Perspectives on the global economic changes

panduranghari · Post by **panduranghari** » 12 May 2015 20:28

The very first post of this thread

http://forums.bharat-rakshak.com/viewto ... 2d#p582815

SSRoy wrote:I am not sure that most of you comprehend the full extent of this self-inflicted disaster. If you do, I am sorry for repeating it.

The facts-

1] The entire western banking system is insolvent- not illiquid, just plain insolvent. Extensive governement intervention is the only reason banks are still operating in the western world.

2] The mechanisms of self-regulation and credit rating has been shown to be fraudulent. Many financial sectors like IBs, Hedge Funds and even plain insurance companies are f**ked. Inter-institution trust has collapsed. Banks are hoarding money and the effects of credit contraction on non-financial businesses are starting to get ugly.

3] The financial system in the west will never be the same again. To date they have lost 4 times the amount of inflation adjusted money they have made since 1400 AD . The 600 year old business model of western banks is therefore essentially dead. Lots of reasons. The reincarnated version of western banks will look a lot like nationalized banks in India.

4] This collapse has destroyed trillions of notional wealth and will destroy trillions more. Pensions in the western world are DOA. Many professions like doctors, lawyers are starting to realize that they will never make the same amount of money again.

5] The financial shell games and ponzi schemes of the last 30 years have come back to haunt them- all at once!The demographic profile of the west is not good. They have too many baby boomers who had hoped to retire but now find themselves unable to retire.

6] Don't believe westerners who say "it will come back". That is PR and wishful thinking. Read more about the real causes of this crisis and why it will essentially end the dominance of the west.

7] The west has not yet officially capitulated, but it will have to..

What it means for India.

1] China is toast! Unless they pull a rabbit out their behinds, their progress will start to unwind. They built an economy that was too dependent on exports, and they discouraged their citizens from consuming their own stuff. The debt based export market has collapsed, and local consumption has not yet caught up with production. Expect massive job losses and widespread civil unrest.

2] Pakistan is DOA. Hopefully they (fundies) will pull of a stupid stunt with loose nukes in the west. It would be very desirable if the US nuked them in retaliation.

3] The main leverage of the west over 'colored' countries like India is gone! They need you much more than you need them. But you guys have to realize that and take advantage of this calamity. Expect them to line up and sell you high tech stuff- nuclear reactors, missiles, avionics, aircrafts, technology- anything you desire. Their socioeconomic system requires new consumers, they are old and tapped out- you are not.

3] If India plays it's cards right, it could position itself as the biggest growth market in the world. We still have well run and transparent banks and people who do not save too much like the chinese or too little like the americans.

4] I hope that any new government in India (2009?) will not be full of geriatrics. Hopefully, they will also stop being obstructionist, petty and let people become rich. I have always believed that politicians and bureaucrats in India conspire to hinder progress and keep people poor.

I could write in much greater detail, but it might make it harder to grasp the big picture.

If could post links to blogs that have been following this story for the last 3 years, if you want..

What has changed? In reality, nothing. SS Roy has made points which are valid even now. But 'Rationality Trap' wins.

KrishnaK · Post by **KrishnaK** » 13 May 2015 01:39

Austin wrote: You see among BRICS the R and C are buying more Gold not Dollah ..... it would be more prudent to buy Gold for RBI and not just invest in Bond which may not be the worth the paper in few years from now.

From Gold Reserves China's gold reserves are 1% of its forex reserves and 13% for Russia.

Neshant · Post by **Neshant** » 13 May 2015 06:48

China lies about the amount of gold it actually has - and probably so does the US.

chandrasekhar.m · Post by **chandrasekhar.m** » 13 May 2015 09:33

Gurulog, in all this talk of impending bust, what is mango abdul to do onlee? Buy gold? Hold on to cash by withdrawing a small amount (500$) every week? (Since large withdrawals might bring the police to your door, at least in the great USofA) Or buy some farmland? Anyway not enough savings to purchase a house at current astronomical prices.

Or chill and go about trusting in the gobermint(s) to save the vast masses. Reading the regular posts here makes this a very unappealing option.

Neshant · Post by **Neshant** » 13 May 2015 10:44

A strange report.

Russia has (unilaterally?) invited Greece to join the BRICS bank as its 6th member.

Considering countries that setup the BRICS bank put up billions of dollars to fund the bank, how exactly can Greece join being on the verge of bankruptcy. What will they put up as capital. Did Russia clear this with the rest of the BRICS prior to making the invitation?

