Perspectives on the global economic meltdown- (Nov 28 2010)

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TSJones
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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 17 Sep 2013 23:26

panduranghari wrote:And even more questions questions questions but no one willing to answer them. Why will they? The gold is already gone.

Why Is JPMorgan's Gold Vault, The Largest In The World, Located Next To The New York Fed's?


:D

I think you should stick to RU Today. They insist the gold is not there. :rotfl:

I wonder how much we're paying Germany to keep quiet about this??? :eek:

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby member_27444 » 18 Sep 2013 01:09

Looks like Odd Job himself went to Kentucky and counted the bars
And reporting here its all right mama it's all right.....

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 18 Sep 2013 06:22

Expert discussion with insight on what's ahead. A must watch. It is long - 93 minutes but worth the time, if one care enough your investments.

Its a good discussion – whats frightening though is that the panelists seem agreed that the lack of regulation and further concentration within the banking sector, means its a matter of ‘when’, not if another crisis hits, and as with 2007/8, derivatives will be at the heart of this.
Read more at http://www.nakedcapitalism.com/2013/09/ ... lVsvJ2r.99

http://www.nakedcapitalism.com/2013/09/ ... tdown.html

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 18 Sep 2013 20:28

http://www.thetrumpet.com/article/10537 ... ollar-dies

The Day the Dollar Dies
From the May/June 2013 Trumpet Print Edition »



America’s financial Pearl Harbor is coming


December 6, 2015, 3 p.m. HKT, Hong Kong
Twenty-one men representing China’s most powerful institutions file into a conference room atop the ICC Tower looming over Victoria Harbor. The Politburo Standing Committee has mustered the CEOS of China’s four largest banks, Sinopec, and several other state-owned multinationals, plus officers from the Central Military Commission and a pair of academics from China’s top technology universities.

The general secretary formally opens the meeting. “As you know, the United States of America continues to manipulate its currency,” he begins. “It is devaluing its dollar, which steals away trade and reduces the value of its debts. The Standing Committee manages the yuan’s value to protect our manufacturing base and support employment.”

The secretary leans back ever so slightly to say what everyone in the room already knows, and the reason why they are here. “Three days ago, the Federal Reserve System announced its sixth quantitative easing policy in the past seven years.”

And now, the marching orders.

“The Central Politburo Standing Committee of the Communist Party has agreed that it is time to use every financial measure of the People’s Republic to preserve the state of its economy. It has approved liquidating the government’s holdings of U.S. treasuries.”

The order from the stone-faced secretary sounds broad, even bland. But it means very specific, very powerful things to each man in this room. It means pulling the trigger on a huge number of massive initiatives. And it’s backed by more than a trillion dollars.

The Chinese economy will suffer some collateral damage as well, but the decision has finally been made. To encourage and to enforce the point, the secretary concludes with a proverb: “Good medicine tastes bitter.”

He could’ve used a different one: “Wait long, strike fast.”

December 7, 9 a.m. EST, New York

It’s a normal day on Wall Street. Markets are up after last week’s Fed announcement of QE6. Thanks to this latest round of money-printing, gold is holding at $2,000 per ounce, oil is $95 per barrel. The dollar index is steady at 82.

Squawk Box is running a story saying China’s new East Asian free-trade zone seems to have been fast-tracked. Mongolia, Vietnam, Cambodia, Thailand and China’s recently reincorporated province of Taiwan are all sending signals that they’re suddenly ready to sign up. Trade will be conducted in Chinese renminbi. An Associated Press story getting some play quotes an unnamed official from Japan’s Ministry of Finance saying that since most of Japan’s trade is now with China, it too will eventually be forced to join the East Asian Prosperity Cooperation. Even Australia is considering participation. The markets yawn.

10 a.m. EST

The Dow Jones Industrial Average hits 16,000—a new record. Gold bumps up $20 per ounce. The dollar index is showing strength. Market Makers is praising Federal Reserve Chairman Ben Bernanke’s masterful handling of the economy, despite stubbornly high unemployment numbers. The lower third is flashing bulletins about surprise resource acquisitions and land deals across Africa and Central Asia by some Chinese state-owned oil and mining giants. Stuart Varney’s show devotes a 30-second chuckle to “irrational Chinese exuberance.”

10:48 a.m. EST, Beijing

Chinese Central Bank governor Zhou Xiaochuan is on television, announcing that China can no longer afford the Fed’s aggressive money-printing. “It has become evident that with America’s stagnant economy and aging population, it will not be able to pay its debts. It is defaulting on its debts by using inflation. China has lent America more than $2 trillion. The People’s Bank of China has no choice but to stop purchasing treasuries. We have spoken our concerns for several years, but the Fed has ignored its largest creditor. We are cutting off the credit card.”

