Perspectives on the global economic changes

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panduranghari
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Re: Perspectives on the global economic changes

Postby panduranghari » 10 Apr 2018 19:24

yensoy wrote:
Read the entire post and please let me know if something there doesn't add up. I thought I explained it.

US is "good for the money". Chinese debt? I'm not sure how that will play out...


There was no evidence of your statement in the earlier post. Hence I had to ask.

US government debt is 21 trillion.

Current US entitlement liabilities are just upwards of 100 trillion.

US dollar is backed by oil. The deficit spending as oil is priced in dollar allowed the government to expand its entitlement programs. The south east asian crisis of 1997 happened due to balance of payment problems. China decided they wont face this so they built a 3 trillion FOREX reserves. By 2022 (revision from 2025) even by the most conservative estimates, US will spend all its tax receipts to fund entitlements. No money left for defense, infrastructure, aid etc. They can only do one thing which they have religiously done since 1950's. Expand the balance sheet and raise the debt ceiling every year- its like extend and pretend nothing is wrong. China cannot sell 3 trillion Treasuries as the yield curve has already inverted and it will make everything worse.

So how is US- good for the money? It seems like a hope driven statement than factual evidence based claim.

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Re: Perspectives on the global economic changes

Postby yensoy » 10 Apr 2018 22:26

panduranghari wrote:US dollar is backed by oil.

That is plain wrong. US is a huge and highly diversified economy. It is the thought leader in just about everything there is - technology, medicine, arts, education... It is a provider of security (which translates into arms sales as well as a captive market for treasury bonds). It still has a massive agricultural sector.

panduranghari wrote:The south east asian crisis of 1997 happened due to balance of payment problems. China decided they wont face this so they built a 3 trillion FOREX reserves.

SE Asian crisis was because of massive short-term debt in local currencies provided by foreign banks, who when these local currencies strengthened, decided to not renew the debts. Financing collapsed, bringing down with it capital intensive investments and sectors.

China is collecting Forex because they have no other option to prevent the Yuan from rising as a consequence of being a mercantilist export powerhouse. Well they had some options like outbound investments (CPEC/OBOR being one variant) but with the souring of deals and reversals of company finances such as HNA, ODI is not so hot anymore.

panduranghari wrote:By 2022 (revision from 2025) even by the most conservative estimates, US will spend all its tax receipts to fund entitlements. No money left for defense, infrastructure, aid etc.

You seriously believe they will let this happen? There will be tighter cost controls on medicare, there will be additional taxes and of course some balance sheet expansion/stealth dollar devaluation. In other words, nothing new.

panduranghari wrote:So how is US- good for the money? It seems like a hope driven statement than factual evidence based claim.

Even with all the facts/opinions that you have put forth, the US continues to be the top destination for immigrants, especially educated/rich persons from countries including China. There is something to be said about rule of law and due process, about care for the environment, about a meritocracy, a society which is deeply religious yet very forward thinking in many ways, and what is at heart a welfare oriented state looking for its citizens first and foremost.

You write off the US at your own peril.

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Re: Perspectives on the global economic changes

Postby panduranghari » 11 Apr 2018 18:14

I am not writing US off. I am stating some facts which I can back with data.

yensoy wrote:That is plain wrong. US is a huge and highly diversified economy. It is the thought leader in just about everything there is - technology, medicine, arts, education... It is a provider of security (which translates into arms sales as well as a captive market for treasury bonds). It still has a massive agricultural sector.


Everything US does has the basis on oil. Why did Kissinger-Adams do a petro dollar deal with Saudi Arabia? Did you know every calorie of food produced is US has 10 calories of oil in it. Did arm sales happen with a need to recycle petro dollars or did they happen because suddenly Saudi Arabia was threated by its neighbours who were even poorer than India is 1970's? Treasury bills are derivatives, derivatives which are based on the dollar and the whole edifice rested until 15 Aug 1971 on Gold, from 1971 to 2008 on Oil and from 2008 to today rests on the PhD. economists credibility who work for the federal reserve.

yensoy wrote:SE Asian crisis was because of massive short-term debt in local currencies provided by foreign banks, who when these local currencies strengthened, decided to not renew the debts. Financing collapsed, bringing down with it capital intensive investments and sectors.

China is collecting Forex because they have no other option to prevent the Yuan from rising as a consequence of being a mercantilist export powerhouse. Well they had some options like outbound investments (CPEC/OBOR being one variant) but with the souring of deals and reversals of company finances such as HNA, ODI is not so hot anymore.