Perhaps what was meant is that Greece can seek loans from the BRICS bank. But I'm sure it will come with the requirement of uncontested collateral in exchange for those loans. Nobody is about to flush a ton of money down the drain issuing loans that will never be repaid.

____

Russia invites Greece to join BRICS bank

Published time: May 12, 2015 10:00

http://rt.com/business/257701-greece-ru ... nvitation/

Greece has been invited by Russia to become the sixth member of the BRICS New Development Bank (NDB). The $100 billion NDB is expected to compete with Western dominance and become one of the key lending institutions.

The invitation was made by Russian Deputy Finance Minister Sergey Storchak on Monday during a phone conversation with Greek Prime Minister Alexis Tsipras, according to a statement on Greece's Syriza party website. Tsipras thanked Storchak, who’s currently a representative of the BRICS Bank for the invitation, and said Greece was interested in the offer.

gakakkad · Post by **gakakkad** » 13 May 2015 11:03

it is a very chankian move by Russia..greek Debt is lose change for BRICS..EU will be dhoti shivering...

chanakyaa · Post by **chanakyaa** » 13 May 2015 15:59

How so? Unless it is just hot air blown by the both leaders. The trouble Greece is in is because of their own doing. Corruption, entitlement attitudes runs sky high. Why do you think BRICS should subsidize such behavior? They have plenty of it happening in their own countries. It is as much change for IMF, US, WB, ECB, China, as it is for BRICS. Why aren't they doing it?

Austin · Post by **Austin** » 13 May 2015 16:20

Negative Interest Rates of Banks – Part 2 - Apekshit Mulay

http://apekmulay.com/negative-interest- ... ks-part-2/

vinod · Post by **vinod** » 13 May 2015 18:21

I think the game here is that everyone is planning for Greece exit from euro. In that case, Russia is leaving the door open for the Greece. This makes the Greece hand stronger in negotiations with EU.

Having port access to euro mainland is mouth watering for all BRICS! Something, I'm sure EU doesn't want.

ramana · Post by **ramana** » 13 May 2015 20:57

panduranghari, last evening a radio show was talking about effect of recent German interest rate hike on US bond market. Appears all US rates are defacto rising.
IOW whether Feds like it or not others are impacting the interest rate knob.

panduranghari · Post by **panduranghari** » 14 May 2015 01:52

vinod wrote:I think the game here is that everyone is planning for Greece exit from euro. In that case, Russia is leaving the door open for the Greece. This makes the Greece hand stronger in negotiations with EU.

Having port access to euro mainland is mouth watering for all BRICS! Something, I'm sure EU doesn't want.

Let's for a pure exercise think what would happen if EU throws Greece under the bus, metaphorically speaking. All the effort of past 50 years wasted, the possibility of re-emergence of financially ruinous wars starts again. The last 60 years, except for the Yugoslav war, was the longest time ever in the history of Europe, where less people have died from wars than from old age. Also after Greece, who next? Will they also throw Spain and Italy and Portugal and France under the bus? Where does all that effort of raising consensus to ratify treaties and treaties eventually go? Dustbin?

No think again.

After fighting for over 600 years, they are giving internal peace a chance. For the European elite, ECB is sacrosanct. And for them the EURO is the pinnacle of their achievement.

The Euro is future oil currency. It will supplant the dollar(without bloodshed), without having any exorbitant privilege that dollar enjoyed. It solves the Triffins Dilemma. It is the return of old world economy through modern conventions. All those who talk about gold standard, do not understand what they are talking about.

After thinking through the design financial architecture, I have come to a understanding that modern fiat currency CAN NEVER be done away with. It is too fundamental to our modern living. But then gold is too hard a currency. Why should we have uncontrolled inflation of fiat money? And why should we tolerate the bone crushing deflation of gold? Why can't money be in unconstrained amounts! Not too much, nor too little.

To enable that, gold has to be set free. Set free from the constrains artificially imposed on it by 'our' modern thinking. Or is it 'western' thinking?

The Euro will do just that. It will set gold free. It may be a bit difficult to understand what this poster is trying to say as I am neither good with words nor smart enough to see many obvious things. But gold. I do understand it. And I think it understand me. No wonder I am 100% in it. Except for 6 months living expenses, I am all in. Following Stanley Drunkmillers advice. http://forums.bharat-rakshak.com/viewto ... 4#p1836914

But as usual the best bet is DYOR- do your own research.

Ramana Saar,

The U.S. Is just reactive to its systemic troubles. They have lost complete control of their own currency. Rates will not only rise, they will double then quadruple overnight. The DC will ensure they will never be short of funds. It will be hyperinflation the likes of which the world has never seen. It will be awesome to watch.

