Perspectives on the global economic changes

[panduranghari]

Eventhough you r not recommending anything, (I also agree that buying Gold when cheap makes perfect sense), your view points tend to give an impression that Physical Gold is the only option to safe guard wealth. .

It is.

And it is the last resort. You could very well put me on ignore.

BTW everyone is for themselves. Or you may have a financial advisor who will suggest some some investments. Of course he/she does not really suffer if you don't get a return on your investment, let alone return of your investment.

[TKiran]

No wonder you r a winner

[Austin]

Comparision between Chinese and US Debt

http://davidstockmanscontracorner.com/2 ... -unravels/

At the turn of the century credit market debt outstanding in the US was about $27 trillion, and we’ve not been slouches attempting to borrow our way to prosperity. Total credit market debt is now $59 trillion—-so America has been burying itself in debt at nearly a 7% annual rate.

But move over America! As the 21st century dawned, China had about $1 trillion of credit market debt outstanding, but after a blistering pace of “borrow and build” for 14 years it now carries nearly $25 trillion. But here’s the thing: this stupendous 25X growth of debt occurred in the context of an economic system designed and run by elderly party apparatchiks who had learned their economic from Mao’s Little Red Book!

I wonder how much is India's total Credit Market Debt ?

[svinayak]

Why is there a comparison between a command economy in a country run by military and the largest economy of the world.

[panduranghari]

From Bill Bonner

The Fed is providing plenty of liquidity. But this liquidity is going into risk assets, not into “anti-risk” assets. Stocks are a risk asset. Gold is not.

Most investors are confident the Yellen Fed has matters under control. They see US stocks going up and ask themselves: What’s to worry?

With nothing to worry about, and the memory of a 180% gain in S&P 500 fresh in their minds, why would they want to buy gold?

Third, the worry that usually moves gold most is inflation. It was that worry that sent it up 20 times in the 1970s… when consumer price inflation rose over 10%.

Consumer price inflation is not something that people are worried about now. And for good reason.

It’s the Money Supply, Stupid

As any economics professor will tell you, the CPI goes up when the quantity and velocity of money increases faster than the output of goods and services.

QE increases the monetary base (the sum of hard currency in circulation and banks’ reserve balances with the Fed). But it’s money supply (which also includes bank deposits and retail money market mutual fund shares) that matters when it comes to inflation.

But increases in the money supply depend on the creation of new bank deposits through new bank lending. And although money supply is growing, banks aren’t lending enough to make for a worrying increase in the quantity of money.

Meanwhile, the average household income is lower than it was when the recession ended in 2009. So, the average American has less money to spend. And under pressure, he is more careful about spending it, too. This decreases the speed with which cash changes hands in the economy – the velocity of money – putting more downward pressure on consumer price inflation.

What Next?

Gold investors see all this. They know consumer price inflation is not a problem right now (at least as it’s officially measured). They must wake up in the morning… check the CPI reading (just over 1% right now)… and go back to sleep.

The time will come, of course, when the CPI gets up and does the boogaloo. But not now. Here is what we see ahead for gold prices:

1. The economy stays sluggish, but doesn’t go into reverse, and the Fed continues to taper.
2. US stocks fall, as the Fed removes its support, causing the Fed to end the taper.
3. US stocks recover, as the Fed wades in with more intervention, then fall more.
4. The Fed panics and introduces more aggressive (money from helicopters?) moves.
5. Gold soars.

[rajrang]

I don't know if this is OT, but any comments about real estate prices in India if Narendra Modi becomes India's PM?

[Austin]

The Real Price Of Gold Since 1791

[Austin]

Janet Yellen Is Caught Between A Rock And A Hard Place

[Austin]

Peter Schiff: It's not the weather, the economy is headed towards recession! ( Interview starts at 4:50 )

[youtube]I3DlF-ueYBg?t=4m51s[/youtube]


at 12:25 "What doesn't make sense to me is that we can create all this money, we can print all this money, and prices not be going up".

Peter Schiff suggests buying Gold , Silver and move away from USD

[Neshant]

Peter Schiff sells gold & silver so obviously he'll be telling you to buy it.

He's been saying buy gold for a long time having ridden the gold price wave up and back down.

His one great call was the 2008 housing meltdown - although he was calling for that since 2000.