Massive short term debt in local currencies in SE Asia caused a run on the currencies. This made the government wake up and they stepped in. Using forex reserves stymied the problem for a short term but after than they had to devalue. Except South Korea all the tiger economies devalued. The reason SoKo did not because the government asked the common people to turn in their gold voluntarily. That prevented the won from depreciating.
China has officially stopped collecting dollars i.e. dollar denominated holdings mostly T Bills. Lets say China allows its currency to rise, with depreciating USD the consequences for their 50 year plan are very poor. Though I do agree that Yuan appreciation is the main deterrent for stopping more dollar accumulation.

yensoy wrote:You seriously believe they will let this happen? There will be tighter cost controls on medicare, there will be additional taxes and of course some balance sheet expansion/stealth dollar devaluation. In other words, nothing new.

:D I do find this naive. If it was politically possible to control the prices of medicare, if it was politically viable to increase taxes then why has it not happened yet? Yes that resort to the only thing that they can do - devalue through inflation.

yensoy wrote:Even with all the facts/opinions that you have put forth, the US continues to be the top destination for immigrants, especially educated/rich persons from countries including China. There is something to be said about rule of law and due process, about care for the environment, about a meritocracy, a society which is deeply religious yet very forward thinking in many ways, and what is at heart a welfare oriented state looking for its citizens first and foremost.


I do not disagree. However its the narrative. Once its broken it needs effort to be restablished. As social creatures, we respond to narratives. And the 2008 crash was the wake up call, what happens next is the final denouement.

TIFWIW.

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Re: Perspectives on the global economic changes

Postby KrishnaK » 12 Apr 2018 04:27

panduranghari wrote:I am not writing US off. I am stating some facts which I can back with data.
Everything US does has the basis on oil. Why did Kissinger-Adams do a petro dollar deal with Saudi Arabia? Did you know every calorie of food produced is US has 10 calories of oil in it. Did arm sales happen with a need to recycle petro dollars or did they happen because suddenly Saudi Arabia was threated by its neighbours who were even poorer than India is 1970's? Treasury bills are derivatives, derivatives which are based on the dollar and the whole edifice rested until 15 Aug 1971 on Gold, from 1971 to 2008 on Oil and from 2008 to today rests on the PhD. economists credibility who work for the federal reserve.
That's your opinion, not fact. And a kooky one at that.

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Re: Perspectives on the global economic changes

Postby panduranghari » 12 Apr 2018 13:39

Krishna K you are well known for your snide remarks. I won’t respond to your flame bait.

Why do you waste your time?

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Re: Perspectives on the global economic changes

Postby Austin » 15 Apr 2018 12:00

Former Reagan White House Budget Director David Stockman sees deflation, depression and financial Armageddon. Stockman says, “In the bond market, I don’t know any other way to describe it. . . . It’s uncharted territory, and we have never been here before. . . . The house of cards is so shaky and so fragile right now that there is the risk of the proverbial black swan event. We don’t see something coming. It shocks the system. It triggers a panic, and the panic soon envelops itself and descends into some sort of doom loop. That could very easily happen.”

Stockman says, “Gold and silver are the only safe investments to have . . . you can’t be safe in the stock market, and you can’t be safe in the bond market.”


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Re: Perspectives on the global economic changes

Postby Austin » 16 Apr 2018 19:54

Donald J. Trump
‏Verified account @realDonaldTrump
2h2 hours ago

Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!



Jim Rickards
‏ @JamesGRickards
38m38 minutes ago

Jim Rickards Retweeted Anirudh Garg

Interesting. Technically it's not true; China has been propping up their currency, not devaluing. But, if Trump takes that view, we'll see currency wars and trade wars bleeding into each other as they historically do.

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Re: Perspectives on the global economic changes

Postby yensoy » 17 Apr 2018 05:12

And now we are back to square one:

https://www.bloomberg.com/news/articles/2018-04-16/china-boosts-its-u-s-treasuries-holdings-by-most-in-six-months

China Boosts Its U.S. Treasuries Holdings by Most in Six Months

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Re: Perspectives on the global economic changes

Postby Austin » 17 Apr 2018 21:29

Austin wrote:Donald J. Trump
‏Verified account @realDonaldTrump
2h2 hours ago

Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!



Jim Rickards
‏ @JamesGRickards
38m38 minutes ago

Jim Rickards Retweeted Anirudh Garg

Interesting. Technically it's not true; China has been propping up their currency, not devaluing. But, if Trump takes that view, we'll see currency wars and trade wars bleeding into each other as they historically do.