As they say- time if all will prove these things.

KrishnaK · Post by **KrishnaK** » 14 May 2015 02:02

panduranghari wrote: Let's for a pure exercise think what would happen if EU throws Greece under the bus, metaphorically speaking. All the effort of past 50 years wasted, the possibility of re-emergence of financially ruinous wars starts again. The last 60 years, except for the Yugoslav war, was the longest time ever in the history of Europe, where less people have died from wars than from old age. Also after Greece, who next? Will they also throw Spain and Italy and Portugal and France under the bus? Where does all that effort of raising consensus to ratify treaties and treaties eventually go? Dustbin?

No think again.

After fighting for over 600 years, they are giving internal peace a chance. For the European elite, ECB is sacrosanct. And for them the EURO is the pinnacle of their achievement.

Why can't the euro be let go of and still have a common market ? Shared prosperity/markets can be achieved without a common currency.

The Euro is future oil currency. It will supplant the dollar(without bloodshed), without having any exorbitant privilege that dollar enjoyed. It solves the Triffins Dilemma. It is the return of old world economy through modern conventions. All those who talk about gold standard, do not understand what they are talking about.

What exactly will force the euro to supplant the USD and do so without bloodshed ? After all the US has military wherewithal that far eclipses what all of EU has. Can the EU show the political commitment to replace the US as the primary provider of security for even say the gulf oil producers, let alone say defending Japan against China. Even without doing any of that the euro is the second most commonly traded currency, primarily because of its demand ? Does it look like the EU wants to take up the exorbitant privilege that the US has while paying the exorbitant costs that go with it ? Is there anyone else that would like the EU to do that perhaps ? If they indeed come to such a consensus, how would they be any better than the US ?

panduranghari · Post by **panduranghari** » 14 May 2015 12:05

Short Answer for now, I am short of time. I gleamed my understanding on this from here http://www.usagold.com/goldtrail/archives/another1.html

Its approximately 2500 A4 pages when printed. Once you read it and think through it and read it second time, many things make sense. Considering it was written in 1997 to 2001, everything that is happening right now, is elaborated in a lot of detail. Except falling oil prices.

Everything from banking bailouts to QE etc.

panduranghari · Post by **panduranghari** » 14 May 2015 17:23

KrishnaK wrote:Why can't the euro be let go of and still have a common market ? Shared prosperity/markets can be achieved without a common currency.

Yes it can be let go of, but they wont. They can still have a common market as they did have before 1999. The common market had a adjustment mechanism called EMU which later became Euro. They just formalised the earlier mechanism. Shared prosperity can be achieved without a common currency. I agree. The Europeans do not trust the Abrahamic thought process of loot and pillage. They started doing it internally and when stalemate arose, they moved to other nations of the world.

What exactly will force the euro to supplant the USD and do so without bloodshed ? After all the US has military wherewithal that far eclipses what all of EU has.

Nature. The system always finds a way to balance itself out. And it will. Every 40 years a new currency system comes into being in the west. And USD has stayed in its present state longer than 40 years. 1910 to 1935 - Gold backed dollar both within and outside USA. 1935 TO 1971 Gold backed US dollar outside USA but not within. 1971 to present- USD with no backing. When sterling lost its global currency role, then went down fighting leading to the Great War in Europe between 1914-1918. I doubt anyone has an appetite for another war like that or the one that ended in 1945. Does US strength depend on its military or does it depend on its global use of dollar? Does the tail wag the dog or the dog wags the tail? Gold transcends human valuations over time and life. And that is the main reason why Euro will find automatic support in the global economy. Euro is the only currency which has severed its link from gold and from nation state.

Can the EU show the political commitment to replace the US as the primary provider of security for even say the gulf oil producers, let alone say defending Japan against China.

Why do you think US military is in Middle East? If you or the Saudis think - its there to protect them, think again. The military is there to protect the oil. Thats it.

Even without doing any of that the euro is the second most commonly traded currency, primarily because of its demand ?

Euro did not ask for it. But it became the same. The wheels within wheels keep things going. Euro does not care if its the biggest currency or the most widely used. It was a way to move away from USD without bloodshed. There may be a future alternative to Euro- possibly arising in Asia. Will it be RMB. In its current form - no. Nor will rupee. nor will yen or anything.

Does it look like the EU wants to take up the exorbitant privilege that the US has while paying the exorbitant costs that go with it ? Is there anyone else that would like the EU to do that perhaps ? If they indeed come to such a consensus, how would they be any better than the US ?

