Gmail - LAR: Central banks begin to buy stocks - flyaway.jack@gmail.com

Gmail - LAR: Central banks begin to buy stocks - flyaway.jack@gmail.com

LAR: Central banks begin to buy stocks

Inbox

x

Americans for Limited Government robert@algnews.org via publicaster.com	12:10 PM (1 hour ago)
to me

March 2, 2012 Central banks begin to buy stocks Are financial institutions sitting on a lot of overvalued assets and need to sell them to book the gains before the correction comes? Cartoon: No Concern to Me Obama apologizes for the Koran burnings. National debt eclipses GDP in size, ALG analysis shows The national debt probably eclipsed the economy in sheer size, perhaps never to return, on or about Feb. 23, 2012. Video: Andrew Breitbart Remembered By Americans for Limited Government The right loses its fearless warrior. Central banks begin to buy stocks By Bill Wilson A small number of central banks around the world have begun investing their foreign exchange reserves in equities, according to Bloomberg News. These include the Swiss National Bank, the Bank of Israel,South Korea and others. So far it's not much, several billion in stock buys by central banks. But all over the world, there are about $10.2 trillion of foreign exchange reserves that could be tapped, according to the International Monetary Fund's Currency Composition of Official Foreign Exchange Reserves (COFER) database. Interestingly, the IMF notes that "COFER data for individual countries are strictly confidential." So, when central banks flood equities markets with excess reserves, investors likely won't know until after the fact, and then, only if such purchases are disclosed. But why would central banks purchase stocks? Aren't those. risky? In 2000, none other than current Federal Reserve Chairman Ben Bernanke - then a professor - commenting on Japanese policies after their housing bubble popped in 1989, included corporate bond and equity purchases in his menu of options that might be pursued in an environment with near-zero interest rates. Bernanke left no mistake that the reason to boost aggregate demand in this fashion is to raise prices: "The object of such purchases would be to raise asset prices, which in turn would stimulate spending". Vince Reinhart, then Fed Director of its Division of Monetary Affairs, at Federal Open Market Committee (FOMC) meeting in June 2004 described the circumstances under which a central bank might engage in such purchases: "if the policymakers believed that deflationary forces were severe." Reinhart also dismissed the possibility at the time, saying, "These options would change how we are viewed in financial markets, involve credit judgments of a form we are not used to, perhaps smack of desperation, and pull us into a tighter relationship with other parts of government." But let's leave that aside. Consider carefully the circumstances Reinhart outlined when this might actually happen: "if the policymakers believed that deflationary forces were severe." Uh-oh. Get full story here. No Concern to Me Get permalink here. National debt eclipses GDP in size, ALG analysis shows By Robert Romano The national debt to GDP ratio is now over 100 percent. It's official now. Well, almost. We'll know more when the first quarter Gross Domestic Product (GDP) numbers are published by the Bureau of Economic Analysis on April 27. But, based on a preliminary analysis of data on the GDP and national debt figures from the Bureau and the U.S. Treasury, barring greater than expected GDP growth in the first quarter, the national debt probably eclipsed the economy in sheer size, perhaps never to return, on or about Feb. 23, 2012. Since the beginning of the year, the national debt has grown by $265.58 billion, or about $4.42 billion every day, to $15.488 trillion. That compares with an economy that is probably only growing by about $1.66 billion a day to a current level of about $15.420 trillion. Therefore, the current debt to GDP ratio is already 100.4 percent - and climbing. When Barack Obama took office it was a little over 74 percent when the debt was about $10.4 trillion. The reason the ratio has skyrocketed is because the debt has been growing much faster than the economy. While the economy grew at 1.8 percent in 2011, the debt grew by over 10 percent, an astounding figure. In 2012, this process will continue, when the debt will grow at over 7 percent for the year, much faster than the economy, which is only expected to grow at 3 percent. Get full story here. Andrew Breitbart Remembered By Americans for Limited Government Video by Frank McCaffrey Get permalink here. Subscribe in a reader