i know where the smart money flow is going and i think i was there first...CLY

How will the USD react when Renminbi (Chinese Yuan) is introduced into the global market

What will happen to the US Dollar when the Renmbinbi because the 4th major trade currency? Well let's look at the introduction of the EURO, the Euro share of trade after 2002, and the US dollar after 2002. Correlation isn't causation but....

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Keep an Eye on The Fed

With Bernank gone there are 3 more nominations pending for the 7 member FED.

http://www.stltoday.com/business/local/fed-board-member-stein-announces-resignation/article_dd68a39d-68c8-5d66-9b63-d68b83363609.html

Currently, there are three Obama nominations pending before the Senate including Stanley Fischer, a former head of Israel's central bank who Obama has nominated as vice chairman. Fischer would succeed Janet Yellen who in February became Fed chair, the first woman to hold the position in the Fed's 100 year history.

Just a guess here but I predict the FED will increasingly look like a 7 pack of Dove soap. ZIRP til mid-term elections. 

I'd love to see a graph of 'FED independence' at least from the rest of the political branch, bank influence, well you know. I have heard it from the horse's mouth, "Do you really think a bunch of poorly paid PhDs are making the decisions. The brightest are at the banks and they telegraph directions to the Fed." At least that is how it used to work. Ah financial repression, now what should a retiree invest in for some income...

How a China Slowdown/Collapse Could Play Out - 2014

China:

Buys Treasuries

Sells Treasuries

weakens Yuan

strengthens Yuan

improves competitive stand point

becomes less competitive, purchasing power increases relative to US Dollar

exposed to inflationary pressures if dollar weaker

deflationary

finances trade with US, more exports to US

removes financing, less exports to US

large depreciating effect on USD since interest rates controlled at short end by FED with ZIRP policy in place

China Collapse

Real Estate values plunge; corporate defaults

mass exodus of capital

Much weaker Yuan

spike in inflation especially food & energy prices

government hikes interest rates & sells treasuries

->

China: energy/food value of imports surge, exports decline, trade deficit widens but total trade declines

Sells Treasuries

strengthens Yuan

becomes less competitive, purchasing power increases relative to US Dollar

deflationary; stabilizes input costs; Chinese companies forced to become more efficient; higher unemployment

removes financing, less exports to US

large depreciating effect on USD since interest rates controlled at short end by FED with ZIRP policy in place

end result: CHIMERICA =

weaker dollar & yuan relative to world

higher interest rates on sovereigns

more competitive globally, lower labour costs

increased capacity utilization in China; yet higher unemployment as companies become more efficient

increased CAPEX and FDI in US due to lower labor costs, weak currency, cheap local energy, stability, etc., lower unemployment, short term inflation spike, insufficient skilled labor pool

immediate result of China Collapse

stronger dollar; weaker yuan; stronger gold & silver

collapse in treasury interest rates

spike in interest rates on China sovereigns; spike in defaults

market crashes, everywhere

some selling of treasuries by countries to stabilize currencies balanced by rush out of financial assets into safe havens

the future of banking?

Court reverses ruling on swipe fees in favor of banks

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By Danielle Douglas, Friday, March 21, 11:51 AM E-mail the writer

A U.S. appeals court on Friday struck down a district court decision that ordered the Federal Reserve to rewrite its rules governing fees that banks collect each time a debit card is swiped, a victory for the banking industry.

The ruling reverses a decision by U.S. District Court Judge Richard Leon, who said in July that the central bank improperly set the cap too high under pressure from the banking lobby. The Fed gave banks the thumbs-up to charge retailers as much as 21 cents a transaction, a few cents lower than the previous 23-to-25-cent charge per swipe.

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Turkey restricted access to Twitter hours after its prime minister threatened to “root out” the social media.

Court reverses ruling on swipe fees in favor of banks

Danielle Douglas 11:51 AM ET

Merchants argued that being charged more per transaction by banks leads to higher prices for consumers.

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The appeals court decision is a blow to merchants who have fought for nearly four years to limit the interchange fee, or “swipe fee.” Merchants have argued that consumers are the ultimate victims of these fees because the costs are usually passed on to them in the form of higher prices.

“The Fed ignored congressional intent and worked to shield debit card companies and big banks. A self-described victory for the banks usually results in higher costs for consumers,” said Mallory Duncan, general counsel of the National Retail Federation.