[/quote]

Euro will never have the exorbitant privilege that dollar had. Because it has severed its link from gold and from nation state. Euro is not better than USD. nor is it better than rupee or yuan. Its all paper. What Euro is doing is its separating the 3 roles of money. Euro will be the medium of exchange and unit of accounting. The store of value will be separate entity. Any guess what that will be?

TSJones · Post by **TSJones** » 14 May 2015 23:21

Head of Germany's Bundesbank not happy with the ECB.

http://finance.yahoo.com/news/bundesban ... 34705.html

....says it's not in ECB's proper domain to lend funds to Greece nor to perform QE.

Neshant · Post by **Neshant** » 15 May 2015 08:54

Amazing how billions upon billions can be defrauded through libor, currency rate fixing & other scams with the DOJ & SEC refusing to prosecute banker criminals. None of those perpetrators go to jail. All they pay is small fines and continue the fraud.

Yet 1 independent guy who managed to beat the thieves at their own game is now being prosecuted vigorously for market manipulation.

The justice system in the west has now been totally corrupted by the banking "industry". Laws are selectively enforced only against those who are not part of the cabal of banking goondas.

____

Flash Crash Scapegoat Nav Sarao Complained More Than 100 Times About The Real Market Manipulators

Several weeks ago, when the CFTC and DOJ's laughable attempt to scapegoat the May 2010 flash crash on the actions of a live-in-his-parents-basement UK trader, we explained "Why Sarao Is The Flash Crash Patsy: He Threatened To Expose The "Mass Manipulation Of High Frequency Nerds."

It now turns out that he not only threatened to expose the real market manipulators, but he acctually did it. More than 100 times.

http://www.zerohedge.com/news/2015-05-1 ... t-manipula

RoyG · Post by **RoyG** » 15 May 2015 10:51

Neshant wrote:China lies about the amount of gold it actually has - and probably so does the US.

China probably has 3-4k tons.

Austin · Post by **Austin** » 15 May 2015 15:47

China could crash US dollar with 30,000 tons of gold: commentary

Austin · Post by **Austin** » 16 May 2015 16:21

China to invest $50bn in Brazil infrastructure

Austin · Post by **Austin** » 16 May 2015 22:36

Martin Armstrong Warns Of The Coming Crash Of All Crashes

Neshant · Post by **Neshant** » 16 May 2015 23:36

Its hard to believe economic professors can be talking such nonsense.

The concept of free market capitalism has gone out the window. What has replaced it are nonsensical theories of societal control & theft of wealth by private banks (aka central banks).

The useless, parasitic banking "industry" which produces nothing has got to go!

____

Leading German Keynesian Economist Calls For Abolition Of Cash

http://www.zerohedge.com/news/2015-05-1 ... s-obsolete

Coins and bills are obsolete and only reduce the influence of central banks. This position represents the economy Peter Bofinger.

The economy Peter Bofinger campaigns for the abolition of cash. "With today's technical possibilities coins and notes are in fact an anachronism," Bofinger told SPIEGEL.

If these away, the markets for undeclared work and drugs could be dried out. In addition, it would have the central banks easier to enforce its monetary policy. The teaching in Würzburg economics professor called on the federal government to promote at the international level for the abolition of cash. "That would certainly be a good topic for the agenda of the G-7 summit in Elmau," he said.

Even the former US Treasury Secretary Larry Summers and economist pleaded for an end to the already cash . Likewise, the US economist Kenneth Rogoff . He also argued that the interest rates of central banks have less clout when banks or consumer credit rather than hoard cash.

Austin · Post by **Austin** » 18 May 2015 18:19

So what citibank economist are saying is relax the bubble wont burst this year but potentially 3rd quarter next year.....thats very reassuring of them

Bubble Blowing to Continue So Long as Yellen Isn’t Raising Rates

http://www.bloomberg.com/news/articles/ ... sing-rates

Janet Yellen will have to do more than talk about potential asset market bubbles if she is to pop any.

Days after Federal Reserve Chair Yellen’s May 6 observation that stock valuations are “quite high,” Citigroup Inc. strategists led by Robert Buckland looked around the world at what central banks have done in the past to rein in financial market excesses.

Their answer is that it usually takes at least three interest rate increases and as many as five to spark a slide in equities. With such a development unlikely for another year in their opinion, they’re betting stocks will keep climbing despite any concerns Yellen may voice.

“The lesson seems to be that bubbles can continue inflating through the first rate increases,” Buckland and colleagues said in a May 14 report. “Rate hikes eventually burst bubbles, but it usually takes at least three increases to stop the juggernaut.”