10:56 a.m. EST, New York Stock Exchange

The markets reverse sharply. Dow futures plunge 1,200 points. Gold, silver and oil fall as investors impulsively rush for cash. Treasury yields skyrocket. Within seven minutes, the frenzy triggers preprogrammed fail-safes. Trading halts temporarily. But in Tokyo, Singapore and New Delhi, they’re still trading. American traders call for calm, saying that a full-on dump of China’s U.S. treasury stockpile would be “mutually assured destruction.”

Thirty minutes later, trading resumes—with an eerie calm.

11:44 a.m. EST, Moscow

As markets settle into an uneasy wait-and-see, Russian President Vladimir Putin appears at an unscheduled press conference. Holding up a gold coin, he announces that the Central Bank of Russia completed the largest bullion transfer in modern history in October: 850 metric tons from the International Monetary Fund. “Russia would like to thank the United States, Canada and Great Britain for approving this historic purchase of their gold holdings. In this age of unrestrained electronic money printing and currency devaluations, it is the opinion of the central bank that physical gold bullion remains a critical component for national wealth and power.”

Putin then throws down this challenge: “The gold is here for anyone to audit. I suggest that investors follow Russia’s example and demand an independent audit of Fort Knox.”

With this shock announcement, Russia becomes the world’s third-largest holder of gold after the European Union and China. Putin adds that Moscow is also negotiating for entry into the East Asian Prosperity Cooperation and, starting in January, will use the Chinese yuan for international currency transactions—with the notable exception of oil and gas exports to Europe, which will now be priced in euro marks.

Putin’s ITAR-TASS transcript goes viral. Twitter and Facebook explode.

To Wall Street and the world, it is now clear that something momentous is happening. It looks like a pre-planned attack on America’s anemic economy. Before Putin finishes his announcement, investors erupt in sell orders. The Dow plummets 30 percent in nine minutes. Institutional investors dump U.S. treasuries at fire-sale prices—trying to get out before China unleashes its hoard. Jim Rickards is on CNN saying it’s a “full-on revolt against the dollar standard.” The ZeroHedge blog has it up in doomsday 100-point font: “Is this the start of WW3?” Rumors begin to swirl on the trading floor and on TV screens around the world that America’s biggest banks are caught short and unable to cover their multibillion-dollar positions in the derivatives market.

12:03 p.m. EST

Bank of America CEO Brian T. Moynihan denies that the bank has a liquidity problem.

12:07 p.m. EST

Citigroup CEO Michael Corbat calls the buzz about his bank’s derivatives positions “malicious rumors started by speculators that are just false.” The bank is “fundamentally sound,” he insists.

12:15 p.m. EST

Warren Buffet warns of contagion to the insurance sector.

12:30 p.m. EST, Federal Reserve Bank, New York

Visibly agitated, Federal Reserve Bank Chairman Ben Bernanke says that due to market conditions the Fed will temporarily purchase “unlimited” amounts of treasuries to restore confidence in the market. “The Federal Reserve is committed to a strong dollar policy and any damage to the banking system is limited and contained,” he said.

His announcement has the opposite effect. Instead of instilling confidence, investors take it as confirmation of a worst-case scenario—and a giant sell signal on the dollar. The dollar index drops into free fall, gold jumps by more than $700 per ounce, and silver hits $100. Ten minutes later, Bill Gross at bond giant PIMCO is being interviewed by Lauren Lyster on MSNBC. She asks if we are witnessing the end of the dollar as the world’s reserve currency. Gross confirms that he began shifting most of his $1 trillion-plus fund out of dollar-denominated assets more than a year ago. He put the money in Europe back when everyone else thought it was falling apart. “The writing was on the dollar’s wall a long time ago,” he says. “America’s mushrooming debt and the lack of political will to address its spending problems assured the demise of the dollar. I just didn’t realize it would happen so fast.”

In an hour and a half, the dollar has lost more than half its value.

Fox News is saying people should spend their dollars now before they are worthless. Dennis Kneale is actually comparing the collapse of the dollar to the Argentine peso and the Greek drachma.

12:39 p.m. EST, Atlanta, Chicago, Phoenix, Oakland …

Riots are reported in shopping malls and business districts across several major cities, as people awake to the fact that the value of their cash is evaporating. Their savings and investments have lost more than half of their purchasing power compared to other currencies. Local news footage shows empty store shelves and malfunctioning ATMs. People panic and rush grocery stores to stock up. Customers claim widespread price gouging. Mobs of young people rampage through Birmingham, Cincinnati, Chicago.