The banking industry applauded the appeals court’s decision, which will eventually funnel billions of dollars back into their coffers. Before the cap, interchange fees totaled nearly $17 billion in 2009, according to the Fed. Banks have argued that they need the fees to offset the cost of providing checking accounts and other services.

“Reasonable minds have prevailed,” said Richard Hunt, president and chief executive of the Consumer Bankers Association, a trade group. “Any further changes to the currently allowed interchange rates would only pile on the negative consequences for consumers. Consumers must come first in this process, not the bottom line of retailers.”

The appellate court said the Fed reasonably interpreted the 2010 Dodd-Frank financial overhaul law, which directed it to revise the way banks charge merchants for accepting debit cards. It determined that the Fed did its best to overcome the “ambiguity” of an amendment authored by Sen. Richard Durbin (D-Ill.) to limit swipe fees to the actual cost of processing debit card transactions.

Although the Fed proposed a cap of 12 cents per transaction, the final rule took an array of expenses into consideration, including the cost of fraud-prevention technology and equipment. The appeals court deemed inclusion of those costs to be in line with the spirit of the amendment.

While the pricing of interchange has dominated the conversation around the Durbin amendment, the rule also addressed the lack of competition in the payment system. The law said merchants must have multiple networks to conduct debit card transactions. The Fed required that each debit be processed on two independent networks for verification — one for PIN and one for signature.

Merchants argued that the law was supposed to give them more flexibility and choice. They wanted at least two signature options, which Leon permitted. The reversal of his ruling puts the kibosh on the argument.

Fed officials could not be reached for comment.

Despite being pleased with Friday’s outcome, Carrie Hunt, senior vice president of government affairs at the National Association of Federal Credit Unions, said the Fed’s rule imposes below-cost caps on interchange fees and fails to provide for a reasonable return.

The race to the bottom - coming to you from Bangalore & China, to the US and Japan.

Bangalore - TOYOTA
“Some of the Toyota workers resorted to go slow, abuse as well as sabotage which forced us to resort to lock out.” Viswanathan said he expected the Government to appreciate the fact that discipline on the shop floor cannot be compromised under any circumstances.

He pointed out that the company had offered an increase of ₹3,050 in wages to the employees and would stick by that figure.

The workers’ union had sought ₹4,000 more, which is same as last year’s wage increase.

http://www.thehindubusinessline.com/companies/toyota-blames-workers-stir-for-production-loss-of-2000-units/article5796972.ece

China - 

In 2013, the wages for Chinese migrant workers increased 13.9 per cent from the previous year. It was nearly twice the growth rate of China’s GDP. For the country’s 269 million migrant workers, their average wages in 2013 were 2609 Yuan, or $480 a month. Though this may not seem to be a terribly large sum of money, it is a far cry from the mystical two dollars a day.

In fact, Chinese wages increased most dramatically around the time of the global financial crisis. Between 2009 and 2013, Chinese wages surged 5.7 per cent, 19.3 per cent, 21.2 per cent, 11.8 per cent and 13.9 per cent, according to data from National Bureau of Statistics.

Why is this important? Because Chinese wages are arguably the single most important price in the world. More important than the price of a barrel of crude oil, the Federal Reserve’s interest rates or value of American dollar.

China’s total labour force is about 800 million. The dramatic increase in wages in the past four years strongly indicates that China is running out of surplus labour or has reached the Lewis turning point in its industrialisation process. 

USA - SUBWAY

SAN ANTONIO — A local franchisee for Subway, Great American Cookies and Marble Slab Creamery is facing a federal lawsuit that alleges he didn't pay employees for overtime or work performed off the clock.

The lawsuit was filed Tuesday in San Antonio by five former workers, but seeks certification as a collective action on behalf of an estimated 125 food-service workers currently or formerly employed by various defendants.

USA - McDonald's

McDonald’s workers in California, Michigan and New York filed lawsuits this week against the company and several franchise owners, asserting that they illegally underpaid employees by erasing hours from their timecards, not paying overtime and ordering them to work off the clock.

The lawsuits were announced Thursday by the employees’ lawyers and organizers of the union-backed movement that is pressing the nation’s fast-food restaurants to increase wages to at least $15 an hour.

In two lawsuits filed in Michigan against McDonald’s and two Detroit-area franchise owners, workers claimed that their restaurants told them to show up to work, but then ordered them to wait an hour or two without pay until enough customers arrived.

