First, Uncle Ben decided to skip the Fed’s annual Jackson Hole conference on Aug 22-24 – no more dropping-money-off-helicopters speeches. Then, it was the bail-in of Cyprus where depositors took a hit. The latest, we have the City of Detroit asking pensioners to bail-in the city:
Pennies or Bankruptcy, Detroit Tells Creditors
“…At most risk is the $11 billion in unsecured debt. That includes almost $6 billion primarily in health benefits for retired city workers; more than $3 billion for retirees’ pensions; and about $530 million in general-obligation bonds. Retirees are set to get less than 10% of what is owed them under the plan…”
Welcome to the world of bail-ins where private ownership is being suppressed for the greater good. What made them change their mind on printing? It could be the treasury yields. If everyone thinks like the Bank of Japan, it is likely that politicians are watching treasury yields closely, and believes that capital fled bonds because of the monetary debasement. Regardless, putting bondholders above depositors and pensioners is unlikely to end well. Would a pensioner who took it to the streets because the state defaulted on pensions qualify as terrorist?
In any case, no-more-money-printing will not be good for gold. Yours truly had been early calling for more carnage in gold. However, am remaining bearish on gold (targeting 1100) as long as Paulson holds on to his losses:
Good luck in the markets.