Looking at Japan first, the strategists noted that in the late 1980s, the Bank of Japan kept interest rates low as inflation was subdued. Yet as prices picked up it began tightening in March 1989. Starting from 2.5 percent, rates reached 4.25 percent before the stock market peaked in December 1989.

It also took time to burst the U.S. Internet bubble of the last decade. The Fed first lifted its benchmark in May 1999 but it took five increases to 6 percent before the Nasdaq Composite Index topped out.

Bull Market

As for emerging market excesses, the Fed raised its key rate to 5.25 percent in June 2006. Even so, developing nation equities didn’t deflate for another 18 months.

With central banks unlikely to turn aggressive so long as inflation remains as low as now, Citigroup’s economists don’t see the potential bubble-bursting third rate increase in the U.S. until the third quarter of next year. Even then, rates adjusted for inflation will still be negative.

And even at that point there will be plenty of support for equities from elsewhere given the European Central Bank is set to keep buying bonds until at least September 2016.

There is also a way to go for borrowing costs to reach their historical highs. Citigroup’s measure of the global interest rate suggests the average price of short-term money is now just 0.7 percent, the lowest level in four decades.

“It’s still too early to fight this bull market,” said Buckland’s team.

Neshant · Post by **Neshant** » 18 May 2015 22:19

Canada is now writing in provisions for their central bank to bailout private banks gambling in the markets.

With it, the banks will have the ability to offload garbage "assets" (like sub-prime mortgages and over-valued stocks) onto the govt in exchange for more money than those assets are worth in the open market. Basically its a give away of money to bankers with the rest of the nation paying for it through higher inflation & taxation.

Once the trade is done, the only way the govt can recoup the money it spent buying those junk "assets" is to devalue the currency & inflate (i.e. steal from wage earners, savers, pensioners, taxpayers..etc).

Its all cloaked in fancy terminology to disguise the word bailout (e.g. "adding liquidity", "contingent term repo facility"). But in simple terms, its a ripoff.

The Bank of Canada which is supposed to be the only central bank in the entire western hemisphere that is owned by the people (i.e. a public bank) is being transformed into a private country club for private banks like the Federal Reserve. The profiteering of these major private banks is being sold as necessary for the well being of the nation.

http://www.theglobeandmail.com/report-o ... cmpid=rss1

Neshant · Post by **Neshant** » 19 May 2015 18:19

Interesting article on the hawala system

http://priceonomics.com/hawala-the-work ... s-bitcoin/

panduranghari · Post by **panduranghari** » 19 May 2015 18:40

The mystery buyer of US treasuries in Belgium revealed

So as a result of the latest TIC data we know know with almost complete confidence that:

i) "Belgium" is, or rather, was a front for China: either SAFE, CIC, or the PBOC itself.

ii) That Belgium's holdings, after soaring as high as $381 billion a year ago, have since tumbled back to only $2532 billon as China has dumped the bulk of its Euroclear custody holdings, and that once this number is back to its historical level of around $170-$180 billion, "Belgium" will again be just Belgium.

iii) China's foreign reserves tumbled and this was offset by a the biggest quarterly drop in Chinese pro-forma treasury holdings, which dropped by a record $72 billion in the month of March, and a record $113 billion for the quarter.

So why mask its offshore holdings? So when China proceeds to liquidate nearly $100 billion via its custody account, the US didn't feel compelled to chastise Beijing. After all there is no official confirmation that Belgium is indeed China, and likely won't be - it was merely a buffer account which China used to build up TSY holdings in, and now - to rapidly liquidate.

A better question perhaps is what is the use of funds of these tens of billions of liquidations: because what was once invested in the form of Treasurys is now invested in the form of something else... most likely real estate in San Francisco, Beverly Hills, or New York City, with a few billion left over to buy stocks.

Finally, the last thing China would want the world to know, is just how acute its capital flight truly is: a capital flight which is the only thing that is preventing the Politburo and the PBOC from cutting rates even more aggressively and/or engaging in even more outright QE than it currently does because should the chart above be matched with a comparably sharp drop in the Renminbi, and suddenly the VIX closing the day at 12 will be a very distant memory.

Vamsee · Post by **Vamsee** » 20 May 2015 03:07

panduranghari ji,

you may find this interesting

====================
Govt hits reset button on gold with monetization scheme

Neshant · Post by **Neshant** » 20 May 2015 07:54

Sounds like a fractional reserve gold scheme

It works until confidence is lost in the system ** or the currency ** and there's a run on the bank to withdraw gold.