1:02 p.m. EST, Washington, D.C.

President Obama holds an emergency press conference. “This morning, December 7, 2015—a date that will live in infamy—the United States of America was suddenly and deliberately attacked by overseas governments in an attempt to discredit the dollar and take away its status as the world’s reserve currency.

“Let me be clear: To even entertain the idea of the United States of America not paying its bills is irresponsible. It’s absurd.

“Some have questioned the integrity of our nation’s bullion reserves. Believe me, the gold is there. When Germany requested its gold holdings back, we began returning it. I now urge my German counterparts to confirm Europe’s commitment to using the dollar as a reserve currency.

“I have authorized Chairman Bernanke to implement capital controls to prevent millionaires and speculators from taking money out of the country. I am also issuing an executive order that will limit private ownership of gold. I am also directing Congress to pass new tax legislation and tariffs on Chinese goods.

“Unfortunately, some elements in our cities seek to gain from this crisis: speculators on Wall Street and rioters on Main Street. To protect the common good, I hereby declare a temporary state of emergency and authorize Homeland Security, FEMA and the National Guard to restore order to our great cities .…”

1:25 p.m. EST, New York

The plunging markets go into free fall after the president’s announcements. Gold jumps another $800, silver is at $175, oil at $250. The dollar hits an all-time low. Investors around the world flee the dollar. American cities have started to burn.

Back in the real world …

Although the dates and events in this scenario are obviously fictitious, the principle isn’t.

In fact, such an economic disaster is imminent enough that the Pentagon held its first-ever financial war games back in 2009. Instead of carrier movements, tactical strikes and aerial bombardments, the weapons were currencies, stocks, bonds, interest rates and derivatives. But just like real war exercises, the purpose was the same: to discover fatal weaknesses and how the enemy might exploit them.

Wall Street banker Jim Rickards participated in the war games. In his book Currency Wars, he writes that the Pentagon is clumsy at financial warfare.

Financial war is not beyond America’s horizon. Whether or not politicians and the Fed will publicly acknowledge it, the war has already begun.

In 2010, Brazilian Finance Minister Guido Mantega was the first public official to confirm what everyone knew but no one would admit. “We’re in the midst of an international currency war,” he told industrial leaders in Sao Paulo. “This threatens us because it takes away our competitiveness. … The advanced countries are seeking to devalue their currencies.”

While the U.S. and other governments might throw out phrases like “commitment to a strong dollar” every now and then, what many of them are actually doing is actively and openly devaluing their currencies to gain unfair short-term economic advantages.

Faced with unacceptably high unemployment and a stagnant global economy, the world’s leading economies are resorting to currency manipulation to steal a greater piece of a shrinking economic pie. The short-sighted goal is to weaken the currency to make domestic goods cheaper for foreigners to buy and foreign goods more expensive to purchase. This beggar-thy-neighbor strategy is highly contentious and potentially explosive.

In 2012 alone, global central banks cut interest rates 75 times in an effort to weaken their currencies.

“Ever since the Fed launched QE2 in August 2010, we have been in the currency war regime,” confirms Alessio de Longis, who runs the Oppenheimer Currency Opportunities Fund. “It will continue to be this.”

Regardless of who started it, the war is heating up.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Suraj » 18 Sep 2013 23:21

After months of nautanki, the Fed decides not to taper today. Stocks up, mortgage rates down, gold up. Global markets will be up strongly tomorrow. With Summers backing out from the Fed chairman contention and Yellen (a dove) as frontrunner, QE-infinity seems more likely.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 19 Sep 2013 01:49

Gold went up by 4.15 percent today. Silver gained by almost 6% in one day.
Who in BRF said Gold was a dead investment

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 19 Sep 2013 01:51

Suraj wrote:After months of nautanki, the Fed decides not to taper today. Stocks up, mortgage rates down, gold up. Global markets will be up strongly tomorrow. With Summers backing out from the Fed chairman contention and Yellen (a dove) as frontrunner, QE-infinity seems more likely.

Welcome to currency cold war.
The general secretary formally opens the meeting. “As you know, the United States of America continues to manipulate its currency,” he begins. “It is devaluing its dollar, which steals away trade and reduces the value of its debts. The Standing Committee manages the yuan’s value to protect our manufacturing base and support employment.”

The secretary leans back ever so slightly to say what everyone in the room already knows, and the reason why they are here. “Three days ago, the Federal Reserve System announced its sixth quantitative easing policy in the past seven years.”

And now, the marching orders.