I do think he will be right - in the end. But how far is it to the end, nobody knows.

One thing is for certain and that is the paper money printing crooks are not going to give up their racket and go quietly into the night. They are going to find some way of keeping paper as the main if not only monetary unit simply because without it, they would be obsolete.

[Austin]

Peter Schiff sells gold & silver so obviously he'll be telling you to buy it.

Partly True ....if you saw his whole interview he mentioned Gold , Silver , Resources and many other thing including many countries that he has invested in for his customer to name a few Singapore , Norway , Latin American Country etc ..... So he is not stating just buy Gold and Silver

One thing is for certain and that is the paper money printing crooks are not going to give up their racket and go quietly into the night. They are going to find some way of keeping paper as the main if not only monetary unit simply because without it, they would be obsolete.

Thats True and something I agree ...they just wont give it because something bad happened once again ... but it would be interesting to see what solution they come up with when ever the meltdown happens next

[Austin]

World Bank Russia Report March 2014

Fully Report Link ---> http://www.worldbank.org/content/dam/Wo ... 31-eng.pdf



How did Russia’s economy fare in the past year?

• Economy expanded at an estimated 1.3 percent in 2013, well below the projected rate of 3.6 percent.
  The ruble came under increasing pressure, triggered by the ongoing deterioration of the current account and by higher volatility in capital outflows.
  Frail domestic demand dragged the Russian economy close to stagnation.
  Lack of growth-supporting structural reforms and decreasing profit margins weighted heavily on business sentiments and pushed down industrial and investment activities.
  The contribution of fixed investment to GDP growth turned negative in 2013, compared to 1.4 percent in 2012.
  Consumption remained the main growth driver, supported by fast credit and wage growth, yet its pace of expansion more than halved compared to 2012.
  External demand recovered as expected in the second half of 2013, while exports grew strongly.

What is the economic outlook for Russia going forward?

Weaker growth prospects and stabilizing consumption at a lower rate decrease the economic mobility outlook. Recent events around the Crimea crisis have compounded the lingering confidence problem and exposed the economic weaknesses of the economic growth model, which is based on large investment projects, continued increases in public wages and transfers.

Given the higher risk environment -- since political uncertainties around the Crimea crisis in early March 2014 led to an increase in market volatility, the World Bank developed two alternative scenarios for Russia’s 2014-2015 growth outlook.

The low-risk scenario assumes a limited and short-lived impact of the Crimea crisis and projects growth to slow to 1.1 percent in 2014 and slightly picking up to 1.3 percent in 2015.

The high-risk scenario assumes a more severe shock to economic and investment activities if the geopolitical situation worsens and projects a contraction in output of 1.8 percent for 2014.

Impact on economic mobility and continued middle-class formation in Russia:

Consumption growth is forecast to decrease to about 2 percent for 2014-2015 in the low-risk scenario, compared to 3.4 percent in 2013 and 6.9 percent in 2012

Russia’s long-term outlook will depend on a sustained positive shift in investors’ and consumers’ confidence.

Structural reforms will need to be started in the coming years.
Inefficiencies in factor allocation across the economy will need to be addressed, so that larger private investment is attracted in a sustained manner and on a larger scale.
The quality of regulatory and market institutions will have to improve, so that rules are implemented evenly.

[Neshant]

Partly True ....if you saw his whole interview he mentioned Gold , Silver , Resources and many other thing including many countries that he has invested in for his customer to name a few Singapore , Norway , Latin American Country etc ..... So he is not stating just buy Gold and Silver

Yea I know he runs an investment firm called Euro Pacific Capital that buys and sells shares for clients in overseas stock markets. You can do the same via iTrade.

Be careful not to get too sucked into everything he says as he is a good salesman. But as I said, I do think he will be right - eventually.

[panduranghari]

They are going to find some way of keeping paper as the main if not only monetary unit simply because without it, they would be obsolete.

Anyone dreaming of the end of paper money is living in utopia. Without paper money, the convenience we have got used to would simply disappear. Think long and hard- do you really want paper money to be gone?

[Austin]

Paper Money is fine as long as its backed up strong fiscal discipline if they cant do that then they better back paper by Gold so that you are forced to discipline yourself if you cant self-regulate and self-discipline. The current unlimited printing regime lacks both and are infact partners in crime at the cost of ordinary citizen.