Unlike fiat paper, gold cannot be printed so default then becomes inevitable due to multiple claims on the same pile of gold.

People won't be getting all of their gold back and like the COMEX, accounts will be settled in paper.

People who take up this scheme should be made aware that there is no guarantee they will get their gold back. They are making a loan to a private bank and loans carry the risk on non-payment of dues. As long as they understand this, they should be free to decide whether to lend their gold to banks for profit.

panduranghari · Post by **panduranghari** » 20 May 2015 17:16

Here is 1999 gold deposit scheme;

http://rbidocs.rbi.org.in/rdocs/notific ... s/9206.pdf

In terms of powers conferred by sub-section (7) of Section 42 of the Reserve Bank of
India Act, 1934 (2 of 1934), Reserve Bank of India hereby exempts authorised scheduled
commercial banks participating in the Gold Deposit Scheme from maintenance of
average Cash Reserve Ratio (CRR) prescribed under Section 42 (1) of the Reserve Bank
of India Act, 1934 on their liabilities under gold deposits mobilised in India.
2. The exemption stipulated above shall be subject to the CRR maintained by an
authorised scheduled commercial bank at not less than 3 per cent of its total net demand
and time liabilities as computed under Section 42(1) of the Reserve Bank of India Act,
1934.

Here is 2006 Gold metal loan scheme;

http://rbidocs.rbi.org.in/rdocs/notific ... /65770.pdf

In terms of our circular DBOD.No.IBS.BC/1519/23.67.001/1998-99 dated
December 31,1998, nominated banks authorized to import gold were advised
that Gold (Metal) loans should be given only to jewellery exporters. Further, in
terms of our circular DBOD.No.IBS.3161/23.67.001/1998-99 dated June
25,1999, nominated banks were advised that they may extend Gold (Metal)
Loans also to the jewellery exporters who are the customers of other nonnominated
banks by accepting a stand-by Letter of Credit (SBLC) or Bank
Guarantee (BG) issued by their bankers subject to nominated banks’ own
norms for lending and the conditions stipulated in our circular dated
December 31,1998 referred to above

From the link Vamsee ji has given;

Customers will receive tax incentives on their gold deposits, like tax-free interest, while banks may be allowed to use these deposits to meet their requirements for statutory liquidity ratio (SLR) and cash reserve ratio (CRR). SLR is the proportion of deposits that banks must invest in government securities and CRR the proportion of deposits they must hold with the central bank.

Thus this is the scheme;
1. Aam abdul deposits gold with bank
2. bank sells it to bullion bank or to MMTC-PAMP India – a joint venture between PAMP SA Switzerland and MMTC Ltd, a Government of India Undertaking – operates the world’s most advanced precious metals processing facility, under the direct technical supervision of PAMP. As India's first and only LBMA Good Delivery refinery accredited for Gold and Silver, MMTC-PAMP India is setting new global standards for product excellence, customer service, environmental management and safety.
3. Bank raises funds (by selling gold which is what the new scheme is all about) which they are short of. PAMP sells it to whoever by purifying the gold. To ensure aam abdul keeps his gold in the bank, the bank will keep giving interest- the higher the better. In that way the aam abdul will feel 'arey interest toh mil raha hai, mere ko kya karna hai agar mera gold mera locker mein hai ya MMTC-PAMP ke locker mein hai'.
4.Some day the SHTF and the aam abdul will go to the bank and say I was my gold back. The aam abdul will be TOLD yes he will get it, but he will have to wait. Because his small gold amount has been converted into a 400oz LBMA good delivery bar. 400 oz is approximately 12400 grammes. If aam abdul has 100 g gold, there is no way he will get his 100 g IMMEDIATELY.
5. When more people approach the banks demanding the gold, the banks will just turn them away.

I trust Indian housewives to be more smarter than this.

Though I am a Modi fan, I want this scheme to fail big time. I think it will. Indians are not stupid. I dont know whom does Jet li serve any more. This most certainly is not national service.

Hopefully R Vaidyanathan ji and S Gurumurthy ji write about this. Aam abdul needs more education.

Thinking that gold is useless and does not give returns is a western view. God help India if this scheme is successful.
4.

