Pater Tenebrarum's Blog

It appears as though the European sovereign debt crisis is about to claim its next scalp. Yesterday we noted that Silvio Berlusconi gained one vote in parliament due to a parliamentarian falling into a coma, but it seems that at the same time, resistance against Uncle Silvio's rule is growing rapidly among his former supporters.

Dividends have become a major bone of contention between gold mining managements and shareholders over the past year or so. After all, gold mines are wasting assets; from the point of view of a shareholder in a gold mining firm dividends are therefore essential.

After the fairly neutral/ bearish FOMC statement was issued yesterday, Ben Bernanke gave a press conference that helped the stock market regain its earlier vigor. In the Q&A following his prepared remarks, Bernanke inter alia indicated that 'QE3' in the form of additional mortgage backed securities purchases definitely remains on the table.

In the 1960's, American economist Robert Triffin identified what later came to be known as the 'Triffin dilemma'. The Bretton Woods system, so Triffin, that had made the US dollar the world's 'reserve currency' necessitated that the US run a perennial current account deficit in order to satisfy the demand for dollars as a reserve asset (we can assume that the same idea holds for its 'gold-free' successor).

As we have recently noted in these pages, it was our expectation that the advice of the currency debasers that rule today's economic orthodoxy would once again prevail, despite the reams of both theoretical and empirical evidence arrayed against it.

The Wall Street Journal opens its editorial pages to a wide swathe of opinions, and although it is slightly more inclined to give free market supporters a say than certain other publications, it occasionally brings us Alan Blinder, the man who up until 1989 was an admirer of Soviet central planning

While the euro-land economy is on the verge of imploding as a result of the sovereign debt crisis and the associated crisis of the fractionally reserved banking system, what do the eurocrats have time to debate?

Since it has emerged after the G-20 meeting that the euro area's political leadership is seriously considering leveraging the EFSF via the ECB or some other mechanism (frankly, the ECB seems the most likely choice), the usual cacophony of squabbling, affirmations and denials has begun to emanate from Europe.

A few more words regarding the 'Operation Twist' aftermath: we want to once again stress a point we touched upon yesterday, namely that the merry pranksters at the Fed have failed to consider a number of points when they decided to embark on their newest experiment.

We recently mentioned that the balance sheets of the three biggest French banks amount to some 250% of French GDP. It should be noted in this context that the entire French banking system holds assets worth 400% of France's GDP (at least that is the stated book value of said assets, which is probably somewhat dubious).