changes

 

by Dave Holmes
	// // // //
For more than 50 years tiny Cuba (its population is currently about 11.25 million) has punched well above its weight in world politics. That’s because it carried out an authentic socialist revolution and has ceaselessly fought to defend and extend it in the teeth of remorseless pressure from its giant neighbour.  This article was  presented as a talk to the Geelong branch of Socialist Alliance1 on October 6, 2010.The slideshow that accompanied the talk can be viewed in Links: International Journal of Socialist Renewa2l. The Cuban Revolution has been marked by its tremendous internationalism, the high points of which have been its armed intervention in Angola in support of the struggle against the South African apartheid regime and its unstinting medical aid to the Third World. The Cuban Revolution has shown that a Stalinist bureaucratic degeneration is not inevitable. There are bureaucrats in Cuba but the Fidelista leadership has largely managed to contain this danger by its constant vigilance, mass campaigns and appeals to the people. Revolution faces biggest challenge

US Policies Intensify World Currency, Trade Conflicts

In the wake of the fractious International Monetary Fund (IMF) meeting held October 9-10 in Washington, the descent into global currency and trade war has accelerated, with the United States playing the role of instigator-in-chief.

The US is deliberately encouraging a sell-off of dollars on international currency markets in order to raise the relative exchange rates of its major trade rivals, increasing the effective price of their exports to the US while cheapening US exports to their markets.