ArmenT · Post by **ArmenT** » 21 May 2015 11:07

Odd that this wasn't discussed earlier. From the BBC:
Record fines for currency market fix

Five of the world's largest banks are to pay fines totalling $5.7bn (£3.6bn) for charges including manipulating the foreign exchange market.
Four of the banks - JPMorgan, Barclays, Citigroup and RBS - have agreed to plead guilty to US criminal charges.
The fifth, UBS, will plead guilty to rigging benchmark interest rates.
...
...
Separately, the Federal Reserve fined a sixth bank, Bank of America, $205m over foreign exchange-rigging. All the other banks were fined by both the Department of Justice and the Federal Reserve.
...
...
Several strategies were used to manipulate prices and a common scheme was to influence prices around the daily fixing of currency levels.
A daily exchange rate fix is held to help businesses and investors value their multi-currency assets and liabilities.
Until February, this happened every day in the 30 seconds before and after 16:00 in London and the result is known as the 4pm fix, or just the fix.
In a scheme known as "building ammo", a single trader would amass a large position in a currency and, just before or during the fix, would exit that position.
Other members of the cartel would be aware of the plan and would be able to profit.

...
...
If anyone in the City thought that the latest multi-billion pound fines for the banks meant that they were now out of the regulatory woods, they should think again.
The New York State Department of Financial Services is still investigating Barclays, for example, over other aspects of the foreign exchange market including electronic trading.
Barclays is also being investigated in the UK over its Qatari fund raising during the financial crisis and in America over the operation of its "dark pool" electronic trading business.
Other allegations include manipulating the energy markets in California and the US precious metal market.

Austin · Post by **Austin** » 21 May 2015 21:38

These fines are not even pinpricks for these major banks , The people who are involved in these market fixing are are let of scott free.

More just a gentle slap on the wrist does not mean much other then generation eye ball and news story.

Typical the way relationship between banks and regulator body works its mutual co-existence and stealing public money

Neshant · Post by **Neshant** » 22 May 2015 09:13

Now who's going to be stupid enough to trust Libor

Austin · Post by **Austin** » 23 May 2015 11:59

Today's Guest: Gregory Mannarino ( Watch it in Full )

Adrija · Post by **Adrija** » 23 May 2015 16:19

Re the gold deposit scheme- I have a slightly different view

The government's thinking is essentially driven by a perception that gold "locks" up capital and hence is a drain on the economy, and hence people "should not "buy gold

But gold DOES have value- if nothing then for at least the amount of money it has been purchased for

The government should not try to persuade people to stop buying gold- that is a losing proposition. Instead, my humble submission would be to come up with a scheme that is hopefully a win-win, including for the government that it addresses simultaneously the significant capital shortage the government sector banks are faced with....here goes:

1. Public sector banks should come out with a share issue in which people can subscribe to these shares with gold. The shares should represent Tier II capital (will explain this more later). This would be in the form of an open issue (i.e. onging subscription any time) of redeemable preference shares the value of which be equal to the prevailing market price of gold the day of deposit. Subscribers would be given a rate of interest of say (X-FD rate)% of the duration of the deposit;
2. Subscribers can deposit gold in any form (e.g., jewellery). While the jewellery etc will be maintained in the original condition and redeemed as such, the interest will be paid only on the value of the gold therein
3. Such deposits will count towards Tier II capital requirements of the banks (this needs to be agreed to with BIS but which I think should not be a problem as this technically meets the requirements already) and hence can count as capital adequacy
4. Subscribers can redeem their shares anytime post a 366 day lock (so that they meet at least one annual reporting requirement for the bank in question)

This will achieve a number of objectives with one shot:

1. Consumers can buy gold and be assured that they will get it back as and when they want, in the original condition (government assurance)
2. They will get interest on it, so it is fetching them at least something
3. The interest would be pegged to the value of the gold prevailing on the day of the deposit, and lower than what they would get as an equivalent FD of the cash of that amount, hence there is no incentive to buy gold for money laundering or arbitrage
4. The value of the gold can now be leveraged as a money multiplier as it counts towards capital adequacy of the banks, hence not "locked" capital and enables associated lending
5. Helps to at least some extent to meet the capital requirements of the banks, easing the government's requirements to a proportionate extent (not same as this would be Tier II capital and not Tier I, but hey, better than nothing)

Comments from gurujan?

panduranghari · Post by **panduranghari** » 23 May 2015 17:09

X post
Naomi Prins writes well about the threat of another Clinton presidency with historical precedent of the earlier one.