I would rather bet on the latter as Humans have the weakness when it comes to self disciplining and at the slightest temptation and short term reward tend to go off rail and then very quickly it becomes a habit.

BTW page 16 of WB report on Russia

The rise in Total External Debt has been amazing from $489 Billion in Jan 11 to $732 Billion Jan-14 more than 70-80 % rise in External Debt which for $2 trillion Economy is big.

Probably availability of Cheap Credit due to QE did the trick ..........How much of a risk is that as most are Corporate and Bank Debt ?

[panduranghari]

Backing paper with gold will never happen. All you need for gold standard is a high enough stock of gold and a set price, then defend a price. Tell me how long will the gold last? If it was that easy why are we still not seeing anyone pushing for gold standard?

You see no one country can defend their gold stock in a gold standard. At some stage, they will default. Make no mistake, gold standard will not happen in our lifetimes.

However, paper money is not going away.

[Austin]

Rejoice QE is hear to stay atleast for sometime

U.S. Fed chief said the need for additional support for the country's economy

CHICAGO, March 31. / ITAR-TASS /. U.S. economy requires additional support "for some period of time," said the head of the U.S. Federal Reserve Janet Yellen, speaking at a conference in Chicago. In addition, she said, the country's economy has been a great weakness, and the labor market has not yet recovered to the normal state.

Yellen noted that the decline of quantitative easing does not mean that the U.S. Federal Reserve waives policy to stimulate the economy. She believes that the Fed's policy aimed at maintaining economic recovery will take another for a certain period of time, adding that this view is shared by most members of the committee on open market operations of the Fed.

According to the U.S. central bank, the total employment in the U.S. will be achieved by reducing unemployment to 5.2-5.6%. The current decline in unemployment to 6.7% did not lead to an increase in wages, and about 7 million people who work in the form of underemployment, still looking for a job full time, noticed Yellen.

[Prem]

http://www.latimes.com/business/money/l ... z2xZvpIIHM
China expected to overtake U.S. in business travel spending by 2015
( but in reality it still will be 1/4 of Us travel Industry)

China could surpass the U.S. as early as next year as the world's biggest spender in business travel, a year sooner than business travel experts had previously forecast.With China's gross domestic product growing at a slow but steady pace, the world's most populous country is expected to increase spending on business travel by 16.5% in 2014 to $262.1 billion and 17.8% in 2015 to $309 billion, according to the Global Business Travel Assn. Foundation.The foundation--the education arm for the world's business traveler managers--had previously predicted that China would overtake the U.S. as the top spender on business travel by 2016.Spending on business travel from China now represents about 20% of the world's global business travel market, up from 5% in 2000, the GBTA estimates.But about 95% of the growth in China's business travel has been driven by domestic travel spending, the group said.

[Austin]

Economist Roger Bootle, the managing director at Capital Economics. He gives us his perspective on the Eurozone, the euro, and macroeconomics in the US and the UK. He also weighs in on Ukraine and the economic consequences surrounding that ongoing conflict.

Boom Bust : Roger Bootle: The Euro should go in the bin!

[Neshant]

A kind of different view on the economy.
Guy claims we are about to go through a global ice age and its starting now.
Food prices will soar and people will starve.
Not sure as to his credibility. He bases his theory on sun cycles.
Not that I take his theories as evidence of anything. But I've heard there is less than 47 days of food supplies on earth at any given time. I've always thought that limited supply to be a real danger.
All its going to take is one global disruption to agriculture and we'll all be killing each other for food.

Incidentally, the winter in North America has been long & very cold this year. Another 3 years of it and I'll start to believe he's onto something. Or it might just all be crazy talk.

We're arming up with all kinds of military stuff but what if the next great challenge is not a military one but a rapid climate shift that drastically lowers agriculture output.

John Casey - COLD SUN -

[panduranghari]

Economist Roger Bootle, the managing director at Capital Economics. He gives us his perspective on the Eurozone, the euro, and macroeconomics in the US and the UK. He also weighs in on Ukraine and the economic consequences surrounding that ongoing conflict.

Boom Bust : Roger Bootle: The Euro should go in the bin!