Those lawsuits also argued that a McDonald’s requirement that employees pay for their uniforms illegally reduced their pay below the federal minimum wage of $7.25 an hour.

USA - Obama - Overtime & Minimum Wage

On Thursday, the president will direct the Labor Department to revamp its regulations to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as “executive or professional” employees to avoid paying them overtime, according to White House officials briefed on the announcement.

Mr. Obama’s decision to use his executive authority to change the nation’s overtime rules is likely to be seen as a challenge to Republicans in Congress, who have already blocked most of the president’s economic agenda and have said they intend to fight his proposal to raise the federal minimum wage to $10.10 per hour from $7.25.

Japan

Japanese labor unions said they clinched their biggest raises in years as Prime Minister Shinzo Abe calls for companies to boost wages to help put the world’s third-largest economy on a path to sustainable growth.

Based on negotiations across 43 union groups, companies agreed to increase base wages by an average of 1,950 yen ($19) a month in the coming year, the Japanese Trade Union Confederation, known as Rengo, said yesterday in Tokyo. The union group, the nation’s biggest, said the increment was significant enough to rank as the biggest raises won since at least the turn of the century.

Ron Paul - Ukraine, Russia, and a debt-ridden US

Submitted by Ron Paul via The Ron Paul Institute,

Officially, US debt stands at more than $17 trillion. In reality, it is many times more. The cost of the US invasion of Afghanistan and Iraq may be more than six trillion dollars. President Obama’s illegal invasion of Libya cost at least a billion dollars and left that country devastated. The costs of US regime change efforts in Syria are likely thus far enormous, both in dollars and lives. That’s still a secret.

So who in his right mind would think it is a good time to start a war with Russia over Ukraine? And worse, who would commit the United States to bail out a Ukraine that will need at least $35 billion to survive the year?

Who? The president and Congress, backed by the neocons and the so-called humanitarian interventionists!

The House voted overwhelmingly last week to provide $1 billion in loan guarantees to Ukraine. That is just the beginning, you can be sure. But let’s be clear: this is not money for the population of that impoverished country. The Administration is sending a billion dollars from US taxpayers to wealthy international bankers who hold Ukrainian debt. It is an international bank bailout, not aid to Ukrainians. And despite the escalating anti-Russia rhetoric, ironically some of that money will likely go to Russia for Ukraine’s two billion dollar unpaid gas bill!

So what happened in Ukraine? The US government and media claims that the US must save Ukrainian democracy from an invading Russian army that is threatening the country’s sovereignty. But in reality the crisis was instigated in part by US meddling. Remember the intercepted telephone call in which two senior Obama Administration officials discussed plans to replace the elected government in Ukraine with US puppets? That is exactly what happened. Is that not a violation of Ukraine’s sovereignty? Is that what democracy is all about?

The Obama Administration’s policy toward Ukraine is hypocritical. The overthrow of the government in Kiev by violent street protests was called a triumph of democracy, but when the elected parliament in autonomous Crimea voted last week to hold a referendum to decide its future, President Obama condemned it as a violation of international law. What about the principle of self-determination, which is also enshrined in international law?

I have long thought that a referendum to reorganize Ukraine into a looser confederation of regions might help reduce tensions. I still believe this could help, but it seems the US government is not so enthusiastic about democracy when there is a chance for an outcome it opposes.

I strongly believe that Crimeans have every right to transfer sovereignty over their peninsula to Russia if they wish. The only question that remains is whether there will there be an honest election, and I don’t see any reason there can’t be.

The US government tells the rest of the world, “We want you to be good democrats and have elections,” but if they don’t elect the right people then we complain about it and throw them out, like we did in Egypt. In Crimea they want to have an election to determine their future. President Obama condemned those plans for a vote by saying, “We are well beyond the days when borders can be redrawn over the heads of democratic leaders.” Does he not remember that the authorities in Kiev were installed just weeks ago after a US-backed coup against the Ukrainian constitution?

Congress next week will likely vote for sanctions against Russia. Though many mistakenly believe that sanctions are a relatively harmless way of forcing foreign countries to do what we say, we should be clear: sanctions are an act of war.

Cooler heads in the United States are not currently prevailing. There is a danger of an unimaginable conflict between the US and Russia. We must demand a shift away from a war footing, away from incendiary rhetoric. We are broke and cannot afford to “buy” Ukraine. We certainly cannot afford another war, especially with Russia!