The USD continues to strengthen against the Euro for no apparent reason. News reports claimed this was from the report of the new Consumer Confidence Index being down unexpectedly. This just seems odd, somebody with a lot of muscle is pushing the market. China, that has a bin full of Dollars that would make Scrooge McDuck faint, has been saying that they would like to reduce their Dollar holdings but how much they actually hold is a closely guarded secret. Opinions vary but a trillion plus in Dollars is likely with that much or more in other currencies, mostly Euros with significant holdings of Sterling and Yen.
Meanwhile in the too big to fail department, Congressman Barney Frank is getting close to producing a new set of rules for seizing and craving up these too big to fail banks and non bank financial institutions like AIG. The Republicans will have fits about this but it really is no different than what the FDIC does to the Third National Bank down on the corner when it fails.
According to the reports, "the legislation will make it easier for government to seize control of troubled financial institutions, remove management, change terms and conditions of existing loans, and wipe out shareholders".
This would circumvent Bankruptcy Court and most importantly, bond holders would not be treated as a special class and be wiped out as well. This would hit the rich elite where they live.
Class warfare could be taking an entirely new turn or maybe not. The Federal Reserve seems to be deeply involved in this new proposal and that should send a chill up your spine. We’ll have to see what is in the final bill but even then we really won’t know what is going on until these broad new powers are actually used. Since all of the too big to fail institutions have all actually failed and the bailout really didn’t change that, we will find out soon enough. www.prairie2.com