China, along with Japan, South Korea, Germany, Switzerland and India, were placed on the Treasury's monitoring list, meaning they satisfied some but not all of the criteria that would have qualified them to be designated as currency manipulators.


So even India is in the esteemed list of US Treasury I wonder why , India does not deliberately devaluates its currency , A stronger Rupee is good for India

Russia does not devaluate its currency , its currency is not tightly pegged against USD/Euro but is free floating and depending on Oil Price its either strengthens or weakens hope Donald knows that

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Re: Perspectives on the global economic changes

Postby panduranghari » 18 Apr 2018 18:34

Astrology of finance presents;

Image

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Re: Perspectives on the global economic changes

Postby panduranghari » 19 Apr 2018 18:03

Todays edition of doom ***** presented by courtsey of Saxo Bank & Mish by me.

Link

Read the whole post. Its worth it. Some snippets.

Image

End of a Cycle Like No Other - Steen Jakobsen - CIO


Please explain to me how a 35-year-old can be less optimistic about the future than a 55-year-old! It defies logic, nature, and reasoning. It is a case of young people feeling the pain of the present economic reality: it’s hard to find a decent job and or even interview for a job when you need a PhD to start with. The young are increasingly indebted by education costs and priced out of getting onto the house ownership ladder.
<snip>
Equity Burnout - Peter Garnry - Head of Equity Strategy


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<snip>
Dollar is a Time Bomb and the Fuse is Burning Faster - John Hardy - Head of FX Strategy


When the Fed tightened policy starting in late 2013, the supply of printed US dollars started drying up and the USD exchange rate went increasingly vertical. Many forget just how bad a year 2015 actually was for global asset prices, particularly in emerging markets, and it was the lucky timing of the European Central Bank’s extreme QE starting in early 2015 and China’s eventual massive stimulus starting later that year that likely kept the world from dipping into recession.

But now, most of the policy punch bowls around the world have been removed or are nearly empty. China’s growth priorities are changing to priorities centred on the standard of living for everyone, as well as environmental policy, and Beijing also faces the onerous task of addressing its own credit bubble.

The Fed, meanwhile, continues to tighten policy and supposedly intends to shrink its balance sheet at an accelerating pace. Elsewhere, the ECB has promised to cease expanding its asset purchases entirely by late this year. Only the Bank of Japan continues to drag its heels, though it has also tapered its rate of asset purchases over the past year.

The removal of global policy stimulus has naturally come about as the world economy finally managed a couple of quarters of synchronised growth in 2017. But our view is that this growth is tenuous and very late-cycle, particularly in China and the US, as the credit cycle has already turned. And the next challenges for markets are just around the corner.

<snip>

Last September, the Bank for International Settlements estimated that there was a net $25 trillion in USD-denominated debts and derivatives in the offshore financial system. The world can ill afford another USD funding mishap, one that has already partially been set in motion by Trump’s corporate tax cuts, which are encouraging US corporations to repatriate hundreds of billions of USD from outside the US and draining liquidity from the offshore USD system.

<snip>

Image

In a highly leveraged economy like the US, credit is a key determinant of growth. Lower credit generation is expected to translate into lower demand and lower private investment in the coming quarters. There is a high 0.70 correlation (out of one) between US credit impulse and private fixed investment and a significant 0.60 correlation between credit impulse and final domestic demand.

<snip>

These indicators suggest that the US is at the end of the business cycle – which is not much of a surprise – and hint that recession is just around the corner and Trump’s economic policy does not seem able to avert it.

Image

Even unconventional indicators are sending warning signs. Product sales by paper and paperboard mills, which reflect the evolution of sales and therefore give a signal about the future evolution of production, have been falling since the beginning of the year. Although this indicator is certainly less reliable than in the past due to the digitalisation of the economy, there is still an obvious correlation with the economic cycle.

<snip>

Image

US consumer confidence has returned to a high level but households’ financial situation remains gloomy. Household debt is at a new record of $13 trillion and the most fragile households are starting to face serious difficulties due to higher interest rates and tightening credit conditions.

Even though we agree that history does not always repeat itself, it is interesting to note that historically, such levels of consumer confidence have been followed by recession and a lost decade. This is too much of a coincidence, is it not?

Delinquencies have increased considerably over the past few months, especially in subprime auto loans where serious delinquencies have reached ‘Lehman moment’ proportions, as well as in credit cards.