Roger Bootle won awards to make a plan for Euro exits for various Eurozone countries.

He famously said this - "quantitative easing (QE) is not the "inflation danger" people should be worried about - the focus should be on the intentions of the government."

Wow. Just wow.

The intention of the government is what? Besides the intention of the government should not be in anyway linked to the tinkering of the monetary policy. The job of the government in my layman opinion should be to create jobs. The job of the central bank should not be QE but controlling inflation and keeping money honest.

But Roger Bootle gets awards from Think tanks who donate generously to the Conservative party. He has to talk what the paymasters want him to say.

[Austin]

The intention of government is to kick the inevitable further ahead via QE so that it does not get blamed when the house of cards fall

[Austin]

A kind of different view on the economy.
Guy claims we are about to go through a global ice age and its starting now.
Food prices will soar and people will starve.

The thing about climate change is no one know exactly how this will play out and every one has their own theory ...Al Gore once predicted that by 2013 Arctic will be Ice Free but its not the case.

Some say nothing will happen Nature will take care of itself.

Every one has their own personal experience when it comes to climate ....May be the US Cold is an exception or could be the beginning of something we dont really know.

What I have experience wrt climate in Mumbai is thing now are more towards the extreme then it was say 20 years back ...... so its gets more hotter and more colder then it used to be and even the rain pattern have drastically changed ....could be effect of climate or rapid urbanization leading to loss of greenery and rise of pollution.

[Austin]

IF any body thinks Rating Agency in US are nothing but an extended arms of US Economic Warfare Tool here is a good example of it.

Where as Obama can stand up and say US will always remain AAA and sack S&P head for downgrading US one notch below AAA ....other can easily get downgraded based on US political climate.

'Information war'? S&P cuts Crimea's rating to default grade

he said that the assessment of the Crimea rating "doesn't have any economic component and is politically motivated".

S&P reduced the forecast on the long-term corporate credit rating of RUSNANO to "BB+" and a short-term rating "B" to negative from stable. It followed a similar downgrade of the sovereign rating forecast for the Russian Federation on March 20.

Another international rating agency, Moody’s, on March 29 revised downwards the sovereign rating of Russia to Baa1, based on theweakening of the Russian economy and the crisis surrounding Ukraine.

The decisions by Moody's and Standard & Poor's to reduce their forecasts on sovereign ratings for Russia should not be seen as serious, Dmitry Peskov, the Russian presidential spokesman said.

[panduranghari]

The job of the government in my layman opinion should be to create jobs. .

I would like to correct this statement. Government should empower people to create jobs. They should just employ people in law and order, defence forces. Rest leave it to people to sort themselves out.

[Austin]

Yellen’s Dog Is Eating Homework Congress Didn’t Even Assign

[Theo_Fidel]

The thing about climate change is no one know exactly how this will play out and every one has their own theory

Bit OT but..

Scientists have no doubt how it will play out. Though folks try to push agendas and confuse things.

For 10,000 years the world has had an exceptionally stable climate. This stability has allowed the human race to settle down and expand its agriculture, etc after millennia of starvation and the threat of extinction. Historically climate was extremely variable. Hot one century, ice age the next, etc. The scientists all say the climate will go back to being very variable. Lay people think that what they mean is drought this year and floods the next. That is not what they mean. When scientists talk of variation they talk of the climate zones themselves shifting. NA & EU becoming Tundra, India becoming scrab land, Sahara becoming wet, etc. At that point there cannot be 7 billion people on the planet.

[TSJones]

.....why the fed managed to lower the debt service burden.....

http://finance.yahoo.com/news/why-fed-m ... 16631.html

...consumers have some deleveraging to do affecting real estate investment trusts (REITs)

http://marketrealist.com/2014/04/consum ... ice-burden

[Austin]

Infographic: Unearthing The World's Gold Supply

[Austin]

David Stockman Interview on The Ron Paul and Charles Goyette Weekly Podcast

[Austin]

Soaring Chinese Gold Demand And Its Geopolitical Strategy

[Austin]

Russia, India may go over to ruble and rupee transactions
Economy
April 07, 21:31 UTC+4

MOSCOW, April 07. /ITAR-TASS/. Russia and India may go over to transactions in roubles and rupees over the next fifteen years, the President of the Indian Business Alliance (IBA) in Moscow, Sammy Manoj Kotwani said Monday after a session of the International Council for Trade and Investment, which reports to the Russian Union of Industrialists and Entrepreneurs (RUIE).