“The Central Politburo Standing Committee of the Communist Party has agreed that it is time to use every financial measure of the People’s Republic to preserve the state of its economy. It has approved liquidating the government’s holdings of U.S. treasuries.”

The order from the stone-faced secretary sounds broad, even bland. But it means very specific, very powerful things to each man in this room. It means pulling the trigger on a huge number of massive initiatives. And it’s backed by more than a trillion dollars.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Suraj » 19 Sep 2013 02:16

Sorry, PRC have already made that threat once. It was effective in terms of market response. The more times they use it, the less effective it will be. Plus, they won't get anywhere near $1 trillion for those bonds when they do that imaginary 'pull the trigger'.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ramana » 19 Sep 2013 02:17

A trillion isn't worth much nowadays.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 19 Sep 2013 03:21

acharya wrote:.....politicians and the Fed will publicly acknowledge it, the war has already begun.

In 2010, Brazilian Finance Minister Guido Mantega was the first public official to confirm what everyone knew but no one would admit. “We’re in the midst of an international currency war,” he told industrial leaders in Sao Paulo. “This threatens us because it takes away our competitiveness. … The advanced countries are seeking to devalue their currencies.”


The war between dollar and gold has long ended with dollar loosing the war. The current war is between the dollar faction and euro faction. Chew that cud.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby vic » 19 Sep 2013 09:00

It would be stupid for China to destroy the value of it's US treasury holdings. It would make more sense for China to use the money to buy tangible assets, equities etc.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 19 Sep 2013 12:50

vic wrote:It would be stupid for China to destroy the value of it's US treasury holdings. It would make more sense for China to use the money to buy tangible assets, equities etc.


The better way to look at it is in the form ofcurrency wars

I think, the currency of a country does no longer hold "backing". This term, it is used often, but is not correct. Today, all modern money does have "reserves", and such is used only for "the dirty float" in currency warfare. As in war, the larger and better equipped army in "reserve" does rule over the lesser force. Perhaps we should think in this way: in a "cold war" of modern exchange rates, "digital currencies from reserves are used", however, when a "hot war" of major default does begin, "nuclear weapons of GOLD" are deployed!

As in real war defense, of today, some countries hold a much lesser army, and depend on "the alliance" with other stronger nations to defend them. Such it is with the currencies! Many states hold but a few "digital currencies" as reserves for currency wars and see no need for "gold nuclear weapons". They sell off these weapons and do join "the currency alliance" of stronger nations. We see this in Europe, yes?

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Christopher Sidor » 19 Sep 2013 17:24

If one owes a bank or any creditor entity Rs 100 then it one's problem. But if one owes a bank or any creditor entity Rs 1 trillion then it is the bank or the creditor entity's problem.

Guess who is what in relation to PRC and USA.

PRC is an export oriented economy, unless and until it wants to see unemployment in excess of 20% and a recession bordering on a depression, it will not under any circumstances sell these 1 trillion dollars of US Treasuries and other US securities. And even it does sell these US securities, what will it get in return? Dollars. And what can it do with these 1 trillion USD bills?
It can allow these 1 trillion USD to flow into the economy and allow two currencies to be the legal tender, USD and Yuan. I hope that they do it I would seriously like to observe the consequences of such an action.
Last I checked nobody is willing to sell Oil & Gas to PRC in Yuan so they will need Dollars. They can use these 1 Trillion USD to buy these and other commodities. But guess what sitting on 1 USD which do not earn interest and especially do not beat the inflation is a losing proposition. After a time the money will run out and then what?

PRC knows it cannot execute the "nuclear option" unless it wants to commit suicide, economically at least. Maybe hot heads in PRC are capable of it. After all they single handedly within a period of 5 years have managed to send practically all of their neighbours into the waiting embrace of USA. So they are capable of monumental stupidity. And they have a history of such actions. Great Leap Forward, Cultural Revolution, 1989 Tiananmen Square Massacre, the list just goes on and on.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 19 Sep 2013 23:31

vic wrote:It would be stupid for China to destroy the value of it's US treasury holdings. It would make more sense for China to use the money to buy tangible assets, equities etc.

PRC is not a normal country. It is a military operated country showing a false image of capitalist economy market driven country with a large external trade.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 20 Sep 2013 10:35

China can use their money treasury holding be it forex or US bonds etc to pay they Fuel Import Bill which is rising every year , they can use it to pay their bill for the current decade.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Suraj » 20 Sep 2013 10:39

The article posted is not about ways to use the forex, but specifically about the act of selling PRCs US treasury holdings en masse, as a threat.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 20 Sep 2013 12:27

They wont do that US and PRC are in mutual dependency relationship so its both in US and Chinese interest that will keep them going.

