A Problem for US Banks: A Reverse Run




Banks in the U.S. are experiencing a very strange problem.
There’s a bank run underway...but in reverse.
All the major U.S. banks are seeing an influx of deposits. Reserve levels at the Federal Reserve [cnbc explains] are climbing to astronomical levels.
Balance sheets are expanding as never before.
Imagine that this is that scene from "It’s A Wonderful Life," but played in rewind. The depositors are rushing in with their money, nearly toppling George Bailey as they try to get their money in the bank.
When the U.S. dollar reserve in the Fed accounts of European banks decline, it necessarily means that the dollar reserves of the U.S. banks are increasing. As a result of various transactions, the Fed is moving money across the digital spreadsheet from European banks to U.S. banks.
http://www.cnbc.com/id/44191317

Is this the start of another banana republic maniac robbing the gold, or is it just good sense to repatriate physical gold!!! You decide! Shaza


Chavez Emptying Bank of England Vault as Venezuela Brings Back Gold Hoard

Venezuelan President Hugo Chavez ordered the central bank to repatriate $11 billion of gold reserves held in developed nations’ institutions such as the Bank of England as prices for the metal rise to a record.
Venezuela, which holds 211 tons of its 365 tons of gold reserves in U.S., European, Canadian and Swiss banks, will progressively return the bars to its central bank’s vault, Chavez said yesterday. JPMorgan Chase & Co. (JPM), Barclays Plc (BARC), and Standard Chartered Plc (STAN) also hold Venezuelan gold, he said.
“We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” Chavez said yesterday on state television. “It’s a healthy decision.”
Gold & Silver: Full Spectrum Dominance


Gold and Silver have emerged in the last 12 months as the dominant asset group. They led the entire 2000 decade, still gathering disrespect. They do not require respect from the Wall Street and London crowd. They serve as effective protection during the slow motion crumbling process to the global monetary system. The sovereign bond crisis has circled the peripheral nations, rendered its wreckage, and is working toward the center where the USTBond and UKGilt reside (worried). Italy and Spain are squarely in the crosshairs for financial assaults, but France and the United States lie closer to the core of Western nation sacred debt territory, soon to become sacred burial grounds. That must sound drastic and melodramatic, but just wait. Other calls of an insolvent US banking system, calls of a chronic housing bear market also once sounded extreme. They came true. So did $1000 gold and Canadian Dollar parity calls made in 2005. Again they came true. Dismissal of Green Shoots, Jobless Recovery, Exit Strategy, and No QE sounded bombastic and pedagogical, but they were also correct calls. In fact, very easy calls. The ruin of the USTreasury Bond debt security is a long drawn out process like a cancer victim. Weakness is followed by emaciation, then organ damage, circulatory problems, finally a bedridden state, and lastly the inevitable death. Analogies to each can be made with USTBonds nowadays, like the foreign central banks withdrawing from the process evident in low Indirect Bids, like dependence upon debt monetization.
http://www.financialsense.com/contributors/jim-willie/2011/08/17/gold-and-silver-full-spectrum-dominance



China Won’t Sell Our Bonds Anytime Soon



Is the PBoC going to stop buying USG bonds?  Once again we are hearing very worried noises from various sectors about the possibility of a reduction in Chinese purchases of USG bonds.  Here is what an article the South China Morning Post said:
China will press ahead with diversification of its US$3.2 trillion in foreign exchange reserves, the State Administration of Foreign Exchange (SAFE) said on Thursday, adding it does not intentionally pursue large-scale foreign currency holdings.  Officials have long pledged to broaden the mix of the country’s huge reserves – as much as 70 per cent of which are now in US dollar assets, according to analysts’ estimates – but the process has been gradual.
“We will continue to diversify the asset allocation of our reserve assets and continue to optimise the holdings based on market conditions,” the foreign exchange regulator said in a statement, responding to questions about its reserve management from the public.  It did not mention the US debt debacle. Top Republicans and Democrats worked behind the scenes on Wednesday on a compromise to avert a crippling US default and potential credit rating downgrade.
Xia Bin, an adviser to the central bank, told reporters earlier this month that China should speed up reserve diversification away from dollars to hedge against risks of the US currency’s possible long-term decline.

http://www.financialsense.com/contributors/michael-pettis/2011/08/17/china-wont-sell-our-bonds-anytime-soon
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