<snip>

Commodities Go There Separate Ways - Ole Hanson - Head of Commodities Strategy


Image

Gold is one of a few metals that has managed to hold onto a positive return this year. However, after several failed attempts to break through the $20 band of resistance above $1,355/oz, many investors have for now adopted a wait-and-see approach.

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Re: Perspectives on the global economic changes

Postby panduranghari » 19 Apr 2018 18:08

Technically speaking the longer gold is bottled up beneath this resistance level of $1355/oz, the faster the move once it does break out.

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Re: Perspectives on the global economic changes

Postby Austin » 20 Apr 2018 11:01

Pandu good read indeed from Saxo link
As the US runs a large current account deficit, it will have to fund that deficit with foreign capital – likely at a far lower USD value. Providing added urgency to the search for an alternative to the USD is the need to devalue the world’s stock of USD-denominated debt – which has only increased by leaps and bounds in the offshore USD system that got global finances in such a pickle back in 2008-09.

Last September, the Bank for International Settlements estimated that there was a net $25 trillion in USD-denominated debts and derivatives in the offshore financial system. The world can ill afford another USD funding mishap, one that has already partially been set in motion by Trump’s corporate tax cuts, which are encouraging US corporations to repatriate hundreds of billions of USD from outside the US and draining liquidity from the offshore USD system.

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Re: Perspectives on the global economic changes

Postby panduranghari » 21 Apr 2018 14:07

Thanks Austin.

Mish talk is a good website to peruse. He is a self declared deflationist but otherwise I agree with everything else he writes.

Listen to this. Real treat to listen to 3 different perspectives but same conclusion.

https://www.macrovoices.com/394-bassman ... ion-review

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Re: Perspectives on the global economic changes

Postby Austin » 22 Apr 2018 20:57

Thanks , They are talking about US 10 year yeald reaching 3.5 % will cause something interesting to happen and Oil price may rise above 70 USD in near short term. John Bolton is WW3 guy while Mattis is Peace Nick :)

Had a question here if country like Iran , Russia Venezeula who are under US/EU sanction does not want invest in US T bills or Euro bills for the fear of getting confiscated what other option they have which is safe besides Gold , Is India and China Soverign bond are safe ? Is there other options which is Safe and can give decent returns too ? What choice is available in market which is beyond the scrunity of US or Euro nation and reliable too

10 year yeald of different nation

https://www.bloomberg.com/markets/rates-bonds

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Re: Perspectives on the global economic changes

Postby Austin » 23 Apr 2018 15:51

"Ice Nine" Comes to China - BY JAMES RICKARDS

The war on cash has been going on for decades. The U.S. abolished the $500 bill in late 1969. (The old $500 bill featured a portrait of President William McKinley, by the way. I remember seeing a few when I was a kid.)

Today’s $100 bill is only worth 10 cents on the dollar compared with the $100 bill of 1969.

Europe will abolish the 500 euro this year. We all recall what happened in India in late 2016 when India abolished the 500 and 1,000 rupee notes (worth about $10 and $20, respectively); there was mass chaos as peasants lined up to turn in the old notes for digital credit.

ATMs were shut down because the replacement notes were too big for the ATMs!

Now the war on cash is being taken to a new level. China, the world’s most populous country and the world’s second-largest economy, has said that physical cash may soon become obsolete.

China has huge digital payments platforms developed by their own companies Tencent and Alibaba, in addition to traditional credit and debit cards and mobile phone payments.

Movements like this might start slowly, but they gain momentum and end quickly. Cash can be expensive to handle because vendors have to hire armored cars to move it, buy machines to count it, pay premiums to insure it and risk losses due to theft.

Those costs only make sense if they can be spread among a high volume of cash. Once cash usage falls below that critical threshold, the handling costs per unit are too high and merchants quickly abandon cash altogether.

China may be getting close to that tipping point, and will get there sooner if the government pushes cash off the ledge by regulation.

This is consistent with the Communist plan for total control of their people.

Once physical cash is gone, your liberty is gone because government can easily monitor and freeze all digital payments. The only recourse for the Chinese people once their cash is gone will be physical gold and silver.

This brings me to what I’ve warned about for years…

It’s what I call “ice-nine.” This refers to government’s ability to lock down the financial system in the next global crisis. And it won’t be just China.

In the 2008 crisis, governments met the demand for liquidity by printing money, guaranteeing banks and money market funds and engaging in trillions of dollars of currency swaps.

The problem is that the central banks still have not normalized their balance sheets and interest rates since the last crisis and are unlikely to be able to do so before the next one. Money printing won’t be an option, because central banks have printed too much already. Any more money printing would trigger a complete loss of confidence in fiat money and a mad scramble for hard assets.