“Quite naturally, it would be too unrealistic to give up the US at once but a possibility of this kind does exist,” he said. “If there’s a wish to do effectuate this transition, the dollar can be removed.”

Sammy Kotwani said the decision of Visa and MasterCard executives to work with the agents blacklisted by the US Administration was an error on their part.

“It was their error and they’ve already realized it,” he said.

IBA Moscow represents the interests of 150 Indian companies working in Russia.

[chola]

Russia, India may go over to ruble and rupee transactions
Economy
April 07, 21:31 UTC+4

As long as it is us who are using rupees to import real stuff like gas and aircraft (I rather we buy western but . . .) and not us getting roubles for whatever they buy from us.

[Austin]

^^ It will always be a two way street when it comes to rouble-rupee trade but then that too far in the future ....most likely Russia will dump USD and move to Euro , Yuan ,Swiss Franc in trade

[Austin]

Gazprom looks to drop the dollar to avoid sanctions’ bite

Alexander Dyukov, chief executive of Gazprom Neft, told reporters in St Petersburg that the company had discussed shifting contracts to euros with its customers. “Practically all – 95 per cent of our customers – confirmed their willingness to move to settlement in euros,” he said.

The discussions reflect the growing fear among larger Russian companies that they could soon come into the cross-hairs of US and European sanctions that have so far targeted wealthy individuals and a single mid-sized bank – Bank Rossiya.

One senior banker said that many commodity groups, including Gazprom Neft, had held talks with bankers about financing in euros rather than dollars. “Every commodity sector business is talking about what is possible if you couldn’t do deals in dollars – if you couldn’t get dollar clearing through New York,” he said.

Such a switch could result in higher costs for companies because of the need to convert currencies and the lower liquidity for those other than the US dollar.

Russian stocks tumbled on Monday after pro-Russian separatists in Donetsk said they would hold a referendum for the eastern province to join Russia, mimicking earlier moves that lead to Crimea’s annexation. The benchmark Micex index fell 2.4 per cent, with Sberbank down 3.7 per cent and Gazprom 2.5 per cent weaker.

The US sanctions – imposed in response to the Crimean annexation – effectively prohibit named companies and individuals from dealing in dollars, lawyers and bankers say.

Andrei Kostin, chief executive of state bank VTB, said over the weekend that Russian exporters should consider payments in roubles rather than dollars. “To a certain degree this would be a guarantee that, if at some point someone decided to impose Iran-style sanctions on us, we would have a level of protection from it,” he told state television.

Mr Kostin, one of the most senior figures in the Russian business community, added that he had spoken to the heads of three of the largest Russian exporters – Gazprom, Rosneft, and Rostec – and that they were “in principle ready to do this”.

“It is somewhat strange that a payment from Kazakhstan to Russia goes through New York,” he said. Gazprom said that it was considering the idea, but Rosneft said that it would “settle payments in the currency of the contract”.

Norilsk Nickel, the world’s largest nickel and palladium miner, earlier told the FT that it was discussing denominating long-term contracts with Chinese consumers in renminbi.

Western sanctions have so far had minimal impact on the Russian commodity sector’s ability to export. But there are worries among some executives that further rounds of sanctions from the US could target the energy sector, which accounts for about half of Moscow’s budget revenues.

Robert McNally, president of Rapidan Group and a former White House oil adviser, said that he expected the next round of sanctions – if it came – to hit investment in oil and gas production.

“In the event Washington and the west are unable to prevent Putin invading southeastern Ukraine, there will be broad-ranging sanctions from the US side that will touch US energy companies,” he told the FT.

“In terms of western investment in promising frontier areas in Russia, it would be very negative for those companies and negative for Russia. They would lose capital and technological expertise and momentum that has been built up already. It would be quite disruptive.”

Mr Dyukov of Gazprom Neft acknowledged that a shift away from dollars would not be without costs to the company.

“I am not ready to say that such a shift will happen absolutely painlessly and without losses,” he said.

