• [UPDATE]:  How Goldman profits from low interest rates

• Banks Game Quantitative Easing

Guess who the real winners are? Surprise, surprise, it’s the banks,  whether they are acting as intermediaries between the different arms of government in the execution of QE or trading into the anticipated government intervention, the banks are raking it in – it wasn’t rocket science for the banks to work out that if the government was buying gilts, yields would fall, and yield-hungry investors would pile into high-yield bonds and equities – and to position themselves accordingly. This is one of the main reasons that recent investment banking results have been so strong, so it is a bit rich when these results are then presented as proof that the business is solid.

Defenders of QE will argue that it was supposed to bolster banks – but only in order to help them replenish capital and lend again, surely, not to boost their trading profits.

• RBI may have sold US T-Bills to buy gold

• Chinese premier calls on US to control deficit

“I hope that as the largest economy in the world and an issuing country of a major reserve currency the United States will effectively discharge its responsibilities,” Wen said at a news conference in Egypt, according to wire reports.

• Developing economies show the way for US & EU to recover

• IMF says dollar funding carry trade, still overvalued

“There are indications that the U.S. dollar is now serving as the funding currency for carry trades,” the IMF said in a report published yesterday. “These trades may be contributing to upward pressure on the euro and some emerging-economy currencies.” While the dollar “has moved closer to medium-run equilibrium,” it is still “on the strong side.”

• Stock Options Hit New High after Bailout Rebound

• Secret £165 billion loan keeping Lloyd’s alive

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