Instead of money printing, central banks and governments plan to lock down the system and not let investors get their money out.

This will begin with money market funds and then spread quickly to bank accounts, ATMs and stock exchanges until the entire system is frozen.

Then an international monetary conference will be convened to create a new global monetary standard, probably based on special drawing rights (SDRs), which will be printed by the trillions and handed out to governments to gradually reliquify the system.

Governments can see this coming and are already taking steps to prepare for more extreme measures.

A few years ago, the SEC changed the rules so that U.S. money market funds can suspend redemptions. Recently, China announced that it would follow suit and allow its money market funds to also suspend redemptions. Now China has halted trading in the stock of one of its largest companies, HNA.

This comes on top of the government takeover of another giant Chinese corporation, Anbang Insurance, at the end of February.

The bottom line is governments are preparing for ice-nine and the lockdown of banks and stock exchanges. That includes the U.S. government.

You should prepare also by buying physical gold and silver to be kept outside the banking system.

Regards,

Jim Rickards
for The Daily Reckoning

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Re: Perspectives on the global economic changes

Postby JayS » 23 Apr 2018 17:24

^^ That's scary.

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Re: Perspectives on the global economic changes

Postby nachiket » 24 Apr 2018 06:20

JayS wrote:^^ That's scary.

Everything James Rickards says is scary. All his books' titles portend gloom and doom. The question to be asked is how right has he been till now? Otherwise anyone can keep warning that there is a big crisis looming all the time. What use is it to anyone?

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Re: Perspectives on the global economic changes

Postby pravula » 24 Apr 2018 08:26

JayS wrote:^^ That's scary.


No, its funny. He probably has not heard of Executive Order 6102

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Re: Perspectives on the global economic changes

Postby JayS » 24 Apr 2018 11:17

Yeah. Whatever is said, is highly unlikely to come into being. If govts get arbitrary power to lock down all transaction, it would simply make people lose trust in financial system and it would simply create bigger chaos than the one its trying to avoid as per the article.

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Re: Perspectives on the global economic changes

Postby panduranghari » 24 Apr 2018 21:12

pravula wrote:
No, its funny. He probably has not heard of Executive Order 6102


EO6102 was useful when gold was legal tender. It not anymore. It has been demonetised from the USG perspective. Rickards likes to sell his well written books, I dont blame him for saying what he does. But he is not wrong. He is onlee early. I do not agree to the adage of Wall street- being early is being wrong. We are not traders FFS. Everything he is saying will come to pass. Make fun of him if you so wish, but he will laugh the loudest. One thing I hate about him is the constant name dropping.

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Re: Perspectives on the global economic changes

Postby Suraj » 24 Apr 2018 21:21

Boss, Rickards is doing the sooted booted equivalent of the guy at the road corner wearing a placard around his neck that says "The End Is Nigh" . Sure, the world is going to end one day. This isn't a matter of whether we're traders or not. None of us are in a rush to kick the bucket, yet being told "you're all going to dieee" isn't quite news.

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Re: Perspectives on the global economic changes

Postby Austin » 24 Apr 2018 22:34

https://twitter.com/PhysGoldFund/status ... 7172267008

Physical Gold Fund
‏ @PhysGoldFund

Gold is one of the most liquid assets on earth, and trades more daily volume in USD than all of the stocks of the S&P 500 combined


Image

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Re: Perspectives on the global economic changes

Postby Austin » 24 Apr 2018 22:35

:lol:

Image

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Re: Perspectives on the global economic changes

Postby Austin » 24 Apr 2018 22:37


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Re: Perspectives on the global economic changes

Postby pravula » 25 Apr 2018 01:14

panduranghari wrote:
pravula wrote:
No, its funny. He probably has not heard of Executive Order 6102


EO6102 was useful when gold was legal tender. It not anymore. It has been demonetised from the USG perspective. Rickards likes to sell his well written books, I dont blame him for saying what he does. But he is not wrong. He is onlee early. I do not agree to the adage of Wall street- being early is being wrong. We are not traders FFS. Everything he is saying will come to pass. Make fun of him if you so wish, but he will laugh the loudest. One thing I hate about him is the constant name dropping.


Possession of gold was a criminal offense with a 10 year jail term. You can stock up all the physical gold, if the govt makes it illegal, jails you, how are you going to recover?

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Re: Perspectives on the global economic changes

Postby Austin » 25 Apr 2018 07:47

The Spectator Index
@spectatorindex
·
6h
GDP (PPP) per capita, 2018.