Alexander Kornilov, oil and gas analyst at Alfa Bank in Moscow, said that the shift, if it happened, could hurt Russian companies’ earnings.

“Switching to the rouble would imply some extra undesirable transaction costs for international buyers, and this could threaten to undermine the competitiveness of Russian oil and gas producers on the global market,” he said.

[Austin]

How The Fed Feeds The Sharks, While Shafting Wage Earners And Savers

[Austin]

Herb Stein Was Right: Bubbles Keep Expanding—Until They Stop

[Austin]

Economic Comic Relief from Jamie Dimon

Europe banks lag behind ‘healthy’ US banking industry – JPMorgan's Dimon

European banks are still lagging behind the US banking industry, which has almost completely recovered from the global financial crisis, Reuters quoted JPMorgan Chase CEO Jamie Dimon as saying. “Profits may still vary for different kinds of reasons. But if you look at the equity, outstanding loans, debt capacity, you would see the [US] banking system is sound,” he told French newspaper Les Echos. “It can now do its job: financing growth and employment... Europe is not yet at the same stage.”

http://rt.com/business/

[Austin]

Warning: Stocks Will Collapse by 50% in 2014

It is only a matter of time before the stock market plunges by 50% or more, according to several reputable experts.

“We have no right to be surprised by a severe and imminent stock market crash,” explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. “In fact, we must absolutely expect it."

Unfortunately Spitznagel isn’t alone.

“We are in a gigantic financial asset bubble,” warns Swiss adviser and fund manager Marc Faber. “It could burst any day.”

Faber doesn’t hesitate to put the blame squarely on President Obama’s big government policies and the Federal Reserve’s risky low-rate policies, which, he says, “penalize the income earners, the savers who save, your parents — why should your parents be forced to speculate in stocks and in real estate and everything under the sun?”

Billion-dollar investor Warren Buffett is rumored to be preparing for a crash as well. The “Warren Buffett Indicator,” also known as the “Total-Market-Cap to GDP Ratio,” is breaching sell-alert status and a collapse may happen at any moment.

So with an inevitable crash looming, what are Main Street investors to do?

One option is to sell all your stocks and stuff your money under the mattress, and another option is to risk everything and ride out the storm.

But according to Sean Hyman, founder of Absolute Profits, there is a third option.

“There are specific sectors of the market that are all but guaranteed to perform well during the next few months,” Hyman explains. “Getting out of stocks now could be costly.”

How can Hyman be so sure?

He has access to a secret Wall Street calendar that has beat the overall market by 250% since 1968. This calendar simply lists 19 investments (based on sectors of the market) and 38 dates to buy and sell them, and by doing so, one could turn $1,000 into as much as $300,000 in a 10-year time frame.

“But this calendar is just one part of my investment system,” Hyman adds. “I also have a Crash Alert System that is designed to warn investors before a major correction as well.”

(The Crash Alert System was actually programmed by one of the individuals who coded nuclear missile flight patterns during the Cold War so that it could be as close to 100% accurate as possible).

Hyman explains that if the market starts to plunge, the Crash Alert System will signal a sell alert warning investors to go to cash.

“You would have been able to completely avoid the 2000 and 2008 collapses if you were using this system based on our back-testing,” Hyman explains. “Imagine how much more money you would have if you had avoided those horrific sell-offs.”

One might think Sean is being too confident, but he has proven himself correct in front of millions of people time and time again.

In a 2012 interview on Bloomberg Television, Hyman correctly predicted that Best Buy would drop down to $11 a share and then it would rally back up to $40 a share over the next few months. The stock did exactly what Hyman predicted.

Then, during a Fox Business interview with Gerri Willis in early 2013, he forecast that the market would rally to new highs of 15,000 despite the massive sell-off that was haunting investors. The stock market almost immediately rebounded and hit Hyman’s targets.

“A lot of people think I am lucky,” Sean said. “But it has nothing to do with luck. It has everything to do with certain tools I use. Tools like the secret Wall Street calendar and my Crash Alert System.”

With more financial uncertainty that ever, thousands of people are flocking to Hyman for his guidance. He has over 114,000 subscribers to his monthly newsletter, and his investment videos have been seen millions of times.

[Austin]

Overlook tapering and tap gold?
Chirag Mehta