Also China does not need to threaten US or vice verse militarily they have enough systems to deter US and vice verse.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 20 Sep 2013 12:40

Russian Government Approves 2014-2016 Budget

MOSCOW, September 20 (RIA Novosti) – The Russian government on Thursday approved the draft budget for 2014-2016, Russian Prime Minister Dmitry Medvedev said.

The budget is based on the Urals oil price of $93 per barrel in 2014 and $95 per barrel in 2015 and 2016.

According to previously announced figures, the 2014 budget deficit will stand at 391.4 billion rubles ($12.4 billion, 0.5 percent of GDP), with incomes of 13.569 trillion rubles ($428.6 billion) and expenditures of 13.96 trillion rubles ($440.1 billion).

In 2015, the deficit will more than double and stand at 817 billion rubles ($25.8 billion, 1 percent of GDP), with incomes of 14.545 trillion rubles ($459.3 billion) and expenditures of 15.362 trillion rubles ($485.2 billion).

The deficit will drop to 485.8 billion rubles ($15.3 billion, 0.6 percent of GDP) in 2016, with incomes at 15.906 trillion rubles ($502.4 billion) and expenditures at 16.392 trillion rubles ($517.7 billion).

The premier said the budget was quite austere, because it is based on the real economic situation in Russia and global markets.

“We will have to cut our expenditures, but not to the detriment of our main plans. Well-thought-out use of funds, a kind of budget rationalism should become obligatory for the whole budget system,” he said.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Suraj » 20 Sep 2013 13:09

Austin wrote:They wont do that US and PRC are in mutual dependency relationship so its both in US and Chinese interest that will keep them going.

Also China does not need to threaten US or vice verse militarily they have enough systems to deter US and vice verse.

That's more or less what I wrote in the earlier post in response to the originally referenced article. They've already made the threat before. The shock effect is gone. People will just smarten up now and realize they can't just press 'sell all shares'.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 20 Sep 2013 15:26

Austin wrote:They wont do that US and PRC are in mutual dependency relationship so its both in US and Chinese interest that will keep them going.

Also China does not need to threaten US or vice verse militarily they have enough systems to deter US and vice verse.



Since 2008 China has been consistently selling US treasury bonds for Euro Bonds. They still buy UST but they are buying more Euro Bonds. I am sure the Chinese cannot wait to sell all their US bonds but the loss of value prevents them from doing it outright.

In 1998 when Bank of International settlements opened its office in China,

Liu Shanen of Chinese Gold Economic Development and Research Institute of the State Metallurgical Industry Bureau

"Liu Shanen, vice director of the Gold Economic Development and Research Institute of the State Metallurgical Industry Bureau, recommended that the People's Republic should increase its gold reserves from the current level of 397 tonnes or 3% of total foreign exchange reserves of $140.5 billion to between 1,000 and 1,500 tonnes, between 6% and 8% of external reserves, "to prevent financial risk."


The reasoning behind this recommendation is apparently the belief that China should cut its holdings of dollar-denominated foreign reserves to guard against a possible fall in the dollar on the introduction of the Euro, the single European currency, at the beginning of next year.


China currently holds about 60% of its external reserves in US dollar-
denominated assets, including about $60 billion in US Treasury bonds. "Compared with cash, gold is stable and safe," Liu Shanen said.


He also recommended that the Chinese government should ease controls on buying and selling by individuals in a bid to boost what he described as "non-governmental" reserves.


Liu Shanen pointed out that China ranks third in global consumption of gold and fifth in mine production, but only twelfth in terms of its official reserves in gold.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 20 Sep 2013 16:18

I believe they buy those US bonds to keep Yuan competitive so beyond a threshold they cant sell those US bonds else Yuan will rise making their export less competitive.

I think the best bet for China is to look into their own internal market and make a transition towards internal consumption and growth driving the economy how smartly they can manage this transistion and within what time period is something that would make the ride bumpy or smooth needs to be seen.

China cannot live forever on exports and Yuan cannot be artificially lowered against USD for long much like US cannot keep increasing its debt and QE cannot go on.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 21 Sep 2013 11:32

We are on a gold standard now, even though it is not recognized

If you believe that gold no longer plays a role, think again. In effect, if you know what to look for, the world is on a gold standard now.

In 1971 the US ‘closed the gold window’ starting an era of global fiat money reference pricing that has been unprecedented in history. Never has the world operated on the basis of no country having a currency tied to something with intrinsic value like Gold. The ‘petro-dollar’ - a US dollar exchange rate based on the deal struck between Saudi Arabia and America - for the US to buy their oil and for the Saudis to buy US dollars and bonds in return - started a period of oil companies (with the military machinery in their pocket) bullying the world into buying US dollars or getting cut off from oil and dollar supplies led to our current political situation with the US now involved in multiple wars in various oil dependent economies and their satellites - and this lulled many into believing that Gold no longer played a role, but recent events prove these assumptions wrong.

