Tuesday, August 20, 2013

Mike Mish Shedlock ~ Hedging Emerging Market Volatility




The Fed money is pouring -- right back into the US. Over the last few years, Bernanke's cheap quantitative easing money flowed outward into developing countries. But countries such as India, Indonesia and Thailand have seen currency devaluation of up to 40%. Hedge funds are losing massive amounts of money on QE bets. Just last week India's currency, the rupee, sank to a record level, prompting the Indian Prime Minister's attempt to reassure markets, stating "There is 'no question' of India going back to an economic crisis experienced in 1991, as its rupee currency is now linked to the market and foreign exchange reserves are adequate." Nothing is confirmed until officially denied. Bob speaks with Mike Shedlock, author of Mish's Global Economic Trend Analysis, about the decline in India's rupee and emerging markets. And, Perianne breaks down inflation. There's more to it than meets the CPI -- which, by the way has been changed twenty times over the last three decades. Finally Bob duels Sam Sacks over public private partnerships and the so-called privatization of prisons.

And according to the S&P Case Shiller report released this morning, Las Vegas and Phoenix are in yet another property boom -- dare we say bubble. Only five years ago, prices had begun plummeting, and foreclosed houses were scooped up by private equity groups and hedge funds. But, as we've discussed, they're cashing out.

Also, in July, Detroit's city manager re-calculated the two pension fund's future obligations to retirees. And the number he came up with -- a $3.5 billion shortfall -- suggests the pension funds are in much worse shape than thought. Now, there's a showdown in Federal bankruptcy Court -- and all we can say is Meredith Whitney was just a few years early on her muni meltdown prediction.