Qatar: $128,700
Singapore: $98,010
US: $62,150
Saudi: $55,860
Germany: $52,800
Canada: $49,780
UK: $45,570
France: $45,470
Japan: $44,430
Italy: $39,500
Russia: $28,960
Turkey: $28,350
China: $18,070
Brazil: $16,200
Indonesia: $13,160
India: $7,780

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Re: Perspectives on the global economic changes

Postby Austin » 25 Apr 2018 07:48

At the current GDP growth how long will it take india to reach China ppp of 18k usd from current 7.7k ?

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Re: Perspectives on the global economic changes

Postby Austin » 25 Apr 2018 08:38

Gundlach On Gold: "Something Big Is Happening... It's Getting Exciting"

https://www.zerohedge.com/news/2018-04- ... g-exciting

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Re: Perspectives on the global economic changes

Postby panduranghari » 25 Apr 2018 12:40

Pravula ji

Why would US government make gold illegal now?

Ok thinking through- gold holding is illegal in US. Next step will be a increased price on black market. The bigger problem will be outflow of gold from US. And even bigger problem IMO will be all those holders of us govt bonds will wonder what is the reason for USG to outlaw gold? They may( may) reconsider their own T bill holdings.

The unintended consequence will be gold becomes more valuable than what USG wants people to believe it will be.

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Re: Perspectives on the global economic changes

Postby pravula » 25 Apr 2018 20:17

panduranghari wrote:Pravula ji

Why would US government make gold illegal now?

Ok thinking through- gold holding is illegal in US. Next step will be a increased price on black market. The bigger problem will be outflow of gold from US. And even bigger problem IMO will be all those holders of us govt bonds will wonder what is the reason for USG to outlaw gold? They may( may) reconsider their own T bill holdings.

The unintended consequence will be gold becomes more valuable than what USG wants people to believe it will be.


The article said the govt is going to take over/freeze all accounts and physical gold is a hedge against it. My point is, if the govt wants to freeze your accounts, they can also make possession of physical gold illegal and demand you surrender it to them.

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Re: Perspectives on the global economic changes

Postby panduranghari » 26 Apr 2018 19:17

The US government can do that in the US. You know how much the Indian government tried to get people to invest in gold monetisation scheme? It has been a failure as it has always been. Milton Friedman advised Morarji Desai to do that during Janata Government tenure and it bombed, then so did Maunmohan during PVNR tenure and so did Rajan to Modi/Jai Italy. In the Eurozone, buying gold is VAT exempt. Even selling certain coins within certain national jurisdiction is exempt from capital gains tax. I actually sold a number of gold sovereign coins which I purchased 10 years back. I made a tidy profit but as its tax exempt, I do not even need to tell the tax man. I did anyway but the point is Gold is not cryptocurrency where globally people can work together to make it illegal. Many jurisdictions wont comply. Gold trades daily and LBMA daily volume of gold traded is over 10 trillion USD. That is a colossal number. Nothing comes close, not even oil. Think about it.

There is a reason why gold is what it is. It just stays idle and does its thing.

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Re: Perspectives on the global economic changes

Postby Neshant » 27 Apr 2018 13:12

China is creating a nice prison system for its inhabitants with "Social Credit Score" - mostly to keep the Communist party goons from being overthrown.

A "soft" version of what's below is planned for India soon enough with demonetization, biometrics..etc.

An unofficial version of what's below is what's been implemented in the west with govts hand in glove with private companies in spying on people via email, social media, voice, data mining..etc to build a composite picture. Talk of "freedom" is bullshit as govts ensure no laws are passed which would impede this spying.

It does have its upsides given that it could (in theory) result in a more orderly society.
The downsides however are too frightening to contemplate.

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"You're Being Controlled All The Time" - An Inside Look At China's "Social Credit Score"


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China's introduction of a "social credit score" that will help the Communist Party monitor the loyalty and ensure the obedience of the country's 1.4 billion people has already produced horror stories like ordinary citizens with no criminal history being banned from flying because they were caught jaywalking by the country's network of surveillance cameras.

The score, which will soon be rolled out across China after first being implemented in the cities, aggregates data from a variety of government databases and other sources that have recently been enabled to share information on citizens' activities. The score will help the government determine which citizens will receive access to social services, and which will be turned away.