Leading up the news that the Federal Reserve would not ‘taper’ their bond buying (QE) program we saw a precipitous drop in the price of Gold. Since I knew (like others including Peter Schiff, Bill Fleckenstein, Michael Pento and even James Rickards who stated as much on “Keiser Report”) that the Fed cannot ‘taper’ at any point going forward without throwing their entire Ponzi scheme into the ditch (causing every major bank in the world to instantly collapse) it was interesting to see the price of Gold trade down - unless you know the Fed, working alongside bankers on Wall St. and the City of London - are actively managing the price of Gold (along with stocks, bonds and currencies). Knowing that the Fed (who is implicated in every recent major market rigging scandal covering Forex, energy markets and credit default swaps) knew that it would make an announcement that would cause a buying panic in Gold (that they were going to debase the currency some more) - it had to go into the market and drive the price of Gold down ahead of the announcement or risk seeing Gold pop to new all-time highs of $2,000 or more.

I commented a few weeks ago that to understand the Fed you have to understand that it, along with JP Morgan and other TBTF banks, are one giant hedge fund. And this is a huge negative for supporters of free markets who believe prices should be determined by the market - not the Fed. Surprisingly, a few days later Warren Buffett made the same observation. He said the ‘Fed is the most successful hedge fund in history.’ For Warren this is true. He is on the receiving end of the biggest transfer of wealth in history from workers and savers to borrowers and speculators. But for those not on the Fed’s list of recipients of hundreds of billions worth of interest free loans that never have to be paid back the fact that the Fed is a giant hedge fund is devastating. It’s no coincidence that the day after the ‘no tapering’ of ‘food stamps for bankers’ aka QE was announced the government announced that food stamps for the non-recipients of the Fed’s free money were told that they can expect a ‘taper’ in the form of a cutback.

The huge price drop in Gold before the taper announcement is ‘smoking gun’ proof the Fed does exactly what Warren Buffett says they do: operate like an enormous hedge fund; making free loans to ‘friends,’ manipulating markets with impunity, disrupting price discovery with high powered algo trading fraud and pressuring governments to submit to various extortion schemes like TARP (created by Goldman Sachs alum and Treasury Secretary Hank Paulson.

In effect, if you know what to look for, the world is on a gold standard now. The price of gold is telling you that the Fed Ponzi is running at full tilt and that the ravages of having such a destructive mechanism at the heart of the economy are unraveling. Because even with all that effort, the trend of the price of Gold is still higher and at some point the ability to keep it down will fail and then; as Warren Buffett also said; ‘You can see who’s not wearing a bathing suit when the tide goes out.’

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 22 Sep 2013 20:43

Max Keiser and Stacy Herbert discuss economic espionage and, perhaps, sabotage by the NSA against the corporations and innovators of competitor nations. In the second half, Max interviews author, journalist and filmmaker, Greg Palast of GregPalast.com, about the Larry Summers’ secret ‘End Game’ memo and the decriminalization of what were once financial crimes.

http://rt.com/shows/keiser-report/episo ... eiser-929/

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 22 Sep 2013 21:29

Bernanke won’t taper, unless bond market or dollar collapses
by Shanmuganathan Nagasundaram Sep 19, 2013

In what had to be one of the most eagerly-awaited announcements of the year, US Fed Chairman Ben Bernanke announced his decision not to taper his bond purchases for now. In my thoughts on this topic written a couple of months ago, QE or no QE, I had said that Bernanke cannot taper “meaningfully” – not only at the September meeting, but ever. No drug addict can give up drugs without first experiencing withdrawal symptoms – which can be painful. It is easier to continue imbibing drugs even if they ultimately kill you. Bernanke won’t do a meaningful taper unless he does a U-turn in terms of his economic beliefs and accepts a collapse of the bond market and a deep recession as a solution to the US’s problems of excessive debt and excessive consumption – which seems unlikely.