Read it all here

http://www.paulcraigroberts.org/2015/05 ... i-prins-2/

But the happiness was misguided. Deregulating the banking industry might have helped the titans of Wall Street but not people on Main Street. The Clinton era epitomized the vast difference between appearance and reality, spin and actuality. As the decade drew to a close, Clinton basked in the glow of a lofty stock market, a budget surplus, and the passage of this key banking “modernization.” It would be revealed in the 2000s that many corporate profits of the 1990s were based on inflated evaluations, manipulation, and fraud. When Clinton left office, the gap between rich and poor was greater than it had been in 1992, and yet the Democrats heralded him as some sort of prosperity hero.

When he resigned in 1997, Robert Reich, Clinton’s labor secretary, said, “America is prospering, but the prosperity is not being widely shared, certainly not as widely shared as it once was… We have made progress in growing the economy. But growing together again must be our central goal in the future.” Instead, the growth of wealth inequality in the United States accelerated, as the men yielding the most financial power wielded it with increasingly less culpability or restriction. By 2015, that wealth or prosperity gap would stand near historic highs.

The power of the bankers increased dramatically in the wake of the repeal of Glass-Steagall. The Clinton administration had rendered twenty-first-century banking practices similar to those of the pre-1929 crash. But worse. “Modernizing” meant utilizing government-backed depositors’ funds as collateral for the creation and distribution of all types of complex securities and derivatives whose proliferation would be increasingly quick and dangerous.

Eviscerating Glass-Steagall allowed big banks to compete against Europe and also enabled them to go on a rampage: more acquisitions, greater speculation, and more risky products. The big banks used their bloated balance sheets to engage in more complex activity, while counting on customer deposits and loans as capital chips on the global betting table. Bankers used hefty trading profits and wealth to increase lobbying funds and campaign donations, creating an endless circle of influence and mutual reinforcement of boundary-less speculation, endorsed by the White House.

Deposits could be used to garner larger windfalls, just as cheap labor and commodities in developing countries were used to formulate more expensive goods for profit in the upper echelons of the global financial hierarchy. Energy and telecoms proved especially fertile ground for the investment banking fee business (and later for fraud, extensive lawsuits, and bankruptcies). Deregulation greased the wheels of complex financial instruments such as collateralized debt obligations, junk bonds, toxic assets, and unregulated derivatives.

Austin · Post by **Austin** » 23 May 2015 21:47

I suspect when/if Hillary Clinton becomes POTUS she would have a bigger mess in hand perhaps a bigger collapse is awaiting her Presidency ....she would get away by blaming the Obama's but the genesis of this also lies with her husband term which deregulated the banks giving them a cheque that would never bounce and the father of it all Allan Greenspan.

Austin · Post by **Austin** » 23 May 2015 22:55

Smart Money on Precious Metals as Russian Buys Another 300,000 Ounces

Austin · Post by **Austin** » 24 May 2015 15:36

How Gold Monetisation Scheme is Win-Win for Everyone ?

vishvak · Post by **vishvak** » 24 May 2015 21:10

Does the scheme guarantees that the gold won't leave country under some 'international' monetary adjustments/ etc? Monetisation also does not treat gold as anything other than metal worth its weight, when the fact is that gold can be used as a hedge against inflation etc. It is indeed strange to see monetisation here when the immediate message earlier is about Russia buying gold!

Austin · Post by **Austin** » 24 May 2015 21:47

GOI wants to get the gold from peoples cupboard/lockers and Temple/Trust Private ownership into GOI's Ownership........ They think gold in private ownership does no good to the economy and drives aways Forex , instead putting it under GOI safeguard would help the economy.

I wonder if they get good feedback with Gold monetisation scheme they would partially back the rupee with Gold during crisis

Neshant · Post by **Neshant** » 24 May 2015 23:33

Its a fancy name for counterfeiting.

There ends up being more paper claims to the physical gold than there is gold.

When in history has any paper claim on gold ever not ended up being worthless eventually.

The ones doing this believe they can buy the gold back on the international markets if there is a sudden run on the bank by gold depositors trying to get their gold back. But consider that purchasing just 200 tons in 2009 from the IMF sent the price of gold up a few hundred dollars. Purchasing 1000 or 2000 tons off the market to meet depositor's sudden demands would send the price up exponentially higher. More so since international speculators would be quick to drive the price higher before GOI could source that amount at short notice.

Who bares the cost of this? If its the taxpayer (aka govt), then the taxpayer is funding the speculative gambles of the bankers who are profiting from this fractional reserve gold scam. Its all being cloaked as being in the interest of the nation but its more so in the interest of those gambling on the markets who want depositors money at a lower rate of interest.

There is a simple way to reduce the demand for gold. Stop destroying the value of the rupee. When people begin to believe their purchasing power is protected by the paper currency they have earned, they have no need to turn to gold.