And in a recent report by CBS New York, television journalists from the US interviewed one man who says his low social credit score is preventing his child from enrolling in a private school, among other majorly disruptive inconveniences. Journalist Liu Hu saw his score downgraded because of his social media posts. When the government demanded that Hu remove the posts and apologize, he immediately complied.

But the government ruled that Liu's apology was insincere, and his low score remained. Now, Liu says, it's his children who are being punished.

"I can’t buy property. My child can’t go to a private school," he said. "You feel you’re being controlled by the list all the time."

With the advent of the social credit score, Chinese citizens can face potentially major punishments for small infractions like smoking in a non-smoking area. Likewise, they can see their scores rise for "patriotic" acts like buying Chinese-made goods instead of foreign imports.

The head of a company that builds surveillance equipment for the Chinese government explained to CBS how the country's network of traffic cameras is now being repurposed to enforce its social credit score rules.

The cameras were initially installed to catch criminals. But unsurprisingly, they're now being used to monitor everybody.

China initially imposed the restrictions on plane and rail travel for people with low social scores shortly before President Xi Jinping cemented his status late last year as the effective emperor for life.

A low score, the government says, can impact these and other "privileges" for up to a year. However, there are signs that the government had implemented a rudimentary version of the social credit score years earlier, when a Chinese court revealed that 6.15 million Chinese had been blocked from boarding flights for "social misdeeds."

The social credit score is based on Xi's "once untrustworthy, always restricted," principle, which also entails creating "green lanes" for well-behaved citizens who categorically support the Communist Party. The Party is hoping to have a social credit score assigned to every citizen by 2020.

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Re: Perspectives on the global economic changes

Postby panduranghari » 27 Apr 2018 22:45

Kuch bhi!! What happens in China stays in China. Juxtaposing happenings in China to India makes no sense.

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Re: Perspectives on the global economic changes

Postby Austin » 30 Apr 2018 11:23

The crash of 1929
In the 4th of February, we published a blog entry detailing the similarities of the current stock market environment with that before the stock market crash in 1987. On February 5th, the Dow Jones Industrial Average (DJIA) experienced the worst daily point decline of its history. Since then, the stock market has recovered, but are we out of the woods?

At the aforementioned entry, we also warned that the situation in the global economy actually resembles more of the time before the Great Depression than that before of the Black Monday in 1987. Worryingly, the same holds for the US equity markets. In fact, almost all of the developments that led to the Great Crash of 1929 are already visible in the US. We may thus be heading towards the worst asset market crash in 90 years.

Prequisites: The ‘Roaring Twenties’

The 1929 crash marked the end of the ‘Roaring Twenties’. The era got its name from consumer and stock market booms driven by the automobile and building sectors. The gold standard and the neutralization of all gold purchases from abroad by the newly created central bank, Federal Reserve or Fed, controlled the consumer price inflation. Due to low inflation, Fed had only limited incentives to intervene on the speculation by increasing the short-term interest rates. The easy credit era was let to persist fueling the boom in the consumer durables, commercial property market, automobile industry and the stock markets.

The tide switched in January 1928. The Fed decided that the boom had gone far enough and started to raise its discount rate and sell its holdings of government securities in effort to stem the speculation. But, rising money market rates made the brokers’ loans viable options for the bank loans because the former were mostly funded by the large balance sheets of corporations. The call loan rates were also clearly higher than the Fed discount rate, which meant that banks were able to borrow cheaply from the Fed and earn a nice margin on loans to investors. The higher interest rates set by Fed thus increased both the bank and non-bank funds available for stock market speculation. Contrary to the aim of the Fed, the financial conditions eased further and the speculation increased. The twenties kept on roaring.

The Great Crash


In 4 December 1928, President Coolidge had given a reassuring State of the Union speech and 1929 started with positive expectations. The stock market kept rising and the consumer boom continued. It was a common belief that earnings and dividends are growing because of the systematic industrial application of the science together with the development of modern management technologies and business mergers. Still, the first half of 1929 was marked with increasing volatility.

By the summer a dubious mood started to creep. The dividend growth was solid but the economy started to look mature. The first hints about the approaching recession arrived in July 1929 as the index of the industrial production of the Fed diminished. Mixed news and rising interest rates in the US and abroad warned of a looming recession. In September, the stock market started to drift downwards. The fear of a recession started to set in.