The other situation in which he may taper is if there is a full-blown US dollar currency crisis. I am not saying that the chances of a mild taper to the tune of $5-10billion a month is very low. In fact, I thought that Bernanke would taper a bit and the revolt in the bond market, with its cascading effects on the housing market as well as government finances, would have made him reverse course. With the Fed being almost the only buyer in the treasury market, any taper would have caused the rates to rise substantially. Even talk of a taper has caused rates to almost double from slightly over 1.5 percent a few months back to nearly 3 percent today. (It was 2.69 percent for 10-year bonds yesterday after the Fed announcement). The media would have portrayed the taper, if it had happened, as a tightening exercise. That’s how low the expectations of the media have been set by central banks – not only by the US Fed, but also by its counterparts in other parts of the world. Most central banks, including our own RBI, are running massively accommodative policies whose deleterious effects have only just started playing out. And yet, all that we can hear in terms of expectations from the government, industry bodies and the media channels are requests for further easing.

So what should Bernanke have done? Bernanke should never have lowered the rates to zero in the first place and indulged in this exercise of bond buying. It was the monetary easing by the previous Fed Chairman, Alan Greenspan, that led to the housing bubble with all the accompanying imbalances in the US economy. This round of easing has been greater, by a wide margin at that, and so the consequences are going to be that much worse than in 2008 when the current bubble in treasuries/ bonds, fiat currencies and “confidence in governments” bursts. Given where we are at, the best course for Bernanke would be to wind down the bond buying programme, do a Paul Volcker on rates, and raise them substantially to generate savings. At the same time, he should force the government to cut back on its expenses. Given the near $20 trillion acknowledged national debt, even a 5 percent rate would put the interest outgo at $1 trillion, forcing the US government to massively scale down its unfettered spending programme. Ofcourse, there is zero chance that Bernanke will do that and so we will continue to witness the train wreck in motion, as has been the case for the last several years. The action in the treasury market is likely to be interesting in the months ahead. While most participants would expect the yields to fall over the short to medium term, I think the opposite is likely to happen. The initial reaction that we have witnessed in bonds all over the world is merely a “head fake”. After all, continued quantitative easing (QE) should logically imply a lower purchasing power for each existing unit of the currency and it’s quite natural for the markets to expect a higher return for holding onto something that is likely to lose its value over a period of time. So this is what is likely to happen: yields, after softening for the next few days, are likely to begin to rise and Bernanke or his successor would be forced to increase the bond buying programme to $100 billion a month from the current $85 billion to buy more treasuries to decrease the yields. As I wrote in the previous article, $100 billion a month will happen before $50 billion a month – and with this continued stimulus distorting the markets to a greater degree, a sustained improvement in the economy or the labour markets is never going to happen. As Ludwig von Mises of the Austrian School would love to compare, any economy on a central bank-induced cheap credit binge is like a drug addict… with time, one needs greater and greater dosages to even maintain the status quo. Any cleansing process of this addiction has to start with the rather painful, but much needed, withdrawal symptoms. In the case of the US economy, these symptoms would include substantially higher bond yields, resulting in a very deep recession, a massive reduction of government expenditure, a cleansing of malinvestment in the bubble sectors and reallocation of freed up resources on a market-driven basis. The path that Bernanke has put the US on is very different. He has taken the route of greater doses of stimuli that would allow him to temporarily postpone the withdrawal symptoms, but would ultimately cause the death of the patient. That has been the case for the last several years, but this time it indeed is going to be different. The patient under question is not only the US economy, but the US dollar as well. Shanmuganathan “Shan” Nagasundaram is the founding director of Benchmark Advisory Services – an economic consulting firm. He is also the India Economist for the World Money Analyst, a monthly publication of International Man. He can be contacted at shanmuganathan.sundaram@gmail.com


Read more at: http://www.firstpost.com/economy/bernan ... ef_article

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 23 Sep 2013 03:14

^^

I have stated before but repeating the same again. US spends 2.5 billion dollars every day and gets approx 2.0 billion dollars returning. There is no way how they can keep haemorrhaging 0.5 billion dollars daily for even a few months. The Fed will paper over all the cracks with even more paper.

Aam Abdul is a saver. He is not an investor nor is he a trader. He can never be an investor or trader because he works and earns money to survive. Investor-trader already has made enough money that he can risk some of it. We are all savers. And in this period of flux the only sensible medium to save is gold. People should be worrying about return OF their money not the return ON their money.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 26 Sep 2013 22:08

Revised US GDP growth unchanged - at 2.5%

The US economy - the world’s biggest – added 2.5% between April and June, according to the final calculation from the Commerce Department published on Thursday. Most economists had expected the final revision would result in growth of between 2.6 or 2.7% for 2Q 2013, up from the first estimate of 2.5%. Growth in the first quarter was 1.1%. The 2Q GDP comes at a sensitive time for the US, when the country needs to decide the future of its massive stimulus program, as well as the debt ceiling.


