If the prices of commodities are falling because of increased margin requirements on ENERGY and PRECIOUS METALS, WHY DOESN’T THE FED JUST ASK FOR EMERGENCY POWERS TO CONTROL MARGINS FOR ALL INVESTMENTS? Chairman Bernanke is on the record as believing that INFLATIONARY PRESSURES ARE TRANSITORY. Well, it seems that the power to make higher commodity prices transitory is to raise margins and force the speculators to disgorge their positions. The increase in MARGINS and the RESULTING LIQUIDATION WOULD ALLOW THE FED TO MAINTAIN QE POLICIES WITHOUT THE FEAR OF TRANSITORY PRICE INCREASES.
Posts Tagged ‘Chinese’
Another FED meeting and another day when the parsers of FED SPEAK get to dissect the nuances that the media uses to fill the void of that vapid wasteland. The current rally in the EQUITY markets will give the FED Board of Governors the needed cover to maintain the extended period language and appear that it is above politics.
The State Administration of Foreign Exchange (SAFE), which administers the vast CHINESE foreign reserves, said it would not go the “nuclear option” and dump U.S. treasuries in a one-off move to reallocate its holdings, but SAFE called upon Washington and other governments to pursue “responsible” policies. The SAFE official told the world that during the last four months they’ve been accumulating Japanese government bonds at a record rate, which has recently pushed the YEN to new highs. Also, the Chinese officials said they would not be purchasing GOLD as the market was too thin and volatile. Plus, whatever the Chinese purchased would not be enough to truly diversify their portfolio.