On Thursday October 24, after a turbulent week, the prices hovered for all while at the start, but then fell rapidly and the stock ticker started to lag behind. The prices kept falling and the ticker fell further behind. The pace of the sell orders grew at an increasing rate and by eleven o’clock a ferocious selling had gripped the market. A few selected quotations given by the bond ticker showed that the that the current values were far below the now seriously lagging tape. Margin calls started to roll in and many investors were forced to liquidate their stock holdings. The increasing uncertainty made the investors even more scared and by eleven-thirty there was a sheer panic. The frenzy of selling could even be heard outside the New York Stock Exchange, where crowds gathered.

At noon, the reporters learned that several notable bankers had gathered at the office of the J.P. Morgan & Company. At one thirty, the vice-president of the New York Stock Exchange (NYSE), Richard Whitney, appeared on the trading floor and started to make large purchases of variety of stocks (starting from the Steel post). This had a clear message: the bankers had stepped in. The effect was imminent. The fear eased and the stocks rallied.

On Friday, the volume of trading was large, but the prices held up. During the weekend, there was a sense of relief. The disaster had been avoided and the actions of the bankers were celebrated. But then came Monday.

On Monday, October 28, the market opened to uneasy tranquility which was quickly broken. The selling started, then accelerated, and by noon the market was in a full panic mode. The bankers gathered again but the savior was never seen on the floor. Heavy selling continued throughout the day, and the market melted down, with the DJIA closing down by almost 13 percentage points for the day. After the close, there was not a word from the bankers or from anyone else, for that matter. During the night, a panic spread through the nation.

On Tuesday, October 29, the selling orders flooded the NYSE in the open. The prices plunged right from the start, feeding the panic. The sell orders from all over the country overwhelmed the ticker and sometimes even the traders. During the day, massive blocks of stocks were sold indicating that the ”big players” (banks, investment funds etc.) were liquidating. During the worst selling periods, there was a countless number of the selling orders but no buyers. This meant that, at times, the markets were in a complete free fall. There was a brief rally before the end of trading but despite this, the ”Black Tuesday” was one of the most brutal days at the NYSE with the DJIA falling by 11 % with heavy volumes. Within a week, DJIA had lost 29 % of its value.

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Are we in a time loop?

The crash of 1929 marked the end of a long stock market boom fed by several years of easy credit. Because inflation was low for most of the 1920’s, Fed did not bother to curb the speculation by rising rates and when it did, the rise was too little too late. The signals for an upcoming recession broke the highly over-valued stock market in 1929. Actually, for example the dividends grew even in the last quarter of 1929 but the faith for the future of the market was broken and the investors panicked.

Currently, we are in a situation where, according to several metrics, the stock market is the most over-valued in the history of the NYSE. The central banks, with their orthodox and unorthodox monetary policies, have fed the asset market mania for nine years now but, currently, they are in a tightening cycle. Moreover, the global economy is in a risk of a dramatic slowdown.

This indicates that the main components of the crash of 1929: an over-valued stock market, a central bank tightening cycle (higher interest rates) and a slowing economy are almost all present in the US. We will thus soon know how well the history rhymes.


The historical accounts are based on the “The Great Crash 1929“ by John K. Galbraith, “The stock market boom and crash of 1929 revisited” by Eugene White and on “Lessons from the 1930’s Great Depression” by Nicholas Crafts and Peter Fearon.

Austin
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Re: Perspectives on the global economic changes

Postby Austin » 30 Apr 2018 16:15

Image


panduranghari
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Re: Perspectives on the global economic changes

Postby panduranghari » 01 May 2018 20:56

https://www.realvision.com/

They are doing a 180$/year subscription. Well worth the money IMO. I was paying $550 until last year. Its also now on chromecast and apple tv.

Watching Jim Grant interviewing many big names itself is worth it.

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Re: Perspectives on the global economic changes

Postby panduranghari » 02 May 2018 18:10


Austin
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Re: Perspectives on the global economic changes

Postby Austin » 03 May 2018 10:48

check the video in the link

Mark Mobius: Investors need to be prepared for a 40% stock-market crash


‘I’m much more cautious. There could be a substantial correction in the markets... these short-term corrections can be quite dramatic.’
Dramatic, as in up to a 40% haircut in the stock market, according to veteran emerging-markets investor Mark Mobius.


“I’m not predicting that, I’m just saying we’ve got to be ready for that,” Mobius told CNBC in an interview Wednesday following his similar warning last month. “The catalyst I believe will come from continuing increases in interest rates. The (Federal Reserve) is definitely moving in that direction. When the Fed moves, everybody else has got to move in that direction.”

Mobius, pointing to the vulnerability of the long-in-the-tooth bull market, also didn’t rule out the potential impact of geopolitical flare-ups on equities, saying that “any event could also be a trigger.”


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