Europe's economy is feeling bad, US is also sliding down slowly to unavoidable catastrophe - expert

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby gakakkad » 26 Sep 2013 22:33

^^all doom and gloom onlee...no one truly predicted the subprime crisis...though many claim to have after it occurred . above article is hawt air onlee...using familiar keywords like 'keynesian',china,banks bla..bla..bla..

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby paramu » 27 Sep 2013 07:12

The Wealthiest 1% Are Preparing for the E*d of a**erica

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby RamaY » 27 Sep 2013 07:33

Question to gurus,

US might be printing money. But what goes its goat as long as dhimmi economies like India depend upon those paper dollars?

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 27 Sep 2013 07:52

RamaY wrote:Question to gurus,

US might be printing money. But what goes its goat as long as dhimmi economies like India depend upon those paper dollars?


Printing dollars faster means more reserve currency for India.

Slower printing of dollars means less reserve currency for India. However goods and services from India becomes cheaper to the US.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 27 Sep 2013 10:15

He He He!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 27 Sep 2013 10:18

Image

Germany, 1923: banknotes had lost so much value that they were used as wallpaper.


http://en.wikipedia.org/wiki/Hyperinflation


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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 27 Sep 2013 14:59

Acharya wrote:He He He!


?

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Christopher Sidor » 27 Sep 2013 15:35


PRC will manage the NPAs of its banking system. It will bail out its banks. India does it. EU does it. US also does it. Lehman was not a bank and that is why it was not saved. To see an extreme case of Banks being saved refer to Japan post its nikke index which came whisper close to touching 40000.

So banking NPAs can be handled and PRC has handled it previously. It is a dictatorship at the end of the day. It can simply wipe the slate clean and start over again, i.e. issue a new currency. This action will of course overnight wipe out the wealth of the entire middle class of PRC. That is a small inconvenience to the people who rolled tank tracks over protesters in 1989.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Austin » 27 Sep 2013 16:51

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the U.S. Federal Reserve Bank as ‘the greatest hedge fund’ in history and ask whether or not their quantitative easing policy is like trying to pass pork off as a prime cut of beef. In the second half, Max interviews precious metals trader, Andrew Maguire, about JPMorgan whistleblowers and the Federal Reserve Bank taper hoax.

http://rt.com/shows/keiser-report/episo ... eiser-238/

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 28 Sep 2013 20:32

Nixon didn't really take the dollar off the Gold Standard in Aug 15 1971; at that point, the dollar had been off the Gold Standard since 1949 with the Bretton Woods agreement. What Nixon did was remove the ability of FOREIGN nations to recall their debts in gold. When the semi-gold standard was ended in 1971, the dollar also wasn't "backed by nothing". It was allowed to float more, certainly, which caused rampant inflation

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 28 Sep 2013 20:42



THis is good explanation of economy, currency, export/import policy and other monetary decision

Nixon blames the attack on the dollar to currency speculators in 1971. Also he tries to reduce the CAD using import taxes.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Neshant » 28 Sep 2013 22:29

Acharya wrote:Nixon didn't really take the dollar off the Gold Standard in Aug 15 1971; at that point, the dollar had been off the Gold Standard since 1949 with the Bretton Woods agreement. What Nixon did was remove the ability of FOREIGN nations to recall their debts in gold. When the semi-gold standard was ended in 1971, the dollar also wasn't "backed by nothing". It was allowed to float more, certainly, which caused rampant inflation



Yes you're right about that. The reality is since the end of WWII, no country dared approach the US with its dollars to ask for gold or they would be punished.

I believe it was the French who broke this rule first by asking for 3 billion dollars worth of gold in exchange for the dollars. They did this deliberately to break the hegemony of the dollar. Their request was refused and the US quickly closed the gold "window" for gold to dollar convertibility. The window was really a mirage as it existed only in name, not in practice.

The rampant inflation was because of the huge war debts brought on by the Vietnam conflict and more so due to OPEC. The US wanted to print away its debt and the market obviously knew that. That US closed the gold window only confirmed it.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 28 Sep 2013 23:50

Neshant wrote:
I believe it was the French who broke this rule first by asking for 3 billion dollars worth of gold in exchange for the dollars. They did this deliberately to break the hegemony of the dollar. Their request was refused and the US quickly closed the gold "window" for gold to dollar convertibility. The window was really a mirage as it existed only in name, not in practice.

The rampant inflation was because of the huge war debts brought on by the Vietnam conflict and more so due to OPEC. The US wanted to print away its debt and the market obviously knew that. That US closed the gold window only confirmed it.

Another information
French had gold and it was held by Iran. Iran kept part of its gold assets in US.

After the Iranian revolution US froze the assets of Iran. French are still